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SMS Lifesciences India Ltd.

BSE: 540679 Sector: Health care
BSE 00:00 | 23 Mar 545.00 14.15






NSE 00:00 | 23 Mar 545.20 6.00






OPEN 531.55
52-Week high 947.75
52-Week low 501.00
P/E 10.96
Mkt Cap.(Rs cr) 165
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 531.55
CLOSE 530.85
52-Week high 947.75
52-Week low 501.00
P/E 10.96
Mkt Cap.(Rs cr) 165
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

SMS Lifesciences India Ltd. (SMSLIFE) - Director Report

Company director report

[For the year ended 31st March 2022]


Your Directors have pleasure in presenting this 16 th (Sixteenth)Directors? Report along with the Audited Financial

Statements for the year ended 31st March 2022.


As per the requirements of Section 134 of the Companies Act 2013 readwith Rule 8(5)(i) of Companies (Accounts) Rules 2014 your Company?s financialperformance during the year 2021-22 as compared to that of the previous year 2020-21 issummarized below: -




2021-22 2020-21 2021-22 2020-21
Revenue from operations 34562.81 26025.55 34974.45 26559.18
Other income 153.55 133.28 206.65 178.10
EBIDTA 4559.24 3106.79 4891.10 3195.83
Finance Cost 462.50 450.02 617.39 452.93
Depreciation 799.04 721.33 1000.60 786.15
Profit before Tax (PBT) 3297.70 1935.44 3273.11 1956.75
Taxation 759.57 618.61 743.11 601.09
Profit after Tax (PAT) 2538.13 1316.83 2530.00 1355.66
Total Comprehensive Income (TCI) 2533.09 1308.08 2524.17 1348.32
TCI attributable to:
- Owner of SMSLIFE - - 2521.94 -
- Non-controlling interests - - 2.23 -
EPS (Basic and Diluted) in ` **83.95 43.56 **83.68 44.84

**Not comparable with previous year as EBIDTA includes Income fromExceptional items

2. REVIEW OF OPERATIONS / STATE OF AFFAIRS OF THE COMPANY AND ITSSUBSIDIARIES STANDALONE: e Pharmaceutical Ingredients (API?s) and its Activ YourCompany is in the Business of manufacturing of intermediates and sells its products inIndia as well as exports.

During the period under review your Company recorded revenue fromoperations of `345.62 Crores in comparison with the last year revenue from operationsof`260.25 Crores. Profit Before Tax (PBT) increased to

`32.97 Crores in comparison to the previous year PBT of `19.35 Crores.Similarly Profit after Tax (PAT) increased to `25.38 Crores in comparison to the previousyear of `13.16 Crores.

The substantial increase in profits of the Company during the periodunder review is majorly due to exceptional incomes from (i) Profit from sale ofInvestments (`491.97 lakhs) and (ii) Profit from sale of non-revenue generating land &building ( `777.25 lakhs).


Your Company has only 1 (one) Subsidiary** i.e. Mahi Drugs PrivateLimited ("Mahi Drugs") and the consolidated statement has been prepared on thebasis of audited financial statements received from Mahi by its Board of Directors on 28thMay 2022. **status has changed from "Wholly-owned Subsidiary" to"Subsidiary" w.e.f. 7th February 2022 pursuant to disinvestment.(Detail mentioned in point no. 3)

Consolidated net Income of the Company was `349.74 crores duringthe year as compared to `265.59 crores in the previous year. ProfitAfter Tax grew by86.62% as compared to previous year which includes exceptional incomes as mentionedabove as a result EPS has also substantially enhancedby 86.62%.


Mahi Drugs Private Limited (subsidiary) reported a net loss of`8.14 lakhs during the period under review as compared to `26.18 lakhs profit during theprevious year 2020-21 and had total Incomeof `32.57 crores during the year as compared to`17.69 crores in the previous year. (Financials of the subsidiary is available in thewebsite of the Company at ) There is a decline in PBTirrespective of increase in total revenue as the subsidiary company is currently in theprocess of revamping the infrastructure by incurring capital expenditure in order tostreamline the manufacturing plants as per the United States Food and Drug Administration(USFDA) and European Union (EU) guidelines in order to cater to the regulated markets inadditionto the domestic market.


Your Company?s has diluted its stake in Mahi Drugs Private Limited("Mahi Drugs") pursuant to Investment Agreement executed on 13th December 2021with ChemWerth Inc. USA a strategic investor (along with their associates) through: i.Disinvestment/ Sale of 10% of the Shareholding in Mahi Drugs. ii. Raising fresh equity inMahi Drugs on a private placement basis.

Accordingly Mahi Drugs has ceased to be a wholly-owned subsidiary ofthe Company w.e.f. 7th February 2022 but shall continue as a"Subsidiary" of the Company with a 60% (sixty per cent) stake. However themanagement the day-to-day business affairs and decision making powers in Mahi Drugs shallbe solely vested with your Company.



Your Company has successfully completed the United States Food andDrug Administration (USFDA) inspection at its API?s manufacturing facility located atSy. NO. 180/2 Kazipally Jinnaram MandaI Sangareddy district Telangana (Unit I) withoutany observations.

Inspection commenced on 4 th April 2022 and conclude on8th April 2022; Establishment Inspection Report was received on 24th June2022. Except the aforesaid there was no material change and commitment affecting thefinancial performance of the Company which occurred between the end of the financial yearof the Company to which the financial statements relate and the date of this Report (i.e.from 1st April 2022 to 9th August 2022).


As per the requirements of Rule 8(5)(xi) and (xii) of the Companies(Accounts) Rules 2014 there were no proceedings against your Company under theInsolvency and Bankruptcy Code 2016 & No one time settlement of financial dues duringthe period under review.


As per the requirements of Rule 8 (5) (ii) of Companies (Accounts)Rules 2014 we would like to inform that there has been no change in the nature ofbusiness of your Company during the year under review.


As per the requirements of Section 134(3)(k) of the Companies Act2013 Board of Directors of your Company have recommended a dividend of 15% (Fifteen percent) on the equity share capital of your Company i.e.`1.50 (Rupee One and Fifty paiseonly) per equity share of face value of `10/- (Rupees Ten only) each for the year ended 31stMarch 2022 subject to the approval of the Shareholders at the ensuing 16th(Sixteenth) Annual General Meeting of the Company.

The Dividend if declared will be paid to the Shareholders whose namesappear in the Register of Members of the Company as on Friday 23rd September2022 out of the profits of the Company and in respect of shares held in dematerializedform it will be paid to Shareholders whose names are furnished by National SecuritiesDepository Limited (NSDL) and Central Depository Services (India) Limited (CDSL) as thebeneficial owners as on the even date.

The Shareholders are requested to note that the Income Tax Act 1961as amended by the Finance Act 2020 mandates that dividends paid or distributed by aCompany after 1 st April 2020 shall be taxable in the hands of the Shareholders. TheCompany shall therefore be required to deduct Tax at Source (TDS) at the time of makingpayment of the dividend. In order to enable your Company to determine and deduct theappropriate TDS as applicable the Shareholders are requested to read theinstructionsgiven in the Note no. 18 to the Notice convening the 16 th (Sixteenth) AnnualGeneral Meeting of the Company forming a part of this Annual Report.

Note: Dividend Distribution Policy pursuant to Regulation 43A ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is notapplicable to the Company.


There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company in the year 2021-22 as requiredunder Section 124(6) of the Companies Act 2013. However the Shareholders are requested toread the instructions given in Note no. 19 to the AGM Notice forming a part of thisAnnual Report. Details of unclaimed dividends and sale proceeds from fractional shares areavailable on the website of the Company at .


During the period under review your Board of Directors in its meeting thMay 2022 has approved toheld on 28 transfer `200 lakhs to the general reserve with suchtransfer the General Reserves of the Company stood at

` 6812.02 lakhs as on 31st March 2022.


Company has received Credit rating from CARE Ratings Limited (CARE)vide letter no. CARE/HRO/RR/2021-22/1037 dated 5th July 2021. CARE hasassigned the following Credit rating in respect of Bank facilities:

Facilities/Instruments Amount Ratings
Long Term Bank Facilities 19.00 CARE BBB+; Stable
(Reduced from 19.25) (Triple B Plus; Outlook: Stable)
Long Term / Short Term Bank Facilities 30.00 CARE BBB+; Stable / CARE A2
(Triple B Plus; Outlook: Stable/ A Two)
Short Term Bank Facilities 0.32 CARE A2 (A Two)
Total Bank Facilities 49.32


As per the requirements of Section 186 and Section 134(3)(g) of theCompanies Act 2013 we would like to inform that details of loans guarantees securitiesand investments made by the Company are provided in the notes to the financial statementsforming part of the Annual Report.

During the period under review there were no loans or advances in thenature of loans extended to any firms/ companies in which directors are interested eitherby the Company or its subsidiary.


Authorized Share capital `35000000 divided into 3500000 equity shares of `10/- each
Subscribed Issued and Paid-up Share capital `30232870 divided into 3023287 equity shares of `10/- each

During the year under review there was no change in capitalstructure of your Company.

Listing of shares: Equity shares of your Company are listed inNational Stock Exchange of India (NSE) and BSE Limited (BSE) with effect from 17th August2017. [Listing fees has been paid for the year 2022-23 to both the Exchanges].


The Company has not accepted or renewed any amount falling within thepurview of provisions of Section 73 of the Companies Act 2013 read with the Companies(Acceptance of Deposit) Rules 2014 during the year under review. Hence the requirementfor furnishing of details relating to deposits covered under Chapter V of the

Companies Act 2013 is not applicable.


As per the requirements of Rule 8(5)(iii) of Companies (Account) Rules2014 your Company is maintaining an optimum combination of Independent / ExecutiveDirectors on the Board who have vast experience in Pharma and other relevant fields.(Details of the Board Members are provided in the Corporate Governance Report). All theDirectors of the Company including the Independent Directors & Senior Management haveaffirmed Codes of Conduct of the Company pursuant to Regulation 26(3) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 and SEBI circular no.CFD/CMD/5/2015 dated 24 th September 2015. A. RETIREMENTBY ROTATION

In accordance with the provisions of Section 152(6) of theCompanies Act 2013 read with the Articles of Association of the Company at least 2/3rdof the total number of Directors of a public company shall be liable to retire by rotationand 1/3 rd of such Directors shall retire by rotation at every AGM However"Independent Directors" are out of the ambit of retiring by rotation. Furtheras Mr. Talluri Venkata Praveen wasappointedbyrotationin the 15 th AGM so Boardhas proposed Mrs. Sudeepthi Gopineedi as the Director to "Retire by rotation" intheth16 AGM. Detailed information as required under Regulation 36(3) of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 asAnnexure-Iforming part of this Report.


During the year under review and until the approval of thisDirectors Report there was following changes in Board composition:

Appointment / re-appointment:
Name Category DIN Event date
Mrs. Sudeepthi Gopineedi Executive Director 09102540 02.09.2021
Mr. Mannam Malakondaiah Independent Director 01431923 13.11.2021
Mr. Srinivas Samavedam Independent Director 02488555 13.11.2021
Mr. Sarath Kumar Pakalapati** Independent Director 01456746 11.02.2022
Mr. TVVSN Murthy## Managing Director 00465198 28.05.2022

**Re-appointed for the second term of 5 (five) years as"Independent Director" w.e.f. 25th May 2022.

## Re-appointed for further period of 3 (three) years as"Managing Director" w.e.f. 1st June 2022.

Name Category DIN Event date
Mr. P. Ramesh Babu Non-Executive Director 00166381 18.06.2021
Dr. (Mrs.) T Neelaveni Independent Director 00065571 02.09.2021
Mr. Shravan Kudaravalli Independent Director 06905851 13.11.2021

Note: appropriate resolutionsfor re-appointment of Mr. SarathKumar Pakalapati as "Independent Director" and re-appointment of Mr. TVVSNMurthy as "Managing Director" are being moved by the means of Postal Ballotnotice th July 2022 which has already commenced from Tuesday 26 dated25 th July 2022and shall conclude on Wednesday 24th August 2022 voting results of the same shall bedeclared on Thursday 25th August 2022 to the Stock Exchanges and hosted atthe website of the Company.


The Independent Directors have furnished declarations ofindependence under Section 149 of the Companies Act 2013 and Regulation 25 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015. They have alsoconfirmed that they are not aware of any circumstance or situation which exist or may bereasonably anticipated that could impair or impact their ability to discharge theirduties with an objective Further the Board after taking these declarations/ disclosureson record and acknowledging the veracity of the same concluded that the IndependentDirectors are persons of integrity and possess the relevant expertise and experience toqualify as Independent Directors of the Company and are Independent of the


Registration of Independent Directors in Independent DirectorsDatabank:

All the Independent Directors of the Company have been registeredand are members of Independent

Directors Databank maintained by Indian Institute of Corporate Affairs(IICA) in terms of the provisions of Rule 6 of the Companies (Appointment andQualification of Directors) Rules 2019 and the Companies (Creation and Maintenance ofDatabank of Independent Directors) Rules 2019.

In terms of the provisions of the Companies (Appointment andQualification of Directors) dealing with the requirement for Independent Directors to passproficiency self-assessment test conducted by IICA: a) Mr. Venkatasubbarao Potluri and Mr.Sarath Kumar Pakalapati are exempted from appearing for the proficiency self-assessmenttest; b) Mr. Mannam Malakondaiah and Mr. Srinivas Samavedam will appear for theproficiency self-assessment test during the year 2022-23 within the mandatory timelinesapplicable to them.

Vigil Mechanism/Whistle-Blower Policy:

Your Company already has in place "Vigil MechanismPolicy" (Whistle Blower Policy) for Directors and employees of the Company pursuantto the provisions of Section 177 (9) of the Companies Act 2013 read with Rule 7 of theCompanies (Meetings of Board and its Powers) Rules 2014 and Regulation 22 of SEBI(Listing Obligation and Disclosure Requirements) Regulations 2015 which provide amechanism which ensures adequate safeguards to employees and Directors and the same can beaccessed from the website of the Company . The employees ofthe Company have the right/option to report their concerns/ grievances to the Chairman ofthe Audit Committee. The Company is committed to adhering to the highest standards ofethical moral and legal conduct of business operations.The contact details for the vigilmechanism are available at the website of the Company at


To the best of their knowledge and belief and according to theinformation and explanations your Directors make the following statements in terms ofSection 134(3)(c) of the Companies Act 2013: a) that in the preparationof the annualaccounts/financial statements for the year ended 31st March 2022 theapplicable accounting standards had been followed along with proper explanation relatingto material departures if any; b) that the accounting policies as mentioned in thefinancial statements were selected and applied consistently and reasonable and prudentjudgments and estimates were made so as to give a true and fair view of the state ofaffairs of the Company at the end of the year and of the profit and loss of the Companyfor that period; c) that proper and sufficient care had been taken for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother d) that the annual accounts were prepared on a going concern basis; e) that properinternal financial controls were in place and that such internal financial controls areadequate and were operating effectively; and f) that proper systems to ensure compliancewith the provisions of all applicable laws were in place and that such systems wereadequate and operating effectively.

Non-disqualification of Directors:

None of the Directors of the Company is disqualified under theprovisions of the Companies Act 2013 or under the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015. Your Company has obtained a Certificate fromMr. C. Sudhir Babu Company Secretary in Practice Hyderabad (ICSI Memb. No. 2724 and C.P.No. 7666) pursuant to the provisions of Regulation 34(3) read with Schedule V of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 provided as AnnexureII certifying that none of the Directors of the Company have been debarred ordisqualified from being appointed or continuing as Directors of companies by theSecurities and Exchange Board of India (SEBI) or by the Ministry of Corporate Affairs(MCA) or by any such statutory authority.


The performance evaluationof the Board / Committees/ ExecutiveDirectors were carried out by the Committee meeting held on 11 Nomination&Remuneration th February 2022 and were overall satisfied with the evaluationresults which reflected the overall engagement and performance of the Board / Committees/Executive Directors of the Company.

The Board of Directors in the meetingheld on 28 th May 2022evaluated the individual performance of the Independent Directors of the Company based onthe specified criteria pursuant to Regulation 17(10) of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and were satisfied with their performance. Disclosureof Expertise / Skills / Competencies of the Board of Directors:

The list of core skills / expertise / competencies identified bythe Board of Directors of the Company as required in the context of its business andsector(s) for it to function effectively and those actually available with the Board formpart of the Corporate Governance Report.


All Independent Directors maintained their limits of Directorshipsas required under SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.The criteria for determining qualifications terms of Appointment Roles Duties andresponsibilities of Independent Directors are provided in the "Terms and Conditionsof appointment of Independent Directors" and Remuneration criteria of Non-executiveDirectors are provided in the website of the Company at


The Company has put in place a system to familiarize itsIndependent Directors with the Company their roles rights & responsibilities in theCompany nature of the industry in which the Company operates business model of theCompany etc. The details of such familiarization programmes are provided on the websiteof the Company and can be accessed


As per the requirements Section 134 Board of Directors met 6 [six]times during this year under review.

Sl. No. Date and time No. of Directors present
1. 18th June 2021 [04.00 pm] 06
2. 13th August 2021 [04.00 pm] 07
3. 2nd September 2021 [05.15 pm] 07
4. 13th November 2021 [05.00 pm] 06
5. 30th November 2021 [05.00 pm] 06
6. 11th February 2022 [02.00 pm] 07

The Meetings of the Board of Directors are prescheduled in order tohelp them to plan their schedule. The details of Board Meetings and the attendance of the

Directors thereat are provided in the Corporate Governance Report.

The intervening time gap between two consecutive Meetings of the Boardwas within the limit prescribed under the Companies Act 2013 i.e. the same was notexceeding 120 (One Hundred and Twenty) days except for the meeting held on 18th June2021 (previous meeting th February 2021) in lieu of the relaxations granted by SEBI videcircular no. SEBI/HO/CFD/CMD1/P/CIR/2021/556 th April 2021 due to the secondwave of the Covid19 pandemic.

Sub-committees:Details of various committees constituted by theBoard of Directors as per the provisions of the Companies Act 2013 and SEBI (ListingObligations and Disclosure are given in the Corporate Governance Report which forms partof this report.

Separate Independent Directors Meeting:

A separate meeting of the Independent Directors without thepresence of Non- Independent Directors and members of management had taken place on 11thFebruary 2022 at the Registered Office of the Company located at Hyderabad in which theIndependent Directors had appreciated the performance of the Executive Directors and theBoard as a whole. They also concluded that the Board as a collective body is alsoperforming satisfactorily and the flow of information between the Company?sManagement and the Board in terms of quality quantity and timeliness is satisfactory.Further the Independent Directors had appreciated the quality of discussions at the Boardand the Committee Meetings and structure that allows and encourages the Board to fulfillits responsibilities.


The Key Managerial Personnel of the Company as on 31stMarch 2022 in accordance with the provisions of Section 2(51) and 203 of the CompaniesAct 2013 read Remuneration of Managerial Personnel) Rules 2014 is as below:

r Mr. TVVSN Murthy Managing Director.

r Mr. N Rajendra Prasad Chief Financial Officer

r Mr. Trupti Ranjan Mohanty Company Secretary

There is No change in KMP?s of the Company during the year.

Directors and Officers Liability Insurance (‘D&O?)

The Company has suo-moto taken Directors and Officers LiabilityInsurance (‘D&O insurance?) for all its Directors and members of the SeniorManagement pursuant to Regulation 25(10) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015.


Management Discussion and Analysis Report for the year under review asstipulated under Regulation 34(3) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 forms part of the Annual Report in

Annexure III.


The shareholding of promoter / promoter group of the Company as on 31stMarch 2022 as compared to previous year.

As on 31st March 2021

As on 31st March 2022

% Changes
Sl. No. Name of Promoter/ Promoter Group No. of Shares %age No. of Shares %age during the year
1. TVVSN Murthy* 480034 15.88 480034 15.88 -
2. TVVSN Murthy – HUF* 227190 7.51 227190 7.51 -
3. Ramesh Babu Potluri* 240190 7.94 240190 7.94 -
4. Suresh Babu Potluri# 5151 0.17 2539 0.08 (50.71%)
5. Hima Bindu Potluri# 83333 2.76 83333 2.76 -
6. Annapurna Talluri# 735584 24.33 742436 24.56 0.93%
7. Rajeswara Rao Gopineedi# 37 - 100 - -
8. Venkata Praveen Talluri# 46262 1.53 67988 2.25 46.96%
9. Hari Kishore Potluri# 15859 0.52 8664 0.29 (45.37%)
10. Sudeepthi Gopineedi# 62500 2.07 72114 2.39 15.38%
11. Venkata Chaitanya - - 105 - -
12. Sukumari Koneru# 714 0.02 714 0.02 -
13. Vamsi Krishna Potluri# 73234 2.42 73234 2.42 -
14. Trilok Potluri# 78141 2.58 78141 2.58 -
15. Satyavani Potluri# - - - - -
16. Potluri Laboratories Pvt. Ltd.# - - - - -
17. Potluri Infra Projects LLP# 8000 0.26 8000 0.26 -
18. Pixalot Labs Private Limited# 7412 0.25 - - (100.00%)
Total 2063641 68.26 2084782 68.96 1.02%

List of Top 10 shareholders (other than Promoter) of the Company as on31st March 2022 is provided separately in Annexure IV.


Your Company had made an application to Stock Exchanges on 27 thOctober 2021 for reclassification of following erstwhile members of Promoter group of theCompany and the same was approved by the Stock Exchanges on

13th April 2022.

Sl. No. Name of the erstwhile promoters group No. of Shares % of holding
1. Mr. Suresh Babu Potluri 2539 0.08
2. Mr. Hari Kishore Potluri 8664 0.29


M/s. Rambabu & Co. (firm Registration No. 002976S) wereappointed as Company in the 15th Annual General Meeting (AGM) held on 30 thSeptember 2021 for a term of 5 (Five) consecutive years pursuant to the provisions ofSection (Audit and Auditors) Rules 2014. The Auditor?s Report for the year ended 31stMarch 2022 on the financial statements of the Company is provided along withfinancialstatements forming part of this Report and the same does not contain anyqualification adverse remark reservation or disclaimer and therefore does not call forany further approval or comments from the Board under Section 134(3) of the Companies Act2013


The cost records are required to be maintained by your Company andthe same are required to be audited pursuant to Section 148 of the Companies Act 2013read with the Companies (Audit and Auditors) Rules 2014 and the Companies (Cost Recordsand Audit) Rules 2014. Company accordingly maintains the required cost accounts andrecords as per the requirements of Section 148 of the Companies Act 2013 The Board hason the recommendations made by the Audit Committeein theirth May 2022reappointed Mr. KSN Sarma Cost Accountant Hyderabad (Registration No. 102145 andMembership no. 6875) as Cost Auditor of the Company for conducting the cost audit for theyear 2022-23 subject to approval of their remuneration at the ensuing 16th (Fifteenth)Annual General Meeting.


Board of Directors had upon recommendation of the AuditCommittee at its Meeting held on 18th June 2021 appointed M/s. SVVS &Associates Company Secretaries LLP a firm of Company Secretaries in Practice to undertakethe Secretarial Audit of your Company for the year 2021-22 pursuant to the provisions ofSection 204 of the Companies Act 2013 and the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014. The Secretarial Audit Report issued by M/s. SVVS &Associates

Company Secretaries LLP Secretarial Auditors for the year ended 31stMarch 2022 which is an unqualified report is annexed herewith as Annexure V.

Board of Directors has upon recommendation of the Audit 28thMay 2022 re-appointed M/s. SVVS & Associates Company Secretaries LLP as the"Secretarial Auditors" of your Company for the year 2022-23. Further Companyhas received consent from M/s SVVS & Associates Company Secretaries LLP to act as theauditor for conducting an audit of the secretarial records for the year ending 31stMarch 2023.

Annual Secretarial Compliance Report:

Company has obtained Annual Secretarial Compliance Report from Mr.C. Sudhir Babu Practicing Company Secretary (Proprietor CSB Associates) on 28thMay 2022 pursuant to SEBI circular no.

CIR/CFD/CMD1/27/2019 dated 8th February 2019; forms part ofthis Report as Annexure VI and the same was also submitted to the Stock Exchange(s)on 30 th May 2022. The aforesaid Report do not contain any reservation oradverse remarks.


Board recommendationof the Audit Committee at its Meetingheld onDirectors had upon 27th July 2020 reappointed M/s Adusumilli &Associates Chartered Accountants (Firm No. 06983S) as the Internal Auditors of theCompany (perpetually unless decided otherwise by the Board) in accordance with theprovisions of Section 138 of the Companies Act 2013 read The Internal Auditors submittheir report on quarterly basis to the Audit Committee. Based on the report of internalaudit management undertakescorrectiveactionintherespective areas and takes necessarysteps to strengthen the levels of Internal Financial and other operational controls.

FrAuditors Reporting of

During the year under review the Statutory Auditors the CostAuditors Internal Auditors and Secretarial Auditors have not reported any instances offraud committed in the Company by its Directors or Officers or Employees to the AuditCommittee under Section 143(12) of the Companies Act 2013.


Your Company has adopted an amended Code of Conduct to regulatemonitor and report trading by Designated

Persons and their Immediate Relatives under the SEBI (Prohibition ofInsider Trading) Regulations 2015. This Code of Conduct also includes code of practicesand procedures for fair disclosure of unpublished price sensitive information and has beenmade available on the Company?s website at Board hasauthorized Mr. Trupti Ranjan Mohanty Company Secretary of the Company to act as theCompliance Officer for setting forth the procedures and implementation of the aforesaidcodes. Report pursuant to Clause I of Schedule B (Minimum Standards for Code of Conduct)of SEBI (Prohibition of and Clause 6 of Code for Regulation & Prohibition of InsiderTrading of the Insider Trading) Regulations Company is submitted to the Board ofDirectors on a quarterly basis.


National Stock Exchange of India Limited and BSE Limited has released alist of ranking of the Companies as on 31st March 2022 based on the Marketcapitalization; ranking of your Company is as under:

Stock Exchange Rank as per Market Capitalization
National Stock Exchange 1363
BSE Limited 1577

Note: Based on the aforesaid ranking constitution of RiskManagement Committee adopting Dividend Distribution Policy and appointment of WomenIndependent Director is not applicable to your Company.


In compliance with Regulation 34(3) read with Schedule V of the SEBI(Listing Obligations & Disclosure Requirements) Regulations 2015 the CorporateGovernance Report for the year 2021-22 as required under SEBI

(Listing Obligations and Disclosure Requirement) Regulations 2015 ofthe Company is attached to this report as

Annexure VII.

M/s. Rambabu & Co. Statutory Auditors of the Company havecertified the said report in compliance with the requirements of Regulation 34 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 and the ComplianceCertificate is annexed to the Corporate Governance Report asAnnexure VIIA.


Your Company is in compliance with the Secretarial Standards onMeetings of the Board of Directors (SS - 1) and General Meetings (SS - 2) issued by theInstitute of Company Secretaries of India (ICSI) and approved by the

Central Government.


Shareholders who have not registered their email addresses with theCompany are requested to register their email addresses with the Company to enable theCompany to deliver notices /documents through e-mail. Shareholders holding their shares indemat mode also have an option to register / update their email addresses KYC and Bankdetails with their depository through their depository participant.


Your Company has 1 (one) subsidiary i.e. Mahi Drugs Private Limited(CIN: U24233AP2012PTC084875) and no joint venture or Associate Companies as on 31stMarch 2022 and pursuant to Section 129(3) of the Companies Act 2013 a statementcontaining salient features of the financial statements of the said subsidiary in theprescribed Form AOC-1 forms part of the Annual Report as Annexure VIII.

No company has ceased to be a subsidiary/ associate/ joint venture ofthe Company during the year. However Mahi Drugs Private Limited has ceased as a"Wholly-owned Subsidiary" of the Company w.e.f. 7th February 2022but shall continue assubsidiary company. (Detail mentioned in point no. 3).

Your Company has separately placed audited financial statements of thesubsidiary on the website of the Company at as perprovisions of Section 136 of the Companies Act 2013 and a copy of the same will beprovided to the shareholder at their request. Further the policy for determining materialsubsidiaries pursuant to the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is available on the website of the Company


Department of Scientific and Industrial Research (DSIR) of Governmentof India Ministry of Science and Technology New Delhi has accorded its recognition toin-house Research and development (R&D) Unit(s) of the

Company located at Plot No. C-23 Industrial Estate SanathnagarHyderabad Telangana.

During the year Company has spent `287.49 lakhs (previous year `195.49lakhs) towards Research and Development and is putting continuous efforts in R&D todevelop the new products & business process for optimization of resources.


The Board of Directors have reconstituted Corporate SocialResponsibility (CSR) Committee in its meeting held on 13th November 2021 incompliance with the requirements of Section 135 of the Companies Act 2013 read with theCompanies (Corporate Social Responsibility Policy) Rules 2014 The details of the CSRCommittee composition meetings and the attendance of the Members at the meetings alongwith the Report on Corporate Governance which forms part of this Annual Report.

The Annual Report on CSR initiatives undertaken during the year ended31st March 2022 in the prescribed format pursuant to the Companies (CorporateSocial Responsibility Policy) Amendment Rules 2021 dated 22nd January2021 is provided as Annexure IX to this Report.

Corporate Social Responsibility Policy:

The policy was amended pursuant to the Companies (Corporate SocialResponsibility Policy) Amendment Rules 2021 dated 22nd January 2021 by theBoard of Directors at its meeting held on 12 th February 2021 as per therecommendations of the CSR Committee meeting and is uploaded on the Company? pdf/Corporate-Social-Responsibility-[CSR]-Policy.pdf


Your Company?s Equity Shares are available for dematerializationthrough National SecuritiesDepository Limited ("NSDL") and Central DepositoryServices (India) Limited ("CDSL").

The ISIN Number of your Company for both NSDL and CDSL is INE320X01016.28. RELATED PARTY TRANSACTIONS

All Related Party Transactionsthat were entered into during the yearunder review were in the ordinary course of business and on an arm?s length basis andwere in compliance with the applicable provisions of SEBI Regulations and Companies Act2013 read with rules made there under and the particulars of contracts or arrangementsentered by the Company with related parties referred to in Section 188(1) are furnishedunder Form AOC-2 as Annexure X.

There was 1 (one) material significant Related Party Transactionspursuant to Regulation 23 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 entered into by the Company during the year under review as mentionedbelow:

Name of Related party Nature of Transaction Threshold Limit* Aggregate Transaction value
Mahi Drugs Private Limited Sales & Purchase 26.55 34.95

*10% of consolidated turnover of the Company for the year 2020-21 TheAudit Committee and the Board of Directors in their respective meetings held on 28 thMay 2022 have approved the same subject to ratification of the Shareholders in theensuing Annual General Meeting. Note: Appropriate resolution for ratification ofall the Related Party Transactions for the year ended31 st March 2022 is beingmoved at the ensuing 16th (Sixteenth) AGM which the Board of Directorsrecommends for your approval.

Your Directors draw attention of the members to Notes No. 47 to thestandalone financial statement forming part of the Annual Report which sets out relatedparty disclosures. All related party transactions are placed before the Audit Committeefor its review on quarterly basis.

Policy on Related Party Transactions:

The policy was amended pursuant to SEBI notification th November2021 read with clarification dated9 SEBI dated 30th March 2022 and 8thApril 2022 by the Board of Directors at its meeting held on 28th May 2022 asper the recommendationsof the Audit Committee and is uploaded on the Company?swebsite at www.smslife. in/policies.php.


As per the requirements of Section 92(3) of the Companies Act 2013read with the Companies (Management and Administration) Amendment Rules 2021 draftAnnual return in Form MGT-7 is hosted on the website of the Company .


In order to ensure orderly and efficient conduct of the businesssafeguard the assets ensure the accuracy and completeness of the accounting records andtimely preparation of reliable financial information and financial statements the Companyhas put in place adequate Internal Financial Controls procedures. Adequacy andeffectiveness of the Internal Financial Controls of the Company are validated on annualbasis by the Audit Committee.


The Management of the Company will take adequate steps in identifyingassessing controlling and mitigating the risks associated with different areas of itsbusiness operations.


During the year under review there were no significant or materialorders passed by the Regulators or Court or Tribunals impacting the going concern statusand Company Operations in future


Your Company is committed to provide a healthy environment to all itsemployees. There is zero tolerance of discrimination and/or harassment in any form. YourCompany has in place a Prevention of Sexual Harassment Policy and anInternalComplaintsCommittee as per the requirements of the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013.

Your Company has complied with provisions relating to the constitutionof InternalComplaintsCommittee under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013. Internal ComplaintsCommittee:

During the financial year under review there was NO COMPLAINTreceived by the Internal Complaints



The information on conservation of energytechnologyabsorptionandforeign exchange earnings and outgo stipulated under Section 134(3)(m) of the CompaniesAct 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 is annexed herewith as AnnexureXI.


The informationrequired under Rule 5(1) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 are provided in separate annexureforming part of this report as Annexure XII.

Disclosure as per Rule 5 (2) and Rule 5 (3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 is as mentioned below:

Name Mr. TVVSN Murthy
Age 62 years
Designation Managing Director
Remuneration** `2.01 Crores
Qualification Graduate in Chemistry
Experience More than 40 years? experience in Pharma sector
Date of commencement of employment 01.04.2016
Nature of employment Contractual (as approved by shareholders)
Last employment SMS Pharmaceuticals Limited
Shareholding as on 31st March 2022 23.39% (including indirect holding)
Relationship with other Directors Father of Mr. TV Praveen Executive Director and
Mrs. Sudeepthi Gopineedi Whole-time Director.

Note - The remuneration paid to Directors Key Managerial Personneland other employees of the Company during the year 2021-22 was in conformity with theNomination and Remuneration Policy of the Company and within the limits approved by theshareholders.


Your Company continues to accord paramount importance to health andsafety of its employees and workforce. Necessary on-job training has been provided toemployees on Safety Quality and Standard Operating Procedures (SOP) aspects. The Companycontinued its welfare measures to its employees and workforce by way of canteen uniformpersonal protective equipment (PPE) etc.

During second wave of Covid-19 pandemic awareness and precautionarymeasures were taken in the Company to prevent the employees from getting effected by theCovid 19 Virus.

The total number of employees of the Company as on 31stMarch 2022 was 565 (previous year 523).


The Companies Act 2013 the Rules framed thereunder and the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 have mandated theformulation of certain policies for all listed companies. All our Corporate GovernancePolicies are available on the Company?s website at ThePolicies are reviewed periodically by the Board and its new compliance requirement.


Your Company being in pharmaceutical sector the compliance withvarious laws and and integral part of your Company?s business operations. We aresubject to various laws and regulations in diverse areas as product safety productclaims competition employee health and safety the environment corporate governancelisting and disclosure employment and Frequent changes in legal and regulatory regimeand introduction of newer regulations with multiple regulating same areas lead tocomplexity in compliance. We closely monitor and review our practices that we remaincomplaint with relevant laws and legal obligatio ns.


A certificate of the Managing Director and Chief Financial Officer ofthe Company on financial statements and applicable internal controls as stipulated underRegulation 17(8) of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 is enclosed asAnnexure XIII to this report.


Your Directors states that no disclosure or reporting is required inrespect of the following matters under the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 either on account of theabsence of any transaction or the inapplicability of the provisions:

a) Your Company has not issued any shares with differentialrights andhence no information as per provisions of Rule 4(4) of the Companies (Share Capital andDebenture) Rules 2014 is furnished.

b) Your Company has not issued any sweat equity shares during the yearunder review and hence no information as per provisions of Rule 8(13) of the Companies(Share Capital and Debenture) Rules 2014 is furnished.

c) Your Company has not issued any equity shares under Employees StockOption Scheme during the year under review and hence no information as per provisions ofRule 12(9) of the Companies (Share Capital and Debenture) Rules 2014 is furnished.

d) There are no instances where the Board has not accepted therecommendation of the Audit Committee/ Nomination and Remuneration Committee.

e) No receipt of any remuneration or commission from the SubsidiaryCompany by the Managing Director or the Whole-time Directors of the Company as persection 197(14) of the Companies Act 2013.

f) No transactions with person(s) or entity(ies) belonging to thePromoter / hold(s) 10% or more shareholding in Your Company as per Schedule V (2A) ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 during theperiod under review except the managerial remuneration paid to Mr. TVVSN Murthy Promoterand Managing Director of the Company. The additional information required to be givenunder the Companies Act 2013 and the Rules made thereunder has been laid out in theNotes attached to and forming part of the Financial Statements.

41. APPRECIATION employees at all levels for their hard work YourDirectorswould liketoexpress their deep appreciation dedication and commitment.

The Board also places on record its appreciation and gratitude for thecontinued cooperation and support received by your Company during the year fromshareholders Strategic investors (ChemWerth Inc.) Bankers customers business partnersall Regulatory and Government Authorities and other stakeholders.

By Order of the Board

For SMS Lifesciences India Limited

TV Praveen TVVSN Murthy
Date: 09.08.2022 DIN: 08772030 DIN: 00465198
Place: Hyderabad Executive Director Managing Director