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Torrent Pharmaceuticals Ltd.

BSE: 500420 Sector: Health care
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OPEN 2870.25
52-Week high 3304.45
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P/E 48.50
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OPEN 2870.25
CLOSE 2882.15
52-Week high 3304.45
52-Week low 2485.00
P/E 48.50
Mkt Cap.(Rs cr) 48,064
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Torrent Pharmaceuticals Ltd. (TORNTPHARM) - Director Report

Company director report


The Shareholders

The Directors have the pleasure of presenting the Forty Eighth Annual Report of yourCompany together with the Audited Financial Statement for the year ended 31stMarch 2021.


1. 2020-21: An unprecedented year:

• The COVID-19 pandemic and its resurgence has posed an unprecedented challenge toglobal economy and corporations. While the pharmaceutical sector is relatively insulatedfrom the pandemic and lockdowns it did have impact on the industry's growth trajectory.

• Employees' safety and business continuity has been at the core of our day to dayfocus during these times. Torrent has taken all appropriate proactive measures to ensurecontinuity of supplies to patients. It laid the highest emphasis on safety of itsemployees and their families through a number of employee centric and safety relatedinitiatives.

2. India business:

• The Indian Pharmaceutical Market registered a rather muted growth of 2.1% owingto pandemic induced lockdowns and economic slowdown. Torrent outperformed the market withgrowth of 6.1% due to high chronicity of its portfolio.

• Torrent continued its focus on new introductions during the year launchingseveral important introductions in key markets: therapy;

Brivaracetam in the Central Nervous System therapy;

Obeticholic Acid within the Gastro Intestinal therapy;

NDDS Tapentadol Nasal spray in Pain Analgesic therapy.

• At the year end field force productivity is` 8.4 Lakhs per month animprovement of 17% over previous year.

• Torrent is ranked 8th in the IPM with 10 brands with sales of morethan Rs 100 crores.

3. US business:

• US revenues were impacted on account of pending new approvals due to OAI / WLclassification of its facilities at Dahej

Indrad and Levittown US.

• For all the three facilities Torrent has already completed its CAPAs andsubmitted the closure report. Torrent continues to await guidance from the USFDA on thenext steps and re-inspection of the facilities.

• Despite a lack of new approvals Torrent continued to strengthen its pipelineand has filed 12 ANDAs (PY 12) during the year.

3 products were launched during the year.

• Torrent is ranked amongst top 3 players in 25 molecules.

4. Brazil business:

• Torrent continues to be ranked the no. 1 Indian Pharmaceutical company inBrazil.

• Brazil sales in constant currency grew by 11% during the year vs market growthof 8.9% backed by new launches & growth in BGx and GGx segments.

• Torrent will maintain its high focus of chronic therapies in Brazil similar tothe Indian portfolio and will enter new therapies which would be important growth levers.

5. Germany business:

• Torrent is ranked the no. 5th generic company and no. 1 IndianPharmaceutical company in Germany.

• Germany sales were stable and were impacted by the pandemic induced lockdowns& market slow down and temporary supply disruption caused due to upgradation ofquality management systems.

• Torrent has resolved the supply related issues and has regained its marketshare. Torrent continues to expand its market coverage through new launches whileexpanding its non-tender and OTC business.

6. Rest of the World:

• ROW markets registered strong growth at 17%.

• Torrent will continue its focus on key ROW markets to develop them as growthengines of the future.

7. The state-of-the-art Oral Oncology manufacturing facility in Gujarat which willcater to both regulated and non-regulated markets is on track and regulatory approvalsare being initiated.

8. Financial performance:

• EBITDA margins improved by 292 bps over last year. Margins were complemented byimprovement levers inherent to Torrent's business model and certain cost savings &efficiencies resulting from pandemic linked lockdowns across different markets during theyear.

• Leverage (Net Debt-to-EBITDA) reduced to 1.6x as of 31st March 2021 compared to2.2x as of 31st March 2020.

Financial Results

The summary of Standalone (Company) and Consolidated (Company and its subsidiaries)operating results for the year and appropriation of divisible profit is given below:

(Rs in crores except per share data)

Standalone Consolidated
2020-21 2019-20 2020-21 2019-20
Sales & Operating Income 6451 6168 8005 7939
Profit Before Depreciation Net Finance Cost Exceptional Items & Tax 2311 2148 2537 2284
Less: Depreciation & Amortisation 610 607 658 654
Less: Net Finance Cost 335 424 353 443
Profit Before Exceptional Items & Tax 1366 1117 1526 1187
Less: Exceptional Items - - - -
Less: Tax Expense 228 178 274 162
Net Profit for the Year 1138 939 1252 1025
Balance brought forward 2093 1884 1893 1616
Other Comprehensive income and other adjustments 7 (11) 0 (14)
Balance available for appropriation 3238 2812 3145 2627
Appropriated as under:
Transfer to General Reserve - - - -
Dividend 338 609 338 609
Tax on Distributed Profits for Dividend - 110 - 125
Balance Carried Forward 2900 2093 2807 1893
Earnings Per Share (` per share) 67.24 55.46 73.98 60.55

Consolidated Operating Results

The consolidated sales and operating income increased to Rs 8005 crores from Rs 7939crores in the previous year showing a growth of 1%. The consolidated operating profit forthe year was Rs 2537 crores as against Rs 2284 crores in the previous year registeringgrowth of 11%. The consolidated net profit stood at`1252 crores compared to Rs 1025crores in the previous year registering growth of 22%.

Management Discussion and Analysis (MDA)

The details of operating performance of the Company for the year the state of affairsand the key changes in the operating environment have been analysed in the ManagementDiscussion and Analysis section which forms a part of the Annual Report.


i) Dividend

The Board had in its meeting held on 18th May 2021 revised the existingDividend Distribution Policy to increase the distribution of dividend to 40% of its annualconsolidatednetprofit after tax without taking into account non-cash charges relating tothe business acquisitions. The revised policy is available on the website

During the year under review an interim dividend of Rs 20/- per equity share of facevalue of Rs 5/- each (@ 400%) amounting to Rs 338 crores was paid to the shareholders.Further the Board considered it prudent torecommendthefinal dividend for 2020-21 as perthe revised Dividend Distribution Policy and accordingly recommended a final dividend ofRs 15/- per equity share of face value of Rs 5/- each (@ 300%) amounting to Rs 254 croresfor approval to shareholders at the 48th Annual General Meeting (AGM) of theCompany. Hence the total dividend paid / payable with respect to the year under reviewwas of Rs 35 per equity share (@700%) amounting to Rs 592 crores.

ii) Transfer to Reserves

The Board of Directors of the Company has decided not to transfer any amount to theReserves for the year under review.

Human Resources

At Torrent we value our employees and believe that Torrent's success is an outcome ofthe collective contribution of all our employees.

The Human Resource Development team continuously strives to create a conducive workenvironment that aims to influence the employees' ability motivation and designsopportunities for one to perform. This ensures the long-term viability of this valuableresource. The Company continues to invest in meritocracy which allows the organisation todevelop employees who become ready to accept new challenges in the future. A sound systemhas been designed that has resulted in improved implementation of the HR processes leadingto better work environment and greater employee job satisfaction.

During the Pandemic period health and safety of employees were the most importantpriority for the Organisation. Safety awareness programmes / counselling sessions playedan important part to spread necessary knowledge and helped employees to cope-up with thechallenge of working amidst the COVID pandemic. Focused efforts were undertaken to improveemployee connect. Regular surveys were conducted to understand the difficulties faced bythe employees and their families and the same were resolved in time. Fresh expertise bothseasoned and new recruits to the workforce were acquired and aligned to theOrganisation's ethos through consistent initiatives. The HR team continued to coordinatetraining and development activities that have assisted in the nurturing of talent as wellas sharpening of new management skills. On the Job training meaningful interactions withsenior professionals and development programmes aid employees to build the rightcompetencies in their work arena be it technical managerial or behavioural. Periodic jobrotation programmes are undertaken enabling every employee to understand the nuances ofthe function thereby developing to take a bigger role in the future. This helps toempower everyone in the Organisation leading to job enrichment and satisfaction. On theIndustrial front the Company continued to foster cordial Industrial Relations with itsworkforce during the year.

Various gender diversity initiatives such as exi-shift hours have aided female workersin balancing work and other duties. Special events promoting a woman's personal and careerdevelopment are often planned with an emphasis on fitness well-being and a stress-freelife. The consistency in performance and commitment of our employees helps both theleadership and the employees to regularly achieve Company's objectives and improve overallCompany's performance.

The Company has a diverse workforce of 12531 employees as on 31st March2021 vis--vis 12881 employees as on 31st March 2020.

Vigil Mechanism

The Company has built a reputation for doing business with honesty and integrity overthe years and has shown zero tolerance for any sort of unethical behaviour or wrongdoing.The Organisation has in effect a rigorous vigil system to report unethical conduct inorder to promote professionalism fairness dignity and ethical behaviour in its staffand stakeholders the particulars of which are covered in the Corporate Governance Report.

The said system also safeguards the employees who use the vigil mechanism from beingvictimised and provides them direct access to the Audit Committee. In addition theCompany's Code of Business Conduct defines essential corporate ethical practices that formthe Company's belief structure and business operations as well as representing theCompany's valued principles.

Whistle-blower Policy and Code of Business Conduct have been hosted on Company'swebsite

Internal complaints committees have been established for all administrative units /offices to redress complaints received regarding sexual harassment as part of the Policyfor the Prevention of Sexual Harassment of Women at Workplace. During the year nocomplaints were received under this policy.

Corporate Social Responsibility

During the year 2020-21 the Company incurred CSR expenditure of Rs 22.29 crores whichis 2.56% of the average net profit of the past three financial years as against statutoryrequirement of 2%. Additionally`1.39 crores was utilised by the CSR implementing agencyout of the surplus arising from funds invested temporarily pending the expenditure. Thishas resulted in total CSR expenditure of Rs 23.68 crores for the year. The CSR activitiesundertaken by the Company were under the thrust areas of Community Healthcare Sanitation& Hygiene Education & Knowledge Enhancement and Social Care & Concern. TheBoard in its meeting held on 18th May 2021 revised the existing CSR Policy ofthe Company to harmonise with the amendments carried out by the Ministry of CorporateAffairs in the Section 135 of the Companies Act 2013 read with the Companies (CorporateSocial Responsibility Policy) Rules 2014.

The brief details of the major CSR activities are described hereunder:

REACH: Driven by the belief of Chairman Emeritus Sudhir Mehta ‘Childrenare the future of our nation and this future must be well preserved' the flagship CSRprogram of the Group "REACH" Reach EAch CHild was initiated in the year 2016under the aegis of Tornascent Care Institute a section 8 company. REACH has three majorpillars:


(b) JATAN and


Salient achievements are:

"Shaishav" the first pillar of the programme targets toestablish baseline health status of children in age group of 6 months to 6 years throughmedical camps in 351 villages surrounding the industrial establishments of the Group. Tilldate 71387 children have been screened and by providing appropriate treatment more than80% Malnourished children more than 90% Anaemic children and 73% children having chronicillnesses were provided appropriate treatment with very encouraging outcomes. During2020-21 inspite of massive challenges posed by COVID-19 pandemic maintained an optimumbalance of serving the community and at the same time avoiding any exposure by adopting‘Minimum Human Intervention Model' weight assessment of 5307 Malnourished childrenwas carried out Mauji Biscuits were provided to beneficiaries and encouraging resultshave been observed. Similarly on Anaemic front Iron supplement were provided to 6765children without reassessment.

"Jatan" the second pillar of the programme encompassesprovision of healthcare services to children upto 18 years. There are three primarypaediatric health centres (PPHCs) with basic laboratory and day care facility at DahejBalasinor and Indrad while fourth centre near SUGEN Power Plant was converted into 150bed paediatric hospital ‘Balsangam' (part of ‘Rangtarang' hospital complex) in2019-20. Due to outbreak of COVID-19 pandemic and consequent nationwide lockdown in H12020-21 telephonic conversations with 46000 parents of the beneficiaries across all fourPPHCs were arranged for spreading awareness of consumption of healthy diet to boost immunesystem and maintain proper hygiene to reduce risk of COVID-19.

With all precautions like sanitizing social distancing and avoiding direct exposure tothe patients PPHC facilities at Balasinor and Indrad were started from September 2020and 7225 beneficiaries were served in 2020-21. From September 2020 onwards startedaudio visual consultation of patients at PPHC facilities near SUGEN Power Plant and Dahejand 4099 beneficiaries have been served in 2020-21.

Under "Muskaan" the third pillar of the programmecounselling and support was provided to rural adolescent girls around SUGEN Dahej andIndrad centres covering menstrual hygiene and sanitation by providing free health andhygiene kits. However due to COVID-19 pandemic this activity was not carried out tillAugust 2020 and with appropriate safety measures and also to avoid beneficiaries goingback to using conventional practice health and hygiene kits were provided to around 5000beneficiaries in 125 villages.

Shiksha Setu: The Teaching and Learning Programme conducted through UNM Foundation(amalgamated with Tornascent Care Institute w.e.f. 26th April 2021 havingappointed date as 1st April 2020) completed fifth year of Phase II. Thisprogramme covers 13 government primary schools located near SUGEN Chhatral ChhapiMemadpur and Ahmedabad having 4500+ students and 150+ teachers of 1st to 8thstandard. During 2020-21 practice assignments prepared for students containing questionsand activities based on skills of previous standards and current curriculum. Theseassignments were based on learning outcomes prescribed in National

Curriculum Framework on the expected skills / Knowledge for each standard and the samewas well received by 4500+ students from 3rd to 8th standard and120+ teachers. Various virtual workshops on important concepts of Maths Science andComputer as per revised curriculum were organised for teachers of 6th to 8thstandard in which 78+ teachers from 36 schools of Shiksha Setu / Chappi/ Memadpur / otherschools (around project schools) participated and benefitted. Continuous interaction wascarried out with teachers students and parents to provide support counsel and addressspecific concerns regarding education.

Development and Maintenance of Public Parks: The Company along with one of India'sbest known landscape design firm developed an approach for development of urban publicparks. Six small sized parks measuring approx. 33000 sq. mt. have been fully developedand opened for public use since 2018-19 and one small sized park was fully developed andopened for public use in 2020-21. Another two large parks measuring approx. 66975 sq. mt.are under development and will be opened for public in 2021-22 if situation caused due toCOVID-19 allows. Maintenance of above public parks is also funded from CSR funds of theCompany.

Community Healthcare : Sumangal - a daycare Clinic for Adults (the erstwhile‘Swadhar') a community healthcare facility was integrated into ‘Rangtarang'hospital complex which caters to medical requirements of nearby 500 villages by providingspecialized consultations in the areas of dental care ophthalmology dermatologygynaecology physiotherapy and orthopedic. Due to outbreak of COVID-19 pandemic andconsequent nationwide lockdown a method of Minimum Human Intervention (Audio calls /Tele- Consultation) evolved wherein there is no / minimum contact with the community andhence all the safety precautions followed to the maximum extend possible and hence thecommunity is still being served and there is a constant rapport with the community. Thismodel maintains an optimum balance between serving the beneficiaries and not putting anyemployee at the risk of exposure to COVID-19. The Report on CSR activities is annexedherewith as Annexure B.

Environment Health & Safety

The Company firmly believes and is committed in inculcating a proactive and wellmatured HSE culture across the group. Sustainable future is essential in ensuring thehealth and well-being of our colleagues the people who use our products and thecommunities we touch. With the sense of this purpose we are in pursuit of a Safe Secure& Healthy workplace for our employees surrounding communities as well as allinterested parties associated with our business operations directly or indirectly.

The Company's EHS function is efficiently driven by established EHS Policy which isapplied uniformly to all its manufacturing facilities and R&D centre. Policy is beingregularly evaluated and updated with consideration of International Organisation forStandardisation (ISO) and other global requirements to ensure that the Company's EHSsystems remains globally oriented and best in class.

Our sincere and focused endeavours in EHS domain has substantially brought downincidents and thus leading to safe and healthy working environment for our work force atlarge. We always remain deeply concerned about the cause of the environment protection andin this direction Company has undertaken initiatives where we have achieved measurablereduction in waste generation utilisation of waste as an alternative fuel in cementindustries. Conservation of energy (saving of 40 MT / Day of steam consumption byinstallation of Heat pumps in place of conventional hot water system at Indradmanufacturing facility) usage of renewable energy (cumulatively generation of 2.5 millionKWH energy by installation of Solar Power panels of 1688 KW capacity at Indrad andOncology (upcoming) manufacturing facilities and R&D Centre). These activities havereduced our environmental impact / carbon footprint significantly.

Our workplace environment is designed to make our employees feel valued respectedempowered and inspired to achieve our EHS goals. Our continuous ongoing efforts inenvironment sustainability has reduced our water consumption hazardous waste and energyconsumption.

We are striving for continuously bringing down the waste quantity to incinerationfacilities. This year we have achieved disposal of 65-70% high calorific value hazardouswaste for co-processing / pre-processing in cement industries (as an alternate fuel)instead of incineration. We have targeted to dispose-off 90% of total such wastegeneration for co-processing in upcoming years. As a part of waste to energy concept weare using canteen food waste and biological waste from ETP for generation of bio gas whichhas significantly reduced annual waste disposal under landfill category. Majority of theCompany's manufacturing facilities are accredited with ISO 14001:2015 (EnvironmentManagement Systems) and ISO 45001:2018 (Occupational Health & Safety Managementsystem).

Rain water harvesting systems are installed at manufacturing facilities with 57 stateof art injection wells with large sunken catchment area of approx. 25000 sq mt and 10nos. of inverted umbrella system (Ulta Chhata). Approximate 40% of dense and lust greenbelt area has been developed across all locations.

Under the Plastic Waste Management Rules 2016 the Company is registered as a BrandOwner with Central Pollution Control Board (CPCB). The Company has initiated ExtendedProducer Responsibility (EPR) programme under these Rules. 1000 MT / Annum plastic wastewas collected from Pan India during the year under review and recycled and co-processed incement industries.

During the year Company at all its facilities has implemented a COVID-19 guidelinesand strictly adhered to it to de-risk employees' health and uninterrupted and consistentproductivity. Department wise core steering team were formed who had individuallysupervised the COVID-19 protocols deliberately. The Company as a responsible corporate hadcomprehensively worked in strategising and implementing various government and IPA (IndianPharmaceuticals Alliance) guidelines to curb the spread of pandemic disease atlarge.

All the manufacturing facilities and R&D Centre are being regularly auditedinternally and externally by In-house cross functional teams global customers regulatorsand external third party auditors which helps us in achieving benchmark / highest levelsof compliance.

This also helps us to review our system through third eye and thus helps us tounderstand risk / opportunities / area of improvisation of our process / manufacturingfacilities at large. The Company's Contractors are well covered under various HSE Drives.It is essential for all contractors to undergo HSE training and follow stipulatedguidelines. All contractors are encouraged to maintain safety standards by abidingCompany's guidelines and procedures.

Moreover the Company has in place the "Conviction of Safety Policy" whichprovides for substantial compensation to the personnel (Employees as well as Contractors)and their families who are adversely affected by any accident.

The Company is constantly striving up to standardise Health Safety and EnvironmentManagement System (HSEMS) to reach the goal of zero injuries. Various objectives are beingtaken and achieved for continual improvement in areas of productivity quality & HSE.


(a) Share Capital

As on 31st March 2021 the Authorised Capital of the Company is Rs 150crores divided into 25 crores Equity Shares of Rs 5/- each and 25 Lakhs Preference Sharesof Rs 100/- each.

(b) Deposits and Loans Guarantees and Investments

The Company has neither accepted nor renewed any deposits. None of the deposits earlieraccepted by the Company remained outstanding unpaid or unclaimed as on 31stMarch 2021.

Details of Loans Guarantees and Investments by Company under the provisions of Section186 of the Companies Act 2013 during the year are provided in Note 10 and 11 to theStandalone Financial Statements.

(c) Debentures and other debt instruments

The Company has raised an amount of Rs 395 crores by way of issue of Non-ConvertibleDebentures on private placement basis during the year. The outstanding amount ofNon-Convertible Debentures issued by the Company is Rs 1559.28 crores as on 31stMarch 2021.

During the year the Company issued Commercial Papers (CPs) aggregating to Rs 100 croreson private placement basis.

(d) Contracts or Arrangements with Related Parties

All Related Party transactions are entered in compliance to the provisions of law thePolicy on Materiality of Related Party Transactions and dealing with Related PartyTransactions and were entered with the approval of Audit Committee Board and Shareholdersif and as applicable. The particulars of material contracts and arrangements entered intowith the related parties in accordance with the Related Party Policy of the Company andpursuant to the provisions of Section 188(1) of the Companies Act 2013 and Rule 8(2) ofthe Companies (Accounts) Rules 2014 are annexed herewith as Annexure A.

(e) Internal Financial Control System

The Company has a formal framework of Internal Financial Control (IFC) in alignmentwith the requirement of Companies Act 2013 and has also laid down specificresponsibilities on the Board Audit Committee Independent Directors and StatutoryAuditors with regard to IFC.

Accordingly the Company has a well-placed proper and adequate IFC system whichensures:

• The orderly and efficient conduct of its business

• Safeguarding of its assets

• The prevention and detection of frauds and errors

• The accuracy and completeness of the accounting records and

• The timely preparation of reliable financial information.

The Board reviews the effectiveness of controls documented as part of IFC frameworkand take necessary corrective actions wherever weaknesses are identified as a result ofsuch reviews. This review covers entity level controls process level controls fraud riskcontrols and Information Technology environment.

Based on this evaluation no significant events had come to notice during the year thathave materially affected or are reasonably likely to materially affect our IFC. Themanagement has also come to a conclusion that the IFC and other financial reporting waseffective during the year and is adequate considering the business operations of theCompany. The Statutory Auditors of the Company has audited the IFC with reference toFinancial Reporting and their Audit Report is annexed as Annexure B and Annexure A to theIndependent Auditors' Report under Standalone Financial Statements and ConsolidatedFinancial Statements respectively.

(f) Material changes affecting the Company

No material changes and commitments have occurred after the close of the year till thedate of this Report which may affect the financial position of the Company.


The Company's manufacturing facilities properties equipment and stocks are adequatelyinsured against all major risks including loss on account of business interruption causeddue to property damage. The Company has appropriate liability insurance coversparticularly for product liability clinical trials and cyber liability. The Company hasalso taken Directors' and Officers' Liability Policy to provide coverage against theliabilities arising on them.

Business Risk Management

Risk Management is an integral part of our strategy for stakeholders' value enhancementand is embedded in to governance & decision-making process across the organisation.The Company has implemented an integrated risk management framework to ensure effectiveresponses to strategic operational financial and compliance risks faced by theorganisation.

As a part this framework all the risks are discussed and deliberated with theconcerned functional heads and business process owners to continually identify assessmitigate and monitor risks across the entity its business functions and units. The RiskManagement Committee meets periodically to assess and deliberate on the key risks andadequacy of mitigation plan. It has formulated a comprehensive ‘Risk Register' whichis continuously updated to capture new risks / threats augmenting from changes in internal/ external environment. Inputs from risk assessment are also embedded in to annualinternal audit programme. Key risks and mitigation measures are summarised in ManagementDiscussion and Analysis section of the Annual Report.

Subsidiaries & Joint Ventures

As of 31st March 2021 the Company has 14 subsidiaries out of which 2 arestep down subsidiaries. Norispharm GmbH a wholly owned subsidiary of Torrent Pharma GmbHwas liquidated w.e.f. 16th March 2021.

The highlights of performance of major subsidiaries of the Company have been discussedand disclosed under the Management Discussion and Analysis section of the Annual Report.The contribution of each of the subsidiaries in terms of the revenue and profit isprovided in Form AOC-1 which forms part of the Annual Report.

The details of two associate companies of the Company is also shown in the AOC-1. Theseassociate companies are Section 8 companies and primarily floated with another company ofthe Torrent group to carry out the CSR activities. UNM Foundation an associate Company ofthe Company has been amalgamated with Tornascent Care Institute another associate Companyof the

Company by the order of NCLT filed with Ministry of Corporate Affairs on 26 thApril 2021 with appointed date as 01st April 2020. The annual accounts of thesubsidiary companies will be made available to any Member of the Company seeking suchinformation at any point of time and are also available for inspection by any Member ofthe Company at the Registered Office of the Company on any working day during businesshours up to the date of the AGM. The annual accounts of the subsidiary companies are alsoavailable on the website of the Company at

Directors and Key Managerial Personnel

(a) Board of Directors

The Board of Directors of the Company is led by the Executive Chairman and comprisessix other Directors as on 31st March 2021 including one Whole-time Directorfour Independent Directors which includes two Women Director and one Non-ExecutiveDirector (other than Independent Directors).

All the Independent Directors of the Company have furnished declarations that they meetthe criteria of independence as prescribed under the Companies Act 2013 and under SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 ("ListingRegulations").

During the year under review Dr. Chaitanya Dutt has completed his tenure as Director(Research & Development) of the Company and also stepped down as the Director of theCompany with effect from 31st December 2020.

The Board places on record its deep appreciation for the guidance and support providedby him for the overall growth of the Company during his tenure as a member of the Boardand its Committees.

As per the provisions of the Companies Act 2013 Samir Mehta Executive Chairman(holding DIN: 00061903) retires by rotation at the ensuing AGM and being eligible hasoffered himself for re-appointment.

The Board has recommended:

• the re-appointment of Ameera Shah as an Independent Director of the Company forthe second term of 5 (five) consecutive years effective from 2nd August 2021;

• the re-appointment of Nayantara Bali as an Independent Director of the Companyfor the second term of 5 (five) consecutive years effective from 7th March2022; for the approval of shareholders in the ensuing AGM. The brief resume and otherrelevant documents of the Directors being re-appointed are given in the ExplanatoryStatement to the Notice convening the AGM for your perusal.

(b) Meetings of Board of Directors

Regular meetings of the Board are held to review performance of the Company to discussand decide on various business strategies policies and other issues. A calendar of Board/ Committee meetings for the year is prepared and circulated to the Directors well inadvance to enable them to plan their schedule for effective participation in the meetings.During the year five meetings of the Board of Directors were convened and held on 26 thMay 2020 30th July 2020 26th October 2020 8thFebruary 2021 and 2nd March 2021. The intervening gap between two consecutivemeetings was not more than one hundred and twenty days. Detailed information on themeetings of the Board is included in the Corporate Governance Report which forms part ofthe Annual Report.

(c) Audit Committee

The composition of the Audit Committee is in compliance with the provisions of Section177 of the Companies Act 2013 and Regulation 18 of the Listing Regulations. Thecomposition of the Committee as on 31st March 2021 is given below:

Name of Director Category of Directorship
Shailesh Haribhakti Chairman Independent Director
Haigreve Khaitan Independent Director
Ameera Shah Independent Director
Nayantara Bali Independent Director

During the year the Board has accepted all the recommendations made by the AuditCommittee.

(d) Appointment of Directors

(i) Criteria for Appointment of Directors

The Board of Directors of the Company has identified following criteria for determiningqualification positive attributes and independence of Directors:

1) Proposed Director ("Person") shall meet all statutory requirements andshould: • possess the highest ethics integrity and values;

• not have direct / indirect conflict with present or potential business /operations of the Company; • have the balance and maturity of judgement;

• be willing to devote sufficient time and energy;

• have demonstrated high level of leadership and vision and the ability toarticulate a clear direction for an organisation;

• have relevant experience (in exceptional circumstances specialisation /expertise in unrelated areas may also be considered);

• have appropriate comprehension to understand or be able to acquire thatunderstanding

Relating to Corporate Functioning

Involved in scale complexity of business and specific market and environment factorsaffecting the functioning of the company.

2) The appointment shall be in compliance with the Board Diversity Policy of theCompany.

The key qualifications skills and attributes which the Board is collectively expectedto have for the effective discharge of their duties are explained in Corporate GovernanceReport of the Company.

(ii) Process for Identification / Appointment of Directors

• Board members may (formally or informally) suggest any potential person to theChairman of the Company meeting the above criteria. If the Chairman deems fit necessaryrecommendation shall be made by him to the Nomination and Remuneration Committee (NRC).

• Chairman of the Company can himself also refer any potential person meeting theabove criteria to the NRC.

• NRC delibrates the matter and recommends such proposal to the Board.

Board considers such proposal on merit and decide suitably.

(e) Familiarisation Programme of Independent Directors

The Independent Directors have been updated with their roles rights andresponsibilities in the Company by specifying them in their appointment letter along withnecessary documents reports and internal policies to enable them to familiarise with theCompany's procedures and practices. The Company endeavours through presentations atregular intervals to familiarise the Independent Directors with the strategy operationsand functioning of the Company and also with changes in the regulatory environment havinga significant impact on the operations of the Company and the pharmaceutical industry as awhole. Site visits to various plant locations and CSR sites get organised for theDirectors to enable them to understand the operations of and CSR activities carried out bythe Company. The Independent Directors also meet with senior management team of theCompany in formal / informal gatherings. The details of such familiarisation programmesfor Independent Directors are posted on the website of the Company and can be accessed at

(f) Board Evaluation

The Evaluation of Board its Committees Individual Directors (Independent and NonIndependent Directors) and Chairperson was carried out as per the process and criterialaid down by the Board of Directors based on the recommendation of the NRC:

• The obtaining and consolidation of feedback from all directors for theevaluation of the Board and its Committees and Individual Directors (i.e. Independent andNon Independent Directors) were co-ordinated by the Chairman of the Board. The feedback onevaluation of the Board and its Committees was discussed in their respective meetings andthe feedback on the evaluation of Individual Directors was discussed individually withthem.

• The evaluation of Chairperson was co-ordinated by the Chairperson of theIndependent Directors meeting.

• The Independent Directors met on 8th February 2021 with respect tothe above process.

(g) Key Managerial Personnel

There was no change in the Key Managerial Personnel during the year under review otherthan the directors as already captured in this report.

(h) Directors' Responsibility Statement

In terms of Section134(3)(c) of the Companies Act 2013 in relation to financial 31stMarch 2021 the Board of Directors state that:

i. the applicable Accounting Standards have been followed in preparation of thefinancial statements and there are no material departures from the said standards;

ii. reasonable and prudent accounting policies have been used in preparation of thefinancial statements and that they have been consistently applied and that reasonable andprudent judgements and estimates have been made in respect of items not concluded by theyear end so as to give a true and fair view of the state of affairs of the Company as at31st March 2021 and of the profit for the year ended on that date;

iii. proper and sufficient care has been taken for maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

iv. the financial statements have been prepared on a going concern basis;

v. proper internal financial controls were in place and were adequate and operatingeffectively; proper systems to ensure compliance with the provisions of applicable lawswere in place and were adequate and operating effectively.


(a) Remuneration Policy

The Remuneration policy covers the remuneration for the Directors (Chairman ManagingDirector Whole-time Directors Independent Directors and other non-executive Directors)and other employees (under senior management cadre and management cadre). The Policy hasbeen formulated with the following key objectives:

• To ensure that employee remuneration is in alignment with business strategy& objectives organisation values and long-term interests of the organisation.

• To ensure objectivity fairness and transparency in determination of employees'remuneration.

• To ensure the level and composition of remuneration are reasonable andsufficient to attract retain and motivate a high performance workforce and are incompliance with all applicable laws.

It covers various heads of remuneration including benefits for Directors and employees.It also covers the process followed with respect to annual performance reviews andvariables considered for revision in the remuneration. The said Policy is available on thewebsite of the Company

(b) Criteria for Remuneration to Non-Executive Directors (NEDs):

1. The payment of commission to the Directors of the Company who are neither in thewhole time employment nor Managing Director(s) (NEDs) is approved by the shareholders ofthe Company and is subject to the condition that total commission paid to the NEDs shallnot exceed the percentage limits of the net profit of the Company as specified in theCompanies Act 2013 (presently 1% of the net profit) calculated in accordance withSection 197 read with Section 198 and any other applicable provisions of the CompaniesAct 2013.

Further as per the Regulation 17(6)(ca) of the Listing Regulations approval of theshareholders by special resolution shall be required every year in which the annualremuneration payable to a single NED exceeds fifty per cent of the total annualremuneration payable to all NEDs giving details of the remuneration thereof.

2. The Board or its Committee specifically authorised for this purpose determines themanner and extent upto which the commission is paid to the NEDs within the limit asapproved by the shareholders. The commission is determined based on the participation ofthe Directors in the meetings of Board and / or Committees thereof as well as on industrypractice performance of the Company and contribution by the Directors etc.

3. Payment of Commission is made annually on determination of profit.

4. Sitting fees of Rs 1 Lakh is paid to Independent Directors for each meeting of theBoard or any Committee thereof attended by them.

5. Independent Directors are reimbursed for all the expenses incurred for attending anymeeting of the Board or Committees thereof and which may arise from performance of anyspecial assignments given by the Board.

(c) Remuneration to Managerial Personnel

The details of remuneration paid to the Managerial Personnel forms part of theCorporate Governance Report.

(d) Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Companies Act 2013 read with Rule5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014disclosures pertaining to remuneration and other details are provided in the Annexure Cto this Report.


(a) Statutory Auditors

B S R & Co. LLP Chartered Accountants (Firm Registration No. 101248W/W-100022)were appointed as the Statutory Auditors of the Company to hold office for five years fromthe conclusion of Forty Fourth AGM held with respect to the financial year 2016-17 up tothe conclusion of the Forty Ninth AGM to be held with respect to the financial year2021-22.

(b) Cost Auditors

In terms of the Section 148 of the Companies Act 2013 read with Rule 8 of theCompanies (Accounts) Rules 2014 the Company has prepared and maintained the costaccounts and records for the year 2020-21.

The Company has appointed M/s. Kirit Mehta & Co. Cost Accountants Mumbai (FirmRegistration No. 000353) as the Cost Auditors of the Company for audit of cost accountingrecords of its activities (Formulation & Bulk Drugs activities) for the financial yearended 31st March 2021. The Cost Audit Report to the Central Government for thefinancial year ended 31 st March 2020 was filed on 25th August 2020 withinthe statutory timeline. Further the Board of Directors has appointed M/s. Kirit Mehta& Co. as the Cost Auditor of the Company for the financial year 2021-22 and fixedtheir remuneration subject to ratification by the shareholders in the ensuing AGM of theCompany.

(c) Secretarial Auditor

The Board pursuant to Section 204 of the Companies Act 2013 read with Rule 9 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 hadappointed M/s. M. C. Gupta & Co. Company Secretaries as the

Secretarial Auditors of the Company to conduct the Secretarial Audit as per theprovisions of the Companies Act 2013 for the year 2020-21.

M/s. M. C. Gupta & Co. have carried out the Secretarial Audit accordingly and theirreport in Form MR-3 is annexed with this Report as Annexure-D. There were noqualification / observations in the report.

During the year 2020-21 the Company has complied with all the applicable SecretarialStandards issued by the Institute of Company Secretaries of India.

Corporate Governance

As required by Regulation 34 read with Schedule V of the Listing Regulations aseparate Report on Corporate Governance forms part of the Annual Report. The Report onCorporate Governance also contains certain disclosures required under the Companies Act2013. A certificate from the Statutory Auditors of the Company regarding compliance ofconditions of Corporate Governance as stipulated under Clause E of Schedule V of theListing Regulations forms part of this Report as Annexure-E.

Annual Return

In terms of Section 92(3) of the Companies Act 2013 and Rule 12 of the Companies(Management and Administration) Rules 2014 the Annual Return of the Company is availableon the website of the Company at the link

Conservation of Energy Technology Absorption etc

A statement containing the necessary information on Conservation of energy Technologyabsorption and Foreign exchange earnings and outgo stipulated under Section 134(3)(m) ofthe Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 isannexed to this Report as Annexure-F.

Appreciation and Acknowledgements

Your Directors appreciate the trust reposed by the medical fraternity and patients inthe Company and look forward to their continued patronage. The Directors are also gratefuland pleased to place on record their appreciation for the excellent support guidance andcooperation extended by the Government of India and various State Governments specificallythe Governments of Gujarat Himachal Pradesh Sikkim Madhya Pradesh and Andhra PradeshCentral and State Government Bodies and Authorities Financial Institutions and Banks. TheBoard also expresses its appreciation of the understanding and support extended by theshareholders and the commitment shown by the employees of the Company.

For and on behalf of the Board of Directors
Ahmedabad Samir Mehta
18th May 2021 Executive Chairman