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Unichem Laboratories Ltd.

BSE: 506690 Sector: Health care
NSE: UNICHEMLAB ISIN Code: INE351A01035
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OPEN 237.05
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VOLUME 1121
52-Week high 345.00
52-Week low 197.50
P/E
Mkt Cap.(Rs cr) 1,700
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Unichem Laboratories Ltd. (UNICHEMLAB) - Director Report

Company director report

Dear Members

Your Directors have the pleasure of presenting the audited accounts of your Company forthe financial year ended 31st March

2021.

Financial Highlights

The table below gives the financial highlights of the Company for the year ended 31stMarch 2021 on a standalone and

consolidated basis as compared to the previous financial year.

(Rs in lakhs)
Particulars

Standalone (Audited) For the year ended

Consolidated (Audited) For the year ended

31st March 2021 31st March 2020 31st March 2021 31st March 2020
Revenue from operations 112397.28 90444.07 123 513.53 110371.28
Other Income 4737.11 9917.01 5018.76 9131.31
Total Income 117134.39 100361.08 128 532.29 119502.59
Profit/(Loss) before tax 6564.55 (6381.18) 5147.94 (4821.02)
Current tax - - 1668.26 547.24
Deferred tax 1094.30 (749.56) (14.82) 649.99
Short/(excess) provision for tax (earlier years) 62.02 - 62.02 -
Profit (Loss) for the year 5408.23 (5631.62) 3432.48 (6018.25)
Other comprehensive Income 2130.49 299.50 1639.47 305.64
Total Comprehensive Income 7538.72 (5332.12) 5071.95 (5712.61)

Management Discussion and Analysis

As required by Regulation 34(2) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (Listing Regulations) a Management Discussion andAnalysis Report is part of this Report as Annexure A.

The state of the affairs of the business along with the financial

and operational developments has been given in this Report.

Appropriations

An amount of Rs 2592 lakhs after considering dividend paid during the year isproposed to be carried forward in the Profit & Loss Account. Your Company does notpropose to transfer any amount in the General Reserves of the Company.

Dividend

The Board has recommended a dividend of Rs 4/- (200%) per equity share of Rs 2/- eachfor the year ended 31st March

2021. The dividend will be paid after approval of Members at the ensuing Annual GeneralMeeting (AGM) of the Company which will result in a cash outflow of Rs 2816.23 lakhs.

The Register of Members and Share Transfer Books shall remain closed from Monday 26thJuly 2021 to Saturday 31st July 2021 (both days inclusive) for AGM and dividend ifapproved by the Members.

Pursuant to Finance Act 2020 dividend income will be taxable in the hands ofShareholders with effect from 1st April 2020 and the Company shall deduct tax at sourcefrom dividends paid to the Shareholders at the prescribed rates. A detailed communicationon this shall be separately sent to the Shareholders.

Dividend Distribution Policy

Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015the Company has formulated a Dividend Distribution Policy and is available on theCompany's website https://www.unichemlabs.com/dividend-distribution-policy.php.

Employees Stock Options Schemes

During the year under review no employee stock options were granted to the SeniorManagement under the Employees Stock Option Scheme 2018. In terms of the requirementsspecified under the SEBI (Share-Based Employee Benefits) Regulations 2014 details ofthis scheme form part of the Director's Report and are available on the Company's websiteat https://www.unichemlabs.com/annual-report.php.

Research and Development (R&D)

Kindly refer to the write-up in the Section Management

Discussion and Analysis Report.

Corporate Governance

As required under Regulation 34 of the Listing Regulations a Report on CorporateGovernance along with a Certificate of Compliance from the Auditors is given in Annexure Bof this Report.

Corporate Social Responsibility (CSR)

The Board has constituted a Corporate Social Responsibility (CSR) Committee to monitorthe implementation of CSR activities of your Company. The Annual Report on CSR activitiesas amended in terms of Section 135 of the Act and the Rules made thereunder is annexed asAnnexure C to this Report.

During the year under review there was no mandatory

requirement to spend towards CSR. However the Company

has voluntarily spent Rs 328.45 lakhs which includes an amount of Rs 5.00 lakhs whichhas remained unutilized with an

implementing agency as on 31st March 2021 due to the Covid-19 pandemic. This isexpected to be utilized in the subsequent financial year.

Consolidated Financial Statements

The annual audited consolidated financial statements together with the report of theAuditors thereon form part of this Annual Report.

Review of Subsidiaries and Associates

Your Company has 6(six) subsidiaries and 1(one) associate company. A statementcontaining salient features of the financial statements of the subsidiaries and associatecompany pursuant to Section 129 of the Companies Act 2013 (the Act) and the Rules madethereunder is annexed to this Report as Annexure D in the prescribed Form AOC -1 andhence not repeated here for the sake of brevity.

Synchron Research Services Private Limited (Synchron) is an associate company in termsof Section 2(6) of the Act. Synchron is a contract research organization in India thatoffers competitive and high-quality clinical trial services to domestic and internationalpharmaceutical and bio-pharmaceutical companies.

Particulars of Loans Guarantees and Investments

Details of Loans Guarantees and Investments covered under the provisions of Section186 of the Act are given in the notes to the financial statements.

Deposits

The Company has not accepted any deposits within the meaning of Section 73 of the Actread with the Companies (Acceptance of Deposits) Rules 2014.

Risk Management

Your Company considers risk management as a key element of its business operations andhas put in place effective systems to identify monitor and mitigate risks to ensuresustained operations. Your Company has constituted a Risk Management Committee details ofwhich are disclosed in the Corporate Governance Report. A section on Risk Managementpractices of the Company is included in the Management Discussion and Analysis Report.

Directors and Key Managerial Personnel

The Members of the Company on 27th May 2021 approved the re-appointment of Mr. DilipKunkolienkar (DIN: 02666678) as the Whole-time Director of the Company designated asDirector Technical with effect from 1st April 2021.

Mr. Kunkolienkar Director Technical retires by rotation and

being eligible has offered himself for re-appointment.

All Independent Directors have declared that they meet the criteria of Independence aslaid down under Section 149(6) of the Act and Regulation 16(b) of the Listing Regulations.All Independent Directors have given declarations stating compliance with the Code ofEthics and Business Conduct. There has been no change in the circumstances affecting theirstatus as Independent Directors of the Company. In the opinion of the Board theIndependent Directors fulfill the conditions specified in these Regulations and areindependent of the management.

During the year under review the Non-Executive Independent Directors of the Companyhad no pecuniary relationship or transactions with the Company other than sitting feesand the dividend paid on the equity shares held by them.

In terms of Section 203 of the Act Dr. Prakash A. Mody Chairman & ManagingDirector Mr. Dilip Kunkolienkar Director Technical Mr. Sandip Ghume Deputy ChiefFinancial Officer and Mr. Pradeep Bhandari Head-Legal & Company Secretary are theKey Managerial Personnel of the Company.

Directors' Responsibility Statement

To the best of their knowledge and belief and according to the information andexplanations obtained by them your Directors make the following statements in terms ofSection 134 (3) (c) of the Companies Act 2013 (Act):

1. that in preparation of annual accounts for the year ended 31st March 2021 theapplicable accounting standards have been followed and no material departures have beenmade from the same;

2. that such accounting policies have been selected and applied consistently and madejudgements and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at the end of the financial year and Profit/Loss for that year;

3. that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;

4. that the annual accounts have been prepared on a going concern basis;

5. that the internal financial controls were in place and that they were adequate andoperating effectively; and

6. that systems to ensure compliance with the provisions of all applicable laws weredevised and such systems were adequate and operating effectively.

Board performance and evaluation

Pursuant to the provisions of the Act and the Listing Regulations the Board hascarried out an annual performance evaluation of the working of its performance itsCommittees and the Directors individually. The performance evaluation of IndependentDirectors was done by the entire Board of Directors and in the evaluation the Directorswho were subject to evaluation did not participate. A structured questionnaire wasprepared after taking into consideration inputs received from the Directors coveringvarious aspects of the functioning of the Board and its Committees.

The evaluation of the Directors was done on various parameters such as vision andstrategy Board participation Board disclosures of interests review of managementpolicies budget concerning the risk and return and leadership skills. The Directorsexpressed their satisfaction with the evaluation process.

Salient features of the Nomination and Remuneration Policy

The Board on the recommendation of the Nomination and Remuneration Committee hasadopted a policy for selection appointment and remuneration of Directors Key ManagerialPersonnel and Senior Management. The policy is available on the Company's website athttps://www.unichemlabs.com/nomination-and-remunerationpolicy.php.

The Company considers human resources as its invaluable assets. The Nomination andRemuneration Policy aims to pay equitable remuneration to all Directors Key ManagerialPersonnel (KMP) and employees of the Company and is linked to the overall individualperformance. The Remuneration policy for all employees is designed to attract talentedpersonnel and remunerate them fairly and responsibly this being a continuous ongoingexercise at each level in the organization.

Whole-time/Managing Director

The Company pays remuneration by way of salary perquisites and allowances (fixedcomponent) and commission (variable components wherever applicable as per terms ofappointment) to its Whole-time Directors. A proper balance between fixed and variablecomponents is aimed at. Salary is paid based on the recommendation of the Nomination andRemuneration Committee and as approved by the Board of Directors subject to the approvalof the Shareholders within the limits stipulated by the Act and the Rules made thereunder.The remuneration paid to the Whole-time Directors is determined keeping in view theindustry benchmark and the relative performance of the Company compared to the industryperformance.

Non-Executive Directors

Non-Executive Directors receive sitting fees for attending Meetings of the Board andits Committees as per the provisions of the Act and the Rules made thereunder. Besidespayment of sitting fees and dividends on equity shares if any held by the Directors noother remuneration is paid to the Non-Executive Directors.

Key Managerial Personnel (KMP) and Senior Management

The remuneration of KMP other than the Executive Directors and other Senior ManagerialEmployees largely consists of basic salary perquisites allowances and performanceincentives (wherever paid). Perquisites and retirement benefits are paid according to theCompany's policy. The components of the total remuneration vary for different grades andare governed by the industry pattern qualification and experience merits andperformance of each employee. The Company while deciding the remuneration package takesinto consideration the current employment scenario and remuneration package prevalent inthe industry and peer group companies.

Board Meetings

During the year 4 (four) Board Meetings were held the details

of which are given in the Corporate Governance Report.

Audit Committee

The Company has an Audit Committee pursuant to the requirements of the Act read withthe Rules framed thereunder and Listing Regulations. The details relating to the same aregiven in the report on Corporate Governance forming part of this Report. During thefinancial year 2020-2021 the recommendations of the Audit Committee were duly accepted bythe Board.

Whistle Blower Policy

The Company has in place a Whistle Blower/Vigil Mechanism through which itsStakeholders Directors and Employees can report genuine concerns about unethicalbehaviour and actual or suspected fraud or violation of the Company's Code of BusinessConduct and Ethics. The said policy provides for adequate safeguards against victimizationand direct access to the Audit Committee. The e-mail id for reporting genuine concerns iswhistleblower@unichemlabs.com. During the year 1 (one) complaint was received and thesame has been resolved in terms of the policy.

Significant and Material Orders passed by the Regulators /Courts/Tribunals

No significant or material orders were passed by the regulators or courts or tribunalswhich impact the Company's going concern status and its operations in the future.

However on 9th July 2014 the European Commission (“EU”) decided to imposean unjustified fine of Euro 13.96 million jointly and severally on the Company and itssubsidiary Niche Generics Limited (“Niche”) contending that they had acted inbreach of EU competition law as Niche Generics Limited had in early 2005 (when theCompany was only a part-owner and financial investor in Niche) had agreed to settle afinancially crippling patent litigation with Laboratories Servier. The Company vehementlydenies any wrongdoing on the part of either itself or Niche. Both the Company and Nichehad submitted appeals in September 2014 to the General Court of the EU seeking appropriaterelief in the matter. The General Court of the EU has rejected the appeals vide Orderdated 12th

December 2018 and confirmed the fine of Euro 13.96 million. The Company and itssubsidiary based on legal advice and merits have filed appeals against the decision of theGeneral Court before the Court of Justice of the EU and the outcome of the appeals isawaited. Considering the above in view of the management no provision for the aforesaidfine is considered necessary. Based on the above a fine imposed by the EU of Euro 13.96million (equivalent to Rs 12044.69 lakhs) is disclosed under contingent liability.

Material changes and commitment if any affecting the financial position of theCompany from the end of the financial year till the date of this Report

There have been no material changes and commitments affecting the financial positionof the Company between the end of the financial year to which the financial statementsrelate and the date of this Report.

Related Party Transactions

During the year under review approval of the Audit Committee and Board of Directorswas sought for Related Party Transactions wherever required.

The Audit Committee has given prior approval for all Related Party Transactionswherever applicable. The policy on Related Party Transactions as approved by the Board isuploaded on the Company's website and the weblink ishttps://www.unichemlabs.com/related-party-transactions-policy.php. The particulars ofcontracts or arrangements with Related Parties referred to in Section 188(1) of the Actare provided in the prescribed Form AOC-2 annexed as Annexure E to this Report.

Except to the extent of the shares held in the Company and the remuneration drawn fromthe Company none of the Directors and Key Managerial Personnel have any pecuniaryrelationships or transactions vis-a-vis the Company.

Disclosure under the Sexual Harassment of Women at Workplace (Prevention Prohibitionand Redressal) Act 2013

The Company has in place a policy on Prevention Prohibition and Redressal of SexualHarassment at the Workplace in line with the requirements of The Sexual Harassment ofWomen at the Workplace (Prevention Prohibition and Redressal) Act 2013. An InternalComplaints Committee (ICC) has been set up to redress complaints received regarding sexualharassment. The policy has set guidelines on the redressal and inquiry process that is tobe followed by complainants and the ICC whilst dealing with issues related to sexualharassment at the workplace. All women employees (permanent temporary contractual andtrainees) are covered under this policy. The policy also provides for the requisitechecks balances and safeguards to ensure that no employee is victimized or harassed forreporting and bringing up such incidents in the interest of the Company. The ICC did notreceive any complaints during the year under review.

Auditors

Pursuant to provisions of Section 139 of the Act read with the Companies (Audit andAuditors) Rules 2014 N.A. Shah Associates LLP (Firm Registration No. 116560W/W100149)Chartered Accountants were appointed as Statutory Auditors of the Company to hold officefrom the conclusion of 54th AGM until the conclusion of 59th AGM subject to ratificationby Members at every subsequent AGM.

The provisions of Section 139 of the Act were amended and notified with effect from 7thMay 2018. In terms of the said amendment the appointment of the Auditors is no longerrequired to be ratified by the Members at every subsequent AGM. Given this no Resolutionis proposed for ratification of the appointment of the Auditors at the ensuing AGM.

N.A. Shah Associates LLP (Firm Registration No. 116560W/W100149) CharteredAccountants have confirmed that they are not disqualified from continuing as StatutoryAuditors of the Company.

During the year under review the Auditors have not reported any matter under Section143 (12) of the Act and therefore no details are disclosed under Section 134 (3) (ca) ofthe Act.

The said auditors have confirmed that their firm has been subjected to the peer-reviewprocess of the Institute of Chartered Accountants of India (ICAI) and they hold a validcertificate issued by the Peer Review Board of the ICAI.

Cost Auditors

The Company is required to maintain cost records as specified by the Central Governmentunder sub-section (1) of Section 148 of the Act accordingly such accounts and records aremade and maintained by the Company.

The Board of Directors at its Meeting held on 29th May 2021 based on therecommendation of the Audit Committee appointed Kishore Bhatia & Associates CostAccountants (Firm Registration No. 00294); as Cost Auditors for undertaking Cost Audit ofthe Cost Accounting Records maintained by the Company for the financial year 2020-2021 ata remuneration not exceeding Rs 8.25 lakhs (Rupees Eight Lakhs Twenty -Five Thousand Only)plus applicable taxes and out-of-pocket expenses at actuals. The said Auditors haveconfirmed their eligibility for appointment as Cost Auditors. The remuneration payable tothe said Cost Auditors is required to be placed before the Members at the ensuing AGM forratification and a suitable Resolution has been set out in the Notice of this AGM. TheCost Audit Report for the year ended 31st March 2020 was filed with the Ministry ofCorporate Affairs on 24th August 2020.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Act and the Rules made thereunder theCompany has appointed Alwyn Jay & Co. Company Secretaries in practice to undertakethe Secretarial

Audit of the Company. The Secretarial Audit Report is annexed as Annexure F to thisReport. There is no qualification reservation adverse remark or disclaimer in the saidReport.

During the year under review the Secretarial Auditors have not reported any matterunder Section 143 (12) of the Act and therefore no details are disclosed under Section134(3) (ca) of the Act.

Compliance with Secretarial Standards

The Company has complied with the Secretarial Standards issued by The Institute ofCompany Secretaries of India about Board Meetings (SS-1) and General Meetings (SS-2).

Internal control systems and their adequacy

The Company has in place adequate internal financial controls concerning its financialstatements. These controls ensure the accuracy and completeness of the accounting recordsand the preparation of reliable financial statements. The details of the same are includedin the Management Discussion and Analysis Report.

Energy Conservation Technology Absorption and

Foreign Exchange Earnings and Outgo

The particulars as prescribed under Section 134(3)(m) of the Act and Rules madethereunder are set out in Annexure G to this Report.

Particulars of Employees and related disclosures

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act and Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 as amended are annexed as Annexure H to this Report.

In terms of the provisions of Section 197(12) of the Act and Rules 5(2) and 5(3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amendeddetails of employee's remuneration form part of this Report. However as per theprovisions of Sections 134 and 136 of the Act the Report and financial statements arebeing sent to the Members and others entitled thereto excluding the information onemployees' particulars. Any Member interested in obtaining a copy of the same may write tothe Company Secretary at shares@unichemlabs.com.

Extract of Annual Return

In accordance with the provisions of Section 92(3) and Section 134 of the Act read withRule 12 of the Companies (Management and Administration) Rules 2014 Annual Return of theCompany is hosted on the website of the Company athttps://www.unichemlabs.com/annual-report.php.

Business Responsibility Report

In compliance with Regulation 34(2) of the Listing Regulations the BusinessResponsibility Report for the financial year 2020-2021 is set out in Annexure I of thisAnnual Report.

Human Resources and Employee Relations

The Board of Directors commends the continued dedication of all its employees. Detailsof Human Resources and Employee Relations and matters incidental thereto are provided inthe Management Discussion and Analysis Report.

Acknowledgement

Your Directors place on record its deep appreciation to employees at all levels fortheir dedication commitment and extended splendid support during this period ofuncertainty created by the Covid-19 pandemic.

Your Directors acknowledge the support and wise counsel extended to the Company byinvestors analysts bankers government agencies shareholders suppliers and othersassociated with the Company as its business partners. Your Directors also acknowledge thetrust reposed in the Company by the medical fraternity and patients. We look forward tohaving the same support in our mission to enhance health through quality products.

Cautionary Statement

Statements in this Directors' Report and Management Discussion and Analysis Reportdescribing the Company's objectives projections estimates expectations or predictionsmay be “forward-looking statements” within the meaning of applicable securitieslaws and regulations. Actual results could differ materially from those expressed orimplied. Important factors that could make a difference to the Company's operationsinclude raw material availability and prices cyclical demand pricing and changes ingovernment regulations tax regimes economic developments among the countries in whichthe Company conducts business and other ancillary factors.

For and on behalf of the Board of Directors
Dr. Prakash A. Mody
Mumbai Chairman & Managing Director
29th May 2021 (DIN: 00001285)

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