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Vivimed Labs Ltd.

BSE: 532660 Sector: Health care
NSE: VIVIMEDLAB ISIN Code: INE526G01021
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VOLUME 180080
52-Week high 28.90
52-Week low 7.58
P/E
Mkt Cap.(Rs cr) 89
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Vivimed Labs Ltd. (VIVIMEDLAB) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the 32nd Annual Report of your Company forthe financial year ended 31st March 2020.

Financial Results

The financial performance of your Company for the year ended 31st March 2020 issummarized below:

(Rs in million)

Standalone

Consolidated

Year ended 31.03.2019

Year ended 31.03.2019

Gross Income 2831.41 2603.42 10670.54 13381.30
Earnings Before Interest Tax Depreciation and Amortization (EBITDA) 388.27 757.92 163.63 2000.97
Finance Charges 429.99 524.03 588.91 672.62
Depreciation/Amortization 165.68 182.59 669.35 667.90
Net Profit Before Tax (207.40) 51.30 (1094.74) 660.45
Provision for Tax (15.70) (10.55) (3.59) 86.79
Net Profit After Tax carried to Balance Sheet (191.70) 61.86 (1091.15) 573.66
Proposed Dividend amount - - - -
Proposed Dividend Tax amount - - - -

OVERVIEW OF COMPANY'S FINANCIAL PERFORMANCE

On a consolidated basis your Company reported total revenue of Rs 10670.54 million asagainst Rs 13381.30 million. EBITDA for FY 2020 was Rs 163.63 million compared to Rs2000.97 million in the previous year. Net profit after tax for the group for the currentyear is Rs (1091.15)million as against Rs 573.66 million in the previous year.

Total revenue from operations on standalone basis increased to Rs 2831.40 million asagainst Rs 2603.42 million in the previous year. FY 2020 EBITDA was C388.26 millioncompared to Rs 757.92 million in the previous year. The Profit after Tax for the currentyear is Rs (191.69) million as against Rs 61.86 million in the previous year.

COVID-19:

Pharmaceutical industry being part of the essential commodities was given specialpermission by Indian government to operate with minimal manpower and maintaining socialdistancing. The Company has followed the guidelines issued by the Government to run theoperations with complete cautious approach about the health and safety of the employees.There is no material impact on the business of the Company during the year under reviewdue to Covid-19 pandemic.

DIVIDEND

Due to proposed investment in expansions and developments in future and to conserve theavailable resources for the same

the board of directors of the company have not recommend any dividend for the year FY2020.

MATERIAL CHANGES AFFECTING THE COMPANY:

There have been no material changes and commitments affecting the financial position ofthe Company between the end of the financial year and date of this report. There has beenno change in the nature of business of the Company.

SHARE CAPITAL

The Authorised Share Capital of the Company is Rs 1110000000/- (Rupees One HundredEleven Crores only) comprising 200000000 (Twenty crores) Equity Shares of Rs 2/-(Rupees Two Only) each and 710000 (Seven Lakh Ten Thousand only) Preference Shares ofthe Company with a par value of Rs 1000/- (Rupees One Thousand only) each. The paid- upshare capital of the Company is Rs 165827830/- (Rupees Sixteen Crores Fifty Eight lakhsTwenty seven thousand Eight hundred and thirty only) comprising 82913915 (Eight croresTwenty nine lakhs thirteen thousand nine hundred and fifteen only) Equity Shares of Rs 2/-(Rupees Two Only) each. During the year the Company allotted 390000 equity shares of Rs2/- each to the Employees of the Company Under VLL Employee Stock Option Scheme 2010.

TRANSFER TO THE INVESTOR EDUCATION & PROTECTION FUND (IEPF):

In terms of Section 124(5) of the Companies Act 2013 read with Investor Education andProtection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 unclaimeddividend amounting to Rs 408261/- (Four lakh eight thousand two hundred and sixty oneonly) for the financial year 2011-12 was transferred during the year under review to theInvestor Education and Protection Fund established by the Central Government.

MANAGEMENT DISCUSSION AND ANALYSIS

The Management Discussion and Analysis forms an integral part of this report and givesdetails of the overall industry structure economic developments performance and state ofaffairs of your Company's various businesses viz. the pharmaceuticals Specialtychemicals API's business internal controls and their adequacy risk management systemsand other material developments during the financial year FY 2020.

SUBSIDIARIES/ JOINT VENTURES/ ASSOCIATE COMPANIES

The statement containing the salient features of the Financial Statements of theCompany's subsidiaries/ joint ventures/ associate companies is given in Form AOC-1provided in Notes to the Consolidated Financial Statements forming part of the AnnualReport.

The highlights of performance of subsidiaries joint ventures and associate companiesand their contribution to the overall performance of the Company during the financial yearis given under 'Annexure 1' to the Consolidated Financial Statements forming part of theAnnual Report.

During the year the Company sold its 100% stake in step down subsidiary Viz. VivimedLabs Europe Ltd pursuant to the shareholders resolutions passed through postal ballotnotice dated: 23.08.2018.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

In accordance with the provisions of Section 152 of the Companies Act 2013 Mr.Subhash Varalwar (Non-Executive Non- Independent Director) of the Company retires byrotation at the ensuing Annual General Meeting and being eligible offers himself forreappointment.

Mr.Santosh Varalwar was re-appointed as Managing Director of the Company in 27th AnnualGeneral Meeting held on 30th September 2015 for a period of five years w.e.f.14th August2015. Mr. Manohar Rao Varalwar was re-appointed as a WTD by the members in the 27th AnnualGeneral Meeting held on 30th September 2015 for a period of five years w.e.f.14th August2015 Mr. Sandeep Varalwar was reappointed as a WTD by the members in the 27th AnnualGeneral Meeting held on 30th September 2015 for a period of five years w.e.f.14th August2015. The current term of them as Managing Director/ whole Time Directors of the Companyexpires on August 13 2020

In view of their consistent efforts which have contributed to the growth of theorganisation and the sincere service rendered for the better performance of theorganisation during their tenure as Managing Director /whole time Directors the Board ofDirectors on the recommendation of the Nomination and Remuneration Committee has decidedto re-appoint Mr.Santosh Varalwar as Managing Director and Mr.Manohar Rao Varalwar and Mr.Sandeep Varalwar as whole

time Directors of the Company for a further period of 5 (five) years effective fromAugust 14 2020 under Section 196 197 203 read with Schedule V of the Companies Act2013 and rules made thereunder. The approval of the members is being sought to the termsconditions and stipulations for the reappointment of Mr.Santosh Varalwar as ManagingDirector and Mr. Manohar Rao Varalwar and Mr.Sandeep Varalwar as Whole time Directors andthe remuneration payable to them and resolution pertaining to the same is contained in thenotice calling Annual General Meeting.

During the year under review the members approved the appointment of Mr.HarigopalJamalapuram as Independent Director of the Company and Prof.M.Bhagvant Rao was appointedas Independent Director of the Company at the 31st AGM who are not liable to retire byrotation.

Mrs.Umanath Varahabhotla was appointed as an Independent Director of the Company in27th Annual General Meeting held on September 30 2015 for a period of 5 years up to 32ndAnnual General Meeting to be held in calendar year 2020. In view of her consistent effortswhich have contributed to the growth of the organisation and the sincere service renderedfor the better performance of the organisation during her tenure as an IndependentDirector the Board of Directors on the recommendation of the Nomination and RemunerationCommittee has decided to re-appoint Mrs.Umanath Varahabhotla as an Independent Directorof the Company for a further period of 5 (five) years under applicable provisions ofCompanies Act 2013 and rules made thereunder. The approval of the members is being soughtto the terms conditions and stipulations for the re-appointment of Mrs.UmanathVarahabhotla as an Independent Director and resolution pertaining to the same iscontained in the notice calling Annual General Meeting.

Mr.Raghunandan Srirambatla Whole Time Director & CFO of the Company demised on 25June 2020. The Board expressed its condolences and appreciated and put on record thevaluable services rendered by Mr.Raghunandan Srirambatla during his tenure of directorshipin the Company. Mr.Nixon Patel Independent Director of the Company has resigned from theBoard of Directors of the Company on 19 December 2019. The Board appreciated and put onrecord the valuable services rendered by Mr. Nixon Patel during his tenure of directorshipin the Company. Prof.M.Bhagvant Rao Independent Director of the Company demised on 30November 2020. The Board expressed its condolences and appreciated and put on record thevaluable services rendered by Prof.M.Bhagvant Rao during his tenure of directorship in theCompany.Shri. Santosh Varalwar Managing Director Shri. Manohar rao Varalwar Whole TimeDirector Shri.Sandeep Varalwar Whole Time Director Shri.Ramesh Krishnamurthy ChiefExecutive Officer and Shri.K.Yugandhar Company Secretary are the Key ManagerialPersonnel of your Company in accordance with the provisions of Sections 2(51) 203 of theCompanies Act 2013 read with Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 (including any statutory modification(s) or reenactment(s) for thetime being in force).

Your Company has received declarations from all the Independent Directors confirmingthat they meet the criteria of independence as prescribed under the provisions of theCompanies Act 2013 read with the Schedules and Rules issued thereunder as well asRegulation 16(1)(b) of Listing Regulations (including any statutory modification(s) or re-enactment(s) for the time being in force).In the opinion of the Board the IndependentDirectors of the Company fulfil the conditions specified in the Act and ListingRegulations and are independent of the management.

The Company has devised a Policy for performance evaluation of Independent DirectorsBoard Committees and other individual Directors which include criteria for performanceevaluation of the non-executive directors and executive directors.

The Board of Directors has complete access to the information within the Company.Independent Directors have the freedom to interact with the Company's management.Interactions happen during Board / Committee meetings when CXOs are asked to makepresentations about performance of the Company to the Board. Apart from this they alsohave independent interactions with the Statutory Auditors the Internal Auditors andexternal advisors appointed from time to time. Further they meet without the presence ofany management personnel and their meetings are conducted informally to enable theIndependent Directors to discuss matters pertaining to the Company's affairs and put forththeir combined views to the Board of Directors of the Company.

BOARD EVALUATION:

The Company has devised a Policy for performance evaluation of Independent DirectorsBoard Committees and other individual Directors which include criteria for performanceevaluation of the Non-Executive Directors and Executive Directors. Pursuant to theprovisions of the Companies Act 2013 read with the Rules issued there under and theListing Regulations (including any statutory modification(s) or re-enactment(s) for thetime being in force) the process for annual evaluation of the performance of the Boardits Committees and individual Directors was carried out in accordance with the policies inforce.

CONSOLIDATED ACCOUNTS

The Consolidated Financial Statements of your Company for the financial year FY 2020are prepared in compliance with applicable provisions of the Companies Act 2013 read withthe Rules issued thereunder applicable Accounting Standards and the provisions of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 (hereinafter referredto as the "Listing Regulations").The consolidated financial statements have beenprepared on the basis of audited/ unaudited financial statements of your Company itssubsidiaries and associate companies as approved by the respective Board of Directors.

COMPLIANCE WITH SECRETARIAL STANDARDS:

The Company has complied with Secretarial Standards issued by the Institute of CompanySecretaries of India.

DIRECTOR'S RESPONSIBILITY STATEMENT:

Pursuant to the requirement of Section 134(5) of the Companies Act 2013 with respectto the Director's Responsibility Statement the Board of Directors of the Company herebyconfirm that:

a) in the preparation of the annual accounts for the year ended March 31 2020 theapplicable accounting standards read with requirements set out under Schedule III to theAct have been followed and there are no material departures from the same;

b) the Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at March 31 2020 and of the profit ofthe Company for the year ended on that date;

c) the Directors have taken proper and sufficient care 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;

d) the Directors have prepared the annual accounts on a 'going concern' basis for thefinancial year ended March 31 2020;

e) the Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and are operatingeffectively; and

f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.

POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION:

The policy of the Company on directors' appointment and remuneration includingcriteria for determining qualifications positive attributes independence of a directorand other matters are adopted as per the provisions of the Companies Act 2013. Theremuneration paid to the Directors is as per the terms laid out in the nomination andremuneration policy of the Company.

DISCLOSURE RELATING TO REMUNERATION OF DIRECTORS KEY MANAGERIAL PERSONNEL ANDPARTICULARS OF EMPLOYEES:

The remuneration paid to the Directors is in accordance with the Nomination andRemuneration Policy formulated in accordance with Section 178 of the Companies Act 2013and Regulation 19 of the Listing Regulations (including any statutory modification(s) orre-enactment(s) for the time being in force). The salient aspects covered in theNomination and Remuneration Policy have been outlined in the Corporate Governance Reportwhich forms part of this report.

The Managing Director of your Company does not receive remuneration from any of thesubsidiaries of your Company.

The information required under Section 197 of the Companies Act 2013 read withCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 in respect ofDirectors/ employees of your Company is set out in

Annexure-2 to this report and is also available on the website of your Company(www.vivimedlabs.com).

FAMILIARISATION PROGRAMME FOR THE INDEPENDENT DIRECTORS

In compliance with the requirements of Regulation 25(7) of the Listing Regulations theCompany has put in place a Familiarisation Programme for the Independent Directors tofamiliarise them with the Company their roles rights responsibilities in the Companynature of the industry in which the Company operates business model etc. The details ofthe Familiarisation Programme conducted are available on the website of the Companywww.vivimedlabs.com.

HUMAN RESOURCES:

The management believes that the competent and committed human resources are vitallyimportant to attain success in the organization. In line with this philosophy utmost careis being exercised to attract quality resources and suitable training is imparted onvarious skill-sets and behavior. Annual sports and games were conducted across theorganization to enhance the competitive spirit and encourage bonding teamwork among theemployees.

LOANS GUARANTEES & INVESTMENTS

Details of loans guarantees and investments under the provisions of Section 186 of theCompanies Act 2013 read with the Companies (Meetings of Board and its Powers) Rules2014 as on 31st March 2020 are set out in the Standalone Financial Statements formingpart of this report.

INTERNAL FINANCIAL CONTROLS RELATED TO FINANCIAL STATEMENTS

Your Company has put in place adequate internal financial controls with reference tothe financial statements some of which are outlined below.

Your Company has adopted accounting policies which are in line with the AccountingStandards prescribed in the Companies (Accounting Standards) Rules 2006 that continue toapply under Section 133 and other applicable provisions if any of the Companies Act2013 read with Rule 7 of the Companies (Accounts) Rules 2014. These are in accordancewith generally accepted accounting principles in India. Changes in policies if any areapproved by the Audit Committee in consultation with the Statutory Auditors.

The policies to ensure uniform accounting treatment are prescribed to the subsidiariesof your Company. The accounts of the subsidiary companies an audited / unaudited andcertified by their respective Statutory Auditors / management for consolidation.

Your Company operates in SAP an ERP system and has many of its accounting recordsstored in an electronic form and backed up periodically. The ERP system is configured toensure that all transactions are integrated seamlessly with the underlying books ofaccount. Your Company has automated processes to ensure accurate and timely updation ofvarious master data in the underlying ERP system.

Your Company has a robust financial closure self-certification mechanism wherein theline managers certify adherence to various accounting policies accounting hygiene andaccuracy of provisions and other estimates.

Your Company operates a shared service center which handles all payments made by yourCompany. This center ensures adherence to all policies laid down by the management.

Your Company in preparing its financial statements makes judgments and estimates basedon sound policies and uses external agencies to verify/ validate them as and whenappropriate. The basis of such judgments and estimates are also approved by the StatutoryAuditors and Audit Committee.

The Management periodically reviews the financial performance of your Company againstthe approved plans across various parameters and takes necessary action wherevernecessary.

Your Company has a code of conduct applicable to all its employees along with a WhistleBlower Policy which requires employees to update accounting information accurately and ina timely manner. Any non-compliance noticed is to be reported and actioned upon in linewith the Whistle Blower Policy.

Your Company gets its Standalone accounts limited review every quarter by its StatutoryAuditors.

PUBLIC DEPOSITS

During the year under review your Company has not accepted any deposit within themeaning of Sections 73 and 74 of the Companies Act 2013 read with the Companies(Acceptance of Deposits) Rules 2014 (including any statutory modification(s) orre-enactment(s) for the time being in force).

CORPORATE GOVERNANCE:

The Company is committed to maintain the highest standards of corporate governance andadhere to the corporate governance requirements set out by Securities and Exchange Boardof India (SEBI). The report on Corporate Governance as stipulated under the ListingRegulations forms an integral secretarial part of this Report. The requisite certificatefrom the secretarial Auditors of the Company confirming compliance with the conditions ofcorporate governance is attached to the report on Corporate Governance.

EMPLOYEES' STOCK OPTION SCHEMES

Last year the Company has granted 2500000 options to eligible employees under theVivimed Labs ESOP 2017 at C35/- per option (exercise price). The shares covered by suchoptions are 2500000 equity shares of Rs 2/- each(face value).

During the year the Company allotted 390000 equity shares of Rs 2/- each to theEmployees of the Company Under VLL Employee Stock Option Scheme 2010.

Pursuant to regulation 13 of Securities and Exchange Board of India (Share BasedEmployee Benefits) Regulations 2014 certificate from M/s.PCN & Associates StatutoryAuditors is given as Annexure-3 to the Board's report.

Disclosure with respect to the Employees' Stock Option Scheme in compliance withSecurities and Exchange Board of India (Share Based Employee Benefits) Regulations 2014is available on the Company's website.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

There are no significant and material orders passed by the regulators or courts ortribunals which impact the going concern status and Company's operations in future.

INSURANCE:

All properties and insurable interests of the Company including buildings plant andmachinery and stocks have been fully insured.

CREDIT RATING

CARE Ratings Limited has reaffirmed the credit rating for the Company as "CARED" for long-term bank facilities and "CARE D" for short-term bankfacilities due to on account of deterioration in the liquidity profile of the company atthe back of cash flow mismatches resulting in delays in meeting debt obligations.

AUDITORS AND AUDITORS' REPORT

(i) Statutory Auditors:

M/s.PCN & Associates Chartered Accountants (Firm Registration No.016016S) wereappointed as the Statutory Auditors of the Company for a period of 5 (five) years at the30th Annual General Meeting till the conclusion of the 35th Annual General Meeting of theCompany.

The Auditor's Report for the financial year ended March 31 2020 has been issued withan unmodified opinion by the Statutory Auditors.

During the year under review there was no audit qualification on your Company'sfinancial statements.

(ii) Cost Auditors:

In accordance with Section 148 of the Companies Act

2013 read with Companies (Audit & Auditors') Rules

2014 and the Companies (Cost Records and Audit) Amendments Rules 2014 the Companymaintains the cost records in respect of its business.

Your Board has appointed M/s.A.S.Rao & Co Cost Accountants (Firm RegistrationNo.000326) as the Cost Auditors of the Company for the Financial Year 2020-21. Asrequired by the Act the remuneration of the Cost Auditors has to be ratified by theMembers and accordingly the resolution relating to the Cost Auditors is being placedbefore the Members for their ratification.

(iii) Secretarial Auditors & Secretarial Audit Report:

Pursuant to the provisions of Section 204 of the Companies Act 2013 and Rule 9 of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 the Companyhas appointed Mr.N.V.S.S.Suryanarayana Rao

Practicing Company Secretary (Certificate of Practice No.2886) to undertake theSecretarial Audit of the Company for the financial year 2019-20. The Secretarial AuditReport issued in Form MR-3 is in Annexure -4 to this Report. There are no qualificationsreservations or adverse remarks in the Secretarial Audit Report except interest ondelayed dividend payment is pending (Dividend for the Financial Year 2017-2018 declared atAGM held on 27.09.2018).

DISCLOSURES:

Meetings of the Board

Five meetings of the Board of Directors were held during the year. The particulars ofmeetings held and attended by each Director are detailed in the Corporate GovernanceReport which forms part of this Report.

Audit Committee

The Audit Committee comprises majority of Independent Directors namely Mrs. UmanathVarahabhotla (Chairperson) *Mr. M Bhagvanth Rao Mr. Sandeep varalwar and Mr. HarigopalJamalapuram as other members. During the year all the recommendations made by the AuditCommittee were accepted by the Board. *Demised on 30.11.2020

Vigil Mechanism

The Company has a Vigil mechanism and a Whistle - blower policy in accordance withprovisions of the Act and Listing Regulations under which the employees are free toreport violations of applicable laws and regulations and the Code of Conduct. Protecteddisclosures can be made by a whistle blower through a dedicated e-mail or a letter to theChairman of the Audit Committee.

The Policy on vigil mechanism and whistle blower policy may be accessed on theCompany's website at: www.vivimedlabs.com

Code of Conduct

A declaration regarding compliance with the code of conduct signed by the Company'sManaging Director is published in the Corporate Governance Report which forms part of theannual report.

Particulars of Loans given Investments made Guarantees given and Securities providedParticulars of loans given investments made guarantees given and securities provided areprovided in the standalone financial statement (Please refer to Notes to the standalonefinancial statement).

Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to conservation of energy technology absorption foreignexchange earnings and outgo as required to be disclosed under the Act are provided inAnnexure -5 to the Board's Report.

Extract of Annual Return

The Extract of Annual Return as per the provisions of Section 92 of the Companies Act2013 and Rule 12 of Companies (Management and Administration) Rules 2014 in Form MGT- 9is annexed as Annexure -6 to this report.

Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 asamended thereof a statement showing the names and other particulars of the employeesdrawing remuneration in excess of the limits set out in the said rules forms part of thisReport.

Disclosures pertaining to remuneration and other details as required under Section197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 also forms part of this Report.

Maintenance of Cost Records specified by the Central Government under Section 148 ofthe Companies Act 2013

The Company has complied with the provisions relating to maintenance of Cost Records asspecified by the Central Government under Section 148 of the Companies Act 2013 duringthe year under review.

Policy on Sexual Harassment and Constitution of Internal Complaints Committee under theSexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013

The Company has a Policy on "Prevention of Sexual Harassment of Women atWorkplace" for the matters connected therewith or incidental thereto covering all theaspects as contained under the "The Sexual Harassment of Women at Workplace(Prohibition Prevention and Redressal) Act 2013" and constituted an InternalComplaints Committee under the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013.

During the year under review the Company has not received any complaints pertaining toSexual Harassment.

The Company regularly conducts awareness programs for its employees.

General

Your Directors state that no disclosure or reporting is required in respect of thefollowing matters as there were no transactions on these items during the year underreview:

• Details relating to deposits covered under Chapter V of the Act.

• Issue of equity shares with differential rights as to dividend voting orotherwise.

• Issue of shares (including sweat equity shares) to employees of the Companyunder any scheme save and except Employee Stock Option Scheme referred to in this Report.

• The Company does not have any scheme of provision of money for the purchase ofits own shares by employees or by trustees for the benefit of employees.

• No significant or material orders were passed by the Regulators or Courts orTribunals which impact the going concern status and Company's operations in future.

• No fraud has been reported by the Auditors to the Audit Committee or the Board.

RELATED PARTY TRANSACTIONS:

In accordance with Sec 134(h) of the Companies Act 2013 and Rule 8(2) of Companies(Accounts) Rules 2014 the particulars of contracts or arrangements entered into by theCompany with the Related Parties referred to in Sec.188(1) of the Act have been providedin Form AOC-2 and attached the same as Annexure-7. The details of related partydisclosures as stated in the notes to the financial statements forms part of this annualreport.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:

Pursuant to the provisions of Section 135 and Schedule VII of the Companies Act 2013CSR Committee of the Board of Directors had framed the policy on Corporate SocialResponsibility and the Projects and Programs undertaken by the Company during the yearunder review have been provided in Annexure - 8 and forms part of this Report.

ACKNOWLEDGEMENTS

Your Directors wish to thank all stakeholders employees and business partnersCompany's bankers medical professionals and business associates for their continuedsupport and valuable cooperation.

The Directors also wish to express their gratitude to investors for the faith that theycontinue to repose in the Company.

For and on behalf of the Board
Sd/-
Manohar Rao Varalwar Whole time Director
Sd/
Santosh Varalwar Managing Director
Place: Hyderabad Date: 04.12.2020

ANNEXURE -3 TO BOARD'S REPORT

INDEPENDENT AUDITORS' CERTIFICATE ON IMPLEMENTATION OF SHARE BASED EMPLOYEE BENEFITSCHEME

To

The Board of Directors Vivimed Labs Limited PlotNo.78/A Kolhar Industrial Area Bidar- 585403 Karnataka 1

Independent Auditors' certificate on implementation of Share Based Employee BenefitScheme in accordance with the Securities and Exchange Board of India (Share Based EmployeeBenefits) Regulations 2014 and the terms of resolution of the Company passed in thegeneral meeting.

1. This Certificate is issued in accordance with the terms of our engagement letterwith Vivimed Labs Limited ('the Company') dated 14.11.2019.

Management's Responsibility

2. The Company's management is solely responsible for ensuring that the Company's ShareBased Employee Benefit Scheme ('Scheme') has been implemented in accordance with theSecurities and Exchange Board of India (Share Based Employee Benefits) Regulations 2014as amended from time to time ('SEBI Regulations') and the terms of the resolutions passedby the Company in the general meeting.

3. The Management of the Company is also responsible for the preparation of thefinancial statements including the preparation and maintenance of all accounting and otherrelevant supporting records and documents. This responsibility includes the designimplementation and maintenance of internal control relevant to the preparation andpresentation of the financial statements and applying an appropriate basis of preparation;and making estimates that are reasonable in the circumstances.

Auditors' Responsibility

4. We P C N & ASSOCIATES the statutory auditors of the Company have beenrequested by the Management of the Company to certify that the Company has complied withthe SEBI Regulations in relation to the Vivimed Labs Limited Employees Stock Option Plan2010 approved by the Company at their general meeting held on 18 September 2010 andEmployees Stock Option Plan 2017 at their general meeting held on 29 September 2017.

5. Based on this information and pursuant to the requirements of the SEBI Regulationsit is our responsibility to certify that the Company's Scheme have been implemented inaccordance with the SEBI Regulations and are in accordance with the terms of theresolution passed by the Company in the general meeting.

6. For the purpose of this certificate we have relied on the audited standalonefinancial statements of the Company for the year ended 31 March 2020 and information anddocuments as made available to us by the Company.

7. We have verified the books of account and other records maintained in relation tothe Scheme by the Company on a test check basis. We have also obtained appropriaterepresentation from the Company's management.

8. The audited standalone financial statements referred to in paragraph 6 above havebeen audited by us on which we issued an unmodified audit opinion vide our report dated25 July 2020. Our audit of these standalone financial statements was conducted inaccordance with the Standards on Auditing and other applicable authoritativepronouncements issued by the Institute of Chartered Accountants of India ('ICAI'). ThoseStandards require that we plan and perform the audit to obtain reasonable assurance aboutwhether the standalone financial statements are free of material misstatement

9. We conducted our examination in accordance with the Guidance Note on Reports orCertificates for Special Purposes (Revised 2016) ('Guidance Note') issued by the ICAI. TheGuidance Note requires that we comply with the ethical requirements of the Code of Ethicsissued by the ICAI.

10. We have complied with the relevant applicable requirements of the Standard onQuality Control (SQC) 1 Quality Control for Firms that Perform Audits and Reviews ofHistorical Financial Information and Other Assurance and Related Services Engagements.

Opinion

11. Based on the examination carried out by us and the information and explanationprovided to us we certify to best of our knowledge and belief that the Vivimed LabsLimited Employees Stock Option Plan 2010 approved by the Company at their general meetingheld on 18 September 2010 and Employees Stock Option Plan 2017 at their general meetingheld on 29 September 2017 have been implemented in accordance with the provisions of theSEBI Regulations and relevant amendments from time to time and in accordance with theterms of the aforesaid resolutions passed by the Company.

Restriction on Use

12. This Certificate has been issued to the Company for placing before the Company'sshareholders at its annual general meeting and should not be used by any other person orfor any other purpose. Accordingly we do not accept or assume any liability or duty ofcare for any other purpose or to any other person to whom this report is shown or intowhose hands it may come save where expressly agreed by our prior consent in writing.

Date: 02.12.2020 for P C N & ASSOCIATES. Chartered Accountants Firm registration Number: 016016S
Place: Hyderabad Sd/- K.Gopala Krishna Partner Membership Number: 203605 ICAI UDIN: 20203605AAAAHM1070

.