Alembic Director Discussions


Dear Members,

Your Directors have pleasure in presenting their 116th Annual Report together with the Audited Statement of Accounts for the year ended on 31st March, 2023.

1 Operations and State of Affairs of the Company:

( In lakhs)

Particulars For the Year ended
2023 2022
Profit for the year before Interest, Depreciation and Tax 9,151 10,201
Adjusting therefrom:
Interest (net) 16 23
Depreciation 636 450
Provision for deferred tax liabilities 248 21
Provision for current tax 325 1,135
Profit for the year 7,927 8,571
Add:
Balance brought forward from previous year 24,593 18,555
Total amount available for Appropriations 35,520 27,126
Other Appropriations 5 20
Less:
Dividend paid on Equity Shares during the year 4622 514
Transfer to General Reserve - 2,000
Balance carried forward to next years accounts 27,893 24,593

The Company has prepared the Standalone and Consolidated Financial Statements in accordance with the Companies (Indian Accounting Standards) Rules, 2015 prescribed under Section 133 of the Companies Act, 2013 ("Act").

2 Transfer to Reserve:

During the year, no amount was transferred to any of the reserves of the Company.

3 Dividend:

The Board of Directors at their meeting held on 12th May, 2023 has recommended Dividend of 2.20/- (i.e. 110%) per equity share having face value 2/- each for the financial year ended 31st March, 2023 as against 1.80/- (i.e. 90%) per equity share having face value 2/- each for the financial year ended 31st March, 2022.

4 Management Discussion and Analysis Report:

The Management Discussion and Analysis Report as required under Regulation 34 read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations, 2015") is annexed herewith as Annexure A. Certain Statements in the said report may be forward-looking. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of the future performance and outlook.

5 Subsidiaries, Associates and Joint Ventures:

A statement containing the salient features of the financial statements of subsidiary and associate companies, as per Section 129(3) of the Act, is part of the consolidated financial statements.

In accordance with third proviso of Section 136(1) of the Act, the Annual Report of the Company, containing therein its standalone and the consolidated financial statements has been placed on the website of the Company, www.alembiclimited.com. Further, as per fourth proviso of the said section, audited annual accounts of the subsidiary company has also been placed on the website of the Company. Shareholders interested in obtaining a physical copy of the audited annual accounts of the subsidiary company may write to the Company Secretary requesting for the same.

6 Directors:

In accordance with the provisions of Section 152 and other applicable provisions, if any, of the Act and the Articles of Association of the Company, Mr. Abhijit Joshi (DIN: 06568584), Non-Executive Director of the Company, will retire by rotation at the ensuing Annual General Meeting ("AGM") and being eligible, offers himself for re-appointment.

The first term of Mr. Mayank Amin (DIN: 03455164) as an Independent Director, will end on 14th May, 2024. Based on the recommendation of Nomination and Remuneration Committee ("NRC"), the Board of Directors at its meeting held on 12th May, 2023 has approved his re-appointment as an Independent Director of the Company for a second term of 5 (five) consecutive years w.e.f. 15 th May, 2024, subject to the approval of the members by way of special resolution at the ensuing AGM.

The Board of Directors of the Company based on the recommendation of NRC has considered the appointment of Dr. Girish Hirode (DIN: 10145777), as an Independent Director of the Company for a term of (5) five consecutive years w.e.f. approval of his appointment at the ensuing AGM.

7 Key Managerial Personnel:

Mrs. Malika Amin, Managing Director and CEO, Mr. Rasesh Shah, CFO and Mr. Drigesh Mittal, Company Secretary are Key Managerial Personnel of the Company.

8 Meetings of the Board:

Four (4) Board Meetings were held during the financial year ended 31st March, 2023. The details of the Board Meetings with regard to their dates and attendance of each of the Directors thereat have been provided in the Corporate Governance Report.

9 Independent Directors:

The Company has received declarations / confirmations from all the Independent Directors of the Company as required under Section 149(7) of the Act read with Rule 6 of the Companies (Appointment and Qualifications of Directors)

Rules, 2014 and Regulation 25(8) of the SEBI Listing Regulations, 2015.

10 Performance Evaluation:

Pursuant to the provisions of the Act, SEBI Listing Regulations, 2015 and Nomination and Remuneration Policy of the Company, the NRC and the Board has carried out the annual performance evaluation of the Board, its Committees and individual Directors by way of individual and collective feedback from Directors. The Independent Directors have also carried out annual performance evaluation of the Chairperson, the non-independent directors and the Board as a whole. Structured questionnaires covering the evaluation criteria laid down by the NRC, prepared after taking into consideration inputs received from Directors, were used for carrying out the evaluation process.

The Directors expressed their satisfaction with the evaluation process.

11 Audit Committee:

The Audit Committee consists of Independent Directors with Mr. C. P. Buch as Chairman and Mr. Sameer Khera and Mr. Mayank Amin as members. The Committee inter alia reviews the Internal Control System, Reports of Internal Auditors, Key Audit Matters presented by the Statutory Auditors and compliance of various regulations. The Committee also reviews the financial results and financial statements before they are placed before the Board of Directors.

12 Vigil Mechanism/Whistle Blower Policy:

Pursuant to the provisions of Section 177(9) & (10) of the Act and the applicable provisions of SEBI Listing Regulations, 2015, a Vigil Mechanism or Whistle Blower Policy for directors and employees to report genuine concerns has been established. The same is also uploaded on the website of the Company and the web-link as required under SEBI Listing Regulations, 2015 is as under: https://www.alembiclimited.com/policy/AL-Whistle%20Blower%20Policy.pdf

13 Internal Control Systems:

The Companys internal control procedures which includes internal financial controls, ensure compliance with various policies, practices and statutes and keeping in view the organizations pace of growth and increasing complexity of operations. The internal auditors team carries out extensive audits throughout the year across all locations and across all functional areas and submits its reports to the Audit Committee.

14 Corporate Social Responsibility:

Alembic Group has been proactively carrying out CSR activities since more than fifty years. Alembic Group has established, nurtured and promoted various Non-Profit Organisations focusing on three major areas – Education, Healthcare and Rural Development.

In compliance with requirements of Section 135 of the Act, the Company has laid down a CSR Policy. The composition of the Committee, contents of CSR Policy and report on CSR activities carried out during the financial year ended 31 st March, 2023 in the format prescribed under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed herewith as Annexure B.

15 Policy on Nomination and Remuneration:

In compliance with the requirements of Section 178 of the Act and Regulation 19 of the SEBI Listing Regulations, 2015, the Company has laid down a Nomination and Remuneration Policy which has been uploaded on the Companys website. The web-link as required under the Act is as under: https://www.alembiclimited.com/policy/AL-NRC%20Policy.pdf

The salient features of the NRC Policy are as under:

1) Setting out the objectives of the Policy.

2) Definitions for the purposes of the Policy.

3) Policy for appointment and removal of Director, KMP and Senior Management.

4) Policy relating to the Remuneration for the Managerial Personnel, KMP, Senior Management Personnel & other employees.

5) Remuneration to Non-Executive / Independent

Director.

16 Dividend Distribution Policy:

In compliance with the requirements of Regulation 43A of the SEBI Listing Regulations, 2015, the Company has laid down a Dividend Distribution Policy, which has been uploaded on the Companys website. The web-link as required under SEBI Listing Regulations, 2015 is as under: https://www.alembiclimited.com/policy/AL-Dividend%20

Distribution%20Policy.pdf

17 Related Party Transactions:

Related party transactions entered into during the financial year were on arms length basis and were in ordinary course of business. In accordance with the requisite approval obtained the Company has entered into transactions with the related party as mentioned in Note No. 34(D) of Standalone Financial Statements. However, there are no related party transactions made by the Company which may have potential conflict with the interest of the Company.

Necessary disclosure in form AOC-2 with respect to the applicable transactions, is given in Annexure C of the Boards

Report. Save and except the above, the Company has not entered into any other arrangement/ transaction with related parties which could be considered material in accordance with the Companys Policy on Related Party Transactions, read with the SEBI Listing Regulations, 2015, during the year under review.

The Board has approved a policy for related party transactions which has been uploaded on the Companys website. The web-link as required under SEBI Listing Regulations, 2015 is as under: https://www.alembiclimited.com/policy/AL-RPT%20Policy. pdf

18 Corporate Governance Report:

The Report on Corporate Governance as stipulated under Regulation 34 read with Schedule V of the SEBI Listing Regulations, 2015 forms part of this Annual Report.

The certificate from M/s. Samdani Shah & Kabra, Practicing

Company Secretaries required as per the aforesaid Schedule

V, confirming compliance with the conditions of Corporate

Governance as stipulated under the SEBI Listing Regulations, 2015 is annexed to the Report on Corporate Governance.

19 Business Responsibility & Sustainability Report: The Business Responsibility & Sustainability Report as required under Regulation 34 of the SEBI Listing Regulations, 2015, forms part of this Annual Report.

20 Listing of shares:

The equity shares of the Company are listed on BSE Limited (BSE) and National Stock Exchange of India Limited (NSE) with security ID/symbol of ALEMBICLTD. The ISIN for equity shares is INE426A01027. The Company confirms that the annual listing fees to both the stock exchanges for the financial year 2023-24 have been paid.

21 Loans, Guarantee or Investments:

During the year under review, the Company has granted Loans, given Guarantees and made investments in compliance with the provisions of Section 186 of the Act read with Companies (Meetings of Board and its Powers) Rules, 2014. The details of the same are provided in the Standalone Financial Statements as follows: loans and advances - Note No. 13 & 14; Corporate Guarantee – Para III (a) of Annexure "A" to the Independent Auditors Report; and Investments - Note No. 6 & 9.

22 Auditors:

(a) Statutory Auditors:

In compliance with the provisions of Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014,

M/s. CNK & Associates LLP, Chartered Accountants, having Firm Registration No. 101961W/W-100036 were appointed as Statutory Auditors of the Company by the Members at their 115th Annual General Meeting (AGM) held on 22nd

September, 2022 to hold office for a second term of five (5) years i.e. till the conclusion of 120th AGM for the financial year ended 2026-27.

The Auditors Report on the Standalone Financial Statements for financial year 2022-23 does not contain any qualification, reservation or adverse remark.

Due to an audit qualification in the Auditors Report of the

Companys associate entity, the Auditors Report on the

Consolidated Financial Statements for financial year 2022-23 has been issued with qualified opinion as mentioned under ‘Basis for Qualified Opinion of their Report. The Company has provided the Statement on Impact of Audit Qualifications on Consolidated Financial Statements as Annexure D to this Report which shall be treated as Boards response.

The Auditors Report is enclosed with the financial statements in this Annual Report.

(b) Secretarial Auditors:

The Board of Directors appointed M/s. Samdani Shah & Kabra,

Practising Company Secretaries, to conduct Secretarial Audit for the financial year 2023-24.

The Secretarial Audit Report of M/s. Samdani Shah & Kabra, Practising Company Secretaries for the financial year ended 2022-23, is annexed as Annexure E.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

During the year under review, the Company has complied with all the applicable provisions of the Secretarial Standards issued by the Institute of Company Secretaries of India.

(c) Cost Auditors:

The provisions of Section 148(1) of the Act with regard to maintenance of cost records are applicable to the Company and the Company has made and maintained the cost records as specified therein.

Pursuant to Rule 4 of the Companies (Cost Records and Audit) Rules, 2014, the Company will be required to get its

Cost records audited by a Cost Auditor for the financial year 2023-24.

The Board of Directors appointed M/s. Santosh Jejurkar

& Associates, Cost & Management Accountants as Cost Auditors for conducting audit of the cost accounts maintained by the Company relating to Bulk Drugs and Real Estate Division for the financial year 2023-24.

(d) Internal Auditors:

The Board of Directors appointed M/s. Sharp & Tannan Associates, Chartered Accountants as Internal Auditors of the Company for the financial year 2023-24.

23 Risk Management:

The Company has constituted a Risk Management Committee and formulated Risk Management Policy which functions as a guiding tool in fulfilling the managements responsibility towards risk management. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Risk Management Committee, Audit Committee and the Board of Directors of the Company.

24 Material Changes:

There have been no material changes and commitments affecting the financial position of the Company since the close of financial year ended 31 st March, 2023. Further, it is hereby confirmed that there has been no change in the nature of business of the Company.

25 Annual Return:

A copy of Annual Return as required under Section 92(3) of the Act has been placed on the website of the Company. The web-link as required under the Section 134(3)(a) of the Act is as under: https://www.alembiclimited.com/#services

26 Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo:

The information required under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure F.

27 Particulars of employees and related disclosures:

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as Annexure G.

A statement showing the names and particulars of the employees falling within the purview of Rules 5(2) and 5(3) of the aforesaid Rules are provided in the Annual Report. The Annual Report is being sent to the members of the Company excluding the aforesaid information. The said information is available for inspection at the Registered Office of the Company during working hours and the same will be furnished on request in writing to the members.

28 Other Disclosures:

(a) The Company has not invited/accepted any deposits from public during the period under review. Further, there has been no default in repayment of deposits or interest thereon on unclaimed deposits.

(b) The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

(c) The Managing Director of the Company has not received any remuneration or commission from its subsidiary.

(d) No fraud has been reported by the Auditors to the Audit Committee or the Board.

(e) No application was made nor is any proceeding pending under the Insolvency and Bankruptcy Code, 2016.

(f) No settlements have been done with banks or financial institutions.

(g) No significant or material orders were passed by the

Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future.

(h) The Company has in place a policy on prevention of Sexual Harassment in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and has constituted the Internal Complaints Committee to redress complaints received regarding sexual harassment. During the year, no complaint was received by the Company.

29 Directors Responsibility Statement:

Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that:

(a) in preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of

Company for that period;

(c) they have taken proper and sufficient care for maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) they have prepared the annual accounts on a going concern basis;

(e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and operating effectively; and

(f) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

For and on behalf of the Board of Directors,

Sd/-

Chirayu Amin

Chairman (DIN: 00242549)

Registered Office:

Alembic Road, Vadodara - 390 003 CIN: L26100GJ1907PLC000033 Tel: +91 265 6637300 Web: www.alembiclimited.com Email ID: alembic.investors@alembic.co.in Date: 12th May, 2023 Place: London

ANNEXURE C

FORM NO. AOC -2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.

Form for Disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto.

1. Details of contracts or arrangements or transactions not at Arms length basis: Not Applicable

2. Details of material contracts or arrangements or transactions at Arms length basis.

Name of Related Party and nature of relationship Nature of contract / arrangement / transaction Amount Paid as Advance, If any Duration of contract / arrangement / transaction Salient terms of the contracts or arrangements Or transactions including the value, if any Date (s) of Approval by the Board, If any
Alembic Pharmaceuticals Limited (APL) – Associate Company (a) Supply / job work / purchase of goods including active pharmaceutical ingredients (‘API), excipients and spent solvents Nil Ongoing and as per approval Transactions to be carried out on arms- length basis. Maximum aggregate value of the transactions: 63 Cr. p.a. Audit Committee and Board of Directors: 10th August, 2022.
(b) Providing various premises on leave and license / lease basis Details of the transactions carried out during the year are provided at note no. 33 D to the Standalone Financial Statements Members approval: 20th September, 2022
(c) Reimbursement of expenses
(d) Receipt of dividend from investment in securities of APL Not Applicable Not Applicable
Shreno Limited – Other Related Parties (a) Buying or selling or leasing immovable property Nil Ongoing and as per approval Transactions to be carried out on arms- length basis. Audit Committee and Board of Directors: 10th August, 2022.
(b) Entering into agreements for Transfer of Development Rights / Floor Space Index (FSI) Maximum aggregate value of the transactions: 30 Cr. p.a.
(c) Entering into Agreements for joint development of projects on revenue sharing / area sharing / profit sharing basis 6.72 Cr. Details of the transactions carried out during the year are provided at note no. 33 D to the Standalone Financial Statements Members approval: 20th September, 2022
(d) Granting of loans, advances and providing guarantee in relation to the above (b) & (c)
(e) Entering into Project Management Consultancy Agreements Nil
(f) Availing or rendering of services
(g) Reimbursement of expenses

For and on behalf of the Board of Directors,

Chirayu Amin
Date: 12th May, 2023 Chairman
Place: London (DIN: 00242549)

ANNEXURE D

Statement on Impact of Audit Qualifications (for audit report with modified opinion) submitted along-with Annual Audited

Financial Results - Consolidated.

Statement on Impact of Audit Qualifications for the Financial Year ended 31 st March, 2023

[See Regulation 33 / 52 of the SEBI (LODR) (Amendment) Regulations, 2016]

Rs. in Lakhs

I

Sl. No. Particulars Audited Figures (as reported before adjusting for qualifications) Adjusted Figures (audited figures after adjusting for qualifications)
1 Total income 19,151 19,151
2 Total Expenditure 9,410 9,410
3 Profit Before Exceptional Item and Tax 9,741 9,741
4 Exceptional Item 1,061 1,061
5 Net Profit after tax for the Period 8,062 8,062
6 Share of Associates Profit/(Loss) 11,003 (18,269)
7 Net Profit/(Loss) after tax and Share of Associates Profit/ (Loss) 19,065 (10,207)
8 Earnings Per Share (in Rs) 7.42 (3.97)
9 Total Assets 2,20,458 2,20,458
10 Total Liabilities 12,655 12,655
11 Net Worth 2,07,803 2,07,803
12 Any other financial item(s) (as felt appropriate management) by the No No

II. Audit Qualification (each audit qualification separately):

a. Details of Audit Qualification:

The Statutory Auditors of Alembic Pharmaceuticals Limited (hereinafter referred to as ‘APL), an Associate of the Holding Company, have mentioned the following Audit Qualification in their Audit Report dated 05 th May, 2023:

"We refer to Note No. 3b to the consolidated financial statements/results regarding Draft Scheme of Arrangement ("Scheme") approved by the Board of Directors of Holding Company in its meeting held on March 2, 2023, involving reorganization / utilisation of General Reserve, between the Holding Company and its shareholders with effect from the appointed date i.e. January 1, 2023 which is pending before regulatory authorities. Further, the Holding Company has withdrawn INR 1,025.66 crores from General Reserve and transferred the same to the Statement of Profit and Loss for the year ended March 31, 2023 under the head "Exceptional Items". We are of the opinion that the said treatment does not meet the criteria of "Income" under

Indian Accounting Standards ("Ind AS") and therefore, the same should not be recognised in the Statement of Profit and Loss for the year. Had this transfer not been effected, Profit after tax for the year and Retained Earnings as at March 31, 2023 would have been reduced by INR 1,025.66 crores each, General Reserve as at March 31, 2023 would have been increased by INR 1,025.66 crores and Basic and Diluted Earnings per Share for the year ended March 31, 2023 would have been lower by INR 52.18 on consolidated basis."

The figures stated above, are adjusted for the above referred qualification, in proportion to the Companys holding in APL.

b. Type of Audit Qualification: Qualified Opinion

c. Frequency of qualification: Appeared first time

d. For Audit Qualification(s) where the impact is quantified by the auditor, Managements Views:

The response filed by the management of APL, in its submission with the Stock Exchanges, is re-produced as under:

The Board of the Company has approved Draft Scheme of Arrangement between the Company and its shareholders ("Scheme"), which provides for reorganization / utilization of General Reserve of the Company, pursuant to the provisions of Section 230 and other applicable provisions of the Companies Act, 2013 read with applicable rules made thereunder (‘the Act), with the Appointed Date of 1st January, 2023 With reference to Note No. 3b, an amount equivalent to the amount of write-off and impairment of assets / Identified CWIP (net of deferred tax amount) has been transferred from General Reserve to the Statement of Profit and Loss for the financial year ended on 31st March, 2023 in order to maintain the accumulated unconditional distributable profits that existed before giving effect of write-off / impairment of Identified CWIP, in a manner permitted under the Act, and in alignment with intention specified in the Scheme.

It is pertinent to note that the transfer of General Reserve to the Statement of Profit and Loss, as aforesaid, does not have any impact on the networth of Company and it is a mode of utilization of the General Reserve of the Company.

The management has considered it appropriate to give the above accounting treatment together with giving effect to the provisions of the Scheme in the financial results for the financial year ended on 31 st March, 2023, pending approval from Honble NCLT, given that appointed date (January 1, 2023 ) falls within the FY 2022-23 and that there is high probability of effectiveness of the Scheme and to avoid reopening / restating the financial statements post receipt of all requisite approvals.

Said treatment gives an appropriate presentation of financial results given that Identified CWIP was built-up over the years and its debit to P&L in the current year does not reflect true financial result for the current year and as such also, said treatment provides better / true reflection of the financial results of the current financial year. e. For Audit Qualification(s) where the impact is not quantified by the auditor: Not Applicable

III. Signatories:

Malika Amin, Managing Director & CEO

(Place: London)

Rasesh Shah, CFO

(Place: Vadodara)

C.P. Buch, Chairman of Audit Committee

(Place: Vadodara)

Himanshu Kishnadwala, Partner -Statutory Auditors

(Place: Mumbai) Date: 12th May, 2023