Biocon Ltd Directors Report.

Dear Shareholders,

We are pleased to present the Forty-Second (42nd) Annual Report on the business and operations along with the audited standalone and consolidated financial statements and the Auditors report of your Company, for the financial year ended March 31, 2020.

Particulars

Standalone financial highlights

Consolidated financial highlights

FY20 FY19 FY20 FY19
Total revenue 21,901 18,946 65,286 56,588
Expenses 18,016 16,703 53,812 46,394
Share of profit/(loss) of joint venture and associates, net (289) 9
Profit before tax and exceptional items 3,885 2,243 11,185 10,203
Exceptional items, net 1,597 1,987 675 1,946
Profit before tax 5,482 4,230 11,860 12,149
Tax expense 1,119 447 3,151 2,123
Non-controlling interest 1,227 973
Profit for the year from discontinued operations 46 1,144
Profit for the year 4,409 4,927 7,482 9,053
Other comprehensive income, net (77) 131 (1,314) (552)
Total comprehensive income 4,332 5,058 6,168 8,501
Earnings per Share (EPS) after exceptional items 3.72 4.17* 6.32 7.65*

* Adjusted for the effect of bonus shares

Standalone and Consolidated Financial Statements

The standalone and consolidated financial statements of your Company have been prepared in accordance with the Indian Accounting Standards (‘Ind AS) as notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended. The financial highlights and the results of the operations, including major developments have been further discussed in detail in the Management Discussion and Analysis Report.

Further, a statement containing the salient features of the financial statements of our subsidiaries pursuant to sub-section 3 of Section 129 of the Companies Act, 2013 (the Act) in the prescribed form AOC-1 is appended as Annexure 1 to the Boards report. The statement also provides the details of performance and the financial positions of each of the subsidiaries.

State of Affairs

The highlights of your Companys Standalone Financial performance are as under:

Revenue from operations for FY20 stood at R 19,884 mn compared to R 17,857 mn for FY19. Other income for FY20 amounted to R 2,017 mn as against R 1,089 mn in FY19, primarily comprised of income earned from providing utility services to subsidiaries R 1,256 mn, foreign exchange gain R 317 mn, income on investments at R 304 mn and dividend income from a subsidiary at R 140 mn.

Core operating margins (EBIDTA margins net of licensing, impact of forex, R&D and dividend from subsidiaries) was 25% compared to 21% in the previous financial year, primarily driven by higher volumes with better margins in the Small Molecules business.

Profit before tax and exceptional items (excluding discontinued operations) stood at R 3,885 mn compared to R 2,243 mn in FY19. Effective tax rate (ETR) for the year before exceptional item and discontinuing operations was 20%, in line with FY19.

Profit for the year stood at R 4,409 mn (including exceptional items R 1,597 mn) compared to R 4,927 mn (including exceptional item R 1,987 mn) for FY19.

The highlights of your Companys Consolidated Financial performance are as under:

During the year, our consolidated revenues registered a growth of 15% to R 65,286 mn from R 56,588 mn in FY19. From a segment perspective, Biologics recorded an annual growth of 29% while Small molecules registered a growth of 18% and Research services grew by 10%.

Core margins (EBITDA margins net of licensing, forex and R&D) stood at 33% compared to 32% for FY 19.

Profit for the year including non-controlling interest stood at R 8,709 mn compared to R 10,026 mn for FY19.

Effective tax rate (ETR) for the year before exceptional item was 22% (19% in FY19).

Exceptional items (Standalone and Consolidated) and Discontinued Operations (Standalone):

Restructuring of Biologics Business (Standalone and Consolidated Financial Statements)

During the year, pursuant to Group restructuring of the Biologics business, the Company has transferred the manufacturing and commercialisation rights of Biosimilars, Insulins and drug substance manufactured in the GPP facility under the Biologics segment effective May 01, 2019 for a consideration of R 7,054 mn and the Branded Formulations India ("BFI") business effective August 01, 2019 for a consideration of R 621 mn to Biocon Biologics India Limited.

Accordingly, results of Biologics and BFI business in FY 20 including gain on transfer of Rs. 46 mn, net of tax and comparatives for previous year has been disclosed as discontinued operations in the standalone financial statements.

On April 01, 2019, the Board of Directors ("The Board") of the Company approved a scheme of Amalgamation (‘the Scheme) of Biocon Research Limited ("BRL"), a wholly owned subsidiary, with Biocon Biologics India limited ("BBIL"), a subsidiary, with an appointed date of April 01, 2019. During the quarter ended March 31, 2020, Bengaluru Bench of National Company Law Tribunal ("NCLT") has approved the scheme. The Company received 3,106 equity shares of Rs. 10 each of BBIL for every 1 equity share held in BRL resulting in the issue of 155,300,000 equity shares of Rs. 10 each. The merger did not have any material impact on the standalone and consolidated financial statements.

During the year, the Company sold its investment in the equity shares of Biocon Biologics Limited, United Kingdom ("BUK"), a wholly owned subsidiary to BBIL for a consideration of Rs. 10,810 mn and received dividend of Rs. 456 mn from BUK. The gain arising from such sale of equity shares, including dividend income, amounting to Rs. 820 mn is recorded as an exceptional item in the standalone financial statements. Consequential tax of Rs. 166 mn is included within the tax expense in the standalone and consolidated financial statements.

Transfer of Fusion Proteins (Standalone Financial Statements)

During the year, the Company granted a license to develop, manufacture and commercialize fusion proteins to Bicara Therapeutics Inc, a wholly owned subsidiary. The gain on such licensing of Rs. 550 mn has been recorded as an exceptional income in the standalone financial statements. Consequential tax impact of Rs. 192 mn has been recorded in the standalone and consolidated financial statements within tax expense.

Sales of Syngene shares (Standalone Financial statements)

During the year, Biocon Limited Employees Welfare Trust ("RSU Trust") sold 812,249 equity shares of Syngene in the open market. Pursuant to the consolidation of the RSU trust with the standalone financial statements, such gain arising from the sale of the equity shares of Syngene amounting to Rs. 259 mn has been recorded as an exceptional item in the standalone financial statements.

During FY 19, the Company along with its subsidiary Biocon Research Limited (‘BRL) sold 3.3% stake in Syngene. Gain on such sale, net of expenses amounting to Rs 1,987 mn was recorded as exceptional gain in the standalone financial statements.

Fire incident in Syngene (Consolidated Financial statements)

Pursuant to a fire incident on December 12, 2016 at Syngene, certain fixed assets, inventory and other contents in one of the buildings were damaged. Syngene had recorded a loss of Rs. 1,057 mn arising from such incident and received the disbursements of Rs. 1,770 mn from the insurance company against the loss till March 31, 2020. The aforementioned loss and the disbursements from the insurance claim has been presented on a net basis as s 713 mn under exceptional items in the standalone and consolidated financial statements. Consequential tax and non-controlling interest of Rs. 254 mn and Rs. 137 mn respectively is included within tax expense and non-controlling interest in the consolidated financial statements.

Investment in Associate (Consolidated Financial statements)

During FY 19, Equillium initiated its initial public offering (IPO) process and consequently had changes in its Board composition, which resulted in loss of significant influence over the investee. The Company fair valued its investment on the date of loss of significant influence which resulted in a gain of Rs 1,762 mn, net of tax expenses of R 184 mn, which was disclosed as an exceptional item.

Impact of the COVID-19 pandemic

The COVID-19 pandemic has intensified into a global crisis, driving the nation to enforce lock-down of all economic activity for the last few months. We remain committed to the health and safety of our employees and their families, as well as, business continuity to safeguard the interests of our patients, partners, customers and other stakeholders. The impact of the pandemic on our business performance is outlined in the Financial FAQs and under the Management and Discussion Analysis Report.

Subsidiaries and Joint Ventures

Your Company has 16 subsidiaries and 1 joint venture as on March 31, 2020. A report on the performance and financial position of each subsidiary and joint venture is outlined in AOC-1 which is annexed to this report as Annexure - 1.

In accordance with the provisions of Section 136 of the Companies Act, 2013 and the amendments thereto, read with the SEBI Listing Regulations, the audited financial statements, including the consolidated financial statements and related information of the Company and financial statements of the subsidiary companies is available on our website www.biocon.com.

The Company has also formulated a policy for determining ‘material subsidiaries pursuant to the provisions of SEBI Listing Regulations. The policy is available at the website of the Company at https://www.biocon.com/biocon_invrelation_cor_keygovernance. asp?subLink=gover.

A report of the salient features and a summary of the financial performance of each of the subsidiaries is presented as below:

Syngene International Limited, India

Syngene International Limited is an innovation-focused global discovery, development and manufacturing organisation providing integrated scientific services to the pharmaceutical, biotechnology, nutrition, animal health, consumer goods and specialty chemical industries around the world. Its services include integrated drug discovery and development capabilities in chemistry, biology, in vivo and in vitro pharmacology, toxicology, custom synthesis, process R&D, cGMP manufacturing, formulation and analytical development along with clinical development services. Syngene is a public limited company incorporated and domiciled in India and has its registered office in Bengaluru, Karnataka, India. The Companys shares are listed on the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE) in India.

During the year ended March 31, 2020, Syngene (consolidated) registered a revenue growth of 10% to R 20,935 mn (FY19 - R 19,007 mn). EBIDTA margin for the year was 33 % with the operating margin at R 6,995 mn (FY19 - R 6,119 mn), registering a growth of 14%.

Syngene USA Inc.

Syngene USA Inc. a wholly owned subsidiary of Syngene, incorporated on August 24, 2017, with its registered office in the State of Delaware, United States of America (USA). The company provides sales and business support services to the operations of Syngene in USA. During FY20, Syngene USA Inc, posted a revenue of R 104 mn and reported a net profit of R 6 mn.

Biocon Biologics India Limited, India

Biocon Biologics India Limited ("BBIL") was incorporated on June 08, 2016 in India with an objective to set up greenfield biosimilar biologics facilities. During the year, the Company transferred its shareholding in Biocon Biologics Limited ("BUK") to BBIL.

Biocon Biologics is uniquely positioned as a fully integrated, global, ‘pure play biosimilars organization and aspires to transform patient lives through innovative and inclusive healthcare solutions. BBILs portfolio of biosimilar molecules includes a rich pipeline of approved and in-development biosimilars; outcome of its world class R&D and global scale manufacturing expertise. BBIL has commercialized three of its biosimilars in developed markets like EU, U.S., Japan and Australia. It is a leading global insulins player with over 15 years of experience in addressing the needs of patients with diabetes, having provided over 2 billion doses of human insulin worldwide.

During the year, with an objective to consolidate the entire Biosimilars business under BBIL, the Company transferred the existing biosimilar business approved by the Board, on a slump sale basis effective May 1, 2019 to BBIL. Further, the Board also approved the transfer of its Branded Formulations India (BFI) Business on a ‘going concern basis to BBIL effective August 1, 2019. The transfer of such BFI business on a slump sale basis will lead to a consolidation of the marketing and manufacturing activities relating to the BFI business under a single entity with a common leadership and achieve synergies and value creation accretion for the group.

During the year, Biocon Research Limited, a wholly owned subsidiary of the Company was amalgamated with BBIL pursuant to the scheme of merger sanctioned by the Bengaluru Bench of National Company Law Tribunal on February 4, 2020 effective from April 1, 2019.

During the year, BBIL had received a primary investment from Activ Pine LLP ("Investor") for R 5,360 Mn that translates to a 2.44% minority stake for the Group.

The infusion by the Investor will enable the expansion of Biosimilars R&D and manufacturing capabilities to meet the growing demands of patients worldwide fuelling future growth of the business.

During the year ended March 31, 2020, BBIL posted revenue growth of 33% to Rs. 17,911 mn (FY19 - Rs. 13,451 mn) and a net profit of Rs. 2,883 mn (FY19 – Rs. 1,792 mn). BBIL has prepared its financial statements as per the applicable Indian Accounting Standard under common control. Accordingly, previous year numbers are restated.

Biocon Biologics Limited, UK

Biocon Biologics Limited ("BUK") which was incorporated in the United Kingdom on March 2016 is a wholly owned subsidiary of BBIL. In addition to the biosimilar Pegfilgrastim, which was launched in the United States under the brand name Fulphila, biosimilar Trastuzumab, branded as Ogivri TM was commercialised in the European union and the United States during the year.

During the year ended March 31, 2020, BUK earned Rs. 12,458 mn as revenue and reported a net profit of Rs. 2,631 mn as against revenue of Rs. 8,044 mn and net profit of Rs. 3,276 mn in FY19. This growth was a combination of increase in base business as well as the launch of co-developed products in new territories.

Biocon Sdn. Bhd., Malaysia

Biocon Sdn. Bhd., Malaysia is a wholly owned subsidiary of BUK. Biocon Sdn. Bhd. was established with an objective to set up the groups first overseas manufacturing facility at Malaysia. The facility is located within BioXcell, a biotechnology park in Iskandar Puteri, Johor. The facility is approved for manufacture of Human insulin and Glargine drug product from National Pharmaceutical Regulatory Authority ("NPRA"), Malaysia, cGMP certification from HPRA ("EMA") and received EIR from U.S. Food and Drug Administration ("USFDA"). Biocon Sdn. Bhd. holds the commercial and development rights of human insulin and analogs and continues the related Research and Development activities.

During the year, Biocon Sdn. Bhd. reported a total revenue of Rs. 2,740 mn and net loss of Rs. 2,794 mn in FY20 against a total revenue of Rs. 3,029 mn and a net loss of Rs. 1,158 mn in FY19.

Biocon Healthcare Sdn. Bhd., Malaysia

Biocon Healthcare Sdn. Bhd. ("BHSB") was incorporated in August 2017. The Company had approved the winding up of operations of BHSB, a wholly-owned subsidiary of the Company, as the entity has no significant operations. Further, BUK expressed interest to acquire BHSB, Malaysia to set up marketing operations for biologics in Malaysia, instead of setting up a new entity in Malaysia. Hence, the Company transferred its shareholding in BHSB to BUK, a step down subsidiary of the Company.

During the year ended March 31, 2020, BHSB earned Rs. 4 mn as revenue and reported a net loss of Rs. 8 mn.

BHSB was set up to carry on the business as importers and distributors of drugs and devices in the Malaysian market.

Biocon Biologics Inc., USA

Biocon Biologics Inc, USA ("BBIU") is a subsidiary of Biocon Biologics Limited, UK which was set-up during the year to undertake all activities relating to pharmaceuticals, bio-pharmaceuticals and biologics products, i.e. commercialization, distribution etc. in the USA and other geographies.

BBIU is yet to commence commercial operations.

Biocon Pharma Limited, India

Biocon Pharma Limited ("BPL") is a wholly owned subsidiary of the Company. BPL is engaged in the development and manufacture of generic formulations for sale in global markets, with a focus on opportunities in the US and EU. BPL has setup its formulations manufacturing facility for oral solid dosages at Bengaluru. BPL has capitalised R 361 Crores in the March 2020.

Commercial operations have commenced in March 2020.

Biocon Pharma Inc, USA

Biocon Pharma, Inc. ("BPI"), a wholly owned subsidiary of Biocon Pharma Limited was incorporated in July 2015 in USA. BPI is engaged in the commercialization of generic formulations in the United States. During the financial year ended March 31, 2020, BPI revenues more than doubled from FY 19 driven by the full year results of the launch of Atorvastatin in FY 19.

BPI registered a turnover of R 3,923 mn and reported a net profit of R 277 mn against a revenue of R 1,574 mn and a net profit of R 23 mn in FY 19.

Biocon Pharma UK Limited, UK

Biocon Pharma UK Limited ("BPUK"), a wholly owned subsidiary of Biocon Pharma Limited was incorporated in December 2018 in the United Kingdom. BPUK is engaged in the commercialization of generic formulations in the United Kingdom. As on March 31, 2020, BPUK has not commenced its commercial operations. During the financial year ended March 31, 2020, BPUK reported a loss of R 45 mn.

Biocon Pharma Ireland Limited, Ireland

Biocon Pharma Ireland Limited ("BPIL"), a wholly owned subsidiary of Biocon Pharma Limited was incorporated in December 2018 in Ireland. BPIL is engaged in commercialization of generic formulations in Ireland. As on March 31, 2020, BPIL is yet to commence commercial operations. During the financial year ended March 31, 2020, BPIL reported a loss of R 16 mn.

Biocon Biosphere Limited, India

During the year, the Company decided to set up a new greenfield facility in Vizag to de-risk fermentation manufacturing at Bengaluru. Consequently, for this greenfield facility in Vizag, Biocon Biosphere Limited ("BBL"), was incorporated on December 24, 2019 as a wholly owned subsidiary of the Company under the Companies Act, 2013. The registered office of BBL is situated at 20th KM, Hosur Road, Electronic City, Bengaluru, Karnataka – 560 100, India.

As on March 31, 2020, BBL has not commenced commercial operations.

Biocon Academy, India

Biocon Academy spearheads Biocon Groups CSR initiatives in technical and professional education. The Academy was established as a Centre of Excellence for Advanced Learning in Biosciences in 2014. Biocon Academy leverages the rich industry experience of Biocon, its subject matter expertise alongside international Education Partners such as Keck Graduate Institute of Claremont, California (USA) and BITS-Pilani, India to deliver industry-oriented advanced learning and skill building programs for pharma and biotech graduates. Biocon Academy is dedicated exclusively to industry-oriented biosciences education. The programs offered by the Academy aim to empower the Biotechnology and Engineering graduates with advanced learning, industrial proficiency and job-skills development, the essential building blocks for a promising career in the Biotech industry.

Bicara Therapeutics Inc., USA

Bicara Therapeutics Inc., USA ("Bicara"), a wholly owned subsidiary of the Company, was incorporated in December 2018 in the United States of America. Bicara is anchoring the development of a pipeline of functional antibodies that exploit the recent advances in immuno-oncology.

During the year, the Company, to further develop and market Fusion MAB, molecules out-licensed the rights related to Fusion MAB molecules to Bicara for further development and commercialization

During the financial year ended March 31, 2020, Bicara recorded a revenue of Rs. 31 mn (FY 19- Nil), and reported a net loss of Rs. 649 mn (FY 19 - Nil).

Biocon SA, Switzerland

Biocon SA ("BSA"), a wholly owned subsidiary of the Company, is primarily engaged in identifying and developing novel molecules into commercial products or licensable assets through strategic partnerships.

During the year, BSA registered a net loss of Rs. 32 mn against a profit of Rs. 40 mn in FY 19.

Biocon FZ LLC, UAE

Biocon FZ LLC is a wholly owned subsidiary of the Company, based in Dubai. Incorporated in June 2015, Biocon FZ LLC was established as a marketing entity for pharmaceutical products to target markets in the Middle East and GCC. During the year ended March 31, 2020, Biocon FZ LLC earned Rs. 834 mn in revenue and reported a net profit of Rs. 65 mn against a revenue of Rs. 1,729 mn and a net loss of Rs. 23 mn in FY 19.

Neo Biocon FZ LLC, UAE

Neo Biocon FZ LLC, UAE (‘NB) is a joint venture (‘JV) based in Dubai. Incorporated in 2007, NB was established as a market entity for the pharmaceutical products to target markets in the Middle East and GCC. During the year ended March 31, 2020 NB reported Rs. 786 mn as revenue and a net loss of Rs. 590 mn as against a revenue of Rs. 168 mn and a net profit of Rs. 18 mn in FY 19.

Bonus Issue

During the year, the Board, at its meeting held on April 25, 2019, approved and recommended the issue of bonus shares in the ratio of 1 equity share for every 1 equity share held as on the record date to commemorate the 40th anniversary of the company. The members approved the issue of bonus shares through postal ballot. Thereafter, the Company allotted 60,00,00,000 equity shares of face value Rs 5 each and these bonus shares were credited to the accounts of eligible members during June 2019.

Dividend

Your Company is committed towards enhancing shareholder value for its investors. The Board, has pursued a policy of providing a consistent distribution of return. However, after careful consideration and taking a holistic view of the unprecedented circumstances of the COVID-19 pandemic, the Company has considered it prudent not to recommend the dividend for FY 2019-20 in order to maintain its liquidity position.

Dividend Distribution Policy

In terms of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘SEBI Listing Regulations), the Board has formulated and adopted the Dividend Distribution Policy. The Policy is annexed as Annexure 2 to the Boards report and is also available on our website at https://www.biocon.com/biocon_invrelation_cor_keygovernance.asp?subLink=gover.

Managements Discussion and Analysis

Pursuant to Regulation 34 of the SEBI, (Listing Regulations) the Management Discussion and Analysis Report for the year, is presented in a separate section, forming part of the Annual Report.

Corporate Governance

Your Company is committed to maintain the highest standards of corporate governance. We believe in adherence to good corporate practices, implement policies and guidelines and develop a culture of the best management practices and compliance with the law coupled with the highest standards of integrity, transparency, accountability and ethics in all business matters to enhance and retain investor trust, long-term shareholder value and respect minority rights in all our business decisions.

The Corporate Governance Report along with the requisite certificate from the statutory auditors of the Company confirming compliance with the conditions of corporate governance as stipulated under SEBI Listing Regulations forms part of the Annual Report.

Business Responsibility Report

As mandated by the Securities and Exchange Board of India (‘SEBI), the Business Responsibility Report (‘BRR) forms part of the Annual Report. The report on the nine principles of the National Voluntary Guidelines on social, environmental and economic responsibilities of business as framed by the Ministry of Corporate Affairs is provided in relevant sections of the BRR.

Employee Stock Option Plan (ESOP)

Biocons Employee Stock Option Plan ("the Plan") is administered by the Biocon India Limited Employees Welfare Trust (ESOP Trust) under the instructions and supervision of the Nomination and Remuneration Committee (NRC). The Plan is implemented through a trust route in accordance with SEBI (Share Based Employee Benefits) Regulations, 2014 ("SEBI SBEB Regulations") with a view to attracting and retaining the best talent, encouraging employees to align individual performances with Company objectives, and promoting increased participation by them in the growth of the Company.

During the year, a total of 3,670,776 shares were transferred from the ESOP Trust to the eligible employees under the Companys prevailing ESOP plan. As on March 31, 2020, the ESOP Trust held 14,811,872 equity shares of the Company. During the year ended March 31, 2020, there has been no material change in the Companys existing plan and the plan is in compliance with SEBI SBEB Regulations.

The applicable disclosures as stipulated under the SEBI SBEB Regulations as on March 31, 2020 are appended herewith as Annexure 3 to the Boards report. The details of the Plan form part of the notes to accounts of the Financial Statements in this Annual Report. The Company has received a certificate from the statutory auditors that the scheme has been implemented in accordance with SEBI SBEB Regulations and the resolutions passed by the shareholders. The certificate would be placed at the Annual General Meeting for inspection by the members.

Deposits

Your Company has not accepted any deposit and as such no amount of principal and interest were outstanding as at the Balance Sheet date.

Particulars of Loans, Guarantees or Investments

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 form part of the notes to the Financial Statements.

Policy on Directors Appointment and Remuneration

The Companys current policy is to have an appropriate mix of Executive and Independent Directors to maintain the independence of the Board and separate its functions of governance and management.

For the purpose of selection of any Director, the Nomination and Remuneration Committee identifies persons of integrity who possess relevant expertise, experience and leadership qualities required for the position. The Committee also ensures that the incumbent fulfils such criteria with regard to qualifications, positive attributes, independence, age and other criteria as laid down under the Act, Listing Regulations or other applicable laws. The Board has, on the recommendation of the Nomination and Remuneration Committee framed a policy on the remuneration of Directors, Key Managerial Personnel and other Employees as required under sub-section (3) of Section 178 of the Companies Act, 2013.The policy of the Company on directors appointment and remuneration is uploaded on to the Companys website and available at https://www.biocon.com/biocon_invrelation_cor_keygovernance.asp?subLink=gover.

As on March 31, 2020, the Board of Directors comprised of nine members including two women members, consisting of two Executive Directors, two Non-Executive Directors, and five Independent Directors. The Board periodically evaluates the need for change in its composition and size.

Board Diversity

Adequate diversity on the Board is essential to meet the challenges of business globalisation, rapid deployment of technology, greater social responsibility, increasing emphasis on corporate governance and enhanced need for risk management. The Board enables efficient functioning through differences in perspective and skill, and fosters differentiated thought processes at the back of varied industrial and management expertise, gender, knowledge and geographical backgrounds. The Board recognises the importance of a diverse composition and has adopted a Board Diversity Policy which sets out its approach to diversity. The policy is available at the website of the Company at https://www.biocon.com/biocon_invrelation_cor_keygovernance.asp?subLink=gover.

Declaration by Independent Directors

All Independent Directors of the Company have submitted the requisite declarations confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act read with Regulation 16 and 25(8) of SEBI Listing Regulations. The Independent Directors have also confirmed that they have complied with Schedule IV of the Act and the Companys Code of Conduct.

Independent Directors have also confirmed that they are not aware of any circumstance or situation which exists or may be reasonably anticipated that could impair or impact their ability to discharge their duties. Further, the Independent Directors have also submitted their declaration in compliance with the provision of Rule 6(3) of Companies (Appointment and Qualification of Directors) Rules, 2014, which mandated the inclusion of an Independent Directors name in the data bank of Indian Institute of Corporate Affairs ("IICA") for a period of one year or five years or life time till they continues to hold the office of an independent director.

In the opinion of the Board, all the independent directors are persons of integrity, possesses relevant expertise and experience.

Board Evaluation

Pursuant to the provisions of Section 134 of the Companies Act, 2013 and Regulation 19 of SEBI Listing Regulations, the Board has carried out the annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its various committees as per the criteria laid down by the Nomination and Remuneration Committee. A structured questionnaire was prepared after taking into consideration inputs received from the directors, covering various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations, independence, governance, ethics and values, adherence to corporate governance norms, interpersonal relationships, attendance and contribution at meetings etc.

A separate exercise was carried out to evaluate the performance of individual directors including the Chairperson of the Board, who were evaluated on parameters such as participation and contribution by a director, commitment, including guidance provided to the senior management outside of Board / committee meetings, effective deployment of knowledge and expertise, effective management of relationship with various stakeholders, independence of behaviour and judgment etc. The performance evaluation of the Independent Directors was carried out by the entire Board. The performance evaluation of the Chairperson and Managing Director was carried out by the Independent Directors. The evaluation process has been explained in the corporate governance report. The Board reviewed the evaluation results as collated by the Nomination and Remuneration Committee.

Directors

As on March 31, 2020, the Board comprised of nine members including two women members. The Board has an appropriate mix of Executive Directors (‘EDs), Non-Executive Directors (‘NEDs) and Independent Directors (‘ID), which is compliant with the Companies Act, 2013, the SEBI Listing Regulations and is also aligned with the best practices of Corporate Governance.

Appointment

During the year, Mr. Siddharth Mittal, was elevated to the position of the Chief Executive Officer (‘CEO) and Joint Managing Director of the Company with effect from December 1, 2019 for a period of five years.

Effective April 1, 2020, he was elevated to the position of Managing Director and CEO of the Company. The Board has recommended his appointment and the same shall be placed for members approval at the ensuing AGM.

Mr. Siddharth Mittal has served as the Chief Financial Officer (‘CFO) of the Company from August 1, 2014 to November 30, 2019.

Re-appointment

Mr. John Shaw, Non-Executive Director retires by rotation at the ensuing AGM and being eligible, seeks re-appointment. The Board recommends his re-appointment and this shall be placed for members approval at the ensuing AGM.

The Board, based on the recommendation of the Nomination and Remuneration Committee, at its meeting held on January 23, 2020, approved the re-appointment of Ms. Kiran Mazumdar-Shaw as an Executive Director (‘designated as an Executive Chairperson) of the Company for a period of five years effective from April 1, 2020 on such terms and conditions including remuneration as may be approved by the Board. This shall be placed for members approval at the ensuing AGM.

To ensure enhanced corporate governance practices, the Securities and Exchange Board of India (‘SEBI) had mandated a clear separation in the roles of Chairperson and Managing Director; the Chairperson should be a Non-Executive Director and not related to the Managing Director or the CEO.

Upon such requirement coming into effect, either on April 1, 2022 or later at such extended date as may be determined by the SEBI, Ms. Kiran Mazumdar-Shaw shall cease to be an Executive Director of the Company and would continue in the capacity of a Non-Executive Director (designated as ‘Non-Executive Chairperson) of the Company, on such remuneration as applicable to other Non-Executive Directors of the Company, as may be determined by the Board of the Company from time to time.

The profile and particulars of experience, attributes and skills of the above Directors is disclosed in the Notice of the AGM and matters are placed for members approval at the ensuing AGM.

Retirement/Cessation

During the year, Mr. Russell Walls, an Independent Director, who had attained the age of 75 years, stepped down as an Independent Director at the conclusion of 41st AGM of the Company held on July 26, 2019. Dr. Arun Suresh Chandavarkar, CEO and Joint Managing Director of the Company, retired on November 30, 2019, after spending three decades with the Company.

Dr. Levin M Jeremy, an Independent Director resigned from the Board with effect from January 23, 2020, owing to his expanding commitments in the United States, which had restricted his availability to attend meetings at Biocon.

The Board expressed its gratitude for the outstanding contribution made by the above directors in the evolution and success of Biocon during their tenure.

Key Managerial Personnel

The Key Managerial Personnel(s) of the Company as on March 31, 2020 are Ms. Kiran Mazumdar-Shaw, Chairperson & Managing Director, Mr. Siddharth Mittal CEO & Joint Managing Director and Mr. Mayank Verma, Company Secretary & Compliance Officer.

Committees of the Board

Currently, the Company has five Board level Committees: Audit Committee ("AC"), Risk Management Committee ("RMC"), Nomination and Remuneration Committee ("NRC"), Stakeholders Relationship Committee ("SRC") and Corporate Social Responsibility Committee ("CSR"). The composition of the above committees, as on March 31, 2020 is disclosed as under:

S. No. Name of Members Category AC

RMC

NRC SRC CSR
C M C M C M C M C M
1 Ms. Kiran Mazumdar-Shaw Chairperson and Managing Director*
2 Mr. John Shaw Non-Executive Director
3 Mr. Siddharth Mittal CEO and Joint Managing Director*
4 Prof. Ravi Mazumdar Non-Executive Director
5 Mr. Bobby Parikh Independent Director
6 Mr. Daniel Mark Bradbury Independent Director
7 Mr. Meleveetil Damodaran Independent Director
8 Ms. Mary Harney Independent Director
9 Dr. Vijay Kuchroo Independent Director

*Ms. Kiran Mazumdar-Shaw is Executive Chairperson effective from April 1, 2020 and Mr. Siddharth Mittal is Managing Director and CEO of the Company effective from April 1, 2020. C: Chairperson and M: Member.

Meetings of the Board

The meetings of the Board are scheduled at regular intervals to discuss and decide on matters of business performance, policies, strategies and other matters of significance. The schedule of the meetings is circulated in advance, to ensure proper planning and effective participation. In certain exigencies, decisions of the Board are also accorded through circulation.

During the year, the Board met six times. The maximum interval between any two meetings did not exceed 120 days, as prescribed in the Companies Act, 2013. Detailed information regarding the meetings of the Board are included in the report on Corporate Governance, which forms part of the annual report.

Related Party Contracts or Arrangements

There were no materially significant related party transactions entered between the Company, Directors, management and their relatives, except for those disclosed in the financial statements. All the contracts/arrangements/transactions entered by the Company with the related parties during FY 2019-20 were in the ordinary course of business and on an arms length basis and whenever required the Company has obtained necessary approval as per the related transaction policy of the Company.

Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) along with the justification for entering into such a contract or arrangement in Form AOC-2 does not form a part of the Report.

The Company formulated the policy on ‘Materiality of Related Party transactions and on dealing with Related Party Transactions, and the same is available at https://www.biocon.com/biocon_invrelation_cor_keygovernance.asp?subLink=gover.The details of related party disclosures form part of the notes to the Financial Statements provided in the Annual Report.

Credit Ratings

ICRA and CRISIL continued to reafirm their rating of AA+/ Stable and A1+, respectively, for various banking facilities throughout the year enabling your Company to avail facilities from banks at attractive rates indicating a very strong degree of safety for timely payment of financial obligations.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings & Outgo

The particulars as prescribed under sub-section (3)(m) of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, is appended herewith as Annexure 4 to the Boards report.

Auditors

Statutory Auditors

M/s. B S R & Co. LLP, Chartered Accountants (ICAI Registration No. 101248W/W-100022) were appointed as the Statutory Auditors of the Company to hold office from the conclusion of the 38th AGM held on June 30, 2016 until the conclusion of the 43rd AGM of the Company to be held in the calendar year 2021.

The Auditors Report on the financial statements of the Company for the financial year ending March 31, 2020 is unmodified i.e. it does not contain any qualification, reservation or adverse remark. The Auditors Report is enclosed with the financial statements forming part of the annual report.

Cost Auditors

The Cost Records of the Company are maintained in accordance with the provisions of Section 148(1) of the Act as specified by the Central Government. The Cost Audit Report, for the financial year ended March 31, 2019, was filed with the Central Government within the prescribed time. The Board, on recommendation of the Audit Committee, had appointed M/s Rao & Murthy, Cost Accountants (Firm Registration Number 000065) as the Cost Auditors to conduct the audit of Companys cost records for the financial year ended March 31, 2020. The Cost Auditors have confirmed that their appointment is within the limits of Section 141(3) (g) of the Companies Act, 2013 and have also certified that they are free from any disqualifications specified under Section 141(3) and proviso to Section 148(3) read with Section 141(4) of the Companies Act, 2013. The Audit Committee has also received a certificate from the Cost Auditors certifying their independence and arms length relationship with the Company.

The Cost Auditor will submit their report for the FY 2019-20 on or before the due date. In accordance with the provisions of Section 148 of the Act read with the Companies (Audit and Auditors) Rules, 2014, since the remuneration payable to the Cost Auditor for FY 2020-21 is required to be ratified by the members, the Board recommends the same for approval by members at the ensuing AGM.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and rules thereunder, M/s V. Sreedharan & Associates, Practicing Company Secretaries were appointed to conduct the secretarial audit of the Company for the financial year 2019-20. The secretarial audit report for financial year 2019-20 is appended herewith as Annexure 5 to the Boards report.

Pursuant to the SEBI circular vide no. CIR/CFD/CMD/1/27/2019 dated February 8, 2019, the Company has submitted the Annual Secretarial Compliance Report, issued by M/s. V. Sreedharan & Associates, Practicing Company Secretaries with the stock exchanges where shares of the Company are listed.

Reporting of fraud by auditors

During the year, the statutory auditors have not reported to the Audit Committee any material fraud on the Company by its officers or employees under Section 143(12) of the Companies Act, 2013, the details of which need to be provided in this report.

Risk Management Policy

The Company has put in place an enterprise wide Risk Management Framework with the objective of timely identification of risks, assessment and evaluation of such risks in line with the overall business objectives or strategies and define adequate mitigation strategy. On a quarterly basis, the Risk Management Committee reviews critical risks on a rotation basis in line with the risk management plan to measure effectiveness of mitigation actions defined against critical risks and its impact on overall risk exposure of the Company. All the critical risk areas are covered at least once a year. All critical risk areas as identified by the Company are re-evaluated annually. During the course of year, appropriate changes were made to the risk register, considering internal or external changes.

Internal Financial Control

The Company has laid down guidelines, processes and structures, which enable implementation of appropriate internal financial controls across the organisation. Such internal financial controls encompass policies and procedures adopted by the Company for ensuring the orderly and efficient conduct of business, including adherence to its policies, safeguarding of its assets, prevention and detection of frauds and errors, the accuracy and completeness of accounting records and the timely preparation of reliable financial information. These include controls in the nature of manual or automated (IT applications including the ERP applications wherein the transactions are approved and recorded). Appropriate review and control mechanisms are put in place to ensure that such control systems are adequate and are operating effectively on an ongoing basis.

Due to the inherent limitations of internal financial controls, including the possibility of collusion or improper management override of controls, material misstatements in financial reporting due to error or fraud may occur and not be detected. Also, evaluation of the internal financial controls are subject to the risk that the internal financial control may become inadequate because of changes in conditions, or that the compliance with the policies or procedures may deteriorate.

The Company has, in all material respects, an adequate internal financial control system and such internal financial controls which were operating effectively based on the internal control criteria established by the Company considering the essential components of internal control stated in the guidance note on audit of internal control over financial reporting issued by the Institute of Chartered Accountants of India.

Vigil Mechanism

The Vigil Mechanism as envisaged in the Companies Act, 2013, the rules prescribed thereunder and the SEBI Listing Regulations is implemented through the Companys Whistle Blower Policy to enable the Directors, employees and all stakeholders of the Company to report genuine concerns, to provide for adequate safeguards against victimisation of persons who use such mechanism and make provision for direct access to the Chairman of the Audit Committee.

Whistle Blower Policy of your Company is available on the Companys website and can be accessed at the web-link: https://www. biocon.com/biocon_invrelation_cor_keygovernance.asp?subLink=gover.

Directors Responsibility Statement

Pursuant to the requirement under Section 134 (3) (c) of the Companies Act, 2013, your directors confirm that:

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

(b) they have selected such accounting policies and applied them consistently and made judgements 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 and loss of the Company for that period.

(c) they have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies 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 based on the internal controls framework established by the Company, which were adequate and are operating effectively and

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

Particulars of Employees

The statement containing particulars in terms of Section 197(12) of the Companies Act 2013 read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report and is appended herewith as Annexure 6 to the Boards report.

The statement containing particulars in terms of Section 197(12) of the Companies Act 2013 read with rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report.

The statement containing the particulars of employees employed throughout the year and in receipt of remuneration of R 1.02 crore or more per annum and employees employed for a part of the year and in receipt of remuneration of R 8.5 Lakhs or more per month, as required under Section 197(12) of the Companies Act 2013 is available on the website of the Company at www.biocon.com

Considering the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report, excluding the aforesaid information, is being sent to the members of the Company and others entitled thereto. The said information is available for inspection at the registered office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. Any shareholder interested in obtaining a copy thereof, may write to the secretarial team of the Company in this regard.

Corporate Social Responsibility (CSR)

At Biocon, CSR has been an integral part of our business since its inception. With the incorporation of Biocon Foundation in 2004, the Company formally structured its CSR activity. Today, the Company span its CSR efforts through the Biocon Foundation, the Biocon Academy and select partnership programs with like-minded private organizations and Government. The Company promotes social and economic inclusion for the marginalized communities with its integrated system focussing on the following areas:

Primary Healthcare- The Company believes that the most cost-efficient method of ensuring the health of a community is by preventing the occurrence of disease. The Company provides affordable primary and preventive healthcare services of assured quality. The initiative provides cushion to low and middle income groups from health shocks, caused by high out-of-pocket health expenditure and it is catering to the healthcare needs of a population of more than 10 lakhs living predominantly in the rural areas, peri-urban areas and slums in Karnataka & Rajasthan.

Promotion of Education- The Company believes in ensuring inclusive and equitable quality education for all. An afterschool enrichment program on English and Phonics, Life Skills, Art and Craft, Digital Literacy and games for children of Government schools is also ongoing successfully. The Biocon Academy is an initiative to create a globally competitive Biotech ecosystem in India.

Gender Equality & Empowerment of Women- Promoting gender equality and empowering women is amongst the most important CSR objectives of the Company. The Biocon Foundation has set up hostels for women who come from weaker sections of ociety. The donation of patrol vehicles to a special cell of Hebbagodi Police for ensuring safety of women is another initiative undertaken towards providing a safe environment.

Environmental sustainability- The Company promotes the conservation of natural resources and improvements in the ecosystem to maintain the quality of soil, air and water. The Company has undertaken lake rejuvenation programs.

Heritage Art & Culture- The Company places high emphasis on the protection of our national heritage, art and culture. We have offered grants to restore many institutions of great public importance including India Foundation for the Arts, in Bengaluru.

Technology Incubation- The Company is keenly aware of the power of technology in transforming the development indicators and accordingly, we support technology incubators which are approved by the Central Government. Under this initiative, the Biocon Foundation has provided grants to The Institute of Bioinformatics and Applied Biotechnology (IBAB), Team Indus & Science Gallery, Bengaluru.

Rural Development- The Company works towards combatting the social and economic problems to ensure the prosperity of rural India. The Biocon Foundation has undertaken many projects to bridge the rural-urban divide in terms of infrastructure. Some of our initiatives include the construction of roads, school buildings, community centres, community toilets and drinking water facilities. In an effort to ensuring rejuvenation of lakes in Bengaluru, the Biocon Foundation has treated the Hebbagodi lake with bio-remediation processes. Similar work on the revival of Yarandahalli Lake is underway.

In compliance with the provisions of Section 135 of the Companies Act, 2013, the Board has formed a Corporate Social Responsibility Committee, which monitors and oversees various CSR initiatives and activities of the Company. The CSR Committee comprises of Ms. Mary Harney (Chairperson), Dr. Vijay Kuchroo and Prof. Ravi Mazumdar.

A detailed report regarding Corporate Social Responsibility is appended herewith as Annexure 7 to the Boards report. The Policy on Corporate Social Responsibility has been uploaded on to the website of the Company and is available at www.biocon.com.

Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal), Act, 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. The Policy is gender neutral. During the financial year under review, 3 complaints with allegations of sexual harassment were filed, of which 2 were disposed-o_ and 1 is pending closure as per the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Transfer of Unpaid and Unclaimed Amounts to IEPF

Pursuant to the provisions of Section 124(5) of the Companies Act, 2013 read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, all dividends which remains unpaid or unclaimed for a period of seven years from the date of their transfer to the unpaid dividend account are required to be transferred by the Company to the Investor Education and Protection Fund ("IEPF"), established by the Central Government. Further, as per IEPF Rules, the shares on which dividend has not been paid or claimed by the members for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority.

During the year, the Company has transferred unpaid and unclaimed dividends of R 13,23,535 for the financial year 2011-12 and 9,566 corresponding shares on which dividends were unclaimed for seven consecutive years were transferred as per requirements of the IEPF Rules.

Further, as per Rule 6(8) of IEPF Rules, all benefits such as bonus shares, split, consolidation except right issue, accruing on shares which are transferred to IEPF, shall also be credited to the demat account of the IEPF authority. During the year, the Company has transferred 38,891 bonus shares to the IEPF authority.

Significant and Material Orders

There are no significant and material orders passed during the year by the regulators, courts or tribunals impacting the going concern status and Companys operations in the future.

Statutory Disclosures

None of the Directors of your Company are disqualified as per the provisions of Section 164(2) of the Companies Act, 2013. Your Directors have made necessary disclosures, as required under various provisions of the Companies Act and SEBI Listing Regulations.

Material Changes and Commitments

No material changes and commitments affecting the financial position of the Company have occurred between March 31, 2020 and the date of this report.

Change in Nature of Business

There has been no change in the nature of the business of the Company. Your Company continues to be a pioneer biopharmaceutical company engaged in manufacturing active pharmaceutical ingredients and formulations, including biosimilar drugs for diabetics, oncology and autoimmune diseases with sales in markets across the globe.

Annual Return

The Extract of annual return in Form MGT-9 as per the provisions of Section 134(3)(a) and 92(3) of the Companies Act, 2013, is annexed to this report as Annexure 8 and also is available on the website of the Company at www.biocon.com.

Secretarial Standards issued by the Institute of Company Secretaries of India (ICSI)

The Company is compliant with and has proper systems to ensure compliance under the provisions of the applicable Secretarial Standards issued by the Institute of Company Secretaries of India ("the ICSI").

Green Initiative

We request all the shareholders to support the ‘Green Initiative of the Ministry of Corporate Affairs and Biocons continuance towards greener environment by enabling the service of the Annual Report, AGM Notice and other documents electronically to your email address registered with your Depository Participant/ Registrar and Share Transfer Agent.

We also request all the investors whose email id is not registered to take necessary steps to register their email id with the Depository Participant/ Registrar and Share Transfer Agent.

Acknowledgement

We place on record our appreciation for the committed services by every member of the Biocon family globally whose contribution was significant to the growth and success of the Company. We would like to thank all our clients, partners, vendors, investors, bankers and other business associates for their continued support and encouragement during the year.

We also thank the Government of India and Malaysia, Government of Karnataka, Government of Telangana, Government of AP, Ministry of Information Technology and Biotechnology, Ministry of Health, Ministry of Commerce and Industry, Ministry of Finance, Department of Pharmaceuticals, Department of Scientific and Industrial Research, Ministry of Corporate Affairs, Central Board of Indirect Taxes and Customs, Income Tax Department, CSEZ, and all other regulatory agencies for their assistance and co-operation during the year and look forward to their continued support in the future.

For and on behalf of the Board
Kiran Mazumdar-Shaw
Bengaluru Executive Chairperson
May 14, 2020 DIN: 00347229