Caplin Point Lab Director Discussions


To the Members,

The Directors present their 32nd Annual Report on the business and operations of the Company and the accounts for the financial year ended March 31, 2023.

1. FINANCIAL HIGHLIGHTS

Rs in Crores

Financial Results Standalone Consolidated
Particulars 2022-23 2021-22 2022-23 2021-22
Revenue from Operations 528.61 528.06 1466.73 1269.41
Other Income 99.00 56.55 55.98 38.75
Total Income 627.61 584.61 1522.71 1308.16
Profit Before Interest, Depreciation and Tax 318.92 276.17 497.04 433.42
Less: Finance cost 0.12 0.09 0.78 0.70
Less : Depreciation and amortisation expenses 25.65 25.77 44.99 46.90
Add: Share of Profit in Associate 0.00 0.00 0.08 0.00
Profit Before Tax 293.15 250.31 451.35 385.82
Less: Tax Expenses 58.89 62.44 74.36 77.37
Profit After Tax 234.26 187.87 376.99 308.45
Less: Non-controlling Interest 0.00 0.00 0.73 8.61
Net profit attributable to the Shareholders of the Company 234.26 187.87 376.26 299.84

2. OPERATIONS REVIEW /PERFORMANCE

The Company has, on standalone basis, registered total revenue from operations of Rs 528.61 Crores (Total Income Rs 627.61 Crores) during the year under review as against Rs 528.06 Crores (Total Income Rs 584.61 Crores) in the previous financial year. The Profit After Tax was Rs 234.26 Crores during the year under review as

against Rs 187.87 Crores in the previous financial year. The Company has on consolidated basis, registered total revenue from operations of Rs 1,466.73 Crores (Total Income Rs 1522.71 Crores) during the year under review as against Rs 1,269.41 Crores (Total Income Rs 1308.16 Crores) in the previous financial year.

3. MANAGEMENT DISCUSSION & ANALYSIS AND BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT

In compliance with Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, (Listing Regulations) separate section on Management Discussion & Analysis and Business Responsibility Report & Sustainability, as approved by the Board, which includes details on the state of affairs of the Company along with operational performance / review, forms part of this Annual Report.

4. DIVIDEND

The Board of Directors at their Meeting held on May 27, 2023, declared an Interim Dividend of Rs 2.00 (100%) per equity share of Rs 2/- each, for the financial year 2022-23 and was paid to those shareholders whose name appeared in the Register of Members and beneficial owners as on the record date June 09, 2023.

Further, the Board of Directors, at their meeting held on August 7, 2023, have recommended a Final Dividend of Rs 2.5 (125%) per equity share of Rs 2 /- each, for the financial year 2022-23, subject to the approval of the shareholders at the ensuing Annual General Meeting (AGM). If approved, the total dividend for the financial year 2022-23 would amount to Rs 4.5/- per equity share (225%) of Rs 2/- each.

In compliance with Regulation 43A of the Listing Regulations, the Dividend Distribution Policy is uploaded on the Companys website at https://www.caplinpoint.net/wp-content/uploads/2021/07/ Dividend_Distribution_Policy.pdf

5. TRANSFER TO RESERVES

The Board of Directors have decided to retain the entire amount of profits for the financial year 2022-23 in profit and loss account.

6. SUBSIDIARIES/ASSOCIATES

Details of subsidiaries have been covered under Extract of Annual Return, which can be accessed on the following link. https://www. caplinpoint.net/index.php/shareholder-information/. During the year the company had disposed its entire investment in Caplin Point Laboratories Colombia SAS to Caplin Point Far East Limited - Hong Kong, a wholly - owned subsidiary of the Company vide share purchase agreement dated March 28, 2023. Hence, w.e.f March 28, 2023 Caplin Point Laboratories Colombia SAS ceased to be a subsidiary but became a step-down subsidiary.

Considering the Income generated for the FY 2021-22, Nuevos Eticos Neo Ethicals S.A - Guatemala a step down subsidiary held through Caplin Point Far East Limited - Hong Kong, exceeded the threshold limit for material subsidiary as specified in the Listing Regulations, in addition to Caplin Steriles Limited and Caplin Point Far East Limited, Hong Kong which were already considered as material subsidiaries of the Company.

Pursuant to Section 129(3) of the Act, 2013, a statement containing the salient features of the financial statements of subsidiaries in the prescribed Form AOC-1 is annexed as Annexure - I to this Report.

7. CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to Section 129(3) of the Act, 2013 and Listing Regulations, the Consolidated Financial Statements prepared in accordance with the Indian Accounting Standards prescribed by the Institute of Chartered Accountants of India, are attached to this report.

Pursuant to the provisions of Section 136 of the Act, 2013 the consolidated financial statements along with relevant documents and separate audited financial statements in respect of the subsidiaries are available on the website of the Company.

8. DEPOSITS

The Company did not accept any deposits from the public within the meaning of Chapter V of the Act, 2013, read with the Companies (Acceptance of Deposits) Rules, 2014 for the year ended March 31, 2023.

9. SHARE CAPITAL

The paid up share capital as on March 31, 2023 stood at Rs 15,18,05,492/-consisting of 7,59,02,746 equity shares of Rs 2/- each. During the financial year the company had allotted 1,13,870 shares under various ESOP Schemes.

10. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE ACT, 2013

Particulars of loans, guarantees and investments as on March 31, 2023 are given in the Note No. 3, 3A, 4 and 8 to the standalone financial statements.

11. NUMBER OF MEETINGS OF THE BOARD

The number of Board meetings held during the financial year 2022- 23 are provided as part of Corporate Governance Report prepared in terms of the Listing Regulations.

12. DIRECTORS AND KEY MANAGERIAL PERSONNEL

a. Directors

As on March 31, 2023, Board comprised of Seven Directors out of which five are Independent Directors (including an Independent Woman Director) a Managing- Director and one Promoter Director.

Mr. C C Paarthipan is a Promoter Director who is also the Chairman of the company. Dr. Sridhar Ganesan is the Managing Director of the Company.

Mr. D P Mishra (DIN: 02032818), Non - Executive Non - Independent Director tendered his resignation with effect from the closing hours of July 11, 2022. Further, Dr K C John (DIN: 01067374), Mr. V Thirumalai (DIN: 03015619) and Mr.R Viswanathan (DIN : 07173713 ) ceased to be Independent Directors on the Board of the company with effect from the close of business hours of August 24, 2022, December 17, 2022 and May 11, 2023 respectively as they have served the maximum term of an Independent Director under the Act. The Board wishes to place on record their appreciation for the valuable guidance and directions provided during their tenure as Directors of the Company.

The shareholders at their meeting held on September 29, 2022 had appointed Dr R Nagendran (DIN: 08943531) and Mr. S Deenadayalan (DIN: 01951620) as Independent Directors

on the Board for a period of five years effective from the date of the meeting based on the recommendation of the Nomination and Remuneration Committee and the Board.

Further, based on the recommendation of the Nomination and Remuneration Committee Dr. C K Gariyali was re-appointed as Independent Director for a second term of three years w.e.f from March 04, 2023 by the board subject to shareholders approval at the ensuing Annual General Meeting. Mr. D. Sathyanarayanan is the other Independent Director on the Board.

b. Company Secretary and Compliance Officer

During the year, Mr. Dinesh R G, Company Secretary, KMP and Compliance Officer of the Company tendered his resignation with effect from the closing hours of June 24, 2022. The Board has appointed Mr. Venkatram G as the Company Secretary & Compliance Officer of the Company effective from August 5, 2022.

c. Retirement by rotation

Pursuant to Section 152 (6) of the Act, 2013, Mr. C C Paarthipan (DIN: 01218784), Non-Executive Promoter Director, retires by rotation and being eligible offers himself for re-appointment.

d. KMP

Pursuant to Sections 2(51) and 203 of the Act, 2013, Dr. Sridhar Ganesan, Managing Director, Mr. D Muralidharan, Chief Financial Officer and Mr. Venkatram G, Company Secretary are the KMP of the Company.

13. DECLARATION BY INDEPENDENT DIRECTORS

Pursuant to Section 149(7) of the Act, 2013, all Independent Directors have declared that they meet the criteria of independence as provided under the Act, 2013 and Listing Regulations and the Board confirms that they are independent of the management.

14. DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to Section 134(5) of the Act, 2013, the Directors confirm that:

a. In the preparation of the annual accounts, the applicable accounting standards (IND AS) had been followed along with proper explanation relating to material departures;

b. The Directors had 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 as at March 31, 2023 and of the profit of the Company for that period;

c. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. The Directors had prepared the annual accounts on a going concern basis;

e. The Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

f. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

15. MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There were no material changes and commitments, affecting the financial position of the Company, which have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the report.

16. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Pursuant to Section 134 (3)(m) of the Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014, particulars of conservation of energy, technology absorption, foreign exchange earnings and outgo, as are given as Annexure - II to this Directors Report.

17. ANNUAL EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS

Pursuant to the provisions of the Act, 2013 and Listing Regulations, the Board of Directors has carried out annual performance evaluation

of its own performance, the Directors Individually as well as the evaluation of the working of its Committees.

The manner in which the evaluation was carried out has been explained in the Corporate Governance Report which forms part of this report.

18. CORPORATE SOCIAL RESPONSIBILITY (CSR)

Pursuant to the provisions of Section 135 of the Act, 2013 read with CSR Rules, the Company has constituted CSR Committee and based upon the recommendations of the CSR Committee the Board of Directors have approved CSR Policy.

Disclosure under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed as an Annexure - III to this report.

19. BOARD COMMITTEES

Pursuant to the Act, 2013 and the Listing Regulations, the Company has formed all the statutory Committees namely, the Audit Committee, the Nomination and Remuneration Committee, the Corporate Social Responsibility Committee, the Stakeholders Relationship Committee and the Risk Management Committee.

Detailed information about these Committees and relevant information for the year under review are given in the Corporate Governance Report.

There have been no instances where the Board did not accept the recommendations of its Committees including the Audit Committee.

20. INTERNAL FINANCIAL CONTROLS

Details in respect of adequacy of internal financial controls concerning the financial statements are stated in the Management Discussion and Analysis section which forms part of this Annual Report.

21. VIGIL MECHANISM

The Company has established a vigil mechanism, through a Whistle Blower Policy, the details of which are given in the Corporate Governance Report which forms part of this report

22. AUDITORS

a. Statutory auditors

The current Statutory auditors M/s. CNGSN & Associates LLP, Chartered Accountants, Chennai, have served their maximum permissible term under the Act, 2013. Their term comes to end at the forthcoming Annual General Meeting. The Board wishes to place on record their gratitude for the valuable guidance and support provided by them during their tenure.

M/s. CNGSN & Associates LLP, Chartered Accountants, Chennai, have issued the Auditors Report for the financial year 2022-23 which does not contain any qualification, reservation or adverse remark and the same is attached with the financial statements.

The Audit Commitee and the Board at their meeting held on August 07, 2023 have recommended the appointment of M/s Brahmayya & Co, Chartered Accountants, (Firm Registration No. 000511S) Chennai, as Statutory Auditors of the Company to hold office from the conclusion of forthcoming AGM till the conclusion of 37th AGM. A resolution to this effect forms part of the Notice to the shareholders.

The Company has obtained necessary certificate under Section 141 of the Act, 2013 conveying their eligibility for being the Statutory Auditors of the Company.

b. Secretarial auditors

Pursuant to Section 204 of the Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company is required to appoint a Secretarial Auditor for auditing secretarial and related records of the Company. Accordingly, M/s. Alagar and Associates was appointed as the Secretarial Auditors of the Company for the financial year March 31, 2023.

The Secretarial Audit Report for the financial year 2022-23, given by M/s. Alagar and Associates, Company Secretaries, Chennai is attached as Annexure - IV to this Report. The Secretarial Audit Report does not contain any qualification, reservation or other remarks.

Pursuant to Regulation 24A of Listing Regulations, the company shall annex with its Annual Report the Secretarial Audit Report of its material unlisted subsidiary incorporated in India. Caplin Steriles Limited being a material unlisted subsidiary of the Company, the Secretarial Audit Report is annexed as Annexure - IV-A to this Directors Report.

c. Internal auditors

Pursuant to Section 138 of the Act, 2013, the Board at its meeting held on May 12, 2022 had re-appointed M/s. TBL &

Associates as Internal Auditors for carrying out internal audit of the Company, for the financial year 2022-23. The internal audit for the financial year 2022-23 was completed as per the scope defined by the Audit Committee.

23. REPORTING OF FRAUDS BY AUDITORS

Pursuant to provisions of the Section 143(12) of the Act, 2013, neither the Statutory Auditors nor the Secretarial Auditors have reported any incident of fraud to the Audit Committee during the year under review.

24. CORPORATE GOVERNANCE

Pursuant to Regulation 34 of Listing Regulations, a Report on Corporate Governance is given separately which forms part of this Annual Report.

25. ANNUAL RETURN

Pursuant to Section 92(3) and 134(3)(a) of the Act, 2013, read with Rule 12 of Chapter VII Rules of the Companies (Management and Administration) Rules, 2014, as amended from time to time, Annual Return in Form MGT-7 for FY 2021-22 is uploaded on the website of the Company and can be accessed at https://www.caplinpoint.net/ index.php/shareholder-information/

26. RISK MANAGEMENT

The Company has constituted a Risk Management Committee in compliance with the requirements of Regulation 21 of the Listing Regulations. The details of this Committee and its terms of reference are set out in Corporate Governance Report, which forms part of this Annual Report.

27. EMPLOYEE STOCK OPTION PLAN

The Company has three stock option schemes in force (i.e) Caplin Point Employee Stock Option Plan - 2015, Caplin Point Employee Stock Option Plan - 2017 and Caplin Point Laboratories Limited Employees Stock Option Plan - 2021. The Company had cumulatively granted 8,14,392 employee stock options across all the schemes of which 3,52,746 equity shares had been allotted as on March 31, 2023. The details as required under Rule 12 (9) of Companies

(Share Capital and Debentures) Rules, 2014 and SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 as on March 31, 2023 is available at https://www.caplinpoint.net/index.php/ shareholder-information/

The Company believes that equity based compensation schemes are an effective tool to reward the employees in the growth of the Company to attract new talents, to retain the key resources in the organisation and for the benefit of the present and future employees of the Company and its subsidiaries.

28. PARTICULARS OF EMPLOYEES RELATED DISCLOSURES

The statements required under Section 197, of the Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, forms part of Annexure - V to this Report.

29. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All the related party transactions are at arms length basis and were approved by the Audit Committee. Those transactions that are not in the normal course of business are approved by the Board in addition to Audit Committee and, if material, are taken to shareholders for approval.

All Related Party Transactions are placed before the Audit Committee for review and approval. Prior omnibus approval of the Audit Committee is obtained on an annual basis for the transactions which are planned/ repetitive in nature. Related Party Transactions entered pursuant to the omnibus approval so granted are placed before the Audit Committee for its review on a quarterly basis, specifying the nature, value and terms and conditions of the transactions. All the Related Party Transactions under Ind AS-24 have been disclosed at Note No. 44 to the standalone financial statements forming part of this Annual Report.

Particulars of transactions with related parties, in prescribed form AOC-2 is enclosed as Annexure - VI to this Report.

The related party transaction policy and material related party transactions have been uploaded on the website of the Company at https://www.caplinpoint.net/wp-content/uploads/2021/07/ RELATED-PARTY-TRANSACTION-POLICY.pdf

30. DETAILS OF 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 or Tribunals which would impact the going concern status of the Company.

31. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

Pursuant to the provisions of Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has put in place a Policy on Prevention of Sexual Harassment at Workplace and Internal Complaints Committees (ICC) has been set up to redress complaints. There were no complaints relating to sexual harassment, pending at the beginning of financial year, received during the year and pending as at the end of the financial year 2022-23.

32. INVESTOR EDUCATION AND PROTECTION FUND

During the year under review, the Company has credited 1,21,725 unclaimed equity shares of Rs2/- each to IEPF pertaining to those shareholders who have not encashed/claimed their dividends for a period of seven consecutive years. The voting rights on the shares outstanding in the IEPF Authority as on March 31, 2023 shall remain frozen till the rightful owner of such shares claims the shares.

Pursuant to Sections 124 and 125 of the Act, 2013, the unpaid or unclaimed dividend for the financial year 2015-16(final) has to be transferred to IEPF. Members, who have not yet en-cashed or claimed the dividends that are yet to be transferred to the IEPF, are requested to refer the Corporate Governance Report.

33. OTHER DISCLOSURES

a. There has been no change in the nature of business of the Company during the year under review.

b. Pursuant to Section 197 (14) of the Act, 2013, the Managing Director of the Company did not receive any remuneration or commission from any of its subsidiaries.

c. The Company maintains cost records as per Companies (Cost Records and Audit) Rules, 2014.

d. The Board confirms the compliance of the provisions of the Secretarial Standards notified by the Institute of Company Secretaries of India, New Delhi.

34 . ACKNOWLEDGEMENT

The Board of Directors wishes to place on record its sincere appreciation to the customers, suppliers, business partners and subsidiaries and shareholders for their support. The Directors would like to thank the Bankers and financial Institutions as well. The Directors would take this opportunity to appreciate and sincerely acknowledge the dedication and hard work of the employees for the growth of the Company.

For and on behalf of the Board of Directors
Place: Chennai C C Paarthipan
Date: August 07, 2023 Chairman