Gujarat Themis Biosyn Ltd Directors Report.

The Members,

Gujarat Themis Biosyn Limited

Your Directors have pleasure in presenting herewith the 41st Annual Report together with the Audited Accounts of the Company for the Financial Year ended 31st March, 2022.

1. FINANCIAL STATEMENTS & RESULTS:

a. FINANCIAL RESULTS:

The Companys performance during the year ended 31st March, 2022 as compared to the previous financial year, is summarized below:

Particular For the financial year ended 31st March, 2022 For the financial year ended 31st March, 2021
Income 11,890.40 9,382.93
Less: Expenses 5,986.95 5,294.74
Profit/ (Loss) before tax 5,903.45 4,088.19
Current Tax 1,533.80 1,057.61
Deferred tax 7.24 12.62
Adjustment of tax relating to earlier periods - -
Profit after Tax 4,362.42 3,017.97

b. OPERATIONS:

Your Company is in the business of manufacturing and sale of finished Active Pharmaceutical Ingredients (API) products by fermentation process.Your Companys performance during the year in terms of Turnover and Profit was substantially better than the previous year. The change in business model made three years ago which was reported earlier has continued to help the Company to report a good financial performance.

During the period, sale of finished products recorded at ? 11,419.17Lakhs (previous year ? 9042.50 Lakhs) registering increase in sale. The Net Profit after tax recorded by the Company for the year under review is ? 4,362.42 Lakhs as compared to net profit of ? 3,017.97 Lakhs during previous year registering an increase of 30.82%.

There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and as on the date of the report.

c. SUBSIDIARIES

The Company does not have any subsidiary.

d. ASSOCIATES

The Company does not have any Associate Company.

e. DIVIDEND

At the Board meeting held on 11th November 2021, the Board had declared an interim dividend of ? 7/-(Rupees Seven only per share) (140%) i.e. 2 plus an additional ? 5 on the completion of forty years of establishment of the Company).

Total dividend payout was ?10.17 Crore.

Your Directors are pleased to recommend a final dividend of ? 4/- per share for the Financial year 2021-22. Total dividend payout was ?5.81Crore.

f. TRANSFER TO RESERVES:

Your Board has not recommended transfer of any amount of profit to reserves during the year under review.

g. REVISION OF FINANCIAL STATEMENT:

There was no revision of the financial statements for the year under review.

h. DEPOSITS:

Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 (the Act) and the Companies (Acceptance of Deposits) Rules, 2014.

2. DISCLOSURES UNDER SECTION 134(3)(l) OF THE COMPANIES ACT. 2013:

Except as disclosed elsewhere in this report, no material changes and commitments which could affect the Companys financial position have occurred between the end of the financial year of the Company and date of this report.

3. STATEMENT ON DECLARATION UNDER SECTION 149(6) OF THE COMPANIES ACT. 2013:

The Board has received declaration from the Independent Directors under section 149(6) of the Companies Act, 2013 that they are not otherwise disqualified to be Independent Directors. The Board further States that all the Independent Directors are persons of integrity and possesses relevant expertise and experience to discharge their duties and roles as Independent Directors of the Company.

4. STATEMENT UNDER SECTION 178:

Your Company has constituted Nomination and Remuneration Committee as well as Stakeholders Relationship Committee as prescribed contemplated under section 178(1) of the Companies Act, 2013. The Nomination and Remuneration Committee considers that the Qualifications, Experience and positive attributes of the Directors on the Board of the Company are sufficient enough to discharge their duties as such.

During the financial year 2021-22, the Company has paid sitting fees to the Independent Directors for attending Board meetings, Audit Committee Meetings and also for Separate Independent Directors Meeting.

Policy on Nomination and Appointment of Directors/Criteria for appointment of Senior Management and Remuneration Policy as formulated under Section 178(3) of the Companies Act, 2013 is annexed as "Annexure I" and forms part of this Report.

5. BOARD?S EXPLANATION ON AUDITORS? REPORTS:

I. Explanation on Statutory Auditors? Report

There are no qualifications, reservations or adverse remarks or disclaimer made by the Statutory Auditors in respect of financial statements as on and for the year ended 31st March, 2022.

II. Explanation on Secretarial Auditors? Report

Provisions of Section 204 read with Section 134(3) of the Companies Act, 2013, mandates the Company to obtain Secretarial Audit Report from Practicing Company Secretary. M/s. HSPN & Associates LLP, Practicing Company Secretaries were appointed to conduct Secretarial Audit and issue Report for the financial year 2021-22

Secretarial Audit Report issued by M/s. HSPN & Associates LLP, Practicing Company Secretaries in Form MR-3 for the financial year 2021-22 forms part to this report. The report of the secretarial Auditor is annexed to this report as Annexure II. The Secretarial Audit report for the financial year 2021-22.

6. PARTICULARS OF LOANS. GUARANTEES OR INVESTMENTS:

Details of Loans, Guarantees and Investments, covered under the provisions of Section 186 of the Act are given in Notes to the Financial Statements.

7. PARTICULAR OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES

The Company in the ordinary course of its business, enters into transactions for purchase and sale of goods, materials & services, other obligations from Related Parties within the meaning of Section 2(76) of the Act and Regulation 23 of the SEBI (LODR), Regulations, 2015.

Contracts/arrangements/transactions entered by the Company during the financial year with related parties were on an arms length basis and in the ordinary course of business. All related party transactions were placed for the approval before the Audit Committee / Board / Shareholders wherever necessary in compliance with the provisions of the Act and Listing Regulations. During the year, the Company has not entered into any contracts/arrangements/transactions with related parties which could be considered material in accordance with policy of the Company on material related party transactions or under section 188(1) of the Act. Accordingly, there are no particulars to report in Form AOC-2.

The details of the transactions with related parties are also provided in the accompanying financial statements.

The Company has formulated a policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions.

The policy on materiality of related party transactions and dealing with related party transactions as approved by the Board has been adopted by the Company and uploaded on the Companys website at the link: http://www.gtbl.in/wp-content/ uploads/2015/08/Related-Party-Policy.pdf

8. DISCLOSURE OF INTERNAL FINANCIAL CONTROLS.

The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency or inadequacy of such controls.

9. DISCLOSURE OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL.

During the financial year 2021-22 no orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and the Companys operations in future.

10. DISCLOSURE UNDER SECTION 43(a)(m OF THE COMPANIES ACT. 2013:

The Company has not issued any shares with differential rights and hence no information is provided as per provisions of Section 43(a) (ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014.

11. DISCLOSURE UNDER SECTION 54(1)(d) OF THE COMPANIES ACT. 2013

The Company has not issued any sweat equity shares during the year under review and hence no information as per provisions of Section 54(1) (d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.

12. DISCLOSURE UNDER SECTION 62(1)(b) OF THE COMPANIES ACT. 2013:

The Company has not issued any equity shares under Employees Stock Option Scheme during the year under review and hence no information is provided as per provisions of Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014.

13. DISCLOSURE UNDER SECTION 67(3) OF THE COMPANIES ACT. 2013:

During the year under review, there were no instances of non-exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014 is furnished.

14. MATTERS RELATED TO DIRECTORS AND KEY MANAGERIAL PERSONNEL- CHANGES IN BOARD OF DIRECTORS.

1) In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Dr. Sachin D. Patel (DIN: 00033353), Director of the Company, retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible offers himself for re-appointment. The Board recommends to the members the re-appointment of Dr. Sachin D. Patel (DIN: 00033353) as Director in the ensuing Annual General Meeting of the Company.

Necessary ordinary Resolution for the reappointment of Dr. Sachin D. Patel (DIN: 00033353) is included in the Notice convening the ensuing Annual General Meeting.

2) Mrs. Preeti Trivedi, Independent Director resigned w.e.f. 02nd May, 2021.

3) Mrs. Kirandeep Madan was appointment as alternate Director in the category of Independent Director with effect from 01st May, 2021 and appointed as Independent Women Director at the 40th Annual General Meeting held on 17th September, 2021.

4) Mr. Namjin Park, Non -Executive Directors resigned w.e.f. 14th May, 2021.

5) Mr. Hinesh Doshi being Alternate Director to Mr. Namjin Park ceased to be Director consequent to the resignation of Mr. Namjin Park resignation w.e.f. 14th May, 2021

6) Mr. Taejin Yoon was appointed as Additional Ddirector in the category of Non- Executive Non Independent Director w.e.f. 04th June, 2021 and appointed as director at 40th Annual General Meeting held on 17th September, 2021.

7) Mr. Hinesh Doshi as an Alternate Director to Mr. Taejin Yoon w.e.f. 04th June, 2021.

8) Mr. Han Kon Kim, was appointed as Director at the 40th Annual General Meeting held on 17th September, 2021

9) Mr. Han Kon Kim, Non -Executive Director resigned w.e.f.18th September, 2021.

10) Dr. Taejin Yoon, Non-Executive Director resigned w.e.f 18th September, 2021.

11) Mr. Hinesh Doshi being alternate Director to Dr. Taejin Yoon ceased to be Alternate Director consequent along with the resignation of Dr. Taejin Yoon resignation w.e.f. 18th September, 2021.

There were no other changes in Directors during the year.

CHANGES IN KEY MANAGERIAL PERSONNEL

1. Mr. Parag Bodha, Company Secretary and Compliance Officer resigned w.e.f. 11th May, 2021.

2. Mr. Rahul Soni was appointed as Company Secretary and Compliance Officer W.e.f. 12th May, 2021.

There were no other changes in Key Managerial Personnel during the year.

BOARD MEETINGS:

The Board of Directors met five times during the financial year ended on 31st March, 2022 in accordance with the provisions of the Companies Act, 2013 and rules made there under.

The Meetings of the Board of Directors are held at regular intervals of not more than one hundred and twenty days. These are generally scheduled well in advance. The Board meets at least once a Quarter to review the Performance and Financial Results of the Company. All the major decisions are taken at the Board meeting wherein Directors are provided with all material information. The Senior Executives of the Company are invited to attend the Board meeting and provide clarifications as and when required.

DIRECTOR?S RESPONSIBILITY STATEMENT:

In terms of Section 134(5) of the Companies Act, 2013, in relation to the audited financial statements of the Company for the year ended 31st March, 2022, the Board of Directors hereby confirms that:

i) in the preparation of the annual accounts, the applicable accounting standards had been followed and there is no material departures according to the accounting standards;

ii) such accounting policies have been selected and applied consistently and the Directors 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 31st March, 2022 and of the profit of the Company for that year;

iii) proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv) the annual accounts of the Company have been prepared on a going concern basis;

v) internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

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

COMMITTEES OF THE BOARD OF DIRECTORS

In compliance with the requirement of applicable laws, the Company has following Committees of the Board as on 31st March, 2022:

i. Audit and Risk Management Committee

ii. Stakeholders Relationship Committee

iii. Nomination and Remuneration Committee

iv. Corporate Social Responsibility Committee

The details with respect to the aforesaid Committees form part of the Corporate Governance Report.

VIGIL MECHANISM POLICY FOR THE DIRECTORS AND EMPLOYEES:

The Board of Directors of the Company has, pursuant to the provisions of Section 177(9) of the Companies Act, 2013 read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, framed "Vigil Mechanism Policy" for Directors and employees of the Company to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any financial statements and reports, etc.

As per SEBI (Prohibition of Insider Trading) (Amendment) Regulation, 2018 which amends SEBI (Prohibition of Insider Trading) Regulation, 2015, the listed company shall have a whistle blower policy and make employees aware of such policy to enable employees to report instances of leak of unpublished price sensitive information.

Considering the above amendment in SEBI (PIT) Regulations, 2015, the Vigil Mechanism Policy of the Company was amended with effect from 01st April, 2019 to enable employees to report instances of leak of unpublished price sensitive information.

The employees of the Company have the right/option to report their concern/grievance to the Chairman of the Audit Committee.

The said Policy is available on the website of the Company at http://www.gtbl.in/wp-content/uploads/2019/04/GTBL-Vigil- Mechanism-or-Whistle-Blower-Policy.pdf

The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations.

RISK MANAGEMENT:

We have an integrated approach to managing risks inherent in various aspect of our business.

CORPORATE SOCIAL RESPONSIBILITY POLICY:

Gujarat Themis Biosyn Limited CSR initiatives and activities are aligned to the requirements of Section 135 of the Act. The brief outline of the CSR policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure III of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.

For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. This Policy is available on the Companys website at http://www.gtbl.in/wp-content/uploads/2019/11/GTBL-Revised-CSR-Policy.pdf

ANNUAL EVALUATION OF DIRECTORS, COMMITTEE AND BOARD:

Provision of the Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, mandates that the Board shall monitor and review the Board evaluation framework. The Schedule IV of the Companies Act, 2013 states that the performance evaluation of the Independent Directors shall be done by the entire Board of Directors, excluding the director being evaluated.

The Board has carried out an annual evaluation of its own performance, Committees and Individual Directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 ("SEBI Listing Regulations").

The performance of the Board and Committees was evaluated by the Board with the help of inputs received from all the Directors and the Committee members on the basis of the criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning, etc.

The Board and the Nomination and Remuneration Committee reviewed the performance of the Individual Directors on the basis of the criteria such as the contribution of the individual director to the Board and Committee meetings like ability to contribute and monitor our corporate governance practices, meaningful and constructive contribution in the issues discussed in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

In a separate meeting of Independent Directors, performance of non-independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views other non-executive directors. The same was discussed in the Board meeting that followed the meeting of the Independent Directors, at which the performance of the Board, its committees and individual directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.

The Board was overall of the opinion that the Independent Directors have contributed through the process of Board and Committee meeting of which they are members in effective manner as per as their expertise in their field and needs of the organization. The suggestions and contributions of the Independent Directors in the working of the Board/Committee were satisfactory and the value addition made by such independent directors individually and as a team is commendable.

DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT. 2013 AND OTHER DISCLOSURES AS PER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION) RULES. 2014:

The Company has not paid any remuneration to the Directors during the financial year 2021-22 and hence disclosure under this section is not applicable.

However, in respect of Key Managerial Personnel the disclosure is attached as Annexure IV.

15. AUDITORS:

STATUTORY AUDITORS

M/s. GMJ & Co., Chartered Accountants (Firm Registration No.103429W) the Statutory Auditors of the Company, will hold office till the conclusion of the Forty-First Annual General Meeting of the Company. The Board has recommended the reappointment of M/s. GMJ & Co., Chartered Accountants as the statutory auditors of the Company, for a second term of five consecutive years, from the conclusion of the Forty-First Annual General Meeting scheduled to be held in the year 2022 till the conclusion of the Forty-Sixth Annual General Meeting to be held in the year 2027, for approval of shareholders of the Company, based on the recommendation of the Audit Committee.

The Ministry of Corporate Affairs (MCA), vide its commencement Notification No. SO 1833(E) dated 7th May, 2018, has notified and amended the relevant provision of the Companies Act, 2013 relating the requirement of placing the matter relating to ratification of appointment of Statutory Auditors by members at every Annual General Meeting. The said amendment has done away with the requirement of Ratification of appointment of the Statutory Auditors. Therefore, M/s. GMJ & Co., Chartered Accountants will continue to hold office till conclusion of the 46th AGM and their appointment will not be subject to ratification by the members at every intervening AGM held after 41st AGM.

16. OTHER DISCLOSURES:

Other disclosures as per provisions of Section 134 of the Act read with Companies (Accounts) Rules, 2014 are furnished as under:

a. EXTRACT OF ANNUAL RETURN:

Pursuant to Section 92(3) read with Section 134(3) (a) of the Act, the Annual Return as on 31st March, 2022 is available on the Companys website on https://www.gtbl.in

b. CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The particulars as required under the provisions of Section 134(3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are furnished in Annexure V which forms part of this Report.

c. CORPORATE GOVERNANCE

Report on Corporate Governance and Certificate of Auditors of your Company regarding compliance of the Conditions of Corporate Governance as stipulated in regulation 17 to 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the Stock Exchanges, are enclosed as a separate section and a part of this report in Annexure VI.

d. PREVENTION OF SEXUAL HARASSMENT:

During the financial year ended 31st March, 2022 your Company has not received any complaint related to sexual harassment.

e. COST RECORDS

Maintenance of cost records is required as specified by the Central Government under sub-section (1) of section 148 of the Companies Act, 2013, and accordingly such accounts and records are made and maintained.

f. SECRETARIAL STANDARDS:

The Company has complied with the applicable Secretarial Standard, as issued by the Institute of Company Secretaries of India and notified by the Central Government.

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

There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and as on the date of the report.

17. MANAGEMENT DISCUSSION & ANALYSIS:

Cautionary Statement:

The statements in the "Management Discussion and Analysis Report" describe your Companys objectives, projections, estimates and expectations which may be "forward-looking statements" within the meaning of the applicable laws and regulations. The actual results could differ materially from those expressed or implied, depending upon the economic and climatic conditions, government policies, taxation and other laws and other incidental factors.

Financial Overview:

The financial performance of the Company for the financial year ended 31st March, 2022, is as follows:

Total revenue from operations stood at ?114.85 Crores for the year ended 31st March, 2022, as against ? 90.56 Crores for the corresponding previous period, an increase of 26.82%.

The cost of raw materials incurred for the financial year ended 31st March, 2022 was ? 21.75 Crores as against ?15.75 Crores for the corresponding previous period.

The EBIDTA (earnings before interest, depreciation and tax, excluding other income) was ? 58.05 Crore for the year ended 31st March, 2022, as against ? 40.33 Crore for the corresponding previous period, an increase of 43.93%.

The finance cost for the financial year ended 31st March, 2022 was ? 0.83 Crore as against ? 0.98 Crore for the corresponding previous period.

The PAT (profit after tax) was ? 43.62 Crores for the year ended 31st March, 2022, as against ? 30.18 Crores for the corresponding previous period, an increase of 44.55%.

Resources and Liquidity:

The cash and cash equivalents at the end of 31st March, 2022 were ? 0.46 Crore. The net debt to equity ratio of the Company stood at 0.0 (zero debt) as on 31st March, 2022.

Business category wise performance:

The Company operates in one segment i.e. pharmaceuticals. The results of the Company under review depict business growth during the period. The Company is presently manufacturing Rifamycin S, which is an intermediate for manufacturing the drug Rifampicin (an Antibiotic used for the treatment of several types of bacterial infections, including tuberculosis, Mycobacterium avium complex, leprosy, and Legionnaires disease.) and Rifamycin O, which is an intermediate for

manufacturing the drug Rifaximin (this is an Antibiotic used for treatment of travelers diarrhea, irritable bowel syndrome, and hepatic encephalopathy).

Risks & Concerns:

The business of the Company is exposed to a few risks. Risks, liabilities and losses are part and parcel of any industry and need to be tackled through well forecasted strategies and actions.

Policy Changes

Adverse changes in government policies with respect to essential medicines and pricing with respect to the products may impact margins of the Company.

Credit Risk

To manage its credit exposure, GTBL has determined a credit policy with credit limit requests and approval procedures. The Company does its own research of a counterpartys financial health and business prospects. Timely and rigorous process is followed up with clients for payments as per schedule. The Company has suitably streamlined the process to develop a focused and aggressive receivables management system to ensure timely collections.

Competition Risk

Like in most other industries, growth opportunities lead to a rise in competition. We face different levels of competition, from domestic as well as Chinese companies. GTBL has created strong differentiators in execution, quality and delivery which make it resilient to competition. Furthermore, the Company intends to focus on investing in R&D and its people to maintain a competitive edge. Stable and long-standing client relationships further help maintain a strong order book and insulate the Company from this risk. We also mitigate this risk with the quality of our infrastructure and specialized fermentation-based methodologies, coupled with prudent financial and human resources management and better control over costs.

Input Cost Risk

Our profitability and cost effectiveness are affected by changes in the prices of raw materials, power and other input costs. OPPORTUNITIES & THREATS:

Opportunities

Growth in Pharma Sector

The Indian pharmaceutical industry ranks third globally for pharma production by volume and 14th by value. The nation has been a well established domestic industry and is one of the largest producers of vaccines worldwide, accounting for about 60% of total vaccines as of 2021.

The Indian pharma sector is forecast to grow at a CAGR of 22.4% in the near future, and reach US$130 billion by 2030. With rising income levels, growing health awareness and better access to healthcare, markets such as India offer significant growth potential for the pharmaceutical industry.

Post the COVID-19 pandemic, healthcare has come even more to the forefront for the masses across the world. With increased awareness and concern for health and well-being, demand for pharmaceutical products has grown significantly over the last two years.

Source: https://www.ibef.org/download/1659942652_Pharmaceuticals-June_2022.pdf

https://www.ibef.org/industry/pharmaceutical-india.aspx

Government Initiatives

Favourable schemes made by the Government of India in the recent past to support and grow the Pharmaceuticals sector bode well for companies operating in this industry.

For instance, in June 2021, the Finance Minister announced an additional outlay of ? 197,000 crore (US $26,578.3 million)

that will be utilized over five years for the pharmaceutical PLI scheme in 13 key sectors such as active pharmaceutical ingredients, drug intermediaries and key starting materials.

Source: https://www.ibef.org/industry/pharmaceutical-india.aspx

Threats

Threat from Global Competitors

Indian pharma companies will face competition from bigger, global pharma companies, backed by huge financial muscle. Generic drugs offer cost-effective alternatives to drugs innovators and significant savings to customers.

Threat from Impact of COVID-19

While the pandemic has spurred demand for specific pharma products in India and globally, the lockdowns to contain the virus have also hampered production and logistics operations to some extent.

Internal control system and adequacy:

The Company ensures the orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

The Statutory Auditors while conducting the statutory audit, review and evaluate the internal controls and their observations are discussed with the Audit Committee of the Board. Other statutory requirements especially, in respect of pharmaceutical business are also vigorously followed in order to have better internal controls over the affairs of the Company.

Outlook:

The overall healthcare sector in India is one of the fastest growing sectors, expected to cross US$ 372 billion in 2022. Pharmaceuticals and biotechnology would be at the forefront of this growth.

To complement domestic growth, the pharma sector is also witnessing increasing exports, as India is becoming one of the key sources for such products worldwide. Indian drug and pharma exports grew from US$24.44 billion in FY21 to US$24.60 billion in FY22.

Medicine spending in India is also forecast to rise 9-12% over the next five years, leading India to become one of the top 10 countries in terms of medicine spending. In line with this, the API market is witnessing a steady growth in terms of volumes and value worldwide. The global API market is expected to grow on the back of rising drug R&D, increasing incidence of chronic diseases, rising importance of generics and higher uptake of biopharmaceuticals. The COVID-19 pandemic has expedited this growth by bringing pharma R&D and manufacturing to the forefront.

There are very few companies in India which have the expertise in the field of fermentation. Many products manufactured by fermentation are not made in India. The countrys needs are largely met through imports. GTBL is continuously identifying fermentation-based products which have good domestic and export potential. The Company is also focusing on R&D for technological developments for new product development.

With such capacities in place, GTBL is in a good position to capitalize on the significant growth opportunities in this sector going forward.

Source: https://www.ibef.org/download/1659942652_Pharmaceuticals-June_2022.pdf

https://www.ibef.org/industry/pharmaceutical-india.aspx

OPERATIONAL OVERVIEW:

The Company constantly reviews its product portfolio and market with the view to sustain its growth. The Company has driven fiscal growth by focusing on the following areas.

a) Industry structure and developments:

The Indian economy suffered to some extent due to the COVID-19 pandemic during the past year as well, much like every other nation across the world. With almost all major industries impacted by the lockdown to curb the virus, overall

output reduced during the initial months of the last year, and growth forecasts were reduced. However, as the economy has reopened worldwide, growth projections are looking upwards again.

The World Bank revised its forecast for growth in the Indian economy by 2.9 percentage points to 8.3% in 2021-22, and 7.5% in 2022-23. This is after a contraction of about 7.3% in 2020.

India holds an important position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers who have the strong potential to steer the industry ahead to an even higher level. Indian pharmaceutical sector industry supplies over 50% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicines in UK. Indias share of vaccine exports increased since the onset of the pandemic, as our country has been one of the key exporters of the vaccine to several nations. Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic diseases.

The Indian Government has taken many steps to reduce costs and bring down healthcare expenses. In addition, the thrust on rural health programs, lifesaving drugs and preventive vaccines also augurs well for the pharmaceutical companies. The Industry, consisting of domestic and foreign players, is witnessing increased spends on R&D initiatives focusing on expanding traditional generic portfolios.

Source: https://timesofindia.indiatimes.com/business/india-business/indian-economy-will-grow-to-8-3-in-2021-says-

world-bank/articleshow/83341057.cms

b) Government Initiatives for Pharmaceuticals Industry:

Government Support for Indian Pharma Sector

The Government of India has drawn several schemes and policies over the recent past to support and grow the pharmaceuticals industry in the country.

In November 2021, the Prime Minister had inaugurated the first Global Innovation Summit of the pharmaceuticals sector. The summit had 12 sessions and over 40 national and international speakers deliberating on a range of subjects including regulatory environment, funding for innovation, industry-academia collaboration and innovation infrastructure.

The Government has approved production linked incentives (PLI) of up to ? 6,940 crores for promotion of domestic manufacturing of critical Key Starting Materials (KSMs)/Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs) in India. These include many fermentation based KSMs, Dis and APIs.

To achieve self-reliance and minimize import dependency in the countrys essential bulk drugs, the Department of Pharmaceuticals had initiated a PLI scheme to promote domestic manufacturing by setting up greenfield plants with minimum domestic value addition in four separate Target Segments with a cumulative outlay of ? 6,940 crore (US$ 951.27 million) from FY21 to FY30.

The Union Cabinet also gave its nod for the amendment of the existing Foreign Direct Investment (FDI) policy in the pharmaceutical sector in order to allow FDI up to 100 per cent under the automatic route for manufacturing of medical devices subject to certain conditions.

Under Union Budget 2021-22, the Ministry of Health and Family Welfare has been allocated ? 73,932 crore (US$ 10.35 billion) and the Department of Health Research has been allocated ? 2,663 crore (US$ 365.68 billion). The government allocated ? 37,130 crore (US$ 5.10 billion) to the National Health Mission. PM Aatmanirbhar Swasth Bharat Yojana was allocated ? 64,180 crore (US$ 8.80 billion) over six years. The Ministry of AYUSH was allocated ? 2,970 crore (US$ 407.84 million), up from ? 2,122 crore (US$ 291.39 million).

The Government of India is also planning to set up an electronic platform to regulate online pharmacies under a new policy, in order to stop any misuse due to easy availability. Approval time for new facilities has also been reduced to boost investments.

Source: https://www.ibef.org/download/1659942652_Pharmaceuticals-June_2022.pdf https://www.investindia.gov.in/schemes-for-pharmaceuticals-manufacturing

https://theprint.in/economy/budget-gives-200-boost-to-pharma-sector-as-govt-looks-to-curb-dependence-on-

china/596549/

c) Companys Strategy

The Company is finding new avenues by seeking to expand its existing production capacity.

As part of its growth strategy, the Company is considering investing in new product development and will subsequently expand capacity., Our shift in business model In the financial year 19-20 three years ago led to increased growth in top line and profitability of the Company which continues to sustain. The Company is fully aware of its capabilities and strengths and is going ahead with hand holding strategy with Pharmaceutical majors.

d) Segment-wise or product-wise performance:

The Company operates in single segment i.e., pharmaceuticals. The results of the Company under review depict business growth during the period.

Discussion on financial performance with respect to operational Performance:

The operational performance during the year under review was one of the best in recent past. The Company changed its business model in September 2019.

The Profit after Tax increased by 44.55% compared to previous year. The Company has generated profit during the year under review as well as in the previous year.

e) Material developments in Human Resources/Industrial Relations front, including number of people employed:

The core of the Human Resource philosophy at Gujarat Themis Biosyn Ltd. is empowering human resources towards achievement of company aspirations. Your Company has a diverse mix of youth and experience which nurtures the business. As on 31st March 2022 the total employee strength was 101.

f) Details of significant changes in key financial ratios (i.e. change of 25% or more as compared to the immediately previous financial year):

Sr.No Particulars 2021-22 2020-21
1. Debtors Turnover ( in days) 63.29 days 70.42 days
2. Inventory Turnover (in days) 28.06 days 24.34 days
3. Interest Coverage Ratio 75.01:1 44.42:1
4. Current Ratio 4.57:1 4.00:1
5. Debt Equity Ratio 0.02:1 0.04:1
6. Operating Profit Margin (%) 52.12% 46.23%
7. Net Profit Margin (%) 37.98% 33.32%

(g) Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.

Financial year 2021-22 2020-21
Return on net worth (%) 42.22% 43.15%

The Return on net worth decreased during the year 2021-22 as compared to previous year 2020-21 but increase in the profit from ? 3017.97 Lakhs in 2020-21 to ? 4,362.42 Lakhs in year 2021-22.

22. ACKNOWLEDGEMENT:

Your Directors have pleasure to place on record their sincere appreciation for the continued co-operation and support extended to the Company by Union Bank of India, all the Employees, Yuhan Corporation, Indian promoters, various other Government authorities and of course, shareholders.

For and on behalf of the Board of Directors
Sd/-
Dr. Dinesh S Patel
Place: Mumbai Chairman
Date: 20th May, 2022 DIN:00033273