Haleos Labs Limited Directors Report

[for the year ended 31^st March 2026]

TO THE MEMBERS,

Your Directors have pleasure in presenting this 20^th (Twentieth) Annual Report along with the Audited Financial Statements for the year ended 31^st March, 2026.

FINANCIAL SUMMARY

Highlights of the standalone and consolidated financial Statements for the year 2025-26 (as per the IND-AS) are as given below:

Particulars	Standalone	Consolidated
	2025-26	2024-25	2025-26	2024-25
Revenue from operations	30,098.96	33,337.10	33,379.45	34,472.35
Other income	142.11	394.56	243.34	486.01
Profit Before Depreciation, Interest and Tax (PBDIT)	4,188.93	4,817.73	4,711.04	4,989.91
Finance Cost	603.42	788.07	644.52	871.26
Depreciation	1,066.40	1,025.55	1,546.88	1,499.67
Profit before Tax (PBT)	2,519.11	3,004.11	2,519.64	2,618.99
Tax expenses	741.43	867.03	739.61	745.75
Profit after Tax (PAT)	1,777.68	2,137.08	1,780.03	1,873.24
Total Comprehensive Income (TCI)	1,785.49	2,140.09	1,791.17	1,886.33
TCI attributable to:
- Equity holders of the parent			1,738.95	2,019.96
- Non-controlling interests			52.22	(133.63)
EPS in R	58.80	70.69	57.26	66.51

Standalone Financial Statement:

During the year, revenue from operations declined by 9.72% to Rs.300.99 Crores, as compared to Rs.333.38 Crores in FY 2024-25.Detailed sales break-up and financial ratios are provided in the Management Discussion and Analysis Report.

EBITDA for the year stood at Rs.41.89 Crores, as against Rs.48.18 Crores in the previous year.

Profits of the Company: (YoY)

Particulars	FY 2025-26	FY 2024-25	Change %age
PBT	Rs.25.19 crores	Rs.30.04 crores	(16.15%)
PAT	Rs.17.78 crores	Rs.21.37 crores	(16.80%)

Decline in revenue during the year was primarily attributable to combination of customer-specific and broader industry-related factors, rather than any fundamental or structural issue in the Companys business operations.

The key factors include:

a) Sale of Ranitidine were impacted as one of the Companys major customers faced financial challenges, resulting in a reduction in offtake during the year.

b) Orders from China were affected due to process-related issues at certain customers facilities. These issues have largely been resolved, and the Company expects the normalisation of orders to support recovery in sales going forward.

c) Middle East crisis resulted in volatility and an increase in raw material prices, leading customers to adopt a cautious procurement approach, which adversely impacted demand.

Consolidated Financial Statement:

Your Company reported consolidated revenue from operations of Rs.333.79 Crores during FY 2025-26, as against Rs.344.72 Crores in the previous year. Consolidated EBITDA stood at Rs.47.11 Crores, compared to Rs.49.90 Crores in FY 2024-25. The consolidated Profit After Tax (PAT) for the year under review stood at Rs.17.80 Crores, as against Rs.18.73 Crores in the previous year, representing marginal decline of 4.97%.

Mahi Drugs Private Limited, Companys subsidiary, recorded significant growth during FY 2025-26, with its total income increasing by approximately 40% to Rs.59.02 Crores, as compared to Rs.42.27 Crores in FY 2024-25. The growth was primarily driven by increased market demand and higher sales volumes. The subsidiary also reported a significant turnaround in profitability, recording a net profit of Rs.122.08 Lakhs during FY 2025-26, as against a net loss of Rs.344.15 Lakhs in the previous year. (Financials of the subsidiary is available in the website of the Company at www. haleoslabs.com/shareholding-information)

Regulatory inspection:

During the year, following statutory/regulatory inspections were conducted:

Authority	Date	Unit	Outcome
1) U.S. Food and Drug Administration (USFDA)	05.05.2025 - 09.05.2025	Sy. No. 180/2, Kazipally (V) Jinnaram Mandal, Sanga Reddy District, Telangana - 502319 (Unit -1)	Voluntary Action Indicated (VAI) status**
2) Brazilian Health Authority (ANVISA) Audit.	22.09.2025 - 26.09.2025	Sy. No. 180/2, Kazipally (V) Jinnaram Mandal, Sanga Reddy District, Telangana - 502319 (Unit -1)	No observations

** observations were procedural in nature.

This successful audits reaffirms your Companys commitment to maintaining global quality standards and enables access to the regulated US market and other highly regulated global markets.

Future outlook:

Your Company remains focused on driving sustainable and profitable growth through combination of product portfolio expansion, commercialization of new products, strengthening of its R&D and process development capabilities and further consolidation of its presence in the global API and pharmaceutical intermediates market.

Your Company expects improvement in business momentum in the coming periods, supported by the anticipated recovery in off take from certain key customers, resolution of process-related issues at customers facilities and progress in the commercialization of key products.

The Company continues to work towards addressing the sales pressure in certain existing products while pursuing opportunities in higher-value and niche therapeutic segments. Your Company remains committed to strengthening its presence in regulated and semi-regulated markets, enhancing its product pipeline and improving operational efficiencies. Continued focus on process optimisation, yield improvement, product quality, cost efficiency, supply chain management and regulatory compliance will remain integral to the Companys growth strategy.

Your Company is also exploring new business opportunities and strategic initiatives across its manufacturing and product portfolio, with the objective of creating a more diversified and resilient revenue base and delivering sustainable long-term value.

Management Discussion and Analysis report:

Report on the Management Discussion and Analysis in terms of the provisions of Regulation 34 read with Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is presented as a separate Report as Annexure 2.

Dividend:

Your Directors are pleased to recommend dividend of Rs.1.50 (Rupee One and Fifty paisa only) per equity share of the face value of Rs.10/- each at a dividend payout ratio of 2.55% for the year ended 31^st March, 2026. Dividend Distribution Policy pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is not applicable to your Company.

Change in Name of the Company:

Board of Directors of your Company, at its meeting held on 29^th May, 2025, approved the proposal to change the name of the Company from "SMS Lifesciences India Limited" to "Haleos Labs Limited", with a view to more accurately reflect the core business activities of the Company, strengthen and reposition its brand identity and provide greater flexibility to explore new verticals and expand into broader geographical markets.

Name "Haleos" is a coined word derived from "Hale," signifying Good Health, and "Leos," symbolising Strength.

Board believed that the new name would align with the Companys core objectives and long-term vision. The rebranding initiative reflects the Companys commitment to "Chemistry for Good Health" and is intended to establish a distinct and focused identity within its industry peer group.

Shareholders of the Company approved the change in name through Postal Ballot conducted between 1^st July, 2025 and 30^th July, 2025, the results of which were declared on 1^st August, 2025. Subsequently, the Registrar of Companies approved the change of name, and the Company was renamed "Haleos Labs Limited" with effect from 21^st August, 2025.

Details of new correspondence:

- Scrip ID / trading symbol: HALEOSLABS

- Email id: info@haleoslabs.com

- Website: www.haleoslabs.com

Change in name does not involve any change in the legal status, constitution, shareholding pattern, management or control of the Company. Further, the objects and line of business of the Company remain unchanged and the change in name does not affect any of the Companys rights, obligations, operations or activities or the rights and obligations of its members and other stakeholders.

Transfer to reserves:

Your Board of Directors in its meeting held on 29^th May, 2026 has approved for transfer of Rs.200 lakhs to the general reserve. Current general reserves stand at Rs.7,616.02 lakhs.

Credit rating:

Details of credit rating ascribed by rating agencies are disclosed in the Corporate Governance Report forming part of this Annual Report. The credit rating is a reflection of your Companys financial position and discipline.

Material changes and commitments:

Except otherwise stated herein in this Report, there are no material changes and commitment affecting financial position of your Company from the closure of year ended on 31^st March, 2026 and till the date of this Annual Report (i.e. between 1^st April 2026 and 5^th August, 2026).

Change in the nature of business:

Board of Directors hereby confirm that there is no change in the nature of business carried on by your Company during the year ended 31^st March, 2026.

BOARD OF DIRECTORS

As on 31^st March, 2026, your Companys Board had 7 (Seven) Directors comprising of 3 (three) Executive Directors and 4 (four) Non-Executive Independent Directors. The Board consist of 2 (two) Women Directors. (1 Executive and 1 Independent Director). The details of Directors and composition of various committees of the Board and other details are provided in Corporate Governance Report forming part of the Annual Report as annexure 9.

Board is of the opinion that the Directors of your Company possess requisite qualifications, experience and expertise (including the proficiency) and hold highest standards of integrity.

Changes in Directors and Key Managerial Personnel:

During the year and between the end of the year and date of this report, following are the changes in Directors and Key Managerial Personnel of your Company:

Appointment:

- The Board of Directors at their meeting held on 12^th February, 2025 and Shareholders of the Company through

Postal Ballot held between 1^st April, 2025 to 30^th April, 2025, result of which was declared on 2^nd May, 2025, approved the appointment of Mrs. Sundaramma Patibandla (DIN: 02366355), as Non-Executive and Women Independent Director of your Company, for a term of 5 (five) consecutive years w.e.f. 12^th February, 2025.

Reappointment:

- The Board of Directors at their meeting held on 12^th February, 2025 and Shareholders of the Company through

Postal Ballot held between 1^st April, 2025 to 30^th April, 2025, result of which was declared on 2^nd May, 2025, approved the reappointment of Mr. TVVSN Murthy (DIN: 00465198), as Managing Director of your Company, for a period of 3 (three) years w.e.f. 1^st June, 2025.

- The Board of Directors at their meeting held on 29^th May, 2025 and Shareholders of the Company through Postal Ballot held between 1^st July, 2025 to 30^th July, 2025, result of which was declared on 1^st August 2025, approved the reappointment of Mr. TV Praveen (DIN: 08772030), as Executive Director of your Company, for a period of 3 (three) years w.e.f. 1^st September, 2025.

Retirement by Rotation:

- Mrs. Sudeepthi Gopineedi (DIN: 09102540), While-Time Director of your Company, who retired by rotation at the 19^th AGM, was re-appointed by the Shareholders of the Company pursuant to the provisions of Section 152(6) of the Companies Act, 2013. Accordingly, Mr. TVVSN Murthy, (DIN: 00465198), Managing Director of your Company, is liable to retire by rotation and being eligible, offers himself for re-appointment at the 20^th AGM of the Company. Resolution seeking shareholders approval for his reappointment along with brief profile and other required details as required under Regulation 36(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forming part of this Report as Annexure 1.

None of the aforesaid Directors are disqualified under Section 164(1) or 164(2) of the Companies Act, 2013 and are not debarred from holding the office of Director pursuant to any order of SEBI or any other authority.

Cessation:

- Mrs. Sundaramma Patibandla (DIN: 02366355), resigned as Non-Executive and Women Independent Director w.e.f. 29^th May, 2026, due to her preoccupation & other professional commitments.

Declaration by Independent Directors:

In terms of Section 149(7) of the Companies Act, 2013 read with Regulation 25(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, all the Independent Directors of your Company have submitted declarations confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Independent Directors have also confirmed their compliance with the Code for Independent Directors prescribed under Schedule IV to the Companies Act, 2013. All the Independent Directors of the Company are registered with the Independent Directors Databank maintained by the Indian Institute of Corporate Affairs.

Annual Evaluation of the Board, its Committees and Individual Directors:

Pursuant to the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors carried out an annual evaluation of its own performance, the performance of its Committees and that of the individual Directors, including the Independent Directors.

Performance evaluation was carried out based on the criteria evolved by the Board, taking into consideration the guidance provided under the SEBI Guidance Note on Board Evaluation. The evaluation process involved obtaining inputs from the Directors individually and from the Committees through structured questionnaires. The evaluation framework was designed to assess, inter alia, the contribution and effectiveness of the Board and its Committees, participation and contribution of individual Directors, overall Board functioning, areas of strength and opportunities for further improvement.

In separate meeting of the Independent Directors held on 11^th February, 2026, the performance of the non-independent Directors and the Board as a whole was evaluated, taking into account the views of the Executive and Non-Executive Directors. The performance of each Independent Director was evaluated by the entire Board in the meeting held on 29^th May, 2026, excluding the Director being evaluated.

As the Company does not have a full-time Chairperson, in terms of Clause 72 of the Articles of Association of the Company, the Directors present at a meeting elect one amongst themselves to act as the Chairperson of that particular meeting.

Directors Responsibility Statement:

Your Board of Directors would like to assure that the financial statements for the year under review is as per the requirements of the Companies Act, 2013 and guidelines issued by SEBI and further confirm that:

- in the preparation of the annual financial statements for the year ended 31^st March, 2026, the applicable accounting standards had been followed along with proper explanation relating to material departures.

- 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 your Company as at the end of year and of the profit and loss for the year 2025-26.

- proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;

- the annual accounts were prepared on a going concern basis;

- proper internal financial controls were in place and that such internal financial controls are adequate and were operating effectively; and

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

Code of Conduct for Directors and Senior Management:

Your Company has formulated a Code of Conduct for its Directors and Senior Management Personnel.

All Directors and Senior Management Personnel have affirmed their compliance with the provisions of the said Code for the year ended 31^st March, 2026. A declaration to this effect, signed by the Managing Director, forms part of this Annual Report as Annexure 3.

Nomination & Remuneration Policy:

Board of Directors, on the recommendation of the Nomination and Remuneration Committee, has formulated and adopted policies for the selection and appointment of Directors, Key Managerial Personnel and Senior Management Personnel and for determining their remuneration.

Policy	Date of approval	Policy Weblink
Criteria for making payment / remuneration to the Non-Executive Directors	08.08.2023	www.haleoslabs.com/wp-content/ uploads/2026/03/14.-Criteria-for-makins-pay- ment-to-the-Non-Executive-Directors.pdf
Nomination and Remuneration Policy	08.08.2023	www.haleoslabs.com/wp-content/ uploads/2026/03/17.-Nomination-and-Remuner- ation-Policy.pdf

Extract of the Nomination & Remuneration Policy covering the salient features are provided in the Corporate Governance Report forming part of the Annual Report.

Familiarization Programme for Independent Directors:

Your Company has adopted Familiarisation Programme for its Independent Directors with the objective of familiarising them with the business, operations and affairs of the Company through structured orientation and familiarisation initiatives. The Programme is designed to provide the Independent Directors with an understanding of the Companys business model, industry, operations, regulatory environment and other matters relevant to the effective discharge of their duties.

Familiarisation Programme also aims to keep the Independent Directors updated on significant developments, including changes in the Companys business, operations and applicable laws and regulations, thereby enabling them to take well-informed and timely decisions.

The familiarisation initiatives, inter alia, include:

1. Independent Directors have one-to-one discussions with the Managing Director, Executive Directors and Chief Financial Officer to familiarise themselves with the Companys business, operations and other relevant aspects.

2. Compliance Officer periodically makes presentations to the Board on amendments to applicable laws and regulations, new enactments and other regulatory developments relevant to the Companys business and operations, as well as the compliance status of the Company.

Policy Weblink: www.haleoslabs.com/wp-content/uploads/2026/03/6.-Familiarisation-programme-for-Independent- Directors-policy.pdf

Key Managerial Personnel

Following are the Key Managerial Personnel ("KMP") of your Company as on 31^st March, 2026, in accordance with the provisions of Sections 2(51) and 203 of the Companies Act, 2013, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

- Mr. TVVSN Murthy, Managing Director

- Mr. N Rajendra Prasad, Chief Financial Officer

- Mr. Trupti Ranjan Mohanty, Company Secretary

There was no change in the Key Managerial Personnel of the Company during the year under review.

Directors and Officers Liability Insurance (D&O)

Your Company has, on voluntary basis, obtained Directors and Officers Liability Insurance ("D&O Insurance") covering all its Directors and members of the Senior Management, pursuant to Regulation 25(10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

AUDITORS AND AUDITORS REPORT

Statutory Auditors:

M/s. Rambabu & Co., Chartered Accountants (Firm Registration No. 002976S), were appointed as the Statutory Auditors of the Company for a term of 5 (five) consecutive years, up to the conclusion of the 20^th Annual General Meeting ("AGM") of the Company. The Statutory Auditors have audited the financial statements of the Company for the year ended 31^st March, 2026, and their report thereon forms part of this Annual Report.

Auditors Report on the financial statements of the Company for the year ended 31^st March, 2026, does not contain any qualification, reservation, adverse remark or disclaimer and Comments on the financial statements referred to in the Auditors Report are self-explanatory.

Appointment:

As the term of office of the existing Statutory Auditors concludes at the 20^th AGM, the Board of Directors of the Company has proposed the appointment of M/s. Suryanarayana & Suresh, Chartered Accountants (Firm Registration No. 006631S), as the Statutory Auditors of the Company, in place of M/s. Rambabu & Co., for a term of 5 (five) consecutive years, commencing from the conclusion of the 20^th AGM until the conclusion of the 25^th AGM, subject to the approval of the shareholders.

Resolution seeking the approval of the Members for the appointment of M/s. Suryanarayana & Suresh, Chartered Accountants, along with their brief profile and other requisite disclosures pursuant to Regulation 36(5) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is provided in the Explanatory Statement annexed to the Notice convening the 20^th AGM.

Secretarial Auditors:

M/s. SVVS & Associates Company Secretaries LLP, (LLPIN - AAE-9368; ICSI UID: L2015MH000700), firm of Company Secretaries in Practice, were appointed to undertake the Secretarial Audit of your Company for a term of 5 (five) consecutive years i.e. from the year 2025-26 to the year 2029-30 pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The Secretarial Auditors, have issued following report for the year 2025-26:

- Secretarial Audit Report for the Company (Annexure 4)

- Secretarial Audit Report for the material subsidiary of the Company (Annexure 5)

- The aforesaid reports does not contain any qualification, reservation or adverse remarks.

Further, Company has obtained Annual Secretarial Compliance Report from Mr. C. Sudhir Babu, Practicing Company Secretary (Proprietor, CSB Associates) on 29^th May, 2026, pursuant to Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Annexure 6) and the same was also submitted to the Stock Exchange(s) on 30^th May, 2026. Aforesaid Report do not contain any qualification, reservation or adverse remarks.

Cost Auditors:

M/s. Annapragada & Co., Cost Accountants (formerly known as M/s. Harshitha Annapragada & Co.), were appointed as the Cost Auditors of the Company to conduct the audit of the cost records maintained by the Company in respect of products covered under the applicable provisions of Section 148 of the Companies Act, 2013, for the year 2025-26. The appointment was approved by the Board of Directors at its meeting held on 29^th May, 2025. The Cost Audit Report for the year 2025-26 does not contain any qualification, reservation, adverse remark or observation/suggestion.

Further, based on the recommendation of the Audit Committee, the Board of Directors, at its meeting held on 29^th May, 2026, re-appointed M/s. Annapragada & Co., Cost Accountants, being eligible, as the Cost Auditors of the Company for conducting the audit of the cost records of the Company for the year 2026-27. The remuneration payable to M/s. Annapragada & Co. for the year 2026-27 is subject to approval by the Members at the ensuing Annual General Meeting.

Internal Auditors:

Your Company continues to engage M/s. Adusumilli & Associates, Chartered Accountants (Firm Registration No. 06983S), as its Internal Auditors, in accordance with the provisions of Section 138 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014. The Internal Auditors submit their reports to the Audit Committee on a quarterly basis. The Audit Committee reviews the Internal Audit Reports, and based on the observations and recommendations of the Internal Auditors, the management undertakes appropriate corrective actions in the respective areas and takes necessary steps to further strengthen the Companys internal financial controls and operational controls.

Reporting of fraud by the Auditors:

During the year, no instance of fraud committed by the officers or employees of the Company was reported by any of the auditors under Section 143(12) of the Companies Act, 2013.

Internal Financial Controls:

Your Company has in place adequate internal financial controls with reference to its financial statements.

These controls are designed to provide reasonable assurance regarding the accuracy and completeness of accounting records and the preparation and presentation of reliable financial statements.

Details regarding the internal financial controls and their adequacy are provided in the Management Discussion and Analysis Report, which forms part of this Annual Report. The certificate pursuant to Regulation 17(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is enclosed as Annexure 7 to this Report.

Vigil Mechanism / Whistle Blower Policy:

Your Company has adopted Whistle Blower Policy and established Vigil Mechanism for its Directors and employees in accordance with the provisions of Section 177(9) of the Companies Act, 2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, to enable them to report concerns relating to unethical behaviour, actual or suspected fraud, or violation of the Companys Code of Conduct or other applicable policies.

Employees and other stakeholders are encouraged to report genuine concerns regarding any actual or suspected violation of applicable laws, regulations, the Companys Code of Conduct or ethical standards. Such concerns may be raised by whistle-blower through an e-mail or written communication addressed to the Chairman of the Audit Committee.

The Company ensures that all concerns reported under the Whistle Blower Policy are examined and investigated, wherever necessary, in an impartial and appropriate manner and suitable corrective action is taken based on the findings. The mechanism provides adequate safeguards against victimisation of Directors and employees who avail themselves of the mechanism and also provides for direct access to the Chairman of the Audit Committee in appropriate cases. Policy Weblink: www.haleoslabs.com/wp-content/uploads/2026/03/1.-Whistle-Blower-Policy.pdf

SUBSIDIARY/ ASSOCIATE/ JOINT VENTURE COMPANIES

Your Company has only 1(one) subsidiary, Mahi Drugs Private Limited, in which it holds 60% equity stake.

Mahi Drugs Private Limited is also a Material Subsidiary of the Company in accordance with Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The subsidiary is engaged in the manufacture and sale of Active Pharmaceutical Ingredients (API) and its intermediates. The products manufactured and sold by the subsidiary are of a similar nature and fall within the pharmaceutical products segment.

During the year under review:

- Your Company had no associate company or joint venture as on 31^st March, 2026.

- No company became or ceased to be a subsidiary, associate or joint venture of the Company during the year under review.

Contribution of the subsidiary to the overall performance of the Company is outlined in the Consolidated Financial Statements for the year 2025-26, which form part of this Annual Report. Further, a statement containing the salient features of the financial statements of the Companys subsidiary, in Form AOC-1, as required under Section 129(3) of the Companies Act, 2013 and the rules made thereunder, is annexed to and forms part of this Annual Report as Annexure 8.

Policy Weblink: www.haleoslabs.com/wp-content/uploads/2026/03/5.-Policy-for-determining-Material-Subsidiaries.pdf

DEPOSITS

Your Company has not accepted any deposits from the public falling within the ambit of Section 73 of the Companies Act, 2013, read with the applicable rules made thereunder. Accordingly, no amount on account of principal or interest in respect of deposits from the public was outstanding as at 31^st March, 2026.

MEETINGS OF THE BOARD OF DIRECTORS

During the year, 4 (four) meetings of the Board of Directors were convened and held. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Details of the meetings of the Board of Directors and its Committees held during the year 2025-26 are provided in the Corporate Governance Report, which forms part of this Annual Report.

Sub-committees of Board:

Pursuant to the requirements of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors has constituted various Committees, namely, the Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee and Corporate Social Responsibility Committee.

Details regarding the composition, terms of reference and meetings of these Committees are provided in the Corporate Governance Report, which forms part of this Annual Report.

Corporate Governance Report:

Your Company firmly believes in adhering to sound Corporate Governance practices to ensure the protection of the interests of its stakeholders and to promote the healthy and sustainable growth of the Company. The Company is committed to upholding high standards of Corporate Governance and complying with the requirements prescribed by SEBI and other applicable statutory and regulatory authorities.

In compliance with Regulation 34(3), read with Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Corporate Governance Report for the year 2025-26, containing the disclosures as required under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, forms part of this Annual Report as Annexure 9.

Certificate from M/s. Rambabu & Co., Chartered Accountants, Statutory Auditors of the Company, regarding compliance with the conditions of Corporate Governance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is annexed to the Corporate Governance Report as Annexure 9A.

Further, certificate from Mr. C. Sudhir Babu, Company Secretary in Practice, Hyderabad (ICSI Membership No. 2724 and Certificate of Practice No. 7666), pursuant to Regulation 34(3), read with Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, confirming that none of the Directors on the Board of the Company has been debarred or disqualified from being appointed or continuing as a Director by SEBI, MCA or any other statutory authority, is enclosed as Annexure 10 to this Report.

SHARE CAPITAL

As on 31^st March, 2026, Authorised Share Capital of the Company stood at Rs.3,50,00,000/- (Rupees Three Crore and Fifty Lakh only), comprising 35,00,000 (Thirty-Five Lakh) Equity Shares of face value of Rs.10/- each.

As on 31^st March, 2026, the issued, subscribed and paid-up Equity Share Capital of the Company stood at Rs.3,02,32,870/- (Rupees Three Crore Two Lakh Thirty-Two Thousand Eight Hundred and Seventy only), comprising 30,23,287 (Thirty Lakh Twenty-Three Thousand Two Hundred and Eighty-Seven) Equity Shares of face value of Rs.10/- each.

During the year under review:

- There was no change in the capital structure of the Company.

- The Promoters shareholding in the Company has increased to 72.11 % from 71.41%, while the public shareholding stood at 27.89% as on 31^st March, 2026, as compared to 28.59% as on 31^st March, 2025.

Equity Shares of the Company are listed on the National Stock Exchange of India Limited ("NSE") and BSE Limited ("BSE"). The Company has paid the requisite annual listing fees to NSE and BSE for the year 2026-27.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

During the year, the Company extended Corporate Guarantee of Rs.20 Crores in favour of RBL Bank to secure the External Commercial Borrowing ("ECB") availed by Mahi Drugs Private Limited, Material Subsidiary of the Company. The requisite approval of the shareholders for providing the said corporate guarantee was obtained through Postal Ballot, the results of which were declared on 1^st May, 2026. Details of the transaction are disclosed in the Financial Statements forming part of this Annual Report.

RELATED PARTY TRANSACTIONS

In line with the requirements of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has in place a Policy on Materiality of Related Party Transactions and Dealing with Related Party Transactions. Policy Weblink: www.haleoslabs.com/policies/

Policy is intended to ensure that appropriate reporting, approval and disclosure processes are in place for all transactions entered into between the Company and its related parties. All Related Party Transactions and any subsequent material modifications thereto are placed before the Audit Committee for its review and approval, as applicable.

Prior approval of the Audit Committee is obtained for Related Party Transactions that are repetitive in nature and entered into in the ordinary course of business, in accordance with the applicable provisions of law and the Companys Policy.

All contracts and arrangements entered into with related parties during the year were in the ordinary course of business and on an arms length basis. The Company did not enter into any materially significant Related Party Transaction that may have a potential conflict of interest with the Company. Details of transactions with related parties during the year are disclosed in Note No. 44 to the Standalone Financial Statements, forming part of this Annual Report.

In accordance with Section 134(3)(h) of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act, 2013 are provided in Form AOC-2, which is annexed as Annexure 11 to this Report.

PARTICULARS OF EMPLOYEES AND REMUNERATION

Ratio of the remuneration of each director to the medians employees remuneration and other details in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Companies Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in separate annexure forming part of this report as Annexure 12.

Disclosure as per Rule 5 (2) and Rule 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is as mentioned below:

Name	Mr. TVVSN Murthy	Mr. TV Praveen
Age	67 years	43 years
Designation	Managing Director	Executive Director
Remuneration paid in FY 2025-26	Rs.199.36 lakhs**	Rs.95.91 lakhs**
Qualification	Graduate in Chemistry	Post Graduate in Management (Strategy & Marketing) from Indian Institute of Management, Kozhikode (IIMK) and Engineering graduate from Birla Institute of Technology & Science (BITS), Pilani.
Experience	More than 40 years experience in Pharma sector	More than 15 years experience in Pharma sector
Date of commencement of employment	01.04.2016	21.08.2020
Nature of employment	Contractual (as approved by shareholders)	Contractual (as approved by shareholders)
Last employment	SMS Pharmaceuticals Limited	SMS Pharmaceuticals Limited
Shareholding as on 31st March, 2026	4,80,034 equity shares of Rs.10/- each i.e. 15.88%	2,73,939 equity shares of Rs.10/- each i.e. 9.06%
Relationship with other Directors	Father of Mr. TV Praveen, Executive Director and Mrs. Sudeepthi Gopineedi, Whole-time Director.	Son of Mr. TVVSN Murthy, Managing Director and Sibling of Mrs. Sudeepthi Gopineedi, Whole-time Director.

**Includes perquisites

Details of the top 10 employees in terms of remuneration are available for inspection at the Registered Office of the Company. Any member desirous of obtaining copy of the same may make written request by sending an e-mail to the Company Secretary at cs@haleoslabs.com. The remuneration paid to the Directors, Key Managerial Personnel and other employees of the Company during the year 2025-26 was in accordance with the Nomination and Remuneration Policy of the Company and within the limits approved by the shareholders, wherever applicable.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Your Company is committed to discharge its social responsibility as an integral part of its corporate governance philosophy and strives to contribute to the development and well-being of society through socially responsible and sustainable initiatives. The Companys CSR initiatives are focused primarily on promoting healthcare, education and rural development, with the objective of creating a meaningful and positive impact on the communities in which it operates.

During the year, the Company spent Rs.44.25 Lakhs towards Corporate Social Responsibility ("CSR") projects and activities in accordance with the provisions of Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014. Annual Report on CSR Activities, containing the requisite disclosures, forms part of this Report as Annexure 13.

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

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo is are provided in separately forming part of this report as Annexure 14.

OTHER STATUTORY REPORTS

Transfer of unpaid/ unclaimed dividend to IEPF:

All the unpaid or unclaimed dividends including the shares on which dividend has not claimed are required to be transferred by the Company to the IEPF Authority after the completion of 7 (seven) years in accordance with the applicable provisions of the Companies Act, 2013 read with the Companies Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("the IEPF Rules"). In FY 2024-25, the unclaimed fractional sale proceeds amounting to Rs.5,97,721/- arising pursuant to the demerger, were transferred to the Investor Education and Protection Fund (IEPF). Eligible claimants are required to approach the IEPF Authority directly to claim their respective unclaimed amounts.

Further, the unclaimed dividend for FY 2018-19, along with the corresponding shares, will be required to be transferred to IEPF during FY 2026-27, in accordance with the applicable provisions of the Companies Act, 2013.. Detailed list of unclaimed dividend amount as on 31^st March, 2026 is uploaded in the website of the Company at www.haleoslabs. com/shareholding-information/

In this regard, notice to the shareholders of the Company has been communicated through the following modes in accordance with the provisions of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016.

a. Separate communications have been dispatched by speed post on 16^th June, 2026 to the individual shareholders whose shares, pertaining to FY 2018-19, are liable to be transferred to the IEPF.

b. Public newspaper notice has been published on 16^th June, 2026 in "Business Standards (English)" and "Telugu Prabha (Telugu)".

Respective genuine shareholders are once again requested to claim the dividend before the due date in order to void transferring the shares and the unclaimed dividend to IEPF account.

In the event of transfer of equity shares and the unclaimed dividends to IEPF, Members are entitled to claim the same from IEPF authority by submitting an online application in the prescribed Form IEPF-5 available on the website, www. iepf.gov.in and sending a physical copy of the same duly signed to the Company along with the requisite documents enumerated in Form IEPF-5.

Details of Nodal Officer:

Details of the Nodal Officer appointed pursuant to the provisions of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), are mentioned below.

Name of the Nodal Officer	Designation	Address and	Email ID & Contact Number
Mr. Trupti Ranjan Mohanty	Company Secretary and Compliance Officer	Plot No.19-III, Road No.71, Jubilee Hills, Opp. Bharatiya Vidya Bhavan Public School, Hyderabad - 500096	cs@haleoslabs.com 040 - 6628 8888

The same are also available on the website of the Company.

Business risk management:

Your Company has in place a robust Business Risk Management Framework for the identification, assessment, evaluation and management of business risks and opportunities. The framework is designed to provide a structured and systematic approach towards risk management, with the objective of enhancing transparency, minimising potential adverse impacts on the Companys business objectives and strengthening its ability to create sustainable value and maintain its competitive advantage.

Risk Management Framework defines the approach to risk management across various levels of the Company, including the processes for identification, assessment, mitigation, monitoring, documentation and reporting of risks.

The framework incorporates various risk assessment models and mechanisms to facilitate the identification and evaluation of emerging and existing risks, assessment of risk trends and exposure, and analysis of their potential impact on the Companys business and operations.

Policy Weblink: www.haleoslabs.com/wp-content/uploads/2026/03/18.-Risk-Manaeement-Policv.pdf

Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

Your Company has constituted an Internal Complaints Committee ("ICC") to redress complaints relating to sexual harassment at the workplace, in accordance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the applicable rules made thereunder.

The following details are reported as on 31^st March, 2026:

- Number of sexual harassment complaints received during the year: 0

- Number of complaints disposed of during the year: 0

- Number of complaints pending for more than 90 days: 0

- Number of employees as on the closure of financial year: Female: 32 & Male: 579

Website Weblink: www.haleoslabs.com/wp-content/uploads/2026/03/8.-Prevention-of-Sexual-Harassment-POSH.pdf Statement on Compliance with the Maternity Benefit Act, 1961:

Your Company has complied with the provisions of the Maternity Benefit Act, 1961, including the applicable amendments and rules made thereunder. The Company remains committed to providing a safe, inclusive and supportive work environment for its women employees and ensuring compliance with all applicable statutory requirements relating to maternity benefits.

Code for Prevention of Insider Trading:

The objective of the aforesaid Code is to regulate, monitor and report trading by the Designated Persons and their Immediate Relatives, with a view to preserving market integrity and protecting the interests of stakeholders at large.

In compliance with the provisions of the SEBI (Prohibition of Insider Trading) Regulations, 2015, the Company maintains a Structured Digital Database with adequate internal controls and checks. Appropriate trading restrictions are also imposed on Designated Persons and their Immediate Relatives in accordance with the Code of Conduct for Regulating, Monitoring and Reporting Trading in the Securities of the Company.

Code Weblink: www.haleoslabs.com/wp-content/uploads/2026/03/3.-Code-of-Conduct-for-Prevention-of-Insider-Tradine.pdf

Designated person with respect to beneficial interest in shares:

Mr. TVVSN Murthy, Managing Director of the Company, has been designated as the person responsible for furnishing information and extending cooperation to the Registrar or any other authorised officer with respect to beneficial interest in the shares of the Company, pursuant to Section 89 of the Companies Act, 2013, read with Rule 9(4) of the Companies (Management and Administration) Rules, 2014 and other applicable provisions, if any.

Compliance with Secretarial Standards:

During the year, the Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India ("ICSI").

Annual Return:

Annual Return of the Company pursuant to Sections 92(3) and 134(3)(a) and of the Companies Act, 2013 is available on the website of the Company. Policy Weblink: www.haleoslabs.com/financials/

Weblink of policies:

Your Company has adopted various statutory policies and codes, as required under the Companies Act, 2013 and the applicable provisions of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. These policies and codes provide an appropriate governance framework and guide the Companys operations, decision-making and compliance practices. Policy Weblink: www.haleoslabs.com/financials/

GENERAL DISCLOSURE:

Your Directors state that no disclosure or reporting is required in respect of the following matters under the Companies Act, 2013, the Rules made thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, either on account of the absence of any transaction or event requiring disclosure or due to the inapplicability of the relevant provisions:

a. Agreements affecting management or control:

No agreements have been entered into by the shareholders, promoters, promoter group, related parties, Directors, Key Managerial Personnel or employees of the Company or its Subsidiary, which are required to be disclosed pursuant to Regulation 30A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and which may impact the management or control of the Company or impose any restriction or liability on the Company, other than those entered into in the ordinary course of business.

b. Special rights to shareholders:

No special rights have been granted to any shareholder of the Company. Accordingly, the disclosure requirements under Regulation 31B of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are not applicable.

c. Material orders:

There are no significant or material orders passed by any regulator, court or tribunal that would impact the going concern status of the Company or its future operations.

d. Issue of shares:

No equity shares with differential rights, sweat equity shares or shares under any Employee Stock Option Scheme were issued during the year under review.

e. Remuneration from subsidiary:

No remuneration or commission was received by the Managing Director or Whole-time Directors of the Company from its Subsidiary during the year, as contemplated under Section 197(14) of the Companies Act, 2013.

f. Business Responsibility and Sustainability Report:

The requirements relating to the Business Responsibility and Sustainability Report ("BRSR") are not applicable to the Company.

g. Revision of financial statements:

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

h. Corporate Actions:

There were no instances of failure in the implementation of any corporate action during the year.

i. Defaults in repayment:

The Company has not defaulted in the payment of interest or repayment of loans to any financial institution or bank during the year under review.

j. Insolvency proceedings and one-time settlement:

No application or proceeding was pending or initiated against the Company under the Insolvency and Bankruptcy Code, 2016, during the year under review. Further, there was no instance of one-time settlement with any bank or financial institution.

k. Transactions with Promoter / Promoter Group entities:

There were no transactions with any person or entity belonging to the Promoter or Promoter Group holding 10% or more of the shareholding in the Company, as required to be disclosed under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, except for the managerial remuneration paid to Mr. TVVSN Murthy, Promoter and Managing Director of the Company.

Additional information and disclosures required under the Companies Act, 2013, the Rules made thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 have been provided in the relevant Annexures to this Report and in the Notes forming part of the Financial Statements.

ACKNOWLEDGEMENTS:

Your Companys culture is founded on the principles of professionalism, integrity and continuous improvement across all functions. The Company remains committed to the optimum utilisation of its resources to achieve sustainable and profitable growth. Your Directors place on record their sincere appreciation for the continued support and cooperation extended by the Companys business partners, members, bankers and other stakeholders during the year.

Your Directors also express their appreciation to all employees for their hard work, dedication and valuable contributions towards the growth and success of the Company. The Directors further extend their sincere gratitude to the Central Government, State Governments and other Government and regulatory authorities for their continued co-operation, assistance and encouragement.