IOL Chemicals & Pharmaceuticals Ltd Directors Report.

Dear Members

The Board of Directors presents the 35th Annual Report of the Company on the business operations and performance of the Company along with the audited financial statements for the financial year ended 31st March 2022.

1. Financial Results

The summary of the financial performance of the Company for the Financial Year ended 31st March 2022 along with the comparative figures for the previous year is summarized herein below:

(Rs. in Crore)
Particulars Year ended 31-Mar-2022 Year ended 31-Mar-2021
Total income 2216.06 1991.28
Profit before interest & depreciation 288.32 616.14
Interest 8.29 5.83
Profit before depreciation 280.03 610.31
Depreciation 43.26 38.92
Profit before exceptional items 236.77 571.39
Exceptional items 13.93 -
Profit before tax 222.84 571.39
Provision for tax (including deferred tax) 57.18 126.83
Profit after tax 165.66 444.56

During the year under review, the standalone operating revenue of your Company was 2216.06 Crore, higher by 11.29% as compared to 1991.28 Crore in the previous year.

During the year under review the due to continued volatility in the output prices, higher raw materials and energy cost margins were impacted adversely. The gross margin for FY 2021-22 was 403.55 Crore as compared to 712.06 Crore in the previous year.

The product portfolio of the Company in the pharamceutical segment is improving year on year basis by adding new products and therefore the non-Ibu business has achived a growth of about 70% in FY 2021-22 as comapraed to last year.

During the year under review. The Company has filed 4 new DMFs with USFDA in addition to 3 CEP applications with EDQM. The Company has got additional approval from Korean FDA for 2 products and 6 products have got approval from Russian regulatory Authorities.

2. Dividend

The Board of Directors has declared interim dividends of 4/- per equity share involving a cash outflow of 23.48 crore during the year. The Board of Directors considers the same as final dividend and has not recommended any further dividend for the financial year 2021-22. The Board has recommended the divided based on the parameters laid down in the dividend distribution policy.

The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing

Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") is available on the Companys website at https://www.iolcp.com/uploads/Dividend%20 Distribution%20Policy.pdf.

3. Transfer to reserves

The Company has not transferred any amount of profits to reserves for FY 2021-22.

4. Fixed Deposits

The Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and as such no amount of principal or interest was outstanding as on 31st March 2022.

5. Share Capital

The paid-up equity share capital of the Company has been 58,70,55,020/- (Rupees fty eight crore seventy lakh fty five thousand and twenty only) consisting of 5,87,05,502 (Five crore eighty seven lakh five thousand five hundred two) equity shares of 10/- each as on 31st March 2022. There is no change in the Capital of the Company during the Financial year 2021-22.

6. Investor Education and Protection Fund (IEPF)

Pursuant to the provisions of Section 124 of the Companies Act,2013 ("the Act") read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), and relevant circulars and amendments thereto, the amount of dividend remaining unpaid or unclaimed for a period of seven years from the due date is required to be transferred to the Investor Education and Protection Fund ("IEPF"), constituted by the Central Government.

During the year under review, no amount of unpaid/ unclaimed dividend was due for transfer to the Investors Education protection Fund.

Members who have not encashed any dividend declared by the Company, are advised to write to the Company immediately at email: investor@iolcp.com

7. Holding & Subsidiary Company

Details of subsidiaries / associates of your Company are provided in notes to financial statements.

During the year under review IOL- Foundation was incorporated as wholly owned subsidiary company under the provisions of Section 8 of the Companies Act, 2013 with charitable objects for implementing the Companies CSR activities.

Pursuant to the provisions of Section 129(3) of the Act, a statement containing the salient features of financial statements of the Companys subsidiaries, associates & joint ventures in Form No. AOC-1 is attached as Annexure – 1 to this report.

Further, pursuant to the provisions of Section 136 of the Act, the standalone and consolidated financial statements of the Company along with relevant documents and separate audited financial statements in respect of subsidiaries, are available on the website of the Company at www.iolcp.com.

The Company has no holding company.

8. Credit Rating

During the year under review, The Credit Analysis & Research Ltd (CARE) has upgraded the credit rating for Long term Bank Facilities from ‘CARE A (Single A; Outlook: Stable) to ‘CARE A+ (Single A plus; Outlook: Stable) and the credit rating for Short Term Bank Facilities from ‘CARE A1(A One) to ‘CARE A1+(A One plus).

9. Expansion

During the financial year 2021-22, the Company has successfully set up multi product manufacturing facilities ‘Unit 10 for manufacturing pharma APIs. The Company has identified to manufacture Feno brate, Lamotrigine etc in this unit.

Further, the Company also initiated the project for installation of new manufacturing facilities (Unit-9) for manufacturing Gabapentin and other Pharma products during the year, which is under implementation.

10. Directors and Key Managerial Personnel

During the Financial Year 2021-22, the Board of Directors, based on the recommendation of the Nomination and Remuneration Committee has appointed Mr Kushal Kumar Rana as Wholetime Director having designation as Director (Works) for a period of 3 years with effect from 4th June 2021, liable to retire by rotation. The said appointment of Mr Kushal Kumar Rana was approved by the shareholders in their 34th Annual General Meeting held on 18th September 2021.

Further, the Nomination and Remuneration Committee based on performance evaluation of Mr Rajender Mohan Malla (DIN: 00136657) and Mr Harpal Singh (DIN: 06658043) as Member of the Board / Committees also their contribution in Board / Committee deliberations during their tenure as an Independent Directors and their skills, background and experience, recommended to the Board for re-appointment as Independent Directors of the Company for a second term of five years. The Board of Directors in their meeting held on 4th February 2022 unanimously endorsed the view of the Nomination and Remuneration Committee and recommended to the Shareholders for re-appointment of Mr. Rajender Mohan Malla and Mr Harpal Singh as Independent Directors of the Company, for a second term of five years, with effect from 6th February 2022, not liable to retire by rotation. The Shareholders of the Company approved the re-appointment of Mr. Rajender Mohan Malla and Mr Harpal Singh as Independent Directors of the Company for their 2nd term as mentioned above by way of a Special Resolution passed through postal ballot on 18th March 2022,

Pursuant to the provisions of the Section 161, 149 read with Schedule IV of the Companies Act 2013 and applicable regulations of SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 and on the basis of recommendations of the Nomination and Remuneration Committee the Board of Directors in its meeting held on 30th May 2022 appointed Mr Sharad Tyagi as Additional Director in the category of Independent Director of the Company for a term of 5 years with effect from 30th May 2022 and recommended to the Shareholders for approving the appointment of Mr Sharad Tyagi as Independent Director of the Company for a period of 5 years effective from 30th May 2022, not liable to retire by rotation. Pursuant to the provisions of Section 161 of the Companies Act, 2013 Mr Sharad Tyagi, holds the office of director upto the ensuing Annual General Meeting of the Company.

The Board of Directors on 30th May 2022, based on the recommendations of Nomination and Remuneration Committee, appointed Dr Sanjay Chaturvedi, who is working as Chief Executive Officer of the Company, as Additional Director of the Company in the category of Wholetime Director having designation as Executive Director & CEO of the Company for a period of 5 years with effect from 30th May 2022. Pursuant to the provisions of Section 161 of the Act, Dr Sanjay Chaturvedi holds the office of director upto the ensuing Annual General Meeting of the Company.

Further, in terms pf the provisions of the Companies Act, 2013, Mr Vikas Gupta, Executive Director of the Company retires by rotation at the ensuing Annual General Meeting and, being eligible, offers himself for re-appointment. The necessary resolution seeking shareholders approval for his re-appointment forms part of the Notice for the ensuing Annual General Meeting.

Also, the necessary resolutions and brief details of all the directors seeking appointment/re-appointment at the ensuing Annual General Meeting are furnished in the notice calling the Annual General Meeting.

During the year under review Mr Varinder Gupta, Managing Director; Mr Kushal Kumar Rana, Director (Works) (being Whole-time Director); Mr Vikas Gupta, Executive Director (being Whole-time Director); Mr Pardeep Kumar Khanna, Chief Financial Officer; Mr Abhay Raj Singh, VP & Company Secretary and Dr Sanjay Chaturvedi, Chief Executive Officer continues to be the Key Managerial Personnel (KMP) of the Company in accordance with the provisions of Section(s) 2(51) and Section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

11. Woman Director

In terms of the provisions of Section 149 of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Dr Sandhya Mehta is serving as Independent Woman Director on the Board of the Company. She is Chairperson of Stakeholders Relationship Committee and Nomination and Remuneration Committee. She is also member of CSR Committee, Risk Management Committee and Banking & Finance Committee.

12. Board Evaluation

Pursuant to the provisions of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the annual evaluation is carried out by the Board of its own performance and that of its committees and individual Directors by way of individual and collective feedback from all the Directors. The Directors expressed their satisfaction with the evaluation process. In a separate meeting of independent directors, performance of non-independent directors, the Board as a whole and Chairman of the Company was evaluated, considering the views of executive as well as non-executive directors. The evaluation criteria are mainly based on the Guidance Note on Board Evaluation issued by the SEBI.

13. Meetings of the Board and Committees of the Board

During the year the Board met 4 times. The gap between any 2 two consecutive meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015. The details of meetings of the Board of Directors and its Committees are provided in the Corporate Governance Report forming part of this report.

14. Meeting of Independent Directors

Pursuant to the requirements of Schedule IV of the Companies Act, 2013 and in terms of Regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate meeting of the Independent Directors of the Company has been convened on 24th March 2022 to review the matters as laid down in the aforesaid Schedule and Regulations.

15. Directors Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:

a. that in the preparation of the annual financial statements for the year ended 31st March 2022, the applicable accounting standards have been followed and that there was no material departures.

b. that such accounting policies as mentioned in Note 1 of the Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the year and of the profit of the Company for that year;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

d. that the annual financial statements have been prepared on a going concern basis.

e. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively.

f. that systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively

16. Declaration by Independent Directors

All the Independent Directors have submitted declarations that each of them meets the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 along with Rules framed thereunder and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015. There has been no change in the circumstances affecting their status as independent directors of the Company.

17. Remuneration Policy

The Board has on the recommendation of the Nomination & Remuneration Committee, framed a policy for selection and appointment of Directors, Senior Management, and fixation of their remuneration. The Remuneration Policy can be viewed on the companys website www.iolcp.com.

18. Internal financial control systems and their adequacy

The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report.

19. Corporate Governance

The Company has in place a system of Corporate Governance. A separate report on Corporate Governance along with Auditors Certificate regarding compliance of conditions of corporate governance set out by the Securities and Exchange Board of India (SEBI) under Listing Regulations is annexed to this Annual Report.

20. Management Discussion and Analysis

In terms of the Regulation 34(2)(e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 Report on Management Discussion and Analysis forms part of the Annual Report.

21. Audit Committee

The Composition and role of the Audit Committee has been provided in the Corporate Governance Report annexed with the report.

22. Risk Management

The risk management is to assess risks, deploy mitigation measures and review them including risk management policy on a periodic basis along with the top key risk indicators of the organisation. This is done through periodic review meetings of the Risk Management Committee comprising of the Board members.

Risk Management Committee meeting held on 4th February 2022 and 29th March 2022 for reviewing the implement and monitor the risk management plan for the Company. It has been covered in the Management Discussion and Analysis Report, which forms part of this report.

23. Related Party Transactions

All related party transactions that were entered into during the financial year were on arms length and were in the ordinary course of business. These related party transactions did not attract the provisions of Section 188 of the Companies Act 2013. Also, there was no material transaction entered into with any related party during the year under review.

All related party transactions were approved by the Audit Committee and periodically reported to the Audit Committee. Prior omnibus approval of the Audit Committee was taken for related party transactions which are of repetitive nature and entered in the ordinary course of the business on arms length basis.

The details of the related party transaction during financial year 2021-22 are provided in the accompanying financial statements.

Accordingly, the disclosures of related party transactions as required under Section 134(3)(h) of the Companies Act 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 in Form No. AOC-2 is not applicable to the Company for the financial year 2021-22 and hence does not form part of this report.

Pursuant to the provisions of the Companies Act 2013 and SEBI Listing Regulations 2015, the Company has formulated a Policy on Materiality of and Dealing with Related Party Transactions and the same is available on the Companys website www.iolcp.com.

24. Corporate Social Responsibility (CSR)

The Board has constituted a CSR Committee comprising of Mr Varinder Gupta as Chairman and Dr Sandhya Mehta, Mr Vikas Gupta, Directors as its members. The report on the Corporate Social Responsibility (CSR) initiatives undertaken by the Company during the year under review are set out in Annexure - 2 of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The CSR Policy is available on Companys website: www.iolcp.com

25. Research and Development

Last two years, pharma industry has seen huge crests & troughs in terms of emerging opportunities and regulatory, supply chain complexities. To surmount the difficulties aroused by the pandemic, IOL is transforming into different dynamics by adopting the innovative technologies for high end sustainability. These evolving tools and skills are also contributing towards reduction in carbon footprint. Thus, IOL is focusing on bringing the innovation through Research and Development to get a larger share in global volumes of their portfolios.

At IOLCP we are embracing advanced technologies, scientific breakthroughs that enabled us to advance research and development towards building a diversified portfolio and gain a leadership position in important new product introductions. Our R&D team constantly aspires to provide novel solutions and processes that enable the regulatory teams to file DMFs across the globe so as the marketing team can reach the customers worldwide.

R&D is focusing on advanced technologies like Enzymatic bio-conversions instead of classical chemical reactions, which are highly product specific with high atom efficient throughputs & use of Continuous flow reactions which minimizes by-products, improves process efficiencies and are also less energy & CAPEX intensive.

The scientists at IOLCP, demonstrated that enzymatic transformations are highly useful in production of high-quality APIs in cost affordable by use of engineered enzyme and recycling them.

Collaborations with the topnotch scientists on the modern trends in industry ensured the core competencies of R&D team are of the highest standards even when compared with Indian market leaders.

To highlight few achievements IOLCP filed four patents, developed processes of various products using novel technologies and filed DMFs & CEPs for six products in US & Europe.

26. Statutory Auditors

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the Rules framed thereunder, M/s Ashwani & Associates, Chartered Accountants, Ludhiana, Registration No:000497N were appointed as statutory auditors of the Company from conclusion of 31st Annual General Meeting of the Company held on 29th September 2018 till the conclusion of the 36th Annual General Meeting to be held in the year 2023.

The Statutory Auditors Report on the accounts is self-explanatory and does not contain any qualifications, reservations or adverse remarks. The Auditors have given an unmodified report.

27. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed M/s B. K. Gupta & Associates, Practicing Company Secretary for conducting secretarial audit of the Company. The Secretarial Audit Report is annexed herewith as Annexure - 3.

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

28. Secretarial Standard

The Company has proper system in place to ensure the due compliance with the provisions of the applicable secretarial standards issued by the Institute of the Company Secretaries of India.

29. Cost Records & Cost Auditors

Pursuant to the provisions of Section 148 of the Companies Act, 2013 the Company is required to maintain the cost records, which are subject to the audit by Ramanath Iyer & Co., Cost Accountants, New Delhi, the Cost Auditors of the Company for FY 2021-22.

The Board of Directors of the Company, on the recommendations of Audit Committee, approved the reappointment of M/s Ramanath Iyer & Co., Cost Accountants, New Delhi as Cost Auditors of the Company for conducting the Cost audits for FY 2022-23. A resolution seeking approval of the Shareholders for ratifying the remuneration payable to them for FY 2022-23 is provided in the Notice of the ensuing Annual General Meeting.

30. Particulars of managerial remuneration and related disclosures

Disclosures relating to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in ‘Annexure – 4.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules forms part of this Report.

31. CEO & CFO Certification

In accordance with the provisions of the SEBI Listing Regulations the Executive Director & CEO and Chief Financial Officer of the Company have submitted the relevant certificate for the Financial Year 2021-22 to the Board of Directors.

32. Annual Return

Pursuant to the provisions of Section 134(3)(a) of Companies Act, 2013, the web address of the Annual Return of the Company is https://www.iolcp.com/investors/annual-returns

33. Loan, Guarantees or Investment Under Section 186 of the Companies Act, 2013

The particulars of loans, guarantees and investments have been provided in the notes of the financial statements.

34. Material Changes and Commitments

There have been no material changes and commitments affecting the financial position of the Company which occurred between the end of the Financial Year of the Company as on 31st March 2022 and the date of this report.

35. Significant and Material Orders Impacting Operations of Company in Future

There has been no significant or material orders passed by any Regulators / Court or Tribunals impacting the going concern status and future operations of your Company.

36. Reporting of Frauds

There have been no instances of fraud reported by the Statutory Auditors of the Company under Section 143(12) of the Companies Act, 2013 and the Rules framed thereunder either to the Company or to the Central Government.

37 Industrial Relations

Industrial relations remained cordial and harmonious throughout the year under review.

38. Safety, Health and Environment

Safety is Companys top priority with regard to employment and it is encouraging safety measures at all levels of operations especially at the floor level. Regular training programmes are being conducted to bring in awareness of safety at workplace.

39. Prevention of Sexual Harassment Policy and Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

In line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has set up a Complaints Committees at its workplace. The Company has zero tolerance towards sexual harassment at workplace and accordingly adopted a policy on prevention, prohibition, and redressal of sexual harassment in pursuance of the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year under review, the Company received only one complaints of sexual harassment, which has been addressed / resolved by taking appropriate action.

40. Vigil Mechanism

In pursuant to the provisions of Section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established.

The Vigil Mechanism Policy can be accessed at companys website: www.iolcp.com

41. Business Responsibility Report

In terms of Regulation 34(2)f of the SEBI Listing Regulations, the Business Responsibility Report (BRR) of your Company detailing initiatives undertaken by the Company on environmental, social and governance front during the year under review, forms part of this Annual Report and is also available on the website of the Company at www.iolcp.com

42. Energy Conservation / Technology Absorption and Foreign Exchange Earnings and Outgo

Energy conservation continues to be an area of major emphasis in the Company. A statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in accordance with Section 134 of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is annexed hereto as Annexure – 5 and forms part of the Report.

43. General

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Issue of equity shares with differential rights as to dividend, voting or otherwise.

2. Change in the nature of business of the Company.

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

4. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.

5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future.

6. No fraud has been reported by the Auditors to the Audit Committee or the Board.

44. Acknowledgement

The Directors wish to place on record their appreciation of the continuous support received by the Company from the investors, Bankers, Central/State Government Departments, its Customers and Suppliers.

We also place on record our sincere appreciation of the contribution made by the employees at all levels. Our consistent growth is made possible by their devout, sincere and unstinted services.

Further, the Board expresses its gratitude to you as Shareholders for the confidence reposed in the management of the Company