IOL Chemicals & Pharmaceuticals Ltd Directors Report.

Dear Members

The Board of Directors presents the 34th Annual Report of the Company on the business operations and performance of the Company along with the audited financial statements for the year ended 31st March 2021.

1. Financial Results:

The brief summary of the financial performance of the Company for the Financial Year ended 31st March 2021 along with the comparative figures for the previous year is summarized herein below:

(Rs. In Crore)

Particulars Year ended 31-Mar-2021 Year ended 31-Mar-2020 % increase/ (decrease)
Total income 1991.28 1910.49 4.23
Profit before interest & depreciation 616.40 589.9 4.49
Interest 5.83 20.93 (72.15)
Profit before depreciation 610.31 568.97 7.27
Depreciation 38.92 35.73 8.93
Profit before tax 571.39 533.24 7.15
Provision for tax (including deferred tax) 126.83 171.95 (26.24)
Profit after tax 444.56 361.29 23.05

2. Financial performance and review of operation

During the year under review, the standalone operating revenue of your Company was Rs.1991.28 Crore, higher by 4.23% as compared to Rs. 1910.49 Crore in the previous year. The Net Profit for the year was higher by 23.05% at Rs. 444.56 Crore as against the previous years Net profit of Rs. 361.29 Crore.

Absolute EBITDA grew over the last five years driven by growth in sale, less cost and optimisation utilisation of recourses .During the year under review the EBITDA increase 4% as Compared to previous year.

3. Covid 19:

The COVID-19 pandemic has emerged as a global challenge, creating disruption across the world. Due to the rapid spread of the second wave of pandemic globally, the uncertainties in growth of key sectors are high and hence the outlook with respect to market dynamics is uncertain and unpredictable. Global solutions are needed to overcome the challenges - businesses & business mode have transformed to create a new work facility.

The physical and emotional wellbeing of employees continues to be a top priority for the Company, with several initiatives to support employees and their families during the pandemic. The Company has invested in medicine, sanitizers, hospital services and providing mental & emotional support to employees. The Company has reframed employee engagement, which outdoes geographic barriers by embracing virtual technologies and grips our diverse workforce.

4. Dividend

The Board of Directors has proposed a final dividend of Rs. 2.00 per share, subject to approval of shareholders at the AGM. Together with interim dividend of Rs. 4.00 per share paid by the Company during the year under review, the total dividend for the financial year ending 31st March, 2021 amounts to Rs. 6.00 per share.

5. Transfer to reserves

The entire amount of profits is retained in the profit and loss account and therefore no amount is transferred to General Reserves. The closing balance of the retained earnings of the Company as on 31st March 2021, after all appropriation and adjustments, stood at Rs. 971.31 Crore as against Rs. 550.23 Crore as on 31st March 2020.

6. Fixed Deposits

Your Company has not accepted any deposit from the public in terms of the provisions of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 including any amendment thereto and as such there is no amount of principal or interest was outstanding as on 31st March 2020.

7. Share Capital

The paid up equity share capital of the Company has been increased Rs. 58,70,55,020/- (Rupees Fifty Eight Crore Seventy Lakh Fifty Five Thousand and Twenty) consisting of 5,87,05,502 (Five Crore Eighty Seven Lakh Five Thousand Five Hundred Two) equity shares of Rs. 10/- each on allotment of 18,18,000 (Eighteen Lakh Eighteen Thousand) equity shares on the converted 18,18000 warrants into equity shares. The amount raised through the issue of equity shares has been utilised in expansion of projects and to meet working capital requirements.

8. Dividend Distribution Policy

Pursuant to the Regulation 43A of SEBI (Listing Obligations & Disclosure Requirements) Regulation, 2015, (the SEBI Listing Regulations) the Board of Directors of the Company formulated and adopted the Dividend Distribution Policy of the Company based on the parameters provided under the said regulation. The Policy is available on Companys website at https://www.iolcp.com/policies.html

9. Investor Education and Protection Fund (IEPF)

Pursuant to the provisions of Section 124 and 125 of the Companies Act, 2013, read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (the Rules), during the year under review, no amount of unpaid/unclaimed

dividend was due for transfer to the Investors Education protection Fund.

10. Holding & Subsidiary Company

The Company has neither any holding company nor a subsidiary company.

11. Credit Rating

During the year under review, Credit Analysis & Research Limited (CARE) has upgraded the credit rating for Long Term Bank Facilities from CARE A- (Single A Minus; Outlook: Stable) to CARE A (Single A; Outlook: Stable) and the credit rating for Short Term Bank Facilities from CARE A2+(A Two Plus) to CARE A1(A One).

12. Expansion

During the year, the Company successfully set up an another manufacturing Unit-7 for manufacturing Metformin with an additional capacity of 7,200 MT per annum with a capex of Rs. 28 Crore which is funded fully through internal accruals only.

During the year 2020-21, the Company has also installed new manufacturing facilities "Unit-8" to manufacture Ibuprofen Derivatives and other Pharma Products.

During the year 2020-21, the Company has increased existing manufacturing facilities of Ethyl Acetate from 87,000 MT per annum to 100,000 MT per annum in Chemical segment.

13. Directors and Key Managerial Personnel

Mr. Vijay Garg, Joint Managing Director of the Company resigned from the directorship of the Company effecting from closure of the 31st March 2021. The Board places on record their appreciation for the services rendered by Mr. Vijay Garg during his association with Company.

The Board of Directors appointed Mr. Sanjay Chaturvadi as Chief Executive Officer of the Company effective from 16th March 2021.

Further, on the recommendation of Nomination & Remuneration Committee the Board of Directors has also appointed Mr. Kushal Kumar Rana as Additional Director in the category of wholetime director having Designation as Director (Works) with effect from 4th June 2021 for a period of 3 years, liable to retire by rotation. In terms of the provisions of Section 161 of the Act, Mr. Kushal Kumar Rana holds the office of director upto the ensuing AGM of the Company. The Board recommends appointment of Mr. Kushal Kumar Rana as wholetime director having designation of Director (Works) for a term of 3 years w.e.f. 4th June 2021 till 3rd June 2024, at the ensuing AGM.

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. A resolution seeking shareholders approval for his re-appointment forms part of the Notice for the ensuing AGM.

The brief details of all the directors seeking appointment/ re-appointment at the ensuing Annual General Meeting is furnished in the explanatory statement to the notice calling the Annual General Meeting.

During the year under review Mr. Varinder Gupta, Managing Director; Mr. Vijay Garg, Joint Managing Director (since resigned from the closure of the 31st March 2021); Mr. Vikas Gupta, Executive Director (Whole-time Director); Mr. Pardeep Kumar Khanna, Chief Financial Officer (CFO); Mr. Abhay Raj Singh, AVP & Company Secretary and Mr. Sanjay Chaturvadi, Chief Executive Officer (wef 16th March 2021) 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.

14. 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 also Chairperson of Stakeholders Relationship Committee, Nomination and Remuneration Committee, and member of Audit Committee, CSR Committee and Risk Management Committee.

15. Board Evaluation

Pursuant to the provisions of Companies Act, 2013 and SEBI Listing Regulations, the annual evaluation has been carried out by the Board of its own performance, its Committees and individual Directors by way of individual and collective feedback from 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, taking into account the views of executive directors and non-executive directors.

16. Familiarisation Programme for Directors

As a policy to familiarise the new directors (including independent directors), with the companys business operations, products, Board constitutions, functioning and

directors roles and responsibilities, the management go through an orientation programme. Presentations are made to provide an overview of the operations to familiarise the new directors with the Companys business operations, also visits to plant location are organised for the new Directors to enable them to understand the business better. During the year under review, no new directors were inducted to the Board.

17. Number of Meetings of the Board

During the year six Board Meetings were held. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013. For details of meetings of the Board of Directors and its Committees, please refer to the Corporate Governance Report, which is a part of this report.

18. 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 Regulations a separate meeting of the Independent Directors of the Company was convened on 26th March 2021 to review the matters as laid down in the aforesaid Schedule and Regulations.

19. 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 2021, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

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

20. Declaration by Independent Directors

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

21. 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 at https://www.iolcp.com/policies.html.

22. 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.

23. Corporate Governance

Pursuant to the Regulation 34 of the SEBI Listing Regulations, Report on Corporate Governance, along with a certificate issued by Statutory Auditor of the Company certifying compliance with conditions of corporate governance is part of the Annual Report.

24. Management Discussion and Analysis

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

25. Audit Committee

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

26. Risk management

The Board has formed Risk Management Committee on 10th February, 2021 inter alia to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for reviewing the risk management plan

and ensuring its effectiveness. It has been covered in the Management Discussion and Analysis Report, which forms part of this annual report.

27. 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. During the year, the Company had entered into contract / arrangement / transaction with related parties which could be considered material in accordance with the provisions of Policy on materiality of and dealing with Related Party Transactions. The disclosures of related party transactions are provided in notes to financial statements.

The information on transactions with related parties pursuant to Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014 are given in Annexure-1 in Form No. AOC-2.

The Company has formulated a Policy on materiality of and dealing with Related Party Transactions. The policy is available on the Companys website at https://www.iolcp.com/policies.html

28. Corporate Social Responsibility (CSR)

The Company has in place a CSR Policy, which sets the principles for conducting the CSR activities of the Company. To implement the CSR Policy of the Company, the Board has constituted a CSR Committee comprising of Mr. Varinder Gupta as Chairman and Dr. Sandhya Mehta, and 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: https://www.iolcp.com/ policies.html

29. Research and Development

The pharma industry is immensely competitive where innovation is essential to financial stability and growth. So companies attempt to outperform their rivals and ensure commercial success by doing innovation and increasing efficiency through Research and Development (R & D) and helps to increase revenue. At IOLCP we are embracing advanced technologies, scientific breakthroughs that enable us to advance research and development towards building a diversified portfolio and gain a leadership position in important new product introductions. Our Research & Development helps build a solid foundation as we progress to become a Complex Generics producer. R&D, work

closely with the business teams to generate innovative concepts and ideas, exploring both the unmet market and synergies across therapeutic areas. We are well on track to emerge as an innovation led transnational pharmaceutical powerhouse providing affordable healthcare solutions with uncompromising quality. R&D have a proven track record of delivering high-quality technology-intensive products, Active Pharmaceutical Ingredients (APIs), KSM, which are commercially viable throughout the life cycle of product, infiltrating continuous process improvements. Apart from this R&D helps QA with investigations & in answering queries from regulatory bodies.

30. 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.

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

31. 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.

32. Cost Auditors

Pursuant to the provisions of Section 139 of Companies Act, 2013, the Board had re-appointed M/s Ramanath Iyer & Co., Cost Accountants, New Delhi as Cost Auditor to conduct the audit of cost accounts of bulk drugs and chemicals for the financial year 2021-22, subject to determination of their remuneration by members of the Company thereto.

The Cost Audit Report for the year ended 31st March 2020 has been filed on 29th August 2020 with Ministry of Corporate Affairs, New Delhi.

33. CEO and CFO Certification

In accordance with the provisions of the SEBI Listing Regulations the Managing Director and Chief Financial Officer of the Company have submitted the relevant certificate for the year ended 31st March, 2021 to the Board of Directors

34. Annual Return

Pursuant to the provisions of Section 134(3)(a) of Companies Act, 2013 and Rules made thereunder, the Annual Returns of the Company for the is available on the website at https://www.iolcp.com/annual-return.html

35. 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.

36. 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 2021 and the date of this report.

37. 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 are provided in Annexure-4.

38. Significant and Material Orders impacting Operations of Company in Future

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

39. 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.

40. Industrial Relations

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

41. 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. The Company continues to endeavor in improving its efforts to minimise environmental impact through reduced process emission, waste and consumption of energy, water and raw materials.

42. Prevention of Sexual Harassment Policy

In line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has adopted a policy on prevention, prohibition and redressal of sexual harassments. The Company has zero tolerance towards sexual harassment at work place. No complaint was received during the year 2020-21.

43. Vigil Mechanism and Whistle Blower Policy

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. This Policy provides a framework to promote responsible and secure reporting of undesirable activities ("whistle blowing"). The Company aims to provide a mechanism to the whistleblower to disclose any misconduct or unethical practice taking place in the Company for appropriate action and reporting, without fear of any kind of discrimination, harassment, victimisation or any other unfair treatment or employment practice being adopted against the whistleblower. The Vigil Mechanism Policy can be accessed at companys website: www.iolcp.com

44. 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

45. 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.

46. 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.

47. 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.

By Order of the Board
Sd/- Sd/-
Place: Ludhiana Varinder Gupta Rajender Mohan Malla
Date: 04th June, 2021 Managing Director Chairman
DIN-00044068 DIN-00136657