IOL Chemicals & Pharmaceuticals Ltd Management Discussions

Economic overview

Global economy

The global economy demonstrated remarkable resilience in the face of macroeconomic challenges. The reported year recorded pe histent geopolitical disequilibrium and volatile commodity markets leading to significant inflationary pressures worldwide. Central banks resorting to calibrated interest rate hikes further exacerbated the situation. Nevertheless, the global economy achieved a growt h.rate of 3.2%. The measures implemented by the central banks enabled to rein in the inflation in most regions. Furthermore, these measures fostered steady economic growt h.and improved employment opportunities across the US, Europe and various emerging markets.

However, ongoing geopolitical conflicts continued to disrupt international supply chains and trade flows. China plays a pivotal role in global manufacturing and possesses an extensive supply network; wit h.Chinas economy facing ongoing pressures, it is expected that it will weig h.on worldwide economic stability as well. On the other hand, several emerging economies, including India, Vietnam and Mexico, saw robust growt h.buoyed by significant investments from foreign institutional investo h. These regions demonstrated strong economic performance, fortifying their position in the global market.

Outlook

Despite the ongoing geopolitical turmoil in Europe and West Asia, a balanced outlook on global economic growt h.is anticipated. The GDP growt h.rate is projected to sustain at 3.2% in CY 2024 and continue throug h.CY 2025 as well. The expected alleviation of inflationary pressures and adoption of more supportive monetary policies by central banks are expected to contribute to the outlook.

Trade volumes globally are projected to maintain modest growth, maintaining itself at 3% in CY 2024 and 3.3% in CY 2025. The collective policy efforts of governments and inherent resilience of global economies will play crucial roles in driving sustainable and inclusive growt h.in the forthcoming year.

Global GDP growth¹

Indian economy²

Despite navigating global adve hities, India maintained its position as the worlds fastest-expanding major economy. The National Statistical Office (NSO) reported a significant real GDP growt h.of 8.2% for the reported year, fuelled by robust macroeconomic stability, escalating domestic demand and prudent monetary strategies implemented by the Reserve Bank of India (RBI).

The manufacturing sector, registering a growt h.of 11.6% in the reported year, contributed extensively to industrial advancement. A decline in inflation coupled wit h.an uptick in credit demand have propelled the growt h.of the Indian economy. The all-India consumer price index (CPI) indicated that headline inflation remained steady at 5.1% in February 2024.

Debottlenecking of supply chains and consistent government emphasis on spending and domestic demand protected India from major economic shocks. India is steadily building its position as an alternative to China. Merchandise exports witnessed a seasonal peak in Marc h.2024, coinciding wit h.the peak in industrial production. Furthermore, greater capacity utilisation across the manufacturing sector has bolstered the economic growt h.

Outlook

India is expected to become the worlds third-largest economy by 2027³, supported by political stability and an increased governmental emphasis on public capital expenditure. Additionally, a noticeable rise in private capital expenditure and a growing demand for credit are expected to fuel economic expansion. Furthermore, Indias robust banking and financial services sector is further accelerating the growt h.trajectory. India is also gaining recognition as a leading manufacturing hub, meeting international demands for manufactured products. Wit h.its vast domestic market and expanding export opportunities, India is poised to surpass other major economies in terms of growt h.in the coming year.

Industry overview

Global Chemical Industry

The dynamic global chemical industry exerts its influence across various secto h from agriculture to high-tec h.industries. An integral component of the Indian economy, the global chemicals market exhibited moderate growt h.in CY 2023, valuing itself at USD 6.2 trillion in CY 2023. Regional dynamics play a crucial role in the industry. While Asia-Pacific dominates in market size growth, Europes continued market size growt h.can be attributed to increased imports despite a decline in regional production.⁵

The landscape has undergone significant transformations over the year. Commodity prices, policies and supply chain concerns have compelled the industry to change its strategies. The US chemical sector is one of the largest global produce h of chemical products, comprising agricultural chemicals, basic chemicals, specialty chemicals, consumer products and pharmaceuticals. On the other hand, Europe has maintained its position as a significant player in the global market despite facing hig h.energy costs, increased international competition and complex regulations.

The chemical fertilise h market has grown steadily in the recent year. The market is expected to be influenced by the growing global

food demand and increasing adoption of bio-fertilise h, primarily due to rising awareness about the adve he effects of synthetic fertilise h on soil and on the environment. China is the one of the largest chemicals markets in the world bot h.in terms of production and capital investment.

Wit h.a surge in demand for chemicals and materials supporting the energy transition, the global chemical industry is expected to maintain a positive growt h.trajectory in the forthcoming year. It is projected to reac h.USD 7.06 trillion by 2027, growing at a compound annual growt h.rate (CAGR) of 7.33% between 2023 and 2027. Furthermore, the advent of digitalisation and increasing demand for sustainable and eco-friendly solutions are spurring innovation and fuelling growt h.⁶

Specialty chemicals sector

The global specialty chemicals industry is a rapidly evolving sector, focused on producing chemicals and materials that cater to specific applications and performance requirements. The sector plays a crucial role within the broader chemical industry. As of 2023, the global specialty chemicals market was valued at approximately USD 641.5 billion, however it is projected to grow at 5.2% CAGR from 2024 to 2030.⁷

Increasing demand for environmental-friendly and bio-based specialty chemicals, rising need for consumer goods and surging infrastructure development are driving the demand for specialty chemicals. Secto h like pharmaceuticals, food and beverages, pe honal care, electronics and construction are becoming increasingly reliant on specialty chemicals for developing high-performance products.

Furthermore, high-performance, function-specific chemicals are also in demand across various end-use secto h suc h.as oil and gas, pulp and paper, cosmetics and othe h. The ve hatility and the critical role of specialty chemicals in enhancing product performance and efficiency are contributing significantly to market growt h.

As in 2023, the Asia-Pacific region leads the specialty chemicals market share by holding a significant share of 49.9%. This dominance is attributed to the rising demand from China and India, driven by rapid industrialisation and the growt h.of various end-use industries.

Pharmaceuticals Industry

The global pharmaceutical industry is experiencing robust growt h. The market size is projected to reac h.approximately $2.3 trillion by 2028, growing at 5-8% CAGR. The growt h.is primarily driven by increased use and expenditure on medicines, surpassing even pre-pandemic levels. The significant facto h contributing to this surge include rising awareness about preventive healthcare and the introduction of breakthroug h.therapies over the past decade.8

Substantial investments play a crucial role in driving the growt h.of the pharmaceutical industry as it aids in the development of new drugs and the expansion of accessible treatments across various regions. In CY 2024, spending on medicines is expected to continue its upward trajectory fuelled by increased adoption of novel and more expensive therapies. This trend is particularly pronounced in developed markets where there is a higher availability and utilisation of innovative therapeutics. However, this growt h.has become moderated due to increasing use of generics and biosimila h that has lowered costs.

Growing consumption of medicine ⁹

Exhibit 1: Historical and projected use of medicines by region, 2018-2028, Defined Daily Doses (DDD) in billions

Regionally, the pharmaceutical market has recorded varied growt h. Emerging markets suc h.as the Asia-Pacific, led by China and India is witnessing fast growt h.driven by increasing healthcare access, rising disposable incomes and ageing population. Developed markets in Nort h.America and Europe, however, are facing challenges wit h.patent expirations and cost pressures. Despite these challenges, the regions remain significant R&D hubs and expected to remain at the forefront of innovation in the global pharmaceutical landscape.

API (Active Pharmaceuticals Ingredients) Sector

In 2023, the global API market recorded significant growt h.driven by increasing demand for pharmaceuticals worldwide. The market size was valued at USD 237.81 million in 2023 and is projected to reac h.USD 393.58 million by 2031, wit h.a CAGR of 6.50 % between 2024 and 2031¹⁰. Facto h suc h.as surging chronic disease cases, rising geriatric population, advancements in API manufacturing and growt h.of the biopharmaceutical sector have contributed significantly to the growt h.of the sector. Furthermore, rising incidences of lifestyle-related diseases globally has led to a higher demand for effective treatments, directly impacting the demand for APIs. Moreover, growing biopharmaceutical sector, especially the biotec h.APIs segment, is observing rapid growt h.due to their role in novel therapies.

Antibody drug conjugates (ADCs) are targeted cancer therapies that combine an antibody wit h.a biologically active drug or cytotoxic compound. The flourishing ADC market, driven by revenue from approved ADCs and those in phase III development, is further projected to reac h.$26 billion by 2028.¹² This surge is attributed to ADCs superior clinical profiles compared to standard chemotherapy across multiple indications.

The market of generic API drugs has seen a significant uptick wit h.the generic APIs segment dominating the market wit h.a revenue share of 56.8% in 2023.¹³ The production of generic APIs is increasing to meet the rising demand for generic medications. The adoption of generic drugs is supported by their lower cost, better accessibility and expiration of patents for various branded molecules.

Indias chemical industry

Indias chemical sector encompasses a vast array of products, including bulk chemicals, specialty chemicals, petrochemicals, agrochemicals, polyme h and fertilise h. As of 2024, this sector is a significant contributor to the countrys GDP. Indias chemical industry, valued at USD 220 billion, is recognised for its extensive product portfolio that spans over 80,000 commercial products. India is the sixt h.largest producer of chemicals globally and the third largest in Asia, holds a significant position in bot h.domestic and international markets.¹⁴

Indias impressive growt h.trajectory is expected to sustain its momentum at a rate of 9-12% per annum, reaching approximately USD 300 billion by 2026.¹⁵ Rising domestic consumption and a shift in global sourcing towards India will play a pivotal role in driving the growt h.of the sector. Additionally, government initiatives suc h.as the Production Linked Incentive (PLI) scheme and the establishment of Bulk Drug Parks have further augmented the confidence of manufacture h and investo h in the sector.

Government support has been pivotal in nurturing the growt h.and development of the Indian chemical industry. For the fiscal year 2024-25, the Department of Chemicals and Petrochemicals received an estimated budget allocation of INR 139.05 crore.¹⁶ These allocations aim to support the chemical industrys expansion and solidify its position on the global stage. The governments commitment to augment the growt h.of the industry is reflected throug h.increasing investments, promoting researc h.and development and facilitating the adoption of new technologies throug h.various schemes and initiatives.

Specialty chemicals sector

The Indian specialty chemicals segment has witnessed robust growt h.and significant market expansion in the recent year. The sector encompass a dive he range of products, including agrochemicals, dyes, pigments and pharmaceutical ingredients whic h.are essential for various industrial applications. Indias specialty chemicals market has reached USD 41.90 billion by 2023¹⁷ and is projected to grow at 11% CAGR till FY26.¹⁸ This growt h.is fuelled by robust demand from various end-user industries that require speciality chemicals.

The China plus one strategy adopted by multinational corporations seeking alternatives to Chinese supplie h and various governmental initiatives focusing on innovation and technological advancements are propelling domestic production of high-value specialty chemicals.

Indias specialty chemicals market is gaining prominence globally. Wit h.ongoing development in secto h suc h.as electric vehicles, green energy and digital infrastructure, the Indian speciality market is poised to become a critical player in the global chemical market. Additionally, Indias cost-competitive manufacturing base coupled wit h.robust process engineering capabilities foste h a conducive environment for bot h.domestic and international companies to scale their operations.

Pharmaceuticals industry

The Indian pharmaceutical industry, catering to a wide spectrum of healthcare needs, continues to be a significant global player commanding a significant share of more than 20% in the global medical supply chain. The industry is characterised by its extensive dive hity as it includes generic drugs, vaccines as well as biosimila h.¹⁹ Currently, Indias pharmaceutical sector ranks as the third largest in the world by volume, exporting to over 200 countries.²⁰ Indias ability to produce hig h.volumes of generic drugs and vaccines at competitive prices makes the country a crucial player in global healthcare.

Rising healthcare awareness coupled wit h.a burgeoning middle-economic class and improving accessibility are driving the growt h.of the Indian pharmaceutical sector. The industrys competitive advantages include cost-effective manufacturing, a large pool of skilled professionals and a strong focus on quality and compliance. The industrys broad spectrum encompassing advanced biologics and complex therapeutic products reflects its comprehensive expertise and innovative prowess. India continues to strengthen its position as the pharmacy of the world, providing essential medications and vaccines to a global audience.

API (Active Pharmaceuticals Ingredients)

The Indian API market stands as a critical component of the global pharmaceutical supply chain, recording significant growt h.and development in the reported year. APIs are the essential raw materials used in the production of pharmaceutical drugs. It has seen a surge in demand bot h.domestically and internationally. The sector has recorded advancements in green chemistry, process optimisation and the adoption of digital technologies to enhance production efficiency and environmental sustainability.

The Indian API market size is estimated at USD 13.64 billion in 2024 and is expected to reac h.USD 20.32 billion by 2029, reflecting a CAGR of 8.31% between 2024 and 2029.²¹ The need to develop a resilient and self-reliant pharmaceutical supply chain post-pandemic has resulted in increased investments in API production. Additionally, the paradigm shift towards reducing dependency on single-source markets, particularly China, for API procurement has benefited India. It has positioned the country as an alternative hub for API manufacturing.

Furthermore, government initiatives supported and accelerated the growt h.of domestic API production. The Indian government has launched the Production Linked Incentive (PLI) scheme to promote domestic manufacturing of critical KSMs (Key Starting Materials), drug intermediates and APIs. Additionally, wit h.the increase in capital expenditure (capex), pharmaceutical companies are expanding their production capacities steadily. These efforts are strengthening Indias position in the global API market, ensuring a stable and secure supply of essential pharmaceutical ingredients while fostering innovation and sustainability in the sector.

Company overview

IOL is a prominent player in the global pharmaceutical and chemical industries wit h.a strong focus on the production of Active Pharmaceutical Ingredients (APIs) and specialty chemicals. The Company is one of the leading manufacture h in APIs and speciality chemicals secto h, steadily dive hifying its product portfolio and expanding its manufacturing capabilities to meet dynamic market needs.

The Company has carved a niche in the API market, catering to various therapeutic categories suc h.as pain management, anti-diabetes and anti-convulsant. Its portfolio includes a range of APIs suc h.as Metformin, Clopidogrel and Paracetamol. The Company is one of the worlds largest produce h of Ibuprofen, commanding 35% global market share.

In addition to APIs, the Company is a significant player in the specialty chemicals space. It is one of the leading domestic produce h of Ethyl Acetate and holds a strong position globally in Iso Butyl Benzene production. The dive hification positions IOL as a ve hatile player in the Indian chemical sector. The Companys consistent efforts to innovate and improve its product portfolio enable it to remain at the forefront of the pharmaceutical and chemical manufacturing industry. Wit h.over three decades of expertise, the Company continues to serve a critical role in global healthcare and chemical supply chains.

Wit h.production facilities in Barnala, Punjab, IOLs growt h.and development can be attributed to significant investments in technology and infrastructure. The Company aims at enhancing its manufacturing capabilities and ensuring compliance wit h.international standards. The Companys researc h.and development centre is approved by the Department of Scientific and Industrial Researc h.(DSIR). On the other hand, the manufacturing facilities are equipped wit h.state-of-the-art technology and adhere to current Good Manufacturing Practices (CGMP). The Company has received certifications from prestigious global entities suc h.as the USFDA, EUGMP, KFDA, TFDA and WHOGMP. The Companys commitment to quality and excellence positions the organisation as a trusted partner in the pharmaceutical and chemical industries, capable of meeting the stringent requirements of global markets.

SCOT analysis

Strengths

IOL enjoys global leade hhip in Ibuprofen production, holding 35% global market share

The Company is fully backward-integrated, enhancing control over the supply chain and cost efficiencies

IOL can manage hig h.scale complex operations

Dive he API and chemical portfolio, catering to various therapeutic and industrial applications

Regulatory approvals by major international regulatory bodies

Healthy long-term relationship wit h.custome h

Opportunities

Growing API market provides an opportunity to expand its market share

Rising demand from end-user industries for specialty chemicals facilitates the Company to strengthen its specialty chemicals segment

Government policies supporting domestic API production, fuelling the Companys growth

China plus one scheme providing increased outsourcing opportunities for the manufacture h

Challenges

Competition in specialty chemicals from established domestic and international playe h

Dependence on bulk drugs makes the Company vulnerable to price fluctuations

Fluctuations in raw material costs can impact production margins

Threats

Stringent regulations in key markets suc h.as the US and Europe, impacting production and export processes

Global economic slowdown could dampen demand for pharmaceuticals and specialty chemicals

Trade disruptions due to geopolitical tensions can impact supply chains and exports

Risk management

The Board ove hees risk management and internal controls. This includes establishing the Companys risk tolerance, consistently evaluating and tracking key risks and scrutinising reports generated by the internal audito h.

The Company is exposed to several risks that could impact its operations and financial performance. Wit h.dependency on key products suc h.as Ibuprofen, the Company is vulnerable to market fluctuations and regulatory changes impacting products demand and pricing. Additionally, operational risks pertaining to safety, healt h.and environmental compliances are inherent in the chemical and pharmaceutical manufacturing secto h. These require continuous management and capital investment. Supply chain disruptions can also hinder efficiency of the Company as it could affect the availability of raw materials and impact production costs.

Furthermore, policy changes, bot h.domestically and internationally, could influence operations, especially in key markets suc h.as the USA and Europe.

IOL has implemented several strategies to mitigate the risks. The Company has dive hified its product portfolio beyond Ibuprofen, expanding into other APIs and specialty chemicals, reducing dependency on a single product line. It also adheres to stringent international regulatory standards to manage regulatory risks effectively. The Company invests in state-of-the-art technology and infrastructure to enhance safety and compliance standards. The robust risk management framework ensures regular risk assessments and the implementation of risk mitigation strategies. The proactive approac h.aids the Companys resilience against operational disruptions and market volatility.

Financial performance

The Company has delivered industry-leading growt h. The Companys total income stood at H.2,163 Crores in FY 2023-24, as compared to H.2,243 Crores in FY 2022-23.

Segmental revenue

The pharmaceutical sector made up about 59% of the overall revenue, marking a boost from approximately 57% the prior year. Meanwhile, the chemicals sector accounted for around 41% of the total revenue for the year, down from its 43% share last year.

EBITDA

The Company registered an EBITDA of H.262 Crores in FY 2023-24 increasing from H.252 Crores in the previous year. The improvement in EBITDA margins was primarily driven by decline in cost of raw material consumed.

Net profit after tax

The Company earned H135 crores as profit after tax during FY 2023-24 as compared to H140 crores earned last year.

Balance sheet

Share capital

As of Marc h.31, 2024, the Companys paid-up equity share capital stands at H.58.71 crore comprising 5,87,05,502 equity shares of H10/- eac h. There were no alterations in the capital throughout the fiscal year 2023-24.

Reserves and surplus

Reserves and Surplus for FY 2023-24 were H.1553 crores as compared to H.1448 crores in the previous year.

Net worth

The net wort h.of the Company has grown to H.1611 crores in FY 2023-24 from H.1,507 crores in FY 2022-23.

Borrowings

As of the end of FY 2023-24, the Company had no long-term secured or unsecured borrowings. Short-term secured borrowings stood at H.33 crores, compared to H.80 crores at the end of FY 2022-23.

Assets

Non-current assets

As of Marc h.31, 2024, the Companys total non-current assets, including capital work in process, rose to H.1124 crores from H.1,102 crores as of Marc h.31, 2023, after adjusting for depreciation and additions.

Current assets and current liabilities

As of Marc h.31, 2024, the Companys inventories totalled H.425 crores, up from H.326 crores as of Marc h.31, 2023. Trade receivables decreased to H.471 crores from H.505 crores in the previous year, while trade payables stood at H.469 crores, compared to H.314 crores as of Marc h.31, 2023. These shifts align wit h.the level of operations.

Cas h.flows

For the fiscal year ending on Marc h.31, 2024, the Company generated a net cas h.flow of H.291 Crores from operating activities of as contrasting wit h.a net cas h.flow generation of H.123 Crores in the previous year.

The Companys net cas h.used in investing activities totalled H.192 crores for the fiscal year ending on Marc h.31, 2024, compared to H.119 crores in the previous year.

In the fiscal year ending on Marc h.31, 2024, the net cas h.used in financing activities amounted to H.92 crores, against H.4 crores used in the previous year.

Ratio	FY 2022-23	FY 2023-24
Operating Profit Margin (EBITDA) (in %)	11.24	12.09
Net Profit Margin (in %)	6.31	6.35
Return on Average Net Wort h.(in %)	9.66	8.69
Trade Receivable Turnover	4.53	4.35
Inventory Turnover Ratio	4.99	4.57
Current Ratio	2.02	2.00

People and culture

IOL prioritises investing in its human resources and promotes a culture of continuous improvement. In FY 2023-24, the Company implemented several key initiatives to attract, develop and retain top talent across its operations. These efforts include training and development programmes to promote career growt h.opportunities and enhancing employee engagement throug h.improved communication channels and committees.

The Company also offe h various programmes to enhance the overall well-being of its employees. These initiatives are expected to further strengthen IOLs objectives of nurturing a high-performing, future-ready workforce capable of driving sustainable growt h.and innovation across its business verticals.

As of 31^st March, 2024, the Company has a competent talent pool comprising 2,777 permanent employees spread across its production facilities and offices. The Company has witnessed remarkable growt h.over the year by prioritising leade hhip development and strong employee engagement.

Internal control system and their adequacy

The Company has aligned its current systems of internal controls including financial controls wit h.the requirement of Companies Act 2013. The Companys internal controls are commensurate wit h.its size and the nature of its operations. These have been designed to provide reasonable assurance wit h.regard to recording and providing reliable financial and operational information, complying wit h.applicable statutes, safeguarding assets from unauthorised use, executing transactions wit h.proper authorisation and ensuring compliance of corporate policies.

The Company uses best IT system to record data for accounting, consolidation and management information purposes and connects to different locations for efficient exchange of information.

The Audit Committee reviews reports submitted by internal audito h regularly and suggest the improvements from time to time whic h.are being implemented by the Company.

Cautionary statement

Statements in Management Discussion and Analysis describing Companys objectives, projections, estimates and expectations may be "Forward-Looking Statements" within the meaning of applicable laws & regulations. Actual results may differ materially from those expressed or implied. Important facto h that could make a difference to Companys operations include but are not restricted to the economic conditions affecting demand/supply and price conditions in the domestic and ove heas markets in whic h.Company operates, changes in the Government regulations, tax laws, and other statues, as also other incidental facto h.

Director Report

Dear Membe h

The Board of Director presents the 37^{t h.}Annual Report of the Company on the business operations and performance of the Company along wit h.the audited financial statements for the year ended 31 Marc h.2024.

1. Financial performance:

The brief summary of the financial performance of the Company for the Financial Year ended 31^st Marc h.2024 along wit h.the comparative figures for the previous year is summarized herein below:

(Rs.in Crore)

	Standalone		Consolidated
Particular	Year ended 31-Mar- 2024	Year ended 31-Mar- 2023	Year ended 31-Mar- 2024	Year ended 31-Mar- 2023
Total income	2162.86	2242.68	2162.86	2242.72
Profit before interest &	261.59	252.09	260.66	251.28
depreciation
Interest	16.10	16.47	16.10	16.47
Profit before depreciation	245.49	235.62	244.56	234.81
Depreciation	62.85	46.13	62.91	46.16
Profit before exceptional	182.64	189.49	181.65	188.65
items
Exceptional items	0	0		0
Profit before tax	182.64	189.49	181.65	188.65
Provision for tax (including	47.22	49.51	47.22	49.51
deferred tax)
Profit after tax	135.42	139.98	134.43	139.14

During the year under review, the standalone operating revenue of your Company was H.2162.86 Crore as compared to H.2242.68 Crore in the previous year. The gross margin for FY 2023-24 was H.418.88 Crore as compared to H.381.20 Crore in the previous year. Margins were improved due to lower raw material cost as compared to previous year.

Pu huant to Regulation 34(2)(e) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations"), the Management Discussion and Analysis Report forms an integral part of this Integrated Annual Report and gives the details, inter alia, about the performance , Companys state of affai h and Industrial Businesses of the Company in India and International , important changes, external environment, and economic outlook during the year under review.

During the year under review, there was no change in the nature of the Companys business.

2. Dividend

The Board of Director has declared interim dividends of H.5 per equity share involving a cas h.outflow of H.29.35 Crore during the year. The Board of Director conside h the same as final dividend. The Board recommends the dividend based on the paramete h laid down in the dividend distribution policy of the Company.

Pu huant to the Regulation 43A of the Listing Regulations, the Board of Director of the Company formulated and adopted the Dividend Distribution Policy of the Company. The said policy is available on the Companys website at https://www. iolcp.com/about-us/policies

3. Transfer to reserves

The Board has decided to retain the entire amount of the profits for the financial year 2023-24 in the profit and loss account and has not transferred any amount of profits to reserves not transferred any amount of profits to reserves for FY 2023-24.

4. Fixed Deposits

The Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and as suc h.no amount of principal or interest was outstanding as on 31^st Marc h.2024.

5. Share Capital

During the financial year 2023-24, there was no change in the authorised, issued, subscribed, and paid-up share capital of the Company. The paid up equity share capital of the Company has been H.58,70,55,020/- (Rupees Fifty Eight Crore Seventy Lak h.Fifty Five Thousand and Twenty) consisting of 5,87,05,502 (Five Crore Eighty Seven Lak h.Five Thousand Five Hundred Two) equity shares of H.10/- eac h.as on 31.03.2024.

6. Investor Education and Protection Fund (IEPF)

Pu huant to the provisions of Section 124 of the Companies Act,2013 ("the Act") read wit h.Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), and relevant circula h and amendments thereto, the amount of dividend remaining unpaid or unclaimed for a period of seven year 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 Investo h Education protection Fund.

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

7. Holding & Subsidiary Company

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

We have 3 subsidiaries as on Marc h.31, 2024. Out of these 3 subsidiaries IOL Foundations Corporate Overview Statutory Reports Financial Statements 41 is a Section 8 Company that undertakes the CSR activities of the Company. During the year under review, the company has closed its ove heas subsidiary IOL GLOBAL LIMITED in UK

The consolidated financial statements of the Company and its subsidiaries have been prepared in accordance wit h.the provisions of Section 129(3) of the Act, whic h.forms part of the Annual Report. A statement containing the salient features of financial statements of the Companys subsidiaries, associates & joint ventures in Form No. AOC-1 is annexed as Annexure – 1 to this report.

Further, pu huant to the provisions of Section 136 of the Act, the financial statements of the Company, consolidated financial statements along wit h.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 neither a holding company nor an associate company

8. Re-affirmation of External Credit Rating

During the year under review, the Credit Analysis & Researc h.Ltd (CARE) has reaffirmed the credit rating of the Company for Long term Bank Facilities as ‘CARE A+ (Single A plus ; Outlook: Stable) and the credit rating for Short Term Bank Facilities as ‘CARE A1+(A One plus).

9. Expansion

During the year 2023-24, the Company commenced "Acetic Anhydride" for captive consumption as well as merchant sale wit h.installed capacity of 25000 MTPA .

During the year 2023-24, the Company has got additional approval from Center for Drug Evaluation (CDE) of National Medical Products Administration (NMPA), China for "Metformin Hydrochloride" whereas European Directorate for the Quality of Medicines & Healt h.Care (EDQM) has issued a Certificate of Suitability for Gabapentin.

Further, during the year 2023-24, the Company successfully completed the Brazilian Healt h.Regulatory Agency (ANVISA) GMP audit for all the 10 APIs manufacturing Units situated at Barnala, Punjab without any observation and later on received a Certificate of Good Manufacturing Practices in May 20024.

10. Director and Key Managerial Pe honnel

The membe h of the company have appointed Mr Abhiraj Gupta as Executive Director for a Period of five year w.e.f 03^rd April 2022 till 2^nd April 2028 and has varied the terms of appointment of Mr Vikas Gupta by re-designating him as Joint Managing Director of the Company w.e.f 3^rd April 2023

The Board of Director has appointed Mr. Vikas Vij as Chief Executive Officer of the Company effective from 3^rd April 2023 at the board meeting held same day.

Mr Vikas Gupta, Joint Managing Director of the Company retires by rotation at the ensuing Annual General Meeting and, being eligible, offe h himself for re-appointment. A resolution seeking shareholde h approval for his re-appointment forms part of the Notice for the ensuing AGM.

Further, On 14^{t h.}May, 2024 the Board of Director, subject to the shareholde h approval, re-appointed Mr. Kushal Kumar Rana as Director(Works) of the Company for a period of 5 year w.e.f. 4^{t h.}June 2024. A resolution in this regard has been proposed in the notice for the ensuing annual general meeting for the shareholde h consideration and approval.

The brief details of all the Director 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 Kushal Kumar Rana, Director-Works(Whole-time Director); Mr Vikas Gupta, Joint Managing Director (Whole-time Director); Mr Abhiraj Gupta, Executive Director (Whole-time Director); Mr Pardeep Kumar Khanna, Chief Financial Officer (CFO); Mr Abhay Raj Singh, Sr. VP & Company Secretary and Mr Vikas Vij, Chief Executive Officer continues to be the Key Managerial Pe honnel (KMP) of the Company in accordance wit h.the provisions of Section(s) 2(51) and Section 203 of the Companies Act, 2013 read wit h.the Companies (Appointment and Remuneration of Managerial Pe honnel) Rules, 2014.

11. Procedure for Nomination and Appointment of Director

The Nomination and Remuneration Committee (‘NRC) evaluate the appropriate characteristics, skills and experience for the individual director and board wit h.an idea to form a well dive he board having dive hified backgrounds and experiences and recommends the eligible candidate to the Board for appointment as new Director.

Your Director consider that the Board dive hity is a key factor in promoting effective governance, innovation, and decision-making. By focusing on board dive hity, organizations can harness the full potential of their leade hhip teams, drive sustainable growth, and build a more inclusive corporate culture. Having a dive he Board is a strategic advantage that can lead to better performance, greater innovation, and enhanced reputation for the organization.

Pu huant to the Regulation 19(4) & 20(4) and Part D of Schedule II of Listing Regulations, 2015 the Board of the Company has adopted a Policy on dive hity of Board of Director. The said policy is available on the website of the company at https:// www.iolcp.com/about-us/policies

Detailed information regarding the nomination and appointment process of Director, along wit h.the list of core skills, expertise, and competencies of the Board of Director, are provided in the Corporate Governance Report, whic h.forms part of the Annual Report.

12. Woman Director

In terms of the provisions of Section 149 of the Companies Act, 2013 and Regulation 17 of the Listing Regulations, Dr Sandhya Mehta is serving as Independent Woman Director on the Board of the Company. She is also Chairpe hon of Stakeholde h Relationship Committee and member of Audit Committee, Nomination and Remuneration Committee, CSR Committee and Risk Management Committee.

13. Board Evaluation

Pu huant to the provisions of Companies Act, 2013 and SEBI Listing Regulations, Company has formulated and adopted Policy of Evaluation of Board (the "Board Evaluation Policy") to formulate the procedures and to prescribe & lay down the criteria to evaluate Board of Director. The annual evaluation is carried out by the Board of its own performance and that of its committees and individual Director by way of individual and collective feedback from all the Director. The Director expressed their satisfaction wit h.the evaluation process. In a separate meeting of independent Director, performance of non-independent Director, the Board as a whole and Chairman of the Company was evaluated, considering the views of executive as well as non-executive Director. The evaluation criteria are mainly based on the Guidance Note on Board Evaluation issued by the SEBI.

14. Number of Meetings 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 Listing Regulations. The details of meetings of the Board of Director and its Committees are provided in the Corporate Governance Report forming part of this report.

15. Meeting of Independent Director

Pu huant to the requirements of Schedule IV of the Companies Act, 2013 and in terms of Regulation 25 of the Listing Regulations, a separate meeting of the Independent Director of the Company were convened on 29^{t h.}March, 2024 to review the matte h as laid down in the aforesaid Schedule and Regulations.

16. Director Responsibility Statement

To the best of their knowledge and belief and according to the information and explanations obtained by them, your

Director 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 31 Marc h.2024, the applicable accounting standards have been followed along wit h.proper explanation relating to material departures, if any;

b. that suc h.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 affai h 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 wit h.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 wit h.the provisions of all applicable laws were in place and were adequate and operating effectively

17. Declaration by Independent Director

All the Independent Director have submitted declarations that eac h.of them meets the criteria of independence as provided in Section 149(6) of the Companies Act along wit h.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 Director of the Company and hance, they continue to comply the criteria to serve as independent Director.

18. Nomination and Remuneration Policy

The Board, has on the recommendation of the Nomination

& Remuneration Committee, framed a Nomination and Remuneration Policy ("Remuneration Policy"), whic h.provides process for selection and appointment of Director, key managerial pe honnel and Senior Management employees including criteria for determining qualifications, positive attributes, fixation of remuneration, independence of a Director and other matte h, as required under sub-section (3) of Section 178 of the Act.

The Remuneration Policy is available on the companys website at https://www.iolcp.com/uploads/Nomination-and-Remuneration-Policy.pdf

19. Corporate Governance

The Company has complied wit h.the requirements of the Listing Regulations regarding corporate governance. A report on the Companys Corporate Governance practices and the Audito h Certificate on compliance of mandatory requirements thereof are given as an annexure to this Report and the same is also available on the website of the Company at https://www. iolcp.com/investo h

20. Management Discussion and Analysis

In terms of the Regulation 34(2)(e) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 a Report on Management Discussion and Analysis (MDA) forms part of the Annual Report. The MDA provides detailed insights on Companys business, financial performance, key achievements, challenges etc.

21. Audit Committee

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

22. Internal financial control systems and their adequacy

The Companys internal control systems are commensurate wit h.the nature of its business, the size and complexity of its operations and suc h.internal financial controls wit h.reference to the Financial Statements are adequate including adherence to the Companys policies, safeguarding of its assets, prevention and detection of frauds and erro h, accuracy and completeness of the accounting records and timely preparation of reliable financial disclosures.

Effectiveness of internal financial controls is ensured throug h.management reviews, controlled self-assessment and Independent Audito h. Refer para on Internal Control Systems and their Adequacy in MDA for additional details.

23. Risk Management

The Risk Management Committee (‘RMC) is constituted to frame, implement and monitor the Enterprise Risk Management (‘ERM) Framework of the Company, while Board takes responsibility for the overall process of risk management throughout the organisation. Throug h.an ERM programme, our business units and corporate functions address risks by adopting an institutionalized approac h.aligned to our objectives. The Business risk is managed throug h.cross-functional involvement and communication across businesses.

RMC reviews on a regular interval monitor and reviews the ERM framework of the Company to assess and manage various existing risk and to identify new risks and prepare mitigation plan.

The Audit Committee also has an additional ove hight in the area of financial risks and controls.

A detailed note on Risk Management has been provided in the Management Discussion and Analysis Report, whic h.forms part of this report.

24. Related Party Transactions

All related party transactions that were entered into during the financial year were on arms lengt h.and were in the ordinary cou he of business and therefore did not attract the provisions of Section 188 of the Companies Act 2013. Moreover, there were no material transaction entered into wit h.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 whic h.are of repetitive nature and entered in the ordinary cou he of the business on arms lengt h.basis.

The details of the related party transaction during financial year 2023-24 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 wit h.Rule 8(2) of the Companies (Accounts) Rules,2014 in Form No. AOC-2 is not applicable to the Company for the financial year 2023-24 and hence does not form part of this report.

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

25. Corporate Social Responsibility (CSR)

The Board has constituted a Corporate Social Responsibility Committee (‘CSR Committee). The Company has in place a Corporate Social Responsibility Committee (‘CSR Committee) in terms of the requirements of section 135 of the Companies Act, 2013 read wit h.the rules made thereunder.

A brief note regarding the Companys initiatives wit h.respect to CSR and the composition of the CSR Committee and the Annual 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/about-us/policies

26. Researc h.and Development

IOL is committed to investing in R&D, as part of our mission to find breakthroughs to safeguard lives. Our R&D program is designed to develop safe and effective breakthroughs for human lives across the globe. R&D has played a significant role in the development of customized requirements, addressing regulatory requirements, leading to four new CEP filings, three USDMF fillings & two new approval of CEPs.

We are active supporte h of finding new ways of developing APIs using latest technological tools by minimizing energy consumption & minimal waste generation to keep environment cleaner. In this context R&D team has successfully developed & scale up a key intermediate of an API via continuous flow chemistry. In continuation to last year, we have established novel route of synthesis for one of our API & filed patent application.

Our Commitment to Improving Healt h.throug h.R&D in APIs is continuous & this year three products have been scaled up at commercial scale in multipurpose production facility, and three new products are at kilo scale.

27. Statutory Audito h

Pu huant 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 audito h of the Company from conclusion of 36^{t h.}Annual General Meeting of the Company held on 10^{t h.}August 2023 till the conclusion of the 41^st Annual General Meeting to be held in the year 2028.

The report of the Statutory Auditor forms part of this Report and Annual Accounts 2023-24. The said report does not contain any qualification, reservation, adve he remark or disclaimer. During the year under review, the Audito h did not report any matter under Section 143(12) of the Act, therefore no detail is required to be disclosed under Section 134(3)(ca)of the Act.

28. Secretarial Audit

Pu huant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Pe honnel) 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 herewit h.as Annexure - 3.

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

29. Secretarial Standards

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

30. Cost Records & Cost Audito h

In accordance wit h.Section 148 of the Act read wit h.the Companies (Audit and Audito h) Rules, 2014, the Company maintains cost records as required, and a Cost Accountant conducts the audit of these records.

The Board of Director, based on the recommendation of the Audit Committee, has approved the appointment of M/s. Ramanat h.Iyer & Co., Cost Accountants, New Delhi, as the Cost Audito h of the Company for the financial year 2024-25 at a remuneration of H.181500/- plus applicable taxes and out-of-pocket expenses in connection wit h.the cost audit.

Further, pu huant to the provisions of Section 148(3) and other applicable provisions, if any, of the Companies Act, 2013 read wit h.Rule 14 of the Companies (Audit and Audito h) Rules, 2014, the remuneration of Cost Audito h as approved by the Board is required to be ratified by the shareholde h of the Company and therefore, the same is included in the ensuing AGM notice for the ratification of the shareholde h.

The Cost Audit Report for the financial year ended 31^st Marc h.2023, provided by the Cost Auditor, does not contain any qualification or adve he remarks that require any clarification or explanation.

31. Particular of managerial remuneration and related disclosures

Disclosures relating to remuneration and other details as required under Section 197(12) of the Act read wit h.Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Pe honnel) Rules, 2014 are provided in Annexure-4.

In terms of the provisions of Section 197(12) of the Act read wit h.Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Pe honnel) Rules, 2014, as amended, a statement showing the names and other Particular of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annual Report, whic h.forms part of this Report.

32. CEO & CFO Certification

In accordance wit h.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 2023-24 to the Board of Director, whic h.forms part of this Report.

33. Annual Return

Pu huant 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/investo h/annual-returns

34. Loan, guarantees or investment under Section 186 of the Companies Act, 2013

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

35. Material Changes and Commitments

There have been no material changes and commitments affecting the financial position of the Company whic h.occurred between the end of the Financial Year of the Company as on 31^st Marc h.2024 and the date of this report.

36. Significant and Material Orde h impacting Operations of Company in Future

There are no significant or material orde h that have been passed by any Regulato h/Court or Tribunals impacting the going concern status and future operations of your company.

37. Reporting of Frauds

There have been no instances of fraud reported by the Statutory Audito h 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.

38. Industrial Relations

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

39. Safety, Healt h.and Environment

Safety is Companys top priority wit h.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.

40. Prevention of Sexual Harassment Policy

In line wit h.the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal)

Act, 2013, the Company has set up Complaints Committees at its workplace. No complaints have been received during the year 2023-24.

41. Vigil Mechanism

In pu huant to the provisions of Section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for Director and employees to report genuine concerns has been established. The Vigil Mechanism Policy can be accessed at companys website: www.iolcp.com

42. Business Responsibility and Sustainability Report

In terms of Regulation 34(2)f of the Listing Regulations, the Business Responsibility and Sustainability Report (B HR) 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

43. 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 wit h.Section 134 of the Companies Act, 2013 read wit h.Rule 8(3) of the Companies (Accounts) Rules, 2014 is annexed hereto as Annexure – 5 and forms part of the Report.

44. Integrated Reporting

The Company is complying wit h.the applicable requirements of the Integrated Reporting Framework. The Integrated Report tracks the sustainability performance of the organization and its interconnectedness wit h.the financial performance, showcasing how the Company is adding value to its stakeholde h. The Integrated Report forms a part of this Integrated Annual report.

45. General

Your Director 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 wit h.differential rights as to dividend, voting or otherwise.