J B Chemicals & Pharmaceuticals Ltd Directors Report.

Your directors are pleased to present forty-sixth report and audited financial statement of the Company for the financial year ended on March 31, 2022.

1. FINANCIAL HIGHLIGHTS

The following are the highlights of financial performance of the Company during the year under review.

(Rs in lakhs)
Standalone Consolidated
2021-22 2020-21 2021-22 2020-21
Sales 216,239.43 184,907.75 239,761.56 200,211.39
Other Operating revenue 2,748.20 4,291.80 2,662.83 4,040.76
Other Income 3,861.38 11,188.94 3,922.63 11,238.32
Total Income 222,849.01 200,388.49 246,347.01 215,490.47
Profit before finance cost and depreciation 54,752.34 66,825.48 58,268.24 67,279.21
Less: Finance cost 494.87 719.18 512.05 724.12
Less: Depreciation & Amortisation expense 7,128.21 6,735.50 7,265.99 6,866.55
Profit before tax 47,129.26 59,370.80 50,490.20 59,688.54
Tax Expense (Net) 11,029.06 14,662.32 11,886.31 14,836.24
Net Profit after tax 36,100.20 44,708.48 38,603.89 44,852.30
Other Comprehensive Income 106.60 (1,249.67) 400.60 33.46
Total Comprehensive Income after tax 36,206.80 43,458.81 39,004.49 44,885.76
Earnings per share of Rs 2 (in Rs)
- Basic 46.71 57.85 49.86 57.96
- Diluted 46.67 57.85 49.82 57.96

2. DIVIDEND

Your directors recommend a final dividend of Rs 8 (400%) per equity share of face value of Rs 2, payment whereof will be subject to deduction of tax at source. During the year, Board of directors declared interim dividend of Rs 8.50 (425%) per equity share, which was paid on March 4, 2022. The final dividend, if declared, together with interim dividend already paid would result in total outgo of Rs 127.52 crores. The Board has not proposed any for the financial year to reserves in relation to transferoutofprofit these dividend payments. The Company paid interim dividend of Rs 8.50 (425%) and final dividend of Rs 8 (400%) per equity share in the previous year.

3. OPERATIONS/STATE OF AFFAIRS

The Companys strong performance and sales momentum continued throughout the year, with several businesses outperforming. Revenue for the organisation was at

Rs 2,424 crores as compared to Rs 2,043 crores recording growth of

19 %. The domestic business continued its outperformance while the international business bounced back strongly in the fourth quarter to record double digit growth for the financial year.

Total standalone sales during the year at Rs 2,189.88 crores were

15.7% higher over the previous year.

Domestic formulations business revenue was at Rs 1,173 crores as compared to Rs 892 crores for the previous financial year registering growth of 32%. Domestic business continued to maintain its stellar performance. The business continued to retain its position as the fastest growing company in IPM amongst top 30. This outperformance is mainly attributed to factors such as the 5 pillar brands driving market-beating growth, increasing contribution from Chronic Therapies, improved field-force productivity, acceleration in new launches. Going forward, we will continue to capitalize on synergies from the acquired brands. Consequently, we have seen a significant improvement in our IPM ranking over the past 12 months from 32 to 25. As per IQVIA MAT Mar22 data, the Company grew at 29% vs market growth of 18%. Its main brands continue their market-beating performance and remain well above market growth rates. During the year, the business introduced fifteen new products. Further, the integration of the newly acquired brands from Sanzyme is on track towards stability and maximization of synergistic growth.

The international business revenue was at Rs 1,236 crores for

FY 22 as compared to Rs 1,127 crores recording growth of 10%.

International business delivered a good performance against the odds of a challenging and volatile market. This strong bounce-back especially in the fourth quarter was made possible by surging demand in Contract Manufacturing & Lozenge business, and revived demand in several pockets of ROW business. Exports formulation business revenue was at Rs 892 crores growing at 10% over the previous year. CMO business aided by new launches and new customers performed well with revenue at Rs 253 crores, registering a growth of 12% over the previous year. The API sales at Rs 91 crores achieved growth of 1% over the previous year.

The business saw a challenging cost environment during the year especially in the second half of the year. Inflation in material costs, power & fuel and shipping costs accentuated alongwith the normalisation of operating costs. These could be partly mitigated through cost savings initiative, pricing & business mix. Reported EBIDTA was Rs 655 crores (previous year Rs 560 crores). Adjusted EBIDTA (after adjusting non-cash ESOP & one-time costs) was Rs 543 crores (previous year Rs 560 crores).

Profit Before Tax was at Rs 505 crores as compared to Rs 597 crores. Profit After Tax was atRs 386 crores as compared to Rs 449 crores. PAT and PBT was impacted due to the non-cash ESOP charge and one time related non-recurring charges in this financial year and higher other income recorded in the previous year.

4. ACQUISITIONS

During the year, the Company acquired portfolio of brands from Sanzyme Private Limited, which has marked the Companys entry into the fast-growing probiotics, therapeutic nutraceuticals and reproductive health market in the country.

Subsequent to the year end, the Company acquired the brand AzmardaR indicated for heart failure patients with reduced ejection fraction (HFrEF) from Novartis AG, Switzerland for India. The said brand shall help the Company in strengthening its presence in the Cardiology segment in the country.

5. RESPONSIBILITY STATEMENT

Thedirectors

(i) that in the preparation of the annual accounts for the year under review, the applicable accounting standards have been followed;

(ii) that they have selected appropriate accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of financial year 2021-22 and of profit of the Company for that year;

(iii) that they have taken proper and sufficient care 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;

(iv) that they have prepared the annual accounts for the year ended on March 31, 2022 on a going concern basis; (v) that they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

6. SUBSIDIARIES

The highlights of performance of subsidiary companies in Rupee terms for the year 2021-22 is presented in Schedule-A. After inter-company adjustments, subsidiary companies contributed Rs 234.37 crores to consolidated income and Rs 33.60 crores to consolidated profit before tax of the Company.

Sales of Biotech Laboratories (Pty.) Ltd., South Africa, for the financial year 2021-22 were Rand 576.66 million, which represents growth of 20.84% over the previous year, while its operating profit and profit after tax at Rand 38.77 million and Rand 28.53 million were 12.12% and 11.14% higher over the previous year respectively. Sales of LLC Unique Pharmaceutical Laboratories, Russia, for the financial year 2021-22, at Rouble 734.56 million were 12.39% higher over the previous year, while it earned net profit of Rouble 26.96 million against loss of Rouble 1.45 million in the previous year. Unique Pharmaceutical Laboratories FZE, Dubai is presently not engaged in any business activity. It has incurred loss of AED 0.78 million due to operating and other expenses.

7. CORPORATE GOVERNANCE AND COMPLIANCES

A certificate from practising company secretary with conditions of corporate governance is annexed to this Boards report. Management Discussion and Analysis Report, Compliance report on Corporate Governance, Business Responsibility Report and Dividend Distribution Policy form part of this annual report.

8. PUBLIC DEPOSITS

The Company has not accepted any deposit covered under Chapter V of the Companies Act, 2013 during the year. All the public deposits accepted prior to the commencement of the said Act have been repaid in 2014-15.

9. DIRECTORS AND KEY MANAGERIAL PERSONNEL

The members of the Company at annual general meeting held on September 9, 2021 appointed Mr. Gaurav Trehan as Non-executive director liable to retire by rotation and re-appointed Ms. Ananya Tripathi, who was retiring by rotation.

Mr. Sanjay Nayar and Ms. Ananya Tripathi, resigned from the Board of directors with effect from January 25, 2022 and March 11, 2022 respectively.

In accordance with provisions of the Companies Act, 2013, Mr. Prashant Kumar would retire by rotation at the ensuing annual general meeting. Being eligible, he has offered himself for re-appointment.

In the opinion of the Board of directors, Mr. Ranjit Shahani, Mr. Sumit Bose and Ms. Padmini Khare Kaicker, independent directors, are persons of integrity and they all possess relevant expertise and experience necessary for effective functioning of the Company. These independent directors have given declarations to the Board that they meet the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 as well as in Regulation 16 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. They have also confirmed that they have registered with the Indian Institute of Corporate Affairs to include their names in the databank of independent directors. However, in terms of Companies (Appointment and Qualification of Directors) Rules, 2014 as amended, these independent directors are not required to pass an online proficiency self-assessment test conducted by the said Institute notified under sub-section (1) of section 150 of the Companies Act, 2013.

Ten meetings of the Board of directors were held during the financial year ended on March 31, 2022. These meetings were held on April 1, 2021, April 28, 2021, June 14, 2021, July 14, 2021, August 12, 2021, October 1, 2021, November 11, 2021, January 25, 2022, February 14, 2022 and March 22, 2022. Mr. Vijay Bhatt resigned as Chief Financial Officer with effect from August 31, 2021 and Mr. Lakshay Kataria was appointed as Chief Financial Officer of the Company with effect from October 4, 2021. Mr. Mayur Mehta resigned as Complany Secretary with effect from July 14, 2021 and Mr. Sandeep Phadnis was appointed as Company Secretary and compliance officer with effect from July 15, 2021.

10. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The Companys policy on directors appointment is set out in Schedule-B. The salient features of the Companys policy on remuneration for the directors, key managerial personnel and other employees is set out in Schedule-C. The said Policy including criteria for determining qualifications, positive attributes and independence of a director has been posted on the Companys website www.jbpharma.com.

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

The particulars as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are given in Schedule-D.

12. CORPORATE SOCIAL RESPONSIBILITY

Corporate Social Responsibility (CSR) Committee of the Board consists of Mr. Ranjit Shahani, Mr. Sumit Bose, Mr. Nikhil Chopra and Mr. Prashant Kumar. The CSR Committee formulated and recommended revised CSR Policy to the Board, which the Board approved on February 10, 2021. The salient features of the said CSR Policy of the Company and the annual report on CSR in the prescribed form are set out in Schedule-E. The CSR Policy and annual report on CSR are posted on the Companys website www.jbpharma.com.

The Company spent Rs 6.95 crores on CSR activities (Rs 6.61 crores on CSR activities and Rs 0.34 crore on administrative overheads for general management and administration of CSR function) on prescribed CSR activities during financial year 2021-22 as against obligation of Rs 6.94 crores being 2% of the averagenetprofitsof the Company made during three immediately preceding financial years.

13. AUDIT COMMITTEE AND VIGILANCE MECHANISM

The Board has constituted Audit Committee that consists of Ms. Padmini Khare Kaicker, Chairperson, Mr. Ranjit Shahani, Mr. Sumit Bose and Mr. Prashant Kumar. There has been no instance of non-acceptance of recommendation of Audit Committee by the Board.

The Board of directors has on November 10, 2020, adopted revised vigil mechanism in the form of Whistle Blower Policy to enable directors, employees and other stakeholders to make Protected Disclosures (as defined in the Policy) in relation to Alleged Wrongful Conduct (as defined in the Policy) to the Redressal Committee for evaluation and investigation in consultation with the Audit Committee. The Policy empowers the Redressal Committee to initiate inquiry and investigation if the issue raised constitutes bona fide Protected Disclosure made in good faith. The Redressal Committee is required to complete the investigation in a time bound manner. Where it concludes that Unethical and/or Improper Activity (as defined has been committed, it shall recommend, after consultation with the Audit Committee, to the management of the Company to take such disciplinary or corrective action as it or the Audit Committee deems fit. The Policy provides for access of whistle blower to the Chairman of the Audit Committee in appropriate or exceptional circumstances. The Policy provides for adequate safeguards of whistle blowers against any kind of victimisation or unfair treatment but also provides for taking stern disciplinary action against who abuses the protection so granted. This functioning of vigil mechanism will be periodically reviewed by the Audit Committee. The Company has posted the Whistle Blower Policy and the associated Complaint Response Plan Policy on its website www.jbpharma.com.

14. ANNUAL PERFORMACE EVALUATION

The Board of directors carried out formal annual evaluation of performance of the Board, its Committees and individual directors during 2021-22 in accordance with the manner specified by the Nomination and Remuneration Committee (NRC) and using evaluation criteria recommended by the NRC and approved by the Board. The performance evaluation was carried out in the following manner, being manner recommended by the NRC.

Evaluation of performance of the Board: Each member of the Board evaluated the Board on the given criteria on scale of 1 to 4 (4 being highest). The aggregate of simple average of rating assigned by each Board member was further averaged to ascertain Boards performance.

Evaluation of performance of the Board Committees: Each member of the concerned committee evaluated performance of the committee on the given criteria on scale of 1 to 4. Aggregate of simple average of rating assigned by each such member was further averaged to ascertain performance of the concerned committee.

Evaluation of performance of Individual Director: Each Board member (excluding director being evaluated) evaluated performance of all other Board members on the given criteria on scale of 1 to 4. Aggregate of simple average of rating assigned to each Board member was further averaged to ascertain performance of such director.

15. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

Form AOC-2 prescribed under Section 134(3)(h) read with Rule 8(2) of the Companies (Accounts) Rules, 2014 provides for disclosure of (a) details of contracts or arrangements or transactions not at arms length basis, and (b) details of material contracts or arrangement or transactions at arms length basis. All the transactions entered into by the Company with the related parties during the year were pursuant to the contract or arrangement approved by the Audit Committee and the Board of directors. The transactions so entered into were in the ordinary course of business of the Company and on arms length basis. The contract or arrangement or transactions were neither material in terms of the Policy on materiality of related party transactions adopted by the Company nor it exceeded the threshold limit prescribed pursuant to first proviso to Section 188(1) of the Companies Act, 2013. Accordingly, the disclosure of related party transactions in Form AOC-2 is not applicable. However, disclosure on related party transactions as per IND AS-24 has been provided under Note No. 46 of the standalone financial statements and Note No. 44 of the consolidated financial statements

16. PARTICULARS OF EMPLOYEES AND OTHER REMUNERATION RELATED DISCLOSURES

The remuneration related and other disclosure required in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, are given in Schedule-F. A statement showing name and other particulars of the employees in terms of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is given in Schedule-G.

17. EMPLOYEE STOCK OPTION SCHEME

During the year, the Company implemented "JBCPL Employee Stock Option Scheme 2021" ("Scheme") as approved by the shareholders on July 31, 2021 and has also received in-principle listing approval from the Stock Exchanges in respect thereof. The Compensation Committee of the Board administers the Scheme and granted time based options and performance based options to eligible employees and director(s) of the Company and its subsidiary companies with a view to achieve overall growth objective. The Scheme is in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (saved under the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021) and there has been no change in the Scheme since the shareholders approval date.

Disclosure of details of the Scheme as required under (a) Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 are posted on the Companys website www.jbpharma.com and web link thereto is https://jbpharma.com/download/esop-disclosure-for-the-year-ended-31-03-2022/?wpdmdl=6061&refresh=62cbdc37cecb81657527351 and (b) the Companies (Share Capital and Debentures) Rules, 2014, is set out in Schedule-H to this report.

18. RISK MANAGEMENT

The Board of directors has developed and implemented risk management policy for the Company. Pursuant to the Listing Regulations, the Board has constituted Risk Management Committee and delegated monitoring and review of the risk management plan to the Committee. Committee would periodically review status of mitigation measures taken in respect of risk management plan and would report progress thereof and new risks identified to the Board and Audit Committee. Board at present does not perceive any element of risk, which may threaten existence of the Company.

19. INTERNAL FINANCIAL CONTROLS

The Board has adopted internal financial controls encompassing policies and procedures for ensuring the orderly and efficient conduct of the business, including adherence to Companys policies, safeguarding the Companys assets, prevention and detection of fraud and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information. The specific internal financial controls with reference to financial statements include internal audit of important activities and processes relating to preparation of financial statements, adoption of well-defined standard operating procedure for business transactions and compliance relating thereto, use of ERP for accuracy and control, review of periodically prepared financial statements with objective to ensure that financial statements present true and fair view and are sufficient/credible and in compliance with legal and regulatory requirement. The Board has appointed Ernst & Young LLP as internal auditor to periodically audit systems and controls in all key areas of operations to ascertain effective functioning of internal controls including internal financial controls. In the opinion of the Board, the Company has adequate internal controls with reference to the financial statements.

Neither management of the Company has come across any instance of fraud during the year 2021-22 nor the auditors of the Company has reported any such instance to the Audit Committee.

20. LOANS, GUARANTEES AND INVESTMENTS

During the year, the Company has not given any loan or guarantee or made any investment attracting the provisions of Section 186 of the Companies Act, 2013. Hence, there is no information to be furnished pursuant to Section 134(3)(g) of the Companies Act, 2013.

21. COST RECORDS

The Company is required to maintain cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013, and such accounts and records are duly made and maintained by the Company. The Company is further required to get such cost records audited by a cost auditor in accordance with the Companies (Cost Records and Audit) Rules, 2014 and furnish cost audit report received from the cost auditor to the Central Government within the prescribed time.

The Company is in compliance with these provisions.

22. SECRETARIAL AUDIT REPORT or material order affecting the going Ashish Bhatt & Associates, Practising Company Secretaries, Secretarial Auditor of the Company, carried out secretarial audit for the financialyear 2021-22 as provided under Section 204 of the Companies Act, 2013 and the rules made there under. The secretarial audit report given by the said auditor is annexed to this report as Schedule-I.

23. AUDITORS

The members at annual general meeting held on September 9, 2021 has appointed Deloitte Haskins & Sells LLP, (having firm registration no. 117366W/W-100018) as statutory auditors of the Company until conclusion of the 49th annual general meeting of the Company at such remuneration as may be agreed by the

Board of directors with the auditors.

24. ESG (ENVIRONMENT, SOCIAL & GOVERNANCE)

We continue to embrace the triple bottom-line philosophy of People, Planet and Profits. During the year under review, we reaffirmed Governance) and have instituted a sustainable business strategy to positively impact the environment and society while also benefiting shareholders. ESG in todays context is not just about goodwill and reputation but it can be used as a competitive edge at the marketplace. While as an organisation we have focused on all these areas in different aspects, we are committed to dedicating further resources and efforts towards this area. During the year under review, we undertook a detailed gap assessment analysis regarding our ESG parameters. Our gap assessment was based on benchmarks established by GRI ( Global Reporting Initiative) and the local ESG standards set by reputed institutions. As you are aware, GRI is the benchmark standard for most

Fortune 500 companies when reporting on ESG parameters. We have instituted various policies to strengthen the governance mechanism including ABAC, POSH etc. We have also ensured that our employees are trained on various governance mechanisms so that these policies are embraced by every employee in the organisation. We have introduced a framework that will help us monitor, measure and improve our environmental footprint; like water usage, waste and effluent generated, use of renewable energy sources, implementation of zero discharge norms across sites and instituting a strong HSE policy. We have instituted a sustainable business strategy which encompasses short-term and medium-term goals for the organisation. Our efforts will continue to focus on increasing ESG standards within the organisation. We also plan to publish a sustainability report based on GRI standards. All these initiatives and efforts will ensure that we continue raise the bar every year regarding ESG standards.

25. OTHER DISCLOSURES AND CONFIRMATIONS

Board has to make further disclosures and provide confirmations, as required, as under:

The Company has placed annual return referred to in subsection (3) of section 92 on its website www.jbpharma.com.

No regulator or court or tribunal has passed, during the year, any significant status and Companys operations in future.

The Company has complied with applicable Secretarial Standards specified by the Institute of of India and approved by the Central Government under Section 118(10) of the Companies Act, 2013.

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

26. HEALTH AND SAFETY

The Company continues to accord high priority to health and safety of employees and workmen at all manufacturing locations. Annual medical check-up of all employees at all sites was carried out. The Company also conducted safety training programmes and mock-drills for increasing disaster preparedness awareness among all employees at the plants. There was no casualty at any site during the year. our commitment to ESG(Environment, Social and

For and on behalf of the Board of Directors
Ranjit Shahani
Chairman
Place : Mumbai
Date : May 26, 2022