Jubilant Pharmova Ltd Management Discussions.

Cautionary Statement

Statements in the Annual Report, particularly those, which relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations, may constitute forward-looking statements within the meaning of applicable laws and regulations. Although the expectations are based on reasonable assumptions, the actual results might differ significantly.

Key Economic and Industry Trends

During the last financial year the worlds economic, social and health infrastructures were severely challenged by the COVID-19 pandemic, which adversely impacted the global economic output. Several developed and developing countries resorted to various degrees of lockdowns and mobility constraints to control the COVID-19 pandemic, which led to major disruptions across sectors, such as manufacturing, construction, logistics, aviation, hospitality and tourism.

As per IMFs April 2021 World Economic Outlook report, in 2020 the global economy contracted by 3.3%, advanced economies by 4.7% and Emerging and Developing Markets by 2.2%. The Indian economy too had its share of turmoil as it contracted by 7.3% in FY 2021 with major impact on economy coming from the national lockdown during the first quarter and below normal economic activity in rest of the quarters.

However, the advent of vaccines and adaptability against COVID-19 means that the global economy is expected to witness a strong rebound with an expected growth in output by 6% and 4.4% in 2021 and 2022 respectively. Indian economy too is expected to return to growth, with IMF forecasting the economic output to grow by 9.5% in FY 2022 and 8.5% in FY 2023. However, possibility of emergence of new mutants that are immune to available vaccines and are more virulent poses risk to the current growth forecasts.

As per IQVIA, the global pharmaceutical market size in CY 2020 was estimated at USD 1.3 trillion and is expected to expand at a Compounded Annual Growth Rate (CAGR) of 3%-6% to USD 1.6 trillion by 2025. The key factor driving the global medicine spending capacity will be based on the strong growth of ‘Pharmerging markets and the consistent launch of high-end specialty innovative products in developed markets. This could possibly be offset with the slower growth in developed markets as losses of exclusivity for original brands outweigh growth from new products.

As per Evaluate Pharmas annual ‘World Preview, demand for innovative and effective therapies will continue to drive long-term growth. Prescription drugs are forecast to grow from an estimated USD 0.9 trillion in 2020 to almost USD 1.4 trillion in 2026 with orphan drugs and oncology products continuing to be high-performing segments. As per the report, oncology remains the leading area for R&D investment with a forecast spend of USD 82 billion which is expected to result in 152 novel FDA approvals and USD 311 billion of drug sales in 2026. The orphan drug market is expected to double from USD 127 billion in 2019 to USD 255 billion in 2026, with a projected CAGR of 10.8% from 2020-2026.

As per the Department of Commerce, Indias pharmaceutical exports during FY 2021 grew by 18% YoY to USD 24 billion. North America was the largest market for India accounting for over 34% of the pharmaceutical exports. Country wise exports to USA, Canada and Mexico recorded growth of 13%, 30% and 21% respectively.

The Government of India (GoI), to promote domestic manufacturing especially in sectors such as Pharmaceuticals and Specialty Chemicals has announced several Production Linked Incentive (PLI) schemes. In March 2021 the GoI, with the aim to further encourage the domestic pharmaceuticals industry to enhance its manufacturing capabilities, announced a new scheme that is expected to offer a total of 150 billion in incentives to the selected applicants for the identified pharma products.

In March 2020, the Government of India, announced a scheme of 30 billion to develop three mega Bulk Drug

Parks in India and a Production Linked Incentive scheme of

69.4 billion for promotion of domestic manufacturing of critical Key Starting Materials (KSMs)/Drug Intermediates and Active Pharmaceutical Ingredients (APIs) in the country. We believe, these are steps in the right direction and will go long way to further strengthen the domestic pharmaceuticals industry and reduce reliance on import of KSMs / Drug Intermediates from other countries.

Pharmaceuticals Segment

The Pharmaceuticals segment is engaged in manufacturing and supply of Radiopharmaceuticals with a network of 48 radio-pharmacies in the US, Allergy Immunotherapy, Contract Manufacturing of Sterile Injectibles and Non-sterile products, APIs and Solid Dosage Formulations through six manufacturing facilities that cater to all the regulated markets including USA, Europe and other geographies. The segment contributed 95% to the Total Revenue from Operations of Continuing business. The revenue generated from this segment stood at 57,897 million in FY 2021 as compared to 57,143 million in FY 2020.

Specialty Pharmaceuticals

Our Specialty Pharmaceuticals business includes our Radiopharma (Radiopharmaceuticals and Radiopharmacies) and Allergy Immunotherapy businesses. Revenue for this segment stood at

23,035 million in FY 2021 vs. 30,191 million in FY 2020 with 40% contribution to total Pharmaceuticals segment revenues.

Radiopharma

Our Radiopharma business is involved in the manufacture, supply and distribution of radiopharmaceutical products, which are used in the diagnosis, treatment and monitoring of various diseases. We specialise in lung, thyroid, bone and cardiac imaging products as well as thyroid disease therapy. It is our vision to be a leading player in nuclear medicine by demonstrating robust quality, value to our customers, sustainability to physicians/their patients and by building a healthy pipeline of products.

The Radiopharma business comprises the Radiopharmaceutical manufacturing business and the Radiopharmacies distribution business. Jubilants Radiopharmacies business is the second largest radiopharmacy network in the US with 48 pharmacies distributing nuclear medicine products to the largest national Group Purchasing Organisations (GPOs), regional health systems, stand-alone imaging centres, cardiologists and hospitals. This business has over 30 years of experience in serving the US nuclear medicine community and its current geographical reach enables it to serve over four million patients yearly. The Radiopharmacies business complements the Companys niche Radiopharmaceuticals business and provides it with direct access to hospital networks.

During the year, with regards to Ruby-Fill litigation, the Company received a favorable and unanimous judgment from the United States Court of Appeals summarily affirming Jubilants earlier favorable rulings from the US Patent

("PTAB") and the US International Trade Commission ("ITC"). These two rulings by the Appellate Court denied the appeals filed by Bracco Diagnostics, Inc ("Bracco"). We are further enhancing marketing and business development efforts for Ruby-Fill in the US and expect a ramp-up of installations if the COVID-19 situation remains stable or improves. During the year, the Company commercially launched Ruby-Fill in Europe and is expanding the distribution network for Ruby-Fill in the region.

In FY 2021, the Companys subsidiary Jubilant Pharma Limited entered in a partnership with SOFIE Biosciences Inc., USA. Under the terms of the partnership, Jubilant with 25% of equity holding has become a strategic partner to SOFIE, enabling SOFIE to continue to grow production capacity, advance its theranostic pipeline and support novel PET diagnostic manufacturing and distribution within the US.

SOFIE is an innovation leader in molecular theranostic, one of the fastest growing fields in medicine. Theranostic is a combination of diagnostic and therapy, using the same target molecule. SOFIE has three lines of businesses that are highly synergistic to Jubilant Radiopharma. The first is a network of 14 radiopharmacies dedicated to PET tracers, which is complementary to Jubilants work. The second business line is a specialised CMO facility in New Jersey, which is dedicated to early clinical developments of theranostic agent by which Jubilant can also partner with innovators early in the development phase. Finally, SOFIE owns 70% exclusive rights of a proprietary "Fibroblast

Activation Protein Inhibitor called FAPI. FAPI has received worldwide acclaim for its value as a key next-generation theranostic agent with the ability to greatly enhance the detection and treatment of a wide variety of oncology diseases. With our deep expertise in R&D, regulatory affairs, marketing and uncompromised quality, SOFIE and Jubilant are partnering to become a theranostic powerhouse.

In FY 2021, performance of the Radiopharma business was affected on account of lower elective procedures especially related to lung scans due to COVID-19 and competition. We are witnessing a gradual recovery in this business due to improving COVID-19 situation in the US, barring lung scans which are trailing the recovery curve.

During FY 2021, business reported a revenue of 19,150 million vs. 26,078 million last year.

The Company has successfully built an integrated ecosystem including a dedicated Research and Development team, specialised manufacturing facilities, best-in-class regulatory affairs, sales and marketing operations. This business has promising growth through our own vertically integrated Radiopharmacies as well as its radiopharmacy customers. The Company is working on several active pipeline projects, which it plans to launch in the next few years. In its Radiopharmacies business, the Company is executing a detailed turnaround plan to grow top line strongly with new customer wins, expand network to service newer geographies and enhance cost and procurement efficiencies.

The Company is well positioned in the North American nuclear medicine market, which is expected to grow across the therapeutic segments of Oncology, Neurology and Cardiology over the next five years. The Company aspires to be the leading manufacturer of nuclear medicine products in North America. With a strong presence in North America, it is expanding its distribution channels in the Latin America, European and Asian markets.

Allergy Immunotherapy

The Allergy Immunotherapy business provides products in the US and also exports to several international markets such as Canada, Europe and Australia. We supply bulk extracts to physicians who then use the products for diagnostic testing and to administer immunotherapy treatment. Allergenic extracts in our portfolio are offered in the form of consistent, high-quality, differentiated products along with a range of specialised diagnostic devices for skin testing.

A differentiated business of manufacturing and marketing of allergenic extracts is backed by one of the oldest and most trusted brands, HollisterStier, which is in existence for the last 100 years. The Company has been focusing on expanding market coverage and this has been bearing fruit with better performance. In addition, we have increased capacities in Lyophilisation and are further increasing capacities in the Allergy Immunotherapy manufacturing facility to ensure consistent and reliable supply of our flying insect venom products. We are the sole producers and suppliers of venom immunotherapy in the US.

Due to the pandemic, our Allergy Immunotherapy business was adversely impacted, venom diagnoses especially witnessed a decline due to state lockdowns and restrictions, which led to reduced office hours and patient visits. During FY 2021, the business revenue stood at

3,885 million as compared to 4,114 million in FY 2020.

This business continues to build on the development of innovative products to address various allergies. It is our endeavour to expand the leadership that our products enjoy on the back of a robust product pipeline along with hands-on production and an extensive presence in important markets. The Company is expanding its footprint beyond the US and is building networks in other countries such as Canada, France, Australia, New Zealand and South Korea with an aim to drive sales of our brands. We are also evaluating strategies to expand coverage mix.

Contract Development and Manufacturing Organisation (CDMO)

Our CDMO business includes our Contract Manufacturing of Sterile Injectables and Non-sterile Products (CMO) and our Active Pharmaceutical Ingredients (APIs) businesses. CDMO revenues were at 20,099 million in FY 2021 as against 15,359 million in FY 2020.

Contract Manufacturing of Sterile Injectables and Non-sterile Products (CMO)

We are a fully integrated leading CMO player based out of North America with operations in Spokane, Washington, US and Kirkland, Montreal, Canada. The facilities offer manufacturing services including sterile injectables (both liquid and lyophilisation), ampoules and sterile ointments, creams and liquids as well as non-sterile ointments, creams and liquids.

We are among the leading contract manufacturers in North America for sterile injectables. Our facilities have been approved by regulators across the world including the USFDA, Health Canada, ANVISA Brazil, PMDA Japan, Russia, MHRA, and various others. The products manufactured at both sites are sold in over 50 countries globally. We also lay strong emphasis on compliance and Intellectual Property Rights (IPR) and focus on the highest-level of compliance with a lean operation setup and supply of right quality products in a timely manner to our customers. These efforts are instrumental in helping us further grow the order book. Injectable forms an increasing proportion of new approvals by innovators for which there is shortage of capacity in the industry for high-quality manufacturing sterile sites, which we have the capability to offer.

The CDMO business has played an integral role in the current pandemic, and we have established contracts with Gilead, Eli Lilly and Novavax for the manufacturing of vaccines and therapeutic drugs to fight the pandemic.

The business witnessed strong growth during the year led by robust demand witnessed from key customers and COVID-19 related contracts. Revenues for FY 2021 were at 13,943 million as against 8,956 million in FY 2020.

Our analysis suggests another area of growth is sterile ophthalmic. With ageing population across the globe, eye ointments are gaining popularity and we are witnessing a lot of Request for Proposals (RFPs) in this field. Based on this assessment, we are setting up a 200 bottles per minute ophthalmic line in Montreal, Canada. The plan is undergoing the validation stage at the vendors site and is scheduled to be installed at our Montreal site in the current fiscal year. Once operational, it is expected to further encourage growth for the CMO business.

We are also continuing to invest on sites to address future growth opportunities. At our Spokane, Washington facility, we have announced a $ 92 million investment to expand sterile injectable manufacturing capacity. This investment is being made to setup a high speed 400 vials a minute injectable fill line with isolator technology, which will enhance

Spokane facilitys capacity by 50%. This expansion, which will also include two 300 sq ft Lyophilizers, will be spread over 50,000 sq feet at the Spokane facility and will be commercially operational by the end of CY 2024.

Active Pharmaceutical Ingredients (APIs)

APls, also known drug actives, are responsible for rendering the therapeutic action to the final formulation of a drug. Jubilant is one of the worlds most reputed manufacturers of APIs and we partner with numerous leading drug formulation companies world-wide to fulfil their requirements of high-quality APls at affordable prices. We are a global market leader in a few APIs across various therapeutic areas and drug classes, e.g., Cardiovascular System (CVS), Central Nervous System (CNS), Anti-Infectives and Anti-depressants among others.

Our API business further adds value to the organisation by virtue of supplying cost-effective and high-quality APIs to our Solid Dosage Formulations business in the US, Europe, and Rest of the World (RoW). As a global market leader in a few APIs, we strive to consolidate our leadership with sizeable capacities and dedicated production streams for certain high-volume molecules. Our portfolio also includes numerous newly-approved molecules. This helps our clients be cost-effective in the market with high-quality products and strengthens our position as their partner-of-choice. We are highly committed to sustain our longstanding relationship with large formulation companies.

In FY 2021, during the first quarter, our Nanjangud plant operations were impacted due to COVID-19, which impacted our revenues and profitability during the year. In very swift response, we further intensified our precautionary protocols for the safety of our employees and adapted agile strategies to bring operations back on track.

In FY 2021, revenue from the API business was 6,156 million as compared to 6,403 million in FY 2020.

As of April 2021, we have filed 98 Drug Master Files (DMFs) in the US, 45 Certification of Suitability (CEPs) in Europe,

40 DMFs in Canada, 15 DMFs in Japan and 14 DMFs in Australia. Additionally, we are on track to obtain approval from the European Directorate for the Quality of Medicines & HealthCare (EDQM) for two more APIs in FY 2022.

We implement the highest-levels of regulatory and quality compliance practices in the APIs industry with a series of successful inspections by various regulatory agencies. Our manufacturing facility at Nanjangud is approved by global regulatory agencies, including Health Canada, TGA Australia, EU GMP (from National Institute of Pharmacy and Nutrition Hungary), PMDA (Japan), FSSAPS (France), KFDA (Republic of Korea), ANVISA (Brazil) and COFEPRIS (Mexico). However, the USFDA has assigned the facility an Official Action Indicated (OAl) classification since

We have completed the remediation activities and await USFDA inspection and are hopeful of resolution of the regulatory status.

In line with our commitment towards our partners, we are leading various initiatives to reduce costs by continuously streamlining our operations, enhancing yield, on-boarding alternative vendors, de-risking our operations and supply chain and optimising input material costs. Several cost improvement and process innovation programmes are being undertaken for various commercial APIs as a part of product life cycle management. This will help us improve profitability and maintain market share despite increasing competition and pricing pressure.

In FY 2019, nitrosoamine issues related to Sartans affected the whole industry. Stringent guidelines of non-detectable limits from the USFDA impacted the supplies. We diligently worked to meet the guidelines, which enabled us to supply these products to the key markets of US and Europe. We have further future-proofed our manufacturing process to address similar regulatory changes, while ensuring compliance with all guidelines. Our new product development philosophy is innovation-led affordability and quality-by-design, giving our customers access to cost-effective APIs, while maintaining consistent global quality standards. Aided by strong process and analytical chemistry capabilities and IP and regulatory expertise, we will continue to focus on developing new products and filings for key markets. Our API development efforts will also enable our Solid Dosage Formulations business to create new formulations using in-house APIs.

This will facilitate the ANDA/dossier filings and assure cost-competitiveness and supply continuity for the business.

The Company has decided to demerge its Active Pharmaceutical Ingredients business, currently an undertaking of Jubilant Generics Limited (JGL) and vesting of the same with the Company on a going concern basis. This demerger is to be implemented through a scheme of arrangement between JGL and the Company and their respective shareholders and creditors under Sections 230. to 232 and other applicable provisions of the Companies Act, 2013.

The business rationales behind this reorganisation plan are as below:

• Creation of a small molecule discovery and chemistry focused vertical present across value chain of CRO & CDMO of Innovative and Generic API

• This will strengthen and sustain long-term growth, profitability, market share, customer service, risk management as it requires focused management attention, different skill sets and resources.

• Synergies between CRO & CDMO businesses can be realised more effectively in a Holding / Subsidiary Company structure as compared to fellow subsidiary structure.

• This would also help in supporting our customers for their needs from early stage of research to commercialisation of active ingredients and will provide competitive edge to this business.

Generics

The Generics business includes our Solid Dosage Formulations. The Solid Dosage Formulations business includes manufacturing and marketing of formulations in the generics space. We have traditionally focused on the US market, which is the largest market for generics. In addition, we are also extensively expanding in RoW markets like Europe, Asia, Middle East, Latin America and Africa and we have promising plans for growth in Europe, Canada, Australia, Japan and China in the near future.

In the United States, we are the market leader in several key products. The business derives benefit of vertical integration with our commercial Solid Dosage Formulations partially integrated with in-house APls. This helps us reduce costs and maintain optimal efficiency. The broad therapeutic areas covered include Cardiovascular System (CVS), Central Nervous System (CNS) and Gastrointestinal (GI).

We manufacture our products in Salisbury, US and Roorkee, India. A few products are also in-licensed from external partners. Our Roorkee facility is approved by FAMHP Belgium, PMDA Japan, TGA Australia, and SAHPRA South Africa. While our Salisbury facility is USFDA approved, our Roorkee facility received an Import Alert in July 2021 from

USFDA. Earlier, the Roorkee facility received an Official Action Indicated classification status from USFDA

December 2018 and a Warning Letter in March 2019. The Company is engaging with the agency and is taking help from consultants to resolve the import alert at the earliest and ensure cGMP compliance. The agency has exempted Meclizine tablets, Olanzapine orally disintegrating tablets, Risperidone orally disintegrating tablets, Spironolactone tablets and Valsartan tablets from the import alert subject to the Company meeting a few conditions. The products that get impacted due to the import alert contributed to less than 3% of FY 2021 total revenues for the Company.

As of 31st March 2021, the business had 54 commercialised products, including 25 in US, 15 in Canada, 29 in Europe, and 32 in RoW. Also, we filed a total of 98 ANDA filings in US, 39 in Europe, 24 in Canada and 42 filings in other RoW countries so far. Additionally, we have received 61 ANDA approvals in the US, 33 in Europe, 23 in Canada and 40 in RoW markets.

Revenue growth during the year was aided by the launch of Remdesivir in India and other lincensed countries and strong market position in select products in the US market. The Total revenue from this business in FY 2021 was

14,763 million as compared to 11,593 million in FY 2020.

We are expanding our product portfolio in oral solids and certain niches in Novel Drug Delivery System (NDDS) with an objective to increase the contribution to revenue as we grow beyond the traditional regulated markets. Our aim is to enhance our focus in the key RoW markets, wherein we foresee significant growth opportunities. Currently, we have obtained approvals in the key markets of Asia and Africa— including South Africa, Philippines, and Malaysia, and a number of these approved products are already commercialised. In Latin America, Middle East, and Commonwealth of Independent States (CIS) markets, our growth will be driven by new filings and new product launches in key markets, including UAE, Chile and Brazil.

Further, we continue to expand our operations in Europe, which has been a consistent revenue contributor for our global business over the year. UK continues to be a key growth market where we have established our subsidiary and are strengthening our team and product portfolio. We have built a strong base with more than 35 customers in Europe and we are continuously strengthening our product portfolio with them. Our businesses in Canada and

Australia are expected to see significant growth based on new launches and new partnerships.

In our Generics business, we are witnessing pricing pressure in some of the product categories in the US market. In the US market, we plan to launch new products via in-licensing and contract manufacturing and are working towards expansion of geographical reach in new markets.

Contract Research and Development Services Segment

The Contract Research and Development Services (CRDS) segment provides Drug Discovery and Development services under Jubilant Biosys Limited and Electronic Data Capture (EDC) software for clinical trials under the TrialStat brand. Jubilant Biosys Limited operates from Bengaluru and Noida offering integrated as well as functional drug discovery and development services to global innovators. Total revenue from this business in

FY 2021 was 3,052 million compared to 2,515 million in

FY 2020.

In our Contract Research and Development Services business, we focus on offering integrated solutions to our pharmaceutical customers which maximises speed to develop a new lead. Our service offering includes early Drug Discovery Services, GMP scale up of Intermediates and New Chemical Entity (NCE). This provides an integrated solution (from early phase discovery and development to commercialisation of the molecule) to pharmaceutical customers.

It is our objective to provide solutions and services to the pharmaceutical and biotechnology industry as well as academic institutions during the research and preclinical phases of drug development. Our therapeutic areas of expertise include Oncology, Metabolic Disorders, Central

Nervous System (CNS), Pain and Inflammation.

We are continually strengthening our relationships in this sector by expanding our service offering through investments in new technologies and capabilities which will enhance our knowledge in select therapeutic areas. Our business presents a vastly capable and effective alternative to customers seeking world-class research and development services which are designed for speed to reach critical milestones. Our chemical development facility adheres to GMP and is capable of conducting multi-kilogram manufacturing campaigns for both pre-clinical toxicology and early clinical stage requirements.

We are strategically investing in capacity expansion and remain focused on integrated programmes as well as discrete Full Time Equivalent (FTE) and Fee For Service (FFS) services. The TrialStat business offers Cloud/ SaaS (Software as a Service) software for clinical trials.

The eClinical Suite includes Trial Stat Orbit for electronic Database Capture, TrialStat CTMS for Clinical Trial Management Software and TrialStat Portal for Analytics and Customer Interface Software.

In August 2021, the business completed the chemistry research capacity expansion in Greater Noida and commissioned the new capacity. We expect this capacity to achieve full utilisation by end of FY 2022, which will drive growth for the business in FY 2022 and FY 2023.

Proprietary Novel Drugs (Jubilant Therapeutics)

In our Proprietary Novel Drugs business through Jubilant Therapeutics, we are working to address unmet medical needs in oncology and autoimmune diseases. Our advanced discovery engine integrates structure-based design and computational architecture to discover and develop novel, precision therapeutics against first-in-class and validated but intractable targets in genetically-defined patient populations. We strive for speed and efficiency by employing a business model that positions Jubilant Therapeutics as a distinct business entity and leverages the proven and synergistic capabilities of the Company. Jubilant Therapeutics comprises a team of passionate and pioneering scientists.

The Companys key strengths include:

• Diversified pipeline with lead programmes transitioning to clinical stage in 9 12 months providing significant value inflection

• Leadership team with large pharma and biotech pedigree, experienced in bringing novel compounds from discovery to clinics • BOD, Key Opinion Leaders and Scientific Advisory

Board from world-class institutions such as Memorial Sloan, Francis Crick and Dana Farber, large Pharma and Investment Banks

• Agile business model and value unlocking opportunity through partnering with global pharma/capital market transactions

Pipeline Overview

Programmes Indication Pathway Details
Current pipeline
LSD1/HDAC6
–Dual Inhibitor Hematological malignancies and solid tumours Epigenetics First-in-class dual inhibitor of LSD1/HDAC6 to address unmet needs in haematological tumours like acute myeloid leukaemia (AML) and select solid tumours.
IND-enabling studies ongoing. The Programmes is expected to start Phase I clinical trial in 2022
PRMT5 Lymphoma, GBM, Brain mets Epigenetics Differentiated programme with potential best-in-class lead molecule that shows direct target interaction and sustained plasma and brain exposure with strong anti-tumour activity in both xenografts and orthotopic glioblastoma models. Potential to address tumours like GBM and brain metastasis. IND submission planned in 2022
PAD4 Rheumatoid arthritis, Acute indications Epigenetics First-in-class PAD4 inhibitor with potential to address unmet needs in auto-immune disorders like rheumatoid arthritis, as well as acute inflammatory indications like AAV, and oncology. Demonstrated efficacy in multiple animal models. IND submission planned in 2022
PDL-1 Multiple cancers Immuno-oncology Small molecule therapy with comparable efficacy to large molecules with potentially better safety profiles in initial studies. Series with organ-direct exposure in GI and brain. IND submission planned in 2022.
Partnered programmes
Undisclosed target Oncology Undisclosed Partnered with Frazier Healthcare Partners in FY 2020
BRD4 Oncology Epigenetics Partnered with Checkpoint Therapeutics in 2016 at lead stage with milestones.

In addition, there are multiple early-stage programmes targeting oncogenes and transcriptional factors in stealth mode.

During FY 2021, the Company progressed on multiple fronts:

• Path-breaking preclinical data presentation for lead programmes at key global scientific conferences such as American Association of Cancer Research, American Society of Haematology and at major global biotech investor conferences • Strengthened scientific advisory board and Board of

Directors with world-renowned leaders

• Research collaborations with Harvard Medical School and the Wistar Institute • Introduced Artificial Intelligence (AI) platform collaboration for drug development

• 1st IND filing preparation

The US biotech market is witnessing very strong investor interest in precision therapeutics in oncology and auto-immune diseases based on the recent equity raises at attractive valuations. In its Proprietary Novel Drugs business, the Company is developing very high potential and first-in-class assets in these areas. Four of its assets under development are at an advanced pre-clinical stage and would transition to the clinics starting early next year. The Company is working towards creating shareholder value in this business through a private/public equity raise /partnering during coming 18-24 months

Four of our assets under development are at an advanced pre-clinical stage and would transition to the clinics starting early next year.

Finance Review

Income Statement (Continuing operations)

( Rs in mn)
FY20 FY21 % Growth
Total Revenue from Operations 59,758 60,985 2%
Other Income 374 176 (53%)
Total Income 60,132 61,161 2%
Material Cost and Change in Inventory 13,006 13,684 5%
Purchases of Stock-in-trade 1,546 1,676 8%
Employee Benefits Expense 18,432 19,229 4%
Power and Fuel Expense 1,122 1,058 (6%)
Other Expenditure 10,173 11,373 12%
Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) 15,853 14,141 (11%)
Depreciation, Amortisation and Impairment Expense 3,398 3,490 3%
Finance Cost 1,997 1,841 (8%)
Share of profit/(loss) of an associate 0 113 -
Profit Before Exceptional Items and Tax 10,458 8,923 (15%)
Exceptional Item 329 212
Profit Before Tax 10,129 8,711 (14%)
Tax Expenses 3,351 2,972 (11%)
Profit After Tax (PAT) 6,778 5,739 (15%)

Consolidated Income Statement

(Rs in mn)
FY20 FY21 % Growth
Total Revenue from Operations 91,544 89,055 (3%)
Other Income 474 298 (37%)
Total Income 92,018 89,353 (3%)
Material Cost and Change in Inventory 28,640 27,514 (4%)
Purchases of Stock-in-trade 2,766 2,511 (9%)
Employee Benefits Expense 21,277 21,728 2%
Power and Fuel Expense 4,738 3,776 (20%)
Other Expenditure 14,652 14,615 0.3%
Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) 19,945 19,209 (4%)
Depreciation, Amortisation and Impairment Expense 4,619 4,517 (2%)
Finance Cost 2,874 2,473 (14%)
Share of Profit/(Loss) of an Associate 113
Profit Before Exceptional Items and Tax 12,452 12,332 (1%)
Exceptional Item 347 212 (39%)
Profit Before Tax 12,105 12,120 0.1%
Tax Expenses 3,123 3,764 21%
Profit After Tax (PAT) 8,982 8,356 (7%)

Revenue

Revenue from continuing operations during the year was at

60,985 million as compared to 59,758 million in FY 2020

Revenue from Pharmaceuticals segment grew 1% YoY at

57,897 million vs. 57,143 million in FY 2020 and contributed 95% to overall revenue. For Contract Research and Development Services, the revenue was at 3,052 million vs. 2,515 million in previous year. Revenue from Proprietary Novel Drugs stood at 37 million in the year.

Total Revenue from Operations during the year stood at

89,055 million as compared to 91,544 million in FY 2020. This includes Life Science Ingredients revenue of

28,070 million as compared to 31,786 million, which was demerged effective 1st Feb, 2021 into Jubilant Ingrevia Limited.

Expenditure

Expenditure for Continuing operations was at 52,351 million in FY 2021 as compared to 49,674 million in the previous year. Material cost stood at 13,488 million vs. 14,380 million in FY 2020. Power and Fuel was at 1,058 million as compared to 1,122 million in FY 2020. Employee benefit expense in FY 2021 was at 19,229 million. Other expense was marginally higher at 11,373 million as compared to 10,173 million in FY 2020.

Expenditure (including Life Science Ingredients) stood at

77,134 million in FY 2021 as compared to 79,567 million in the previous year. Materials cost stood at 26,728 million in vs. FY 2021 31,194 million in FY 2020. Power and Fuel expense was at 3,776 million in FY 2021 as compared to 4,738 million in FY 2020. Employee benefit expenses stood at 21,728 million during the year as compared to 21,277 million in FY 2020. Other expenses were at 14,615 million in FY 2021 vs. 14,652 million in the previous year.

Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA)

The EBITDA from continuing operations was at 14,141 million in FY 2021 as compared to 15,853 million in the previous year. The EBITDA of Pharmaceuticals segment was at 13,863 million as against 15,555 million in FY 2020 with margins of 23.9% as against 27.2% in FY 2020. Contract Research and Development Services

EBITDA was at 1,085 million as compared to 855 million in FY 2020, translating to EBITDA margin of 35.6%.

EBITDA (including Life Science Ingredients) in FY 2021 was 19,209 million translating to EBITDA margin of 21.6%. This includes Life Science Ingredients (Demerged Business) EBITDA in FY 2021, which was at 5,127 million as compared to 4,310 million in FY 2020.

Finance Cost and Depreciation

From continuing operations, Depreciation and Amortisation was at 3,490 million in FY 2021 vs. 3,398 million in FY 2020. Finance cost was at 1,841 million as compared to 1,997 million in FY 2020. Average blended interest rate for FY 2021 stood at 5.07% as against 5.39% in FY 2020.

Depreciation and Amortisation (including Life Science

Ingredients) in FY 2021 was at 4,517 million compared to 4,619 million in FY 2020. Finance cost in FY 2021 was at 2,473 million as compared with 2,874 million in FY 2020.

Profit Before Tax

Profit Before Tax from continuing operations was at 8,711 million as compared to 10,129 million in FY 2020. Profit Before Tax (including Life Science Ingredients) for FY 2021 stood at 12,120 million, an increase from 12,105 million in the previous year.

Tax Expenses

Tax Expenses from continuing operation were lower at

2,972 million in FY 2021 as compared to 3,351 million in the previous year. Tax Expense (including Life Science

Ingredients) was at 3,764 million in FY 2021 as compared to 3,123 million in FY 2020.

Profit After Tax

From continuing operations, Profit After Tax was at 5,739 million vs. 6,778 million in the previous year. Earnings per Share (EPS) from continuing operation was at 36.05 per equity share of 1 each.

The Profit After Tax (including Life Science Ingredients) was at 8,356 million in FY 2021 from 8,982 million in FY 2020. Earnings per Share (EPS) during the year was at 52.48 per equity share of 1 each.

Review of Operations

Our continuing operations comprise products and services across Pharmaceuticals, Contract Research and

Development Services and Proprietary Novel Drugs. During the year, Jubilant Life Sciences Limited was renamed as Jubilant Pharmova Limited effective 1st February, 2021. The Company continues to remain listed on NSE and BSE.

1. Pharmaceuticals segment includes the following:

• Specialty Pharmaceuticals, comprising Radiopharma (Radiopharmaceuticals and Radiopharmacies) and Allergy Immunotherapy businesses

• CDMO, comprising Contract Manufacturing of Sterile Injectables and Non-sterile Products and Active Pharmaceutical Ingredients businesses

• Generics, comprising Solid Dosage Formulations

2. Jubilant Biosys comprises Contract Research and Development Services business

3. Jubilant Therapeutics comprises Proprietary Novel Drugs

Segmental Revenue Analysis

(Rs in mn)
FY20 FY21 % Growth
Pharmaceuticals 57,143 57,897 1%
Specialty Pharmaceuticals 30,191 23,035 (24%)
Radiopharma 26,078 19,150 (27%)
Allergy Immunotherapy 4,114 3,885 (6%)
CDMO 15,359 20,099 31%
CMO 8,956 13,943 56%
Active Pharmaceutical ingredients 6,403 6,156 (4%)
Generics (Solid Dosage Formulations)* 11,593 14,763 27%
Contract Research and Development Services 2,515 3,052 21%
Proprietary Novel Products 100 37
Continuing Operations, Total Revenue 59,758 60,985 2%
Life Science Ingredients (Demerged Business) 31,786 28,070 (12%)
Total Revenue from Operations 91,544 89,055 (3%)

* The Solid Dosage Formulations business includes India Branded Pharmaceuticals

Key Financial Ratios (Consolidated)1,2

(Rs in mn)
Particulars Units FY20 FY21
Debtor Turnover times 7.00 7.27
Inventory Turnover times 5.50 5.28
Interest Coverage times 6.94 7.68
Current Ratio times 1.92 2.82
Debt Equity Ratio times 0.58 0.41
Operating Profit Margin % 22% 23%
Net Profit Margin % 10% 10%
Return on Net Worth % 17% 12%

Note

1. Effective 1st February, 2021 the Lifescience Ingredients business demerged from Jubilant Pharmova Limited

2. FY 2020 financial ratios are calculated on erstwhile Jubilant Life Sciences Limiteds consolidated financials. For FY 2021 financial fi of the Continuing business of Jubilant Pharmova Limited. As such, the FY 2020 ratiosarecalculatedontheconsolidated and FY 2021 financial ratios are not comparable

Business Enablers

Research & Development and Intellectual Property

Pharmaceuticals

Our Research & Development (R&D) is an ever-evolving centre for excellence and remains strong on its belief towards innovation and quality to magnify the Companys business aspirations.

The focus of our R&D is to enhance innovation, scientific Jubilant ‘s core values and support the execution of business strategies. The R&D centres are located in North America and India with expertise in the development of novel, robust and non-infringing processes for generics and APIs, as well as specialised and niche formulations and designs for radiopharmaceuticals and other products, which have been taken to commercialisation. Our R&D continues to lead to new, innovative processes and knowledge-driven products that increase the efficiencies of our production and allow us to capitalise on opportunities for growth in competitive markets.

The multi-skilled R&D teams, with specialisation across the value chain of pharmaceuticals, focuses on generics research, including APls and dosage forms, novel drug delivery systems research, radiopharmaceuticals, allergenic extracts research, analytical research and biological support including pharmacokinetics and Bio Availability/Bio Equivalence research. R&D supports the activities of our various businesses by developing breakthrough technologies in new products, process chemistry, analytical chemistry, process intensification and establishing technologies at commercial scale. All the R&D centres are process-driven and promote a disciplined work culture. Our strong internal audit framework ensures overall regulatory compliance. The R&D team keeps itself updated with the regulations, upcoming technological trends and proactively ensures pharmacopeial compliance while adopting best industry practices.

Our Radiopharmaceuticals business has a focused R&D team with radiochemistry expertise, based in Montreal, Canada, and the team works on nuclear medicine for the diagnosis, treatment and monitoring of various diseases.

It serves hospital-based customers (nuclear medicine efficiency and effectiveness in compliance with physicians and technologists) and radiopharmacies, globally, with high quality and reliable specialty products. The business is backed by a dedicated R&D team, specialised manufacturing, strong regulatory and medical affairs and commercial operations using radiation safety protocols. The areas of specialisation include cardiac, lung, bone and thyroid diseases. This team supports existing products and leads the development of new products using its own resources by collaborating with our R&D team in India.

We are continually engaged in the development of new products that have yielded a pipeline of products that can be introduced in the future. We are expending efforts to enhance the product offerings across the diagnostics and therapeutics to increase the bandwidth of products and their applications.

Our highly experienced team of dedicated scientists focus on development of variety of niche generic products across the spectrum of available dosage formulation technologies. Using our strong R&D capabilities and manufacturing expertise in solid dosage formulation, the team focuses on development of immediate release, extended release products and novel drug delivery system-based products. This includes ophthalmic products, injectable products and formulations for veterinary business. Our broad development pipeline comprises dosage formulations ranging from immediate release oral formulations to more complex generics based on matrix, reservoir, Multi-Unit Particulate (MUPS) technologies and powder or granules for oral suspension. Dosage R&D skill set includes development of various forms of immediate release of tablets, capsules, powder for oral suspensions, multi-unit particulate dosage forms, modified release dosage forms, inlay tablets, oral liquids, sterile dosage forms including prefilled syringes and lyophilized powders for injection, ophthalmic dosage forms, topical dosage forms and veterinary products. Our developed technologies and products are Intellectual Property (IP), regulatory and quality compliant and we intend to focus on continuous investment using our in-house capabilities and expertise.

Our API R&D focuses on developing commercially competitive, robust and eco-friendly technologies and it is capable of developing complex molecules having multiple chiral centres and has outstanding capabilities of carrying out PolyState characterisation. Our API R&D teams thrive on ‘green chemistry culture and have developed various environment friendly and disruptive technologies wherein many batch processes have been replaced by continuous processes and chemical processes with enzymatic/ chemo catalysis processes. We continue to develop NCE-1 molecules meant for FTF opportunities and evaluate options for 505(b) (2) and Day 1/181 launches, focusing on sustainable and competitive offerings to customer. During the current financial year, we have enhanced our capability in mass spectrometry by adding T-quad LC-MS/MS, T-quad GC-MS/MS and S-quad GC-MS for the sub ppm level determination of N-Nitrosomamines in various APls to comply with the current stringent regulatory requirements.

API R&D is critical in ensuring development of Key Starting Materials (KSMs) to enhance the overall control over process, de-risking raw material availability and ensuring regulatory and quality compliance. We have a dedicated highly-experienced team of scientists focusing on development of variety of niche generic products across the spectrum of available dosage formulation technologies. Our product development pipeline comprises dosage formulations ranging from immediate release oral formulations to more complex generics based on matrix, reservoir, Multi-Unit Particulate (MUPS) technologies and powder or granules for oral suspension.

The Company is also working in the space of allergy diagnostics and therapeutics for treating allergies caused by companion animals (cats and dogs), mites, pollen, dust etc. Allergy R&D has expertise in biopharmaceuticals—specifically sterile liquid vaccines. The core focus is on allergen (natural) extracts for immunotherapy with a range of vaccines to immunise patients against lgE mediated allergen specific hypersensitivity. The Allergy

Immunotherapy business has evolved into a global player in providing high quality products to the global immunotherapy market for diagnosis and treatment of allergies. Its cGMP facility manufactures products to meet the high-quality standards followed in the allergy industry. Over the years, the Company has extended its customer base to include allergists, ENT doctors and clinics, primary care physicians, hospitals and pharmacies in the US, Canada, Australia and many other international markets. It currently has over 200 allergenic extracts (standardised grass pollen extracts, non-standardised tree, grass and weed pollen extracts,

Acetone Precipitated (AP) product line of extracts, standard mite extract, standardised venom, mold extracts and foods and mixes and a line of specialised skin-test devices) in the market.

We have evolved our production technologies including specialised proprietary know-how over a period of time with the help of R&D. We keep our options to licence- in/licence-out technologies/know-how to accelerate businesses of interest.

Our Intellectual Property (IP) - enabled innovative R&D efforts helped us avoid IP disputes after developing outstanding designing capabilities by identifying newer opportunities, better understanding of emerging challenges, developing alternative/innovative research strategies and creating intellectual property which is well-protected in the geographies of our business interests. Our efforts have fructified into intellectual properties, which have grown over the years creating a strong position for the generic pharmaceutical business in regulated markets.

We protect our inventions by filing patent applications in India, US, Europe, Canada, Australia, China, International Patent

Applications (PCT) and other countries. We pursue them and maintain them in countries of business interest. Below is the list of Companys Patent Portfolio as on 31st March, 2021.

Rs
R&D Cumulative Inventions Cumulative Patent Applications Cumulative Patents Granted
Active Pharmaceutical Ingredients (APIs) 174 344 106
Dosage Formulations 97 186 22
Dosage Innovation 17 26 0
Radiopharmaceuticals 47 431 257
Allergy Immunotherapy 6 8 2
Total 341 995 387

Cumulative: Covers all active and inactive invention, patents and patent applications. Data also covers in-licensed inventions/Patent applications/granted patents by Jubilant Pharma or Subsidiaries

Contract Research & Development Services (CRDS)

Contract Research & Development Services business offers state-of-the-art capabilities in small molecule discovery and preclinical development. These include capabilities in Discovery Informatics, Molecular Modelling, Structural Biology, Medicinal Chemistry, Synthetic Chemistry, in-vitro Biology, in-vivo Biology, DMPK studies, Pharmacology, Toxicology, Scale up and GMP. Our disease biology expertise spans across multiple therapy areas including oncology, metabolic disorders, neurological disorders and inflammation.

Drug discovery is driven by the passion of our scientists, to provide affordable drugs to patients worldwide in areas of unmet needs. Our scientists collaborate across technology and therapeutic platforms to identify and validate novel small molecules and platforms that will enable first or best-in-class healthcare solutions of our collaborators. The competence of our team has been demonstrated by the progression of molecules to candidates and beyond starting from targets in a span of less than three years. The ISO

27001-certified facility is designed to firewall collaborations for scientific, operational and data exclusivity.

In FY 2021, we have made significant progress in our AI/ML enabled drug design and validation and we have continued our investments in state-of-the art technologies such as the BD FACSLyric™ Flow Cytometry System and Pioneer FE SPR system from ForteBio. Digital initiatives were rolled out to improvise day-to-day operations, notebook keeping and customer engagement. In parallel, numerous investments were made to enhance EHS standards in the laboratories. Together, these strategic actions and investments will pave the way for business growth in the coming years. The scientific achievements in FY 2021 include nomination of a preclinical candidate for IND application and achieving the milestone in a large pharma collaboration, initiation of multiple drug discovery collaborations with Biotech companies, as well as filling of numerous patent applications and publishing high-quality research articles. We continue to maintain a healthy pipeline of client programmes that can help offset attrition and we continue our efforts to expand the business base.

Manufacturing

The manufacturing operations continue to be streamlined with strong focus on the key enablers.

• Compliance: Compliance with diverse international regulations to maintain high quality standards and global customer base

• Customer service: Heightened awareness of our customer needs and striving towards delivering a quality product in a timely manner • Capacity and Capabilities Enhancement: Sufficient capacity to meet demand as well as respond to market opportunities while implementing technology advancements

• Cost Leadership: Continue to improve our conversion cost to remain competitive and establish long-term presence in the market

• Continuous Improvement: Review and revise our processes using business excellence models and lean strategies

• Continuity: Business continuity through risk mitigation and sustainability measures

Compliance

We continue to improve and harmonise our quality systems to ensure compliance with ever evolving regulations. At Jubilant Pharmova Limited, we always strive to stay ahead of the curve to ensure compliance with regulations while meeting patient needs.

As the financial year ended on 31 st March, 2021, our facilities were inspected by various regulatory authorities from US, Canada, Brazil and India among others.

The Jubilant HollisterStier CMO facility in Spokane, USA was inspected in March 2021 by the USFDA (CDER) and received zero 483 observations. Similarly, both our Spokane CMO and Allergy Immunotherapy facilities were subject to a form 4003 document review request from the USFDA (CBER) in March 2021. The FDA (CBER) document review has yielded no additional queries at this time. Likewise, FDA (CDER) inspection was deemed successful and is pending the Establishment Inspection Report (EIR). Our Jubilant HollisterStier General Partnership, CMO Montreal , Canada facility was also subject to a form 4003 document review request from the USFDA (Centre for Veterinary

Medicine) for a client product filing in December 2020. client product has since been approved and the review deemed successful.

The API Nanjangud facility underwent an inspection in June 2020 by CDSCO as well as the local state drug control authority for a preapproval inspection of Remdesivir API. Subsequently, the local state drug control authority performed a post-approval inspection for Remdesivir API in May 2021. Overall, the site received approval. In addition, the site also was subjected to a desktop assessment by

ANVISA in March 2021. With regards to the USFDA OAI classification, we have completed the remediation activities and await USFDA inspection and are hopeful of resolution of the regulatory status.

Our Roorkee facility received an Import Alert in July 2021 from the USFDA. Earlier, the Roorkee facility received an

Official Action Classification status in December 2018 and a Warning Letter in March 2019. The Company is engaging with the agency and is taking help from consultants to resolve the import alert at the earliest and ensure cGMP compliance. The Jubilant DraxImage business unit underwent an inspection by Health Canada in January of 2021, which resulted in a Compliant rating.

The Jubilant Radiopharma division operates 48 compounding nuclear pharmacies (Radiopharmacies) and three Positron Emission Tomography (PET) drug manufacturing facilities across twenty-two states in the US. Our products are viewed as reliable and trusted in the industry, as we procure, prepare and deliver the highest quality FDA-approved products, and fully support and comply with State Boards of Pharmacy (BOP) and USP compounding standards. Our pharmacies are ‘open formulary, providing customers with a full array of options that allow clinicians to achieve the greatest benefits for their patients.

The regulatory standards for compounding radiopharmacy facilities have been undergoing constant and stringent changes over the past few years. During the end of the financial year on 31 st March, 2021, many of our facilities underwent successful inspections by multiple regulatory agencies, including the State Boards of Pharmacy, USFDA, State Departments of Health and Radiation Safety, and Environmental Protection Agency.

No major observations were noted during the course of 69 regulatory inspections within the financial year. All minor observations during inspections have been corrected and confirmed as per the requisite standards. The business has a good compliance history and good standing with regulatory agencies.

For Jubilant Pharma, Environment, Health & Safety (EHS) is one of the key decision enablers for any process implementation. Training sessions have been timely conducted to keep our employees, community, and other stakeholders educated on key EHS aspects relevant to their operations. The status of the EHS compliance with respect to various statutes, rules and regulations applicable to the Company is governed through an intranet based application, Conformity, to ensure that we always remain abreast with the guidelines.

The Compliance Manager tool uses contemporary technology and helps us with a single reporting framework across the Group for various clusters including: Environment, Health & Safety (EHS), Human Resources (HR), Regulatory Affairs, Finance Tax, and various licenses. It also helps in linking compliances to our processes and, where required, changing business processes/policies. The tool provides real-time MIS capability for the reviewer/ approver and management. The compliance reports are reviewed by the Board on a periodic basis.

Jubilant HollisterStier facility at Spokane, Washington, US, successfully completed a periodic inspection by the State Department of Ecology. Jubilant Cadista Pharmaceutical Inc. facility at Salisbury, Maryland completed the periodic inspection by Maryland, US Department of the Environment/ City of Salisbury, Maryland Kirkland, Montreal, Canada. The facility that was inspected by Standards, Fairness, Occupational Health and Safety Commission in FY 2020.

At Nanjangud, our facility runs on zero liquid discharge basis. Further improvement has been made in segregation of effluent such as SCALEBAN and waste heat recovery project that resulted in reducing operational cost of management. The operation of the in-house liquid and solid waste incinerator has been completely suspended by disposing such incinerable hazardous waste through Cement Co-incineration and thereby mitigating risk of community health hazard. Successful in-house piloting has been conducted in the Effluent Treatment Plant (ETP) to further reduce Volatile Organic Compounds (VoC) emissions while handling the process effluent by carrying high-volatile compounds. This is being implemented at multiple stages of the effluent treatment plant. Changes have been implemented in the hazardous ETP sludge handling operations that has further improved the facility upkeep and safety of labour handling these wastes. Our Sewage Treatment Plan has been upgraded to meet the revised norms of Central and State Pollution Control Boards.

At all our sites we ensure that safety and health of the people is accorded paramount importance. We are committed to ensure that the health and safety of our employees, customers and the public at large are protected. We take pride in managing our operations with a high concern for EHS. Ever changing EHS regulations are being followed, and we understand these requirements are necessary and we are committed to comply with them by going the extra mile. Our Nanjangud site obtained Environmental clearance (EC) Consent for Expansion (CFE) followed by Consent for Operation (CFO) to meet the enhanced strategy volumes.

At all the manufacturing sites, we ensure that the process safety reviews are assessed through an external subject matter expert and the recommendations are effectively executed to enhance safer processes by effective processstreams,introductionofnewtechnologies controls. Safety culture in terms of behaviour is being promoted at the workplace. People capability is built within Line function to enhance knowledge on the safety management systems through various training programmes. Comprehensive safety improvement and capacity building exercises have been undertaken to improve the knowledge, competency, expertise, and commitment level of the people through an external safety consultant.

Our manufacturing sites are well-equipped with Occupational Health Centre (OHC) run by experienced professionals. A comprehensive health assessment programme is ensured for all the people working in our various facilities. The OHC provides curative, advisory and health promotion services to the employees. We have a full-fledged matters of environment and health and safety and also conducts periodical safety assessments and audits.

Customer Service

Our operations fundamentally focus on Supply Level Adherence (SLA) and Right First Time (RFT). By achieving excellence in these two key metrics, high levels of customer service are automatically achieved. Bringing in customer-centricity in our Operations by leveraging excellence tools and methodology to unlock the ‘overall plant efficiency

(OPE) and ‘On time in full (OTIF) is important to achieve competitive advantage to support the business growth.

As an organisation, we are able to demonstrate our promise of Caring, Sharing, and Growing by providing direct help to save enhance human lives through the launch of Remdesivir drug in India with an integrated development and manufacturing of intermediates, API and final dosage form.

Capacity and Capabilities Enhancement

Our Roorkee, India, manufacturing facility completed its expansion and increased capacity to manufacture, test and warehouse oral dosage forms. We have made strategic and major investments in this plant to increase the capacity of bottle packaging to meet the rising market demand. We have introduced MUPS technology, sachet packing and European Union serialisation and expanded to three more packaging lines at Roorkee site. With state-of-the-art facility and machinery, the capacity will increase by one billion doses with large batch sizes. We are aiming to automate several other manual processes to enhance efficiencies and compliance while ensuring health and safety of our employees.

EHS team which continuously addresses the

Our manufacturing facility in Salisbury has continued to invest capital to increase our capacity and capabilities for multiple unit operations, including roller compaction, blending, compression and tablet coating, to scale up for potential and acquired market opportunities requiring this technology. This has increased the overall installed capacity by 50% and has increased flexibility to take on additional products. The site has successfully commercialised an integrated blister and cartoning automated line with full serialisation capabilities. Additionally, an investment in FY 2021 on installing modular, multipurpose room type system will add to the GMP footprint and provide additional rooms to house future growth. The site is undergoing an upgrade in terms of overhauling the HVAC system for the GMP space.

Jubilant Radiopharma has undertaken several facility improvement initiatives over the course of FY 2021. These include implementation of ISO 7/8 classified cleanrooms in accordance with the impending USP <825> compounding standards as well as ongoing facility improvement projects across the pharmacy network. Kansas City, Missouri, Pine brook, New Jersey, and Dallas, Texas sites were relocated where a new office, laboratory, and modular clean rooms were installed and certified. The three new sites were inspected by their respective state Boards of Pharmacy with all three obtaining approval. Additional renovations were initiated in FY 2021 to include Atlanta (Georgia), Denver (Colorado) and Dayton (Ohio). Facility improvement projects were also initiated in FY 2020 to include Beltsville (Maryland) and St. Louis (Missouri).

We optimised the process with an added Isolator technology at our Montreal, Canada manufacturing facility resulting in a 100% capacity increase as well as reduced radiation exposure to our employees. We automated our RUBY-FILL manufacturing processes by installing automated loading stations resulting in a 15% capacity expansion, efficiency gains and improved compliance.

At our CMO operations in Spokane, US, we are increasing our sterile liquid and lyophilisation capacity through the addition of a new filing line with lyophilisation capability. The planned expansion is set to get commissioned in CY 2024. The site continues to operate 24x7 across all production activities. At our Spokane, US manufacturing site for Allergy

Immunotherapy business, an additional line is qualified to meet the higher market demand of the venom product. We have also installed a new Lyophilizer and commissioning of the same is expected in FY 2022 to further improve operations reliability and capacities. Also, a new fill line been purchased for the Allergy Immunotherapy business. Several capital investment projects will be initiated in FY 2022 to upgrade facilities for Allergy.

At our CMO operations at Montreal, Canada, we upgraded our filling line and are in the process of procuring additional Ophthalmic manufacturing and filling capacities. The

Ophthalmic line will have the capability to manufacture preservative-free Ophthalmic solutions and it is expected to be operational by the end of FY 2022. We continue to contribute during the pandemic by manufacturing both drugs and vaccines at both our injectable sites.

Several capacity de-bottlenecking projects have been implemented, and facilities and processes have been upgraded to enhance GMP at our formulations and APIs manufacturing facility at Roorkee and Nanjangud, India.

At Nanjangud, various capacity enhancement and cost improvement projects (Carbamazepine, Tramadol, Losartan, lrbesartan, Esomeprazole Trihydrate and Escitalopram Oxalate) have been implemented to minimise the Cost of Goods Manufactured (COGM) and improve the capacity utilisation as well as capability building.

Cost Leadership

Our focus has been on conversion cost optimisation without compromising our quality and customer service standards and several initiatives have been undertaken to reduce the conversion cost. Our manufacturing facilities in Salisbury and Spokane have led structured improvement projects that have delivered significant conversion cost savings, while at the same time improving safety rate, deviation rate, productivity, batch rejections and service level. We have undertaken numerous energy-saving projects to reduce our utilities costs. Several automation projects and increased batch sizes in our operations are leading to efficient head count utilisation. Our bottoms-up Business Excellence initiative named ‘Eureka in North America and ‘Sankalp in India has allowed employees to come up with suggestions to reduce or eliminate waste in our processes. Our focus on training and process improvements led to a reduction in discards and improved ‘Right First Time (RFT).

At Nanjangud, as a part of the continuous improvement journey towards cost leadership/cost optimisation, our business excellence team along with CFT (Production,

Technical Services and R&D) focusses on identification of waste across the value chain and eliminating it using structured approach to improve product quality, RFT, service levels, productivity, planning and yields. They have successfully executed process automation and digitalisation projects.

Continuous Improvements

At Jubilant Pharmova, the Business Excellence function is proactively creating the framework for new improvement strategies which drives the competitive advantage backed by a strong execution mechanism and capability. These improvement strategies pertain to all the three critical pillars of the organisation, which are- customer, process, and people.

The continual effort of Business Excellence function is to understand processes and systems, model them using statistics and define crucial measurements which results in a superior co-ordination and integration of processes, learning and reconfiguration and transfiguration. This leads to a competitive advantage, which can be effectively used to leverage Companys competitive strategy. During this journey of continual improvement, we have adopted improvement methodologies in line with the organisations priorities like Lean Six Sigma, Total Productive Maintenance (TPM) and Business Intelligence (Bl) tools like Power BI, Qlik Sense etc. This year, the Business Excellence function continued to extend efforts towards Lean Lab fundamentals for optimising the efficiencies in Quality Labs. Use of

Internet of Things (IOT) for online Overall Equipment

Efficiency (OEE) has helped in understanding our losses in detail and improvement of projects are executed around key losses. In addition, the team facilitated the deployment of Smartsheet for efficient project management across all businesses.

The Business Excellence infrastructure helps in creating a self-driven/Mission Directed Team (MDT), which drives their operational area towards excellence in alignment to business objective through right accountability and training.

Our Technical Services function is conducting more technology transfers than ever before. We understand that process robustness is a critical success factor for ensuring reliable supply chain and product quality. Key emphasis has been laid by senior management on ‘Right First Time transfers from R&D to manufacturing facilities or from one manufacturing facility to another. As part of its commitment to continuous improvement, knowledge transfers and enhanced product and process understanding, the Company established technology transfer groups at its manufacturing and corporate sites as part of its commitment to new product introduction, product launches and continuous process improvement.

The Technical Services/Technology transfer groups interface with key functions like R&D, Regulatory, Quality, Business, Supply Chain and Operations to ensure realisation of business objectives. Most importantly, the Technical Services functions ensure that fundamental knowledge gained during the development is transferred to the manufacturing scale using a robust Quality by Design (QbD) approach.

Continuity

Business continuity is essential for sustenance and the Company has already established a sound strategy. We also executed several risk mitigation projects to qualify alternate sites for key products, qualification of alternate sources for key active ingredients, excipients and components. This provides greater confidence in our overall supply chain with our customers. We see our sustainability programmes as key enablers for ensuring business continuity. At Nanjangud, a comprehensive asset health assessment exercise is carried out to replace the ageing assets in a phased manner to avoid business interruptions and for enhanced compliance levels.

To bring about a cultural transformation across the organisation with a safety and quality mind set, programmes on the Companys values, safety management system and quality culture transformational are being carried out.

Supply Chain

As we continued our journey into FY 2021, we focused on sustained cost optimisation as well as de-risking of supply chain to mitigate any supply chain disruption risks. Working capital reduction through better inventory management and improving on creditors management were areas where significant efforts were made. Advance analytics tools were developed to create a robust system for inventory management. Significant efforts were employed in harmonisation of supply chain process across all sites.

In FY 2021, we made important progress in de-risking our supply chain against any vulnerability from single sourced products as well as pandemics like COVID-19. Based on the material risk assessment, several initiatives were implemented across businesses to either initiate alternate vendor development programme or perform reassessment of inventory norms to avoid supply chain disruptions. The supply chain was successfully able to mitigate any risk from COVID-19 in product availability without any major impact on raw material prices.

The team worked extensively in developing multiple vendors and ensure seamless supply/production and distribution of Remdesivir in India and to many other countries.

It is worthwhile to mention that we have made great progress to reduce our direct dependence on countries impacted due to geopolitical disturbances for raw material supplies. The availability constraints had to be navigated through strategic negotiations with securing required quantities, even at higher prices, to ensure business continuity. Logistical challenges were overcome considering the reduced availability of cargo spaces in all modes of transportation.

During the year, special focus was on digitalisation intiatives, such as automation of supply chain performance dashboard through Qlikview/Power BI applications, global spend consolidation initiatives, vendor performance management, inventory management and sales and operations processes.

Business Excellence

We are striving towards customer-centricity in our operations by leveraging excellence in tools and methodologies. Our goal is to achieve overall plant efficiency. Identification of waste across the value chain and eliminating it by improving product quality, service levels, productivity, planning and yields is integral to our approach.

To bring about a cultural change across the organisation with ‘safety and quality first mindset, programmes such values work-shop, safety management system trainings, and lean management projects were undertaken. Further, cross functional team collaboration has been actively encouraged for solving business problems.

There is high level of commitment from each team member across the value chain to leverage the new technologies and automation to deliver breakthrough results and achieve competitive advantage. Apart from using Power BI backed dashboards, with dynamic project management through Smartsheet, we began our digitalisation journey.

In our journey, we took a step forward during the year by using Artificial Intelligence and Machine Learning backed by logistic planning modules for all our North America Nuclear Pharmacies. For strengthening our project management practices, we migrated to Smartsheet for dynamic milestone control and monitoring through dashboards.

Information Technology

Information Technology is the backbone of any business. A robust IT strategy that includes adequate IT infrastructure, integrity, data confidentiality and data availability, at all times, is important to achieve our business objectives. Occurrence of any unforeseen threats to information technology systems could have an adverse impact on data availability and continuity of business operations. Our IT processes are ISO 27001 certified and we follow NIST

Cyber Security framework which ensures compliance to international standards and frameworks. Various components of information technology like network, operating system, firewall, software license compliance, applications controls, among others are covered under the annual audit plans and appropriate corrective and preventive actions are taken based on audit findings. Requisite redundancies have been built within the IT infrastructure to always ensure availability of information. There is a well-defined organisation-wide information security governance structure with the information security steering committee at the apex level which gives directions and resources to manage information security of the Company.

The Company has an incident management process which ensures all IT security events impacting critical IT infrastructure are getting logged and monitored round the clock by our Cyber Defence Centre (CDC).

Since employee awareness is an integral part of managing information security risk and creating a cyber aware culture, we provide structured training to the employees through internal and external training programmes.

Cyber disruptions are an inexorable reality, hence, it is imperative for businesses to function without disruptions caused by technology. We have a well-defined disaster recovery (DR) process to ensure that mission-critical applications are available and responsive when required. The DR process has been designed keeping in view global operations and business presence.

The Company adopted the cloud first strategy, which reduced turnaround time and made it possible for businesses to expand rapidly and embrace mobility without having to worry about incidents such as downtime and data loss, without compromising global compliance.

Software defined wide area network (SD-WAN) was deployed for high resiliency and centralised control function to securely and intelligently direct traffic across the network.

This increased application performance and delivered high quality user experience, resulting in increased business productivity, agility, and reduced costs.

Human Resources

In the midst of the crisis presented by COVID-19, our actions continue to be guided by our promise of Caring, Sharing, Growing. Our priority is the health and safety of our people while maintaining business continuity.

We implemented several safety and precautionary measures at all our workplaces, supported employees and their families with the necessary resources and assistance, established mechanisms for a personal and daily connect with all those effected. To maintain business continuity, we established safe boarding and meals within the workplace preventing the risk of exposure during the pandemic. In addition, work-from-home was encouraged. This demanded a new mindset, discipline, self-governance and protocols. Training and toolkits for employees and managers were provided to facilitate working from home. Sessions on mindfulness, yoga, meditation, and resilience were regularly conducted to assist employees in managing their emotional and mental well-being.

We continued to focus on our talent strategy and our annual exercise of succession planning for key positions through in-depth, rigorous discussions and application of a uniform potential assessment methodology.

A meritocratic, growth-oriented culture is key to an organisations sustainable growth. We benchmarked our performance management process, critically examined its effectiveness, transparency, and simplicity. We then launched a renewed, upgraded and contemporary performance management process with a strong employee communication plan and training. Towards the same objective, we revisited our promotion policy and introduced role-based promotions.

Within the first quarter, we revisited our learning strategy and shifted all our learning programmes to a Virtual Instructor Led Training (VILT) or to eLearning. Our annual learning calendar was replaced by a quarterly programme calendar. The monthly ‘Leader Speak series continued to provide our employees opportunities to learn from the best internal and external leaders and subject matter experts. Besides the internal speakers, we had a few external speakers who spoke on topics ranging from managing a crisis, communication, self-leadership and design thinking. We upgraded our eLearning from 100 courses to 3,000 courses across topics of business, functional, management and leadership skills to hone and foster a culture of continuous learning in the organisation. The learning management system reported about 80% employee usage. Additionally, we have mandatory programmes for employees on the Code of Conduct, Whistle Blower Policy and Policy on Prevention of Sexual Harassment at the workplace to reinforce our commitment to governance and adherence to the code of conduct and fair business practices.

The Chairman Annual Awards, the highest and most prestigious awards at the Company, was conducted over a digital platform this year. The ceremony was viewed across India and North America as a common platform to applaud our achievers.

Using digital ways allows us to simply do what we already do, but just more effectively. We adopted digitising across four categories: cost reduction, improved customer service, new revenue sources, and informed decision-making. After digitising the key processes of Talent Acquisition (TA) in FY 2020, Global TA analytics with more than 35 data reports were put in place. With the click of a button, one can see the TA process health across the globe while making decisions. Further, global analytics helps in maintaining data integrity, ensuring better process governance and control, enhancing processes and delivering higher productivity.

In addition, we launched a gamified social ‘Refer a Friend tool in North America for deeper reach in the talent market. To strengthen our employer brand, we launched two digital programmes globally to enhance candidate experience and new hire experience.

In the area of compensation and benefits, a global job grading exercise was concluded to bring uniformity across geographies and businesses to deliver a well-defined career path framework by enabling smooth cross business movements for employees. From the organisations perspective, a clear sizing and scoping of a role is important to determine the grade.

In our continuous effort to move into a fully digital environment, we globally launched a workforce budgeting tool. The system is well-integrated with our core HRMS and has made the entire process very simple and fast that leads to reduced man days and increase in productivity.

We reviewed and revamped our performance management process to further strengthen the culture of performance.

Environment Health and Safety (EHS)

Our vision is to achieve and maintain highest standards of EHS performance that ensures compliance to regulatory requirements and strengthens our commitment to our stakeholders. Our promise is that with utmost care for the environment and safety we will always strive to excel in quality of our processes, products and services.

The Companys operations are spread across different geographical regions and are subject to a wide range of EHS laws and regulations. In North America, we are regulated by various safety, health and environmental agencies and authorities including the United States Environmental Protection Agency (US EPA), Occupational Safety and Health Administration (OSHA), United States Nuclear Regulatory Safety Commission, Committee on Standards, Equity, Health and Safety at Work (CNESST, Quebec), Canadian Nuclear Safety Commission (CNSC), United States Boards of Pharmacy and Environment and Climate Change Canada. In India, we are regulated by various environmental agencies and authorities including the Central Pollution Control Board (CPCB) and State Pollution Control Boards. We require certain statutory and regulatory permits and approvals to operate our business, including environmental clearances. Regulatory compliance is a responsibility we take very seriously. Any failure to procure, renew or maintain the required permits or approvals or any violations of EHS requirements may result in substantial fines or penalties, the imposition of other civil or criminal sanctions, clean-up costs, claims for personal injury or property damages, restrictions on or the suspension of our operating permits or activities. Any such violation may also lead to interruption of our operations and may have adverse effect on the Companys financial condition, results of operations and profitability. With this in mind, we have implemented a cloud-based compliance management and reporting system across key entities in locations of North America and India. The system includes a comprehensive check-list of applicable compliances for the businesses of Pharmova. The purpose of this robust system is to further strengthen the governance towards compliance management in line with our business objectives.

We are aware of the rapid changes in the business environment such as increased global competition; more rigorous customer and societal demands; and extensive investor requirements. To tackle these challenges and ensure sustainability, excellence in cost, quality, services, and Environment, Health and Safety is of utmost importance. We are committed to protecting the environment and ensuring the health and safety of our employees, customers, and the public.

Over the years, EHS excellence has been extensively promoted as a part our culture. It is also clearly reflected in our policies on sustainability, EHS, climate change, and green supply chain. Our senior management has the ultimate responsibility and accountability for these initiatives. Performance reviews across the business regularly look at EHS key performance indicators (both lagging and leading) to reinforce leadership commitment towards employee safety, well-being, and environmental sustainability. Inputs are also integral to our major business decisions, such as new product development, facility enhancements and contractor/vendor relations.

The Company takes appropriate steps to ensure that our employees, the community at large, and the environment, including natural resources, are protected. Leaving minimal environmental footprint is integral to our EHS philosophy. On the road to achieving excellence, we have adopted a top down approach and have been enhancing the impact of initiatives by making it a line function responsibility through active employee consultation and participation. Efforts have been regularly implemented to drive a common governance approach on EHS across the board, and to adopt management programmes and systems that follow a standard framework for deployment, but with the flexibility to tailor-fit local regulatory and other location specific requirements.

Caring for the environment is a core corporate promise and as a part of this commitment, requisite capital expenditure is being incurred on process improvements as well as upgradation of environmental management facilities using the latest technologies. While end-of-the-pipe solutions are implemented, we are also making progress on initiatives for reduction of waste at source. Efforts to process more by-products and waste to make them reusable are paying off in terms of ecological and economic impact.

Investments are regularly made for the up-gradation of process safety and enhanced process controls at our sites. We implemented a new EHS solution, GenSuite, which is a cloud-based management system that provides integrated

EHS applications into a suite of tools specific for each business. The applications are related to management of corrective actions, incidents recording, incident investigation, data mining, auto notifications, compliance calendar among others. GenSuite allows for greater flexibility in data collection that matches our business needs and helps drive consistency in terms of tracking EHS challenges and ultimately improve our overall performance.

Our personnel stay updated through various external and in-house training programmes, including special training programmes by external experts and consultants.

We engaged with an external expert agency for strengthening our safety management system as part of our Occupational Health and Safety Strategy. The two-year project includes implementation of global OH&S Standards, competency building of the people, development of safety KPIs and driving safety governance across all the levels of the organisation till top management level.

The programmes are critically evaluated by our clients and customers on a regular basis and have served as an important enabler to further improve our EHS performance. Our growing and capable team is proactively engaged in systematically assessing our operations by conducting audits, inspections, training, and awareness sessions, thereby ensuring our EHS safeguards are effective, efficient, and delivering the intended results.

Despite the unprecedented COVID-19 crisis, we have continued to spread awareness and ensured safety and health of the employees as well as neighbouring communities. Some of the steps taken by us are:

• Rapid Response Team created at the corporate office, manufacturing and research facilities

• Creating a resource centre on office intranet for accurate information on the pandemic

• Providing training and guidance on COVID-19 to employees, partners and vendors

• Distributions of leaflets at manufacturing facilities on

COVID-19 awareness

• Advising self-isolation (14 days) and testing to employees experiencing any flu like symptoms

• Advised employees not to travel

• Continuous sanitisation and fumigation of all offices manufacturing facilities

• Sanitisation of vehicles entering Companys premises

• Transportation facilities for employees to avoid using public transport

• Restricting entry of visitors

• Investigation process to track exposure in the event of a positive onsite COVID-19 case

• Hand sanitisers placed at all the common areas, entry and exit

• Daily monitoring of body temperature of working employees using Infra-Red (IR) thermometers

• Stopping biometric attendance for all the employees

• Introduction of Work from Home (WFH)

• Maintaining social distancing at work place including at manufacturing sites

Corporate Social Responsibility (CSR)

Our approach towards sustainability rests on triple bottom line of Economic, Environmental, and Social performance. Corporate Social Responsibility (CSR) is an imperative part of our framework for sustainability. All CSR activities are in accordance with the provisions of Section 135 read with Schedule VII to the Act and are implemented through Jubilant Bhatia Foundation (JBF), the social development segment of Jubilant Bhartia Group, established in the year 2007.

The CSR interventions of our Company are also in line with the United Nations Sustainable Development Goals (SDGs). The CSR projects primarily lay emphasis on empowering the communities around the area of operations of our Company through 4P model (Public-Private-People-Partnership). Jubilant Pharmova Limited acts a catalyst and facilitates the implementation of the project and participation of community to bring out the optimal outcomes.

JBFs detailed activities are available on its website www.jubilantbhartiafoundation.com.

Our Companys vision is to create a positive impact on society through strategic multi-stakeholder engagement and bring about a ‘social change involving knowledge generation and sharing, experiential learning and entrepreneurial ecosystem through JBF.

Following are the highlights of CSR at Jubilant:

• CSR is extensively weaved-in the sustainable development charter of the Company. We consider community as one of the apex stakeholders and believes in inclusive growth

• Jubilant Pharmova Limited has been publishing its Corporate Sustainability Report every year from 2003.

The report is externally verified and is in accordance with the Global Reporting Initiative (GRI) guidelines

• We have achieved and maintained level A+ by GRI for our Corporate Sustainability Report since 2007. FY 2018 onwards the Sustainability Report of the Company is aligned with the Global Reporting Initiatives GRI Standards which is in accordance with the ‘Comprehensive option. All the reports are available on the Companys website www.jubilantpharmova.com

• During FY 2021, the Company instinctively supported its people and the community around its manufacturing locations amidst the COVID-19 pandemic. The Company strategised and re-structured its development initiative for the people in marginalised and remote areas, supporting them to continue their life during the pandemic. The projects were designed keeping in the safety and vulnerability of the community around the manufacturing locations

• Three major projects which helped the Company to sustain its engagement with the community are:

JubiCare Tele-clinic, a telemedicine application, conceptualised and developed by Jubilant Bhartia Foundation. This telemedicine interface provides a real-time patient-doctor consultation through text/audio/ video. JubiCare app uses ICT for the exchange of information for the diagnosis and treatment of diseases by a certified medical professional. The application aims at addressing the health issues of patients by health workers without unnecessary exposure to infections. The application provides immediate support and delivery of healthcare services to the underprivileged communities in rural and urban areas without traveling

• E- Muskaan, supporting education through digital literacy is ensuring the continuity in learning of students in rural areas by promoting the digital education inclusion of the last mile learners; thereby, facilitating cognitive growth. The Company has partnered with iDream Social Edtech Foundation and engaged in facilitating digital education in local languages to provide e-content free of cost to students at all project ‘Muskaan schools across the locations

JubiFarm, strengthening livelihood by facilitating access for farmers to modern and sustainable farming methods. This is a sustainable and multi-

stakeholder initiative that is conceived to enhance the profitability and generate income opportunities in farming for migrants returning to their native homes. The initiative recognises both male and female as equal stakeholders of the farmland

• Jubilant Pharmova Limited developed a strategy to mentor young adults as future Youth Leaders under Muskaan Fellowship project. They, in turn, will become goodwill ambassadors for the Company

• Jan Sanchetna initiative has been formulated to focus on establishing village-level Emergency Preparedness Team (ERT) in line with Village Disaster Management Committee (VDMC). The ERT will work in coordination with the plants at each location to strengthen offsite emergency plan We look forward to continuing our CSR programmes with greater zeal and strong commitment. The organisation will continue adding value to the lives of the community, which it considers to be an apex stakeholder.

Internal Control Systems and Risk Management

Risk-taking is an inherent trait of any enterprise. It is essential for growth or creation of value in a company. At the same time, it is important that the risks are properly managed and controlled, so that the Company can achieve its objectives effectively and efficiently.

Internal Financial Control Framework

Section 134(5)(e) of the Companies Act, 2013 requires a company to lay down Internal Financial Controls (IFC) system and to ensure that it is adequate and operating effectively. Internal Financial Controls means the policy and procedures adopted for ensuring the orderly and efficient conduct of its business. The above requirement has the following elements:

• Orderly and efficient conduct of the business

• Safeguarding of its assets

• Adherence to Companys policies

• Prevention and detection of frauds and errors

• Accuracy and completeness of the accounting records and timely preparation of reliable financial information

At Jubilant Pharmova Limited, the Internal Financial Controls (IFC) system has been established and incorporates all the above five elements. In addition, our Company has transparent framework for periodic evaluation of the Internal Financial Controls in the form of perpetual internal audit exercises and quarterly online controls self-assessment through Controls Manager software, thereby reinforcing the commitment to adopt best corporate governance practices.

Policy and procedure adopted by the Company to adhere to IFC elements are given below:

Orderly and Efficient Conduct of Business

The Company has an established organisational structure, which defines the roles and responsibility relationship. The Company has a formal financial planning and budgeting system encompassing short-term as well as long-term planning. In order to ensure that decisions are made and action are taken at an appropriate level, the Board of Directors of the Company have formulated the Delegation of Authority, which has been designed to ensure that there, is judicious balance of authority and responsibility. The adherence to delegation of authority is part of internal audit plan. The Company also has a risk management framework which has been discussed under the heading ‘Our Vision on Risk Management.

We have implemented a web-based automated compliance management and reporting system. The objective of the system is to ensure that the compliances are regularly monitored and controlled with a view to support the Companys business objectives and corporate policy requirements. The system includes a comprehensive checklist for ensuring compliance with the laws and regulations applicable to all plants and offices of the

Company. To ensure timely and effective compliances, the compliance status is monitored on a real-time basis by the respective functions. The status is presented by legal team and reviewed on a quarterly basis by the

Senior Management and the Board of Directors. Pursuant to the Listing Regulations, the Company Secretary and

Compliance Officer present a compliance report to

Board of Directors on a quarterly basis.

Safeguarding of its Assets

The Company has taken an Industrial All Risk (IAR) Policy for its plants as well as fire policy for Corporate to safeguard its assets. It also carries out a physical verification of its assets. Company has also obtained Cyber insurance policy during the year to protect its assets from cyber-attacks.

Adherence to the Companys Policies

The Company has two-tier policies and procedures: Entity Level Controls and Process Level Controls. The entity level controls include a comprehensive Code of Conduct. The Company also has a Whistle Blower policy, and any employee of the Company can directly write to the Ombudsperson. We also have process level controls which cover a wide range of key operating, financial and compliance related areas like Accounting, Order to Cash, Procurement to Payment, Inventory and Production, Treasury, Legal, Forex, Fixed Assets, Direct and Indirect Tax, Research and Development (R&D) and Information Technology General Controls ( ITGC).

Self-assessment certification of controls is being done by the control owners through a verifiable and transparent process and such a certification is reinforced by activity and location owners, as they give in-principle approval to the self-assessment by the control owners. Result of

Controls Manager certification is prepared and presented to the audit committee every quarter by the Chief Financial

Officer (CFO) for exception review.

Controls certification is also being validated by the in-house team through review of the assertions certified by

Control Owners on sample basis regularly across business units, plants, branches and corporate office and validation results of Controls Manager certification are prepared presented annually to the audit committee. The policies are periodically reviewed and refreshed in line with the changes in business and regulatory requirements.

The audit committee, on a quarterly and annual basis, reviews the adequacy and effectiveness of the internal controls being exercised by various business and support functions.

Prevention and Detection of Frauds and Errors

Due to the presence of strong Code of Conduct and Whistle Blower policy, it is generally expected that serious frauds will not take place. In order to prevent and detect frauds and errors, Ernst & Young LLP carries out perpetual internal audit activity. Action points and suggestions made by them are discussed in sub-audit committee meeting before presenting the same to the audit committee. Subsequently, follow-up audits are also carried out by in-house internal audit team to ensure implementation of the suggestions. In addition, special audits are carried out by Ernst & Young LLP in areas that may be vulnerable to fraud.

Accuracy and Completeness of the Accounting Records and Timely Preparation of Reliable Financial Information

The Company has a well-documented accounting manual. The accounting manual contains detailed guidelines on all aspects of accounting which helps in ensuring that the accounts and finance team is well updated on the accounting requirements. Financial consolidation is carried out through an Enterprise Resource Planning system called Hyperion, thereby minimising the chances of manual errors. The financial information is verified by the statutory auditors on a periodic basis as per the requirements of Companies Act, 2013, Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the ‘Listing Regulations), Institute of Chartered Accountants of India (ICAI) guidelines, etc. The Company provides structured training to the accounts and finance team on a wide range of topics covering Ind AS (Indian Accounting Standards), IFRS (International Financial Reporting Standards), Companies Act, 2013, Direct & Indirect taxes, etc. through in-house and outside experts.

Implementation of Internal Financial Controls

To compete globally, world-class Corporate Governance and financial control over operations is necessary for the

Company. The Internal Financial Controls as mandated by the Companies Act not onlyrequire certification from

CEO and CFO but also put an obligation on the Board of Directors to ensure that the Internal Financial Controls are adequate and operating effectively. Besides this, the statutory auditors are also required to give an opinion on the adequacy and effectiveness of Internal Controls over Financial Reporting (ICFR).

To make the Internal Financial Controls framework robust, we have worked on three lines of defence strategy, which is as under:

• First Line of Defence: Build internal controls into operating processes - To this end, we have ensured that a detailed Delegation of Authority is issued, Standard Operating Procedures (SOPs) for the processes are created, financial done through Committees, IT controls are built into the processes, segregation of duties is done, strong budgetary control framework exists, the entity level controls including Code of Conduct, Ombudsperson office etc. are established.

• Second Line of Defence: Create an efficient review mechanism - We created a review mechanism under which all the business units and functions are reviewed for performance at least once a month by the respective Chief Executive Officers (CEOs) and once in a quarter, by the corporate team. The formats for these reviews are detailed and finalised with the help of global consulting firms.

• Third Line of Defence: Independent assurance - We have appointed E&Y as our internal auditors to perform systematic independent audit of every aspect of the business to provide independent assurance on the effectiveness of the internal controls and highlight the gaps for continuous improvement.

A programme has been developed under which more than

1,500 financial controls have been established and certified on a quarterly basis by the relevant process owners before the financial results are closed for the quarter. A quarterly certification process is maintained through work flow based IT tool called ‘Controls Manager and this certification is the basis of the ‘CEO-CFO certification internal controls as per Regulation 17(8) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the ‘Listing Regulations)

The Company regularly updates the control library and risk and control matrix. The statutory auditors tested the updated control framework for operational effectiveness, and they have given an affirmative opinion about the adequacy effectiveness of Internal Controls for financial reporting the Company.

The Company has three business segments namely:

a) Pharmaceuticals b) Contract Research & Development Services and c) Proprietary Novel Drugs

The segments have a complete management set up with

CEO, Chief Financial Officer (CFO) and other functional heads who are responsible for running the operations and report to the Chairman/Co-Chairman and Managing Director (CCMD) and the Corporate Committee.

To improve the controls in operations, we have established, for each line of business, the concept of financial decision making through operational committees. The entire purchase, credit control and capital expenditure decisions are taken jointly in committees. The key roles of these business committees are as under:

• Purchase Committee, which ensures high quality purchases at economical cost and maintains reliability of supplies from reputed suppliers with long-term relationships. This committee includes CEO, CFO, Head of Supply Chain and the relevant BU (Business Unit)/ Functional Head.

• Capex Committee, which ensures cost reduction with proper negotiation and monitors time and cost overrun. This committee includes CEO, CFO, Head of Project, Head of Supply Chain and the relevant BU Head/ Functional Head.

• Credit Committee, which evaluates the credit risk and approves the maximum credit, which can be provided to a customer. This committee approves the credit limits at the beginning of the year and is empowered to make changes as and when required. This committee includes CFO, CEO and the BU Head.

• Business Performance Committee, which reviews the business performance on a monthly basis. This committee includes CEO, CFO, Functional Heads and the relevant BU Head.

In addition, to maintain periodic review and control, we have a structured weekly meeting between the corporate team and the business leadership team. Through this meeting, a the corporate team keeps itself abreast of the latest business developments and guides the business team to of undertake mid-course corrections, if required. This meeting also provides a forum for obtaining the relevant approvals required from the corporate team as per Delegation of Authority. Participants at this meeting are Chairman/CCMD from Corporate side, CEOs, and CFOs from the business side.

Further, a detailed quarterly review of the business performance with the Chairman/CCMD and the corporate committee is organised to identify any gaps in performance in and to consider mid-course corrections.

Risk Management Vision

To establish and maintain enterprise-wide risk management capabilities for active monitoring and mitigation of organisational risks on a continuous and sustainable basis.

Risk Management Strategy

We have formed a strong risk management framework that enables regular and active monitoring of business activities for identification, assessment and mitigation of potential internal or external risks. We have established processes and guidelines, along with a strong overview and monitoring system at the Board and senior management levels.

Our senior management team sets the overall tone for risk minimisation culture through defined and communicated corporate values, clearly assigned risk mitigation responsibilities, and appropriately delegated authority. We have laid down procedures to inform Board members about the risk assessment and risk minimisation procedures. As an organisation, we promote strong ethical values and high levels of integrity in all our activities, which by itself significantly mitigates risk.

Risk Management Structure

Our risk management structure comprises the Board of Directors, Risk Management Committee and Audit Committee at the apex level, supported by CEOs, CFOs, Functional Heads, Business Heads and Head of Management Assurance function. As risk owners, the

Heads are entrusted with the responsibility of identification and monitoring of risks. These are then discussed and deliberated at various review forums chaired by the CEOs and actions are drawn upon. Progress against the risk management plan is periodically monitored.

The Risk Management Committee, Audit Committee, CEOs, CFOs and Head of Management Assurance act as a governing body to monitor the effectiveness of the Risk Management and Internal Financial Controls framework.

Risk Mitigation Methodology

We have in place a comprehensive internal audit plan and a robust Enterprise Risk Management (ERM) exercise which helps to identify risks at an early stage and take appropriate steps to mitigate the same.

Each Business head updates the risk register and identifies top risks for the business. The CEO and CFO then consolidate top risks and report them periodically to the Board of Directors along with a mitigation plan.

We have a quarterly certification process wherein, the concerned control/process owners certify the correctness of entity level and process level controls. The certification process has been in operation for more than 8 years and covers over 1,500 controls. The process level controls cover a wide variety of key operating, financial and compliance related areas while entity level controls cover integrity and ethical values, adequacy of audit and control mechanism and effectiveness of internal and external communication, thereby, strengthening the internal financial control systems and processes with clear documentation on key control points. This has made our internal controls and processes stronger and serves as the basis for compliance with the provisions of the ‘Listing Regulations.

Managements Assessment of Risk

The Company identifies and evaluates several risk factors and draws out appropriate mitigation plans associated with the same. Some of the key risks affecting its businesses are laid out below:

1. Pandemic Risk - Uncertainty Due to COVID-19

Since FY 2020-21, the world has been adversely affected by COVID-19. Besides the staggering humanitarian crisis across nations including India, the pandemic has had a significant impact on the economy and businesses. It has disrupted the supply, demand, and logistics front.

Risk Mitigation Plan

Jubilant Pharmova Limited, being part of the essential pharmaceutical value chain, with our effective business continuity plans and safety measures, our focus in FY 2020-21 was squarely on securing the well-being, health and safety of our people; developing and maintaining business continuity plans.

• Right at the onset of the pandemic, we mobilised efforts and established strict COVID-19 protection especially at our research and manufacturing sites.

• A work from home policy was announced for all the employees. We continue to monitor the situation, adapting our response to minimise the impact on employees, customers and suppliers.

• One of the key measures undertaken during the year was the formation of a COVID-19 task force, which is tasked with maintaining business continuity to augment the existing risk management activities

• During the reporting period, the Company strengthened its cybersecurity controls and focused on enabling swift action on risks emerging across the businesses

2. Manufacturing Operations Risk

As a pharmaceutical manufacturer, our manufacturing facilities are required to comply with extensive USFDA and comparable foreign regulatory authority requirements, including ensuring that quality and manufacturing processes conform to current Good Manufacturing Practices (cGMP).

During the financial year ending on 31 st March, 2021, various regulatory authorities from the US, Canada, Brazil, India, etc. inspected our facilities. For example, the Jubilant HollisterStier CMO facility in Spokane, USA was inspected in March 2021 by the USFDA (CDER) and received zero 483 observations. Similarly, both our Spokane CMO and Allergy Immunotherapy facilities were subject to a form 4003 document review request from the USFDA (CBER) in March 2021. The FDA (CDER) inspection was deemed successful and is pending the Establishment Inspection Report (EIR). Likewise, the FDA (CBER) document review has yielded no additional queries at this time.

Our Jubilant HollisterStier General Partnership, CMO Montreal, Canada facility was also subject to a form 4003 document review request from the USFDA (Center for Veterinary Medicine) for a client product filing in December 2020. The client product has since been approved and the review deemed successful.

The API Nanjangud facility underwent an inspection in June 2020 by Central Drugs Standard Control Organisation (CDSCO) as well as the local state drug control authority for a preapproval inspection of Remdesivir API. Subsequently, the local state drug control authority performed a post approval inspection for Remdesivir API in May 2021 and received approval. In addition, the site also was subject to a desktop assessment by ANVISA in March 2021. The Nanjangud site continues its remediation efforts with respect to the Official Action Indicated (OAI) status with the USFDA. We continue to work with the USFDA to bring the regulatory status of this facility to a complete state of compliance.

Our Dosage Formulation facility at Roorkee which manufactures and distributes finished solid dosage pharmaceutical products, has received an import alert notification by the USFDA after the site was inspected by the agency in March 2021. FDA has exempted five products from being exported to US, which are subject to company meeting certain conditions.

The Jubilant DraxImage business unit underwent an inspection by Health Canada in January, 2021, and that has resulted in a Compliant rating.

Risk Mitigation Plan

• We are committed to business process improvement by means of automation and providing timely training to workers, establishing clear Standard Operating Procedures (SOPs) and process guidelines, which will lead to reduction in cycle time, and improvement in productivity

• We continue to improve and harmonise our quality systems to ensure compliance with ever evolving regulations

• We have formed a dedicated team to address the import alert issue. This team includes highly specialised consultants, who have wide experience in resolving such issues. This team will not only remediate the gaps identified by USFDA but will also take a holistic approach towards further improvise our cGMP quality systems, in addition to implementing a comprehensive programme to improve our processes, this team will also proactively address all the gaps identified

• We are working very closely with the Agency and are providing them with regular updates and progress on the highlighted findings during inspection

• We continue to deliver safe and effective products to our clients in a timely manner. In the true spirit of continuous improvement and to be in line with the latest industry standards and trends, we will continue to make significant investments in our people, strengthen our processes, bring state-of-the-art technologies, and further develop in-house expertise like computer system validation

3. Information Technology (IT) Risk

Today, Information Technology has become the backbone of any business. Robust IT strategy that includes adequate IT infrastructure, integrity, data confidentiality and data availability at all times is key achieving our business objectives. Occurrence of any unforeseen threats to information technology systems could have adverse impact on data availability and continuity of business operations.

Risk Mitigation Plan

• Our Information security framework is certified for

ISO/IEC 27001 Standards, which ensures that all the information assets are adequately safeguarded

• New DR (Disaster Recovery) site has been setup on cloud for India side

• There is an information security steering committee at the apex level, which gives directions and resources to manage information security of the Company

• All the IT security events affecting critical IT infrastructure are being logged and monitored round the clock by our Cyber Defence Centre (CDC)

• Most of the IT assets are hosted in the ISO certified data centres, which are subject to appropriate physical and logical access controls

• Requisite redundancies have been built within the IT infrastructure to ensure availability of information at all times

• We also publish a monthly information security newsletter to create end user awareness about information security risks and mitigation strategies

4. Dependence on Certain Key Products and Customer Risk

The Company depends on certain key products and key long-term contracts with customers for a significant portion of its total revenue and any events that adversely affects the markets for key products or key contracts may adversely affect its financial condition, results of operations and profitability.

Risk Mitigation Plan

While we are not dependent on any single customer and have a broad and diversified customer base across businesses, we continue to launch new products with the help of R&D teams, which help in developing new cost-effective processes/products to meet customer demand and build market share.

5. Dependence on Single Manufacturing Facility Risk

Some of our products are produced by a single manufacturing facility. For instance, Allergy within Specialty Pharmaceuticals are solely produced by our manufacturing facility in Jubilant HollisterStier LLC Spokane, US and our Radiopharmaceutical products, which currently are solely produced by our Jubilant Draxlmage Inc. - Montreal facility, Canada. Similarly, the manufacturing facility in Nanjangud, India of our subsidiary, Jubilant Generics Limited, is the sole manufacturing facility for APls. On account of this facility being located in India, it may be subject to risks such as changes in regulatory, economic, fiscal and taxation policies, natural calamities, terrorist attacks, pandemics etc., which may affect the operations or profitability of our APls manufacturing facility and other manufacturing facilities located in India.

The spread of the COVID-19 and the related quarantines and travel advisories had, for a few weeks, disrupted production at Nanjangud manufacturing facility.

6. Supply Interruptions Due to Few Suppliers Risk

In our Pharmaceuticals segment, which includes Solid Dosage Formulations, APls, Radiopharmaceuticals and commercial Radiopharmacy businesses, for some of our key raw materials, we have only a single or a few external sources of supply, and alternative sources of supply may not be readily available.

Risk Mitigation Plan

• We have an effective strategy to mitigate these risks by developing alternative suppliers on a continuous basis that minimises any order cancellations and decrease in revenues • We identified common suppliers and initiatives were taken to consolidate spending between various businesses to leverage procurement from common suppliers

• We have established long-term supply arrangements with suppliers to ensure uninterrupted material availability

7. Human Resources - Acquire and Retain Talent Risk

Given the nature and complexity of the regulatory regime of the pharmaceutical industry and our dependence on R&D activity, it is imperative that we recruit and retain high quality R&D specialists and Quality Control personnel. Lack of credible, talented successors or effective knowledge transition mechanism may adversely affect operations.

Risk Mitigation Plan

• As a part of our strategic talent and succession management process, the leadership invests valuable time in identifying high potential candidates and planning their development for succession to critical positions

• We conduct the leadership development programme and the 360-degree feedback mechanism for these employees based on the leadership competency framework

• Management employees at critical positions enrol in customised general management programmes at premier institutes to prepare for larger roles and build cross-functional capability in the organisation

• We have launched a Learning Management System (LMS), which comprises an extensive collection of training and learning resources and can be accessed by all employees through the online portal

• We conduct regular communication forums in the form of town halls, skip-level meetings and new joiner assimilation programmes to understand employee concerns and a structured mitigation process is developed for effective redressal

• We ensure that there is full adherence to the code of conduct and fair business practices are followed

8. Compliance and Regulatory Risk

Our business operates within a highly regulated environment and regulatory affairs play a vital role in the development of all businesses. Due to constantly increasing regulatory obligations, new requirements as well as globalisation of market, the demands and responsibilities of business in terms of regulatory readiness are becoming stringent. We deal with various international regulatory agencies like USFDA, EU agencies, Australian agency, Canadian agency, WHO, CDSCO India and various other international regulatory agencies in different parts of the world pertaining to drug substances and drug products.

Risk Mitigation Plan

• We have adopted measures to address these stringent regulations by increasing the efficiency of our R&D process, reducing the impact of extended testing, timely submission of dossiers and ensuring timely product availability

• We are proactively following-up with regulatory authorities regarding pending approvals and queries raised by authorities are addressed promptly

• We have also put in place a compliance management system to ensure compliance with all applicable laws and regulations

• We have a dedicated team of experts whose knowledge ensures that the global regulatory compliances are met and we can build competitive advantage

• We also undertake training and orientation programs to keep the relevant process owners updated on new regulations and changes in the existing laws

9. Competition, Cost Competitiveness and Pricing Risk

Being a global manufacturer Jubilant Pharmova is exposed to pricing risk both as a buyer and seller. Concentration of raw material procurement to a few suppliers may lead to unfavorable and unethical price setting by suppliers, thereby eroding financial margins and affecting competitiveness. The competition we face in some of our businesses is described in detail below:

Specialty Pharmaceuticals

Many of our competitors have substantially greater experience in the development and marketing of branded, innovative and consumer oriented products. Other risks are the introduction of generic versions when our proprietary products lose their patent protection or any new entrants into a Generics market in which we are already a participant. In addition, distributors of our products could attempt to shift end-users to competing diagnostic modalities and products. Our current or future Radiopharmaceutical products could be rendered obsolete or uneconomical because of these activities.

Risk Mitigation Plan

We aim to differentiate through improvement in our service quality, provision of added services such as product development, targeted formulation, laboratory analytical services as well as superior technical expertise.

Contract Development and Manufacturing (CDMO)

There is intense competition in the market for CMO and APl business. Once we develop an API, we need to identify and partner with a generic drug manufacturer that will use our APls in their formulation or wait for our solid dosage formulations to receive the requisite approvals. The regulatory approval process for new suppliers of APls to generic manufacturers imposes significant timing constraints in bringing products to market.

Risk Mitigation Plan

• New products continue to be launched by experienced and talented R&D teams. The in-house R&D team further develops cost-effective products by redefining the production process

• For some of our generic formulations, we have captive manufacturing of APls to ensure timely material availability and effective cost control to focus on improving profit margins

Generics

Pricing pressure could arise from competitive products being introduced into a particular product market, price reductions by competitors, the ability of competitors to capitalise on their economies of scale to create excess product supply, the ability of competitors to produce or otherwise secure APls at lower costs than what we are required to pay to our suppliers.

In our Solid Dosage Formulations business, any delay due to failure in bioavailability and bioequivalence studies or regulatory approvals may significantly reduce our capability to gain market share in this business.

Risk Mitigation Plan

• Increasing penetration in other geographical regions and strengthening our supply position with our existing strategic customers through competitive offering to achieve a higher share of customers business

• Building long-term relationships with key customers by offering improved quality and service experience

• Building economies of scale in manufacturing, distribution channels and procurement to maintain cost advantage and sustained entry barrier

• Introducing cost improvement initiatives and manufacturing efficiency improvement plans at plants by undertaking projects under Business Excellence programmes • Significant R&D has been done to improve raw material and utilities consumption and increase manufacturing efficiency

• Developing external manufacturing facilities to make the products expeditiously and at lower cost

Contract Research & Development Services

In the Contract Research & Development Services area, the pharmaceutical industry is facing significant challenges such as escalating cost of R&D, patent expirations, pricing pressure, increased regulatory and safety hurdles as well as lower productivity.

A further risk in this business is the intrinsic discovery and development risk when programmes fail to meet efficacy, which leads to suspension of the efforts, and short-term decline in revenue until other compensatory programmes are developed.

Risk Mitigation Plan

• To mitigate this risk, we are constantly reviewing our internal processes and organisational structure to ensure higher efficiency, increased scientific output and cost effectiveness.

Proprietary Novel Drugs

In Proprietary Novel Drugs segment, we face significant competition in an environment of rapid technological and scientific change, and our failure to effectively compete may prevent us from achieving significant market penetration.

Risk Mitigation Plan

• Significant number of product are currently under development, and may become commercially available in the future, for the treatment of diseases and other conditions for which we may try to develop new products.

• Our precision medicine target and biomarker discovery platform and our scientific and technical know-how give us a competitive advantage in this space, though competition from many sources remains.

10. Capacity Planning and Optimisation Risk

Our production capacity may not be aligned with market demand. Insufficient capacity threatens our ability to meet demand and be competitive and excess capacity threatens the organisations ability to generate competitive profit margins.

Risk Mitigation Plan

• The Company continues to invest in the optimisation of our manufacturing capacity utilisation. Such optimisation is driven by continuous de-bottlenecking our manufacturing plants and by value engineering through the application of Six Sigma, Lean Sigma and other value-added tools for productivity enhancement

• The business teams regularly track the trends for each product to ensure that there is sufficient capacity to meet demand

• We periodically undertake other initiatives to improve efficiency in terms of throughput, cost reduction and to build additional capacities without committing significant capital outlay thereby generating better return on investment

• We have developed a dedicated external manufacturing team, which can help to outsource some capacities and capabilities in order to ensure quicker response to unforeseen market demand

11. Research and Development (R&D) Effectiveness

Risk

As a pharmaceutical manufacturer, our business growth is dependent on successful execution of R&D strategy. Our R&D is focused to develop commercially viable and sustainable new products, effectively improve and enhance our existing products, along with process improvements that can improve time, quality and cost efficiency.

Risk Mitigation Plan

• We have an effective strategy to mitigate potential risks and ensure R&D effectiveness with earmarked budgets and investments in R&D commensurate with the business plans. We routinely evaluate and prioritise our R&D programmes based on market dynamics and commercial viability

• We are continuously engaged in the development of new products for pipeline of products that can be introduced in future

• The focus is on development of processes within the deadlines at optimum cost with effective and efficient scalability

12. Environment, Health, and Safety (EHS) Risk

Companys operations are spread across different geographical regions and are subject to a wide range of EHS laws and regulations. In North America, various environmental agencies, authorities including the United States Environmental Protection Agency (US EPA), Environment, and Climate Change Canada regulate us. In India, various environmental agencies and authorities including the Central Pollution Control Board (CPCB) and State Pollution Control Boards regulate us.

Risk Mitigation Plan

• We implemented a new EH&S solution, GenSuite, which is a cloud-based EHS management system that provides integrated EHS applications into suite of tools specific for each business

• Performance reviews across the business regularly look at EH&S key performance indicators to reinforce leadership commitment towards employee safety, well-being and environmental sustainability

• Requisite capital expenditure is being incurred on process improvements as well as up-gradation of environmental management facilities using the latest technologies that have helped to reduce environmental footprint. While end-of-the-pipe solutions are implemented, we are also making progress on initiatives for reduction of waste at source

• We engaged an external expert agency for strengthening our safety management system as part of our Occupational Health and Safety Strategy

13. Protecting Intellectual Property Rights (IPR) Risk

There has been substantial patent related litigation in the pharmaceutical and medical device industries concerning the manufacture, use and sales of various products. We take all reasonable steps to ensure that our products do not infringe valid third-party IPRs. Any material litigation or other communication alleging such infringements could delay the sale of or prevent us from selling our products.

Risk Mitigation Plan

• We protect our products with patents in major markets. Depending on the jurisdiction, patent protection may be available for individual active ingredients; specific compounds, formulations and combinations containing active ingredients; manufacturing processes; intermediates useful in the manufacture of products; and new uses for existing products • The Company has filed intellectual property applications in various countries for innovations. The Company has trademarks primarily in India, US, Canada, Europe, Nigeria, South Africa, Mexico, Columbia, China and Australia

• Besides patents, the Company relies on trade secrets, knowhow and other proprietary information and, hence, our employees, vendors and suppliers sign confidentiality agreements

• We have a dedicated team of scientists whose primary task is to ensure that the products are manufactured using only non-infringing processes and compliance requirements are met by reviewing and monitoring IPR issues continuously

14. Failure to Supply to Customers Risk

In the Pharmaceuticals segment, if we are unable to supply our products to customers as per the agreed timelines or specifications or other conditions, we may face penalties from our customers as per the terms of the agreement.

Risk Mitigation Plan

We ensure that such risks are monitored and mitigated on a continuous basis to avoid customer dissatisfaction, order cancellations and decreased revenues.

15. Changes in Tax Legislation Risk

The Companys activities are subject to tax at various rates around the world computed in accordance with local legislation and practice. Actions by governments to increase tax rates or to impose additional taxes may reduce our profitability. Revisions to tax legislation or to its interpretation (whether with prospective or retrospective effect) may also affect our results and significant judgment is required in determining our provision for income taxes. Likewise, we are subject to audit by tax authorities in many jurisdictions. In such audits, our interpretation of tax legislation might be challenged and tax authorities in various jurisdictions may disagree with, and subsequently challenge, the amount of profits taxed in such jurisdictions.

Risk Mitigation Plan

We have a dedicated team of tax professionals whose primary task is to ensure that the tax liabilities are correctly computed and any revision in the tax legislation is monitored continuously.

16. Liquidity, Solvency, Debt repayment/Bond holder Payment Risk

There may be risk that Company may not be able to raise funding from financial institutions in case of need or Company is unable to meet its short-term and long-term obligations in a timely manner.

Risk Mitigation Plan

• Liquidity risk is managed by regular monitoring through cash flow statements and financial ratio analysis

• There is a dedicated treasury team supported by finance team which ensures liquidity risk is managed and ensure working capital is optimised

• Capital expenditure is reviewed and approved by Senior Management to avoid any unplanned capital expenditure

• A thorough assessment of available funding and strength of the relationships with lenders, shareholders and investors is carried out to ensure liquidity and solvent risk is addressed • Due to our significant operating cash flows, financial assets, access to capital markets and available lines of credit and revolving credit agreements, we continue to believe that we have, and will maintain, the ability to meet our liquidity needs for the foreseeable future

17. Foreign Currency Exposure Risk

There has been significant movement in exchange rates over many years. An increasing amount of our sales, particularly in US, Canada and European countries, is recorded in local currencies, which exposes us to the direct risk of exchange rate fluctuations.

The Company did not use any derivative financial instruments or other hedging techniques to cover its potential exposure since net foreign exchange exposure is not significant.