Krebs Biochemicals & Industries Ltd Directors Report.

To,

The Members,

The directors submit annual report of Krebs Biochemicals & Industries Limited (the Company) along with the audited financial statements for the financial year ended 31st March 2021.

1. Financial Summary

Particulars 2020-21 2019-20
Net Sales 3860.64 2358.38
Other Income 1571.53 1,019.35
Total Income 5432.17 3377.73
Expenditure 7127.73 5204.25
P(L)BDIT (1696.56) (1826.52)
Loss on sale of Assets - Nil
PBDIT (After Extra Ordinary Items) (1696.56) (1826.52)
Finance Charges 627.90 592.78
Depreciation 512.40 467.90
Profit/(Loss) Before Tax (2835.86) (2887.20)
Exceptional Items Nil Nil
Deferred Tax Asset Nil Nil
Taxes of earlier years Nil Nil
Net profit/(Loss) after Tax (2835.86) (2887.20)
Other Comprehensive Income 17.26 (127.08)
Total comprehensive income for the period (2818.60) (3,014.28)
(comprising Profit/(loss) and other
comprehensive income for the year)
Add: balance brought Forward (15305.67) (12292.01)
Less: Depreciation Nil Nil
Add: Transferred from Profit & Loss Account (2818.60) (3013.67)
Balance Carried to Balance Sheet (18124.26) (15305.68)

3. Financial Performance

During the year under review, the Company has posted net sales of Rs. 3860.64 lakhs and Rs. 1571.53 lakhs as other income. For the FY 2020-21 the company has incurred a loss of Rs. (2835.86) lakhs as against loss of Rs. (2887.20) lakhs of the previous year ended 31st March 2020. Detailed Performance of the Company is given in the Management and Discussion analysis forming part of the Corporate Governance report.

4. Change in nature of business

During the year under review, there is no change in the nature of business of the company.

5. Dividend

On account of losses during the year, no dividend is proposed to be declared for the financial year 2020-21.

6. Operations

During the FY 2020-21, A total of four products are being produced in our plant which include Phenylephrine HCl, Simvastatin, Serratiopeptidase and RSS. Backward integaration for one of the current products and new product development is ongoing. Significant investment has been made into upgrading the effulent and waste management system and also safety systems to comply with the latest regulations. All statutory licensing and legal requirements are being continuously complied by your company.

1. Material changes and commitments affecting the financial position of the company. a. Covid-19 In the FY 2020-21, the COVID-19 pandemic has continued to contribute to the global crisis, forcing governments to enforce lock-downs in between thereby stalling of all economic activity. The Company immediately focused and ensured the health and well-being of all employees, and on minimizing disruption of production by the Company.

As of March 31, 2021, work from home was enabled to employees who could accommodate the same and to work remotely and securely. Although there are uncertainties due to the pandemic the Company has engaged in the best practises to continue the manufacturing operations. b. Warrants Conversion The Company has obtained the in-principle approval and also listing and trading approvals from NSE and BSE for the issue and allotment of 35,60,000 Convertible Warrants to IPCA Laboratories Limited and has accordingly allotted Convertible warrants to M/s. IPCA Laboratories Limited on February 5th, 2020. The Company has on 20th May, 2020 converted partially Warrants to an extent of 16,20,000 and allotted Shares to an extent of 16,20,000 for a price of Rs.10/- each and at a premium of Rs.76/- amounting to Rs.139,320,000/-the same has been listed on NSE and BSE after obtaining the listing and trading approvals. Further the Company has on 6th April, 2021 at its Board meeting made the Allotment Of remaining 19,40,000 Equity Shares of Rs. 10/- Each at a Premium of Rs. 76/- Per Share to M/S Ipca Laboratories Limited, Promoter Group Shareholder amounting to Rs.166,840,000/-, the same has been listed on NSE and BSE after obtaining the listing and trading approvals. c. Settlement of Cases Some of the Vendors have filed winding up cases against the company for the outstanding dues in the various legal forum. The Company has paid all the debts due to the Vendors by entering into a Memorandum of Understanding with them.

8. Share Capital a) Conversion of Warrants

The Company has on 20th May, 2020 converted partially Warrants to an extent of 16,20,000 and allotted Shares to an extent of 16,20,000 for a price of Rs.10/- each to M/s. IPCA Laboratories Limited and at a premium of Rs.76/-, with this allotment, the paid up equity share capital of the Company has increased to Rs. 1,96,205,860 /- consisting of 19620586 equity shares of Rs. 10/- each of the Company.

Further on 6th April, 2021 at its Board meeting the company made the Allotment of remaining 19,40,000 Equity Shares of Rs. 10/- Each at a Premium of Rs. 76/-Per Share to M/S Ipca Laboratories Limited, Promoter Group Shareholder and with this allotment, the paid up equity share capital of the Company increased to Rs. 21,56,05,860/- consisting of 21,560,586 equity shares of Rs. 10/- each of the Company.

9. Investor Education and Protection Fund

No amounts and/or shares were transferred to the Investor Education and Protection Fund during the year under review.

10. Statutory Auditors

At the twenty-seventh AGM held on September 25, 2019 the Members approved appointment of Bhavani & Co, Chartered Accountants (Firm Registration No. 012139S) as Statutory Auditors of the Company to hold office for a period of five years from the conclusion of that AGM till the conclusion of the Thirty Second AGM. The requirement to place the matter relating to appointment of auditors for ratification by Members at every AGM has been done away by the Companies (Amendment) Act, 2017 with effect from May 7, 2018. Accordingly, no resolution is being proposed for ratification of appointment of statutory auditors at this AGM.

11. Internal Auditors:

The Board of Directors based on the recommendation of Audit Committee has re-appointed M/s Suryanarayana & Suresh, Chartered Accountants, Hyderabad, as Internal Auditors of the Company for the Financial Year 2020-21 at their meeting held on 27th May, 2021.

The internal auditors submitted their reports at quarterly intervals to the Audit Committee and the Board.

12. Directors and Key Managerial Personnel

During the year, the non-executive directors of the company had no pecuniary relationship or transactions with the company, other than sitting fees and reimbursement of expenses incurred by them for the purpose of attending meetings of the Company.

Re-appointments a) During the year under review, Mr. Manish Jain has retired by rotation and being eligible for reappointment, at the 28th Annual General Meeting held on 26th September 2020 he had been reappointed as Director.

b) During the year under review, the period of Mr. Raj Kamal Verma, Independent Director has ended on 12th February, 2021 and being eligible for reappointment, the Board of Directors at its meeting held on 5th November, 2020 has re-appointed him with effect from 13th February, 2021, subject to approval of members at this Annual General Meeting.

Cessation

None of the directors ceased to be directors during the FY2020-21.

Mr. Manish Jain, Director has ceased to be a director w.e.f 31st July, 2021.

Key Managerial Personnel

The Board of Directors at its meeting held on 30th April, 2020 appointed Mr. R. Ravi Babu as Chief Financial Officer of the Company.

The Board of Directors at its meeting held on 30th July, 2021 appointed Mr. Pabitrakumar Kalipada Bhattacharyya as Managing Director and Key Managerial Personnel of the company, Mr. Avinash Ravi, ceased to be the Managing Director of the company and his designation has been changed to Non-Executive Director (Promoter group).

Pursuant to the provisions of Section 203 of the Companies Act, 2013, the Key Managerial Personnel of the Company on the date of this report are-Mr. Avinash Ravi-Managing Director (ceased w.e.f 31st July, 2021) Mr. Pabitrakumar Kalipada Bhattacharyya-Managing Director (w.e.f 1st August, 2021) Mr. R. Ravi Babu - Chief Financial Officer Ms. Taruni Banda - Company Secretary

13.1 Retire by Rotation

Mr. E J Babu, retires by rotation as Director and he offers himself for re-appointment at the ensuing 29th Annual General Meeting to be held on 23rd September 2021.

13.2 Declaration of Independence

The Company has received the declarations under Section149 (6) of the Companies Act, 2013, from the independent directors that each of them meets the criteria of independence and there has been no change in the circumstances which may affect their status as independent directors during the year.

All the Independent Directors have registered themselves under independent director data bank.

14. Board Meetings

During the financial year 2020-21, Six (6) meetings of the Board were held. Details of the meetings of the board are provided in the corporate governance report which forms part of this report.

15. Corporate Social Responsibility

Your Company regards the wider community in which it operates to be an important stakeholder and actively contributes towards its welfare. According to the provisions of Section 135 of the Companies Act, 2013 the company doesnt fall under the categories of the companies to which the Corporate Social Responsibility is applicable. However, your company feels that making a positive contribution to the local community is the right thing to do and to this end, during the year, has contributed towards welfare of the poor, old aged and differently abled persons.

16. Quality Initiatives

Company is committed to meet the customers Quality requirements and satisfaction by maintaining high degree of assurance in Quality, Safety, efficacy and Multi disciplinary functions. We maintain mutual and beneficial relationship with the Suppliers, Vendors and Customers. We provide continual training to the employees working in the plants by upgrading the knowledge of GMP practices, enriching the quality of life. We continually focus on developing new products with innovative knowledge and robust practices meeting / fulfilling the Regulatory and statutory requirement.

Company is committed to meet the regulatory standards set by USFDA, WHO-GMP & EDQM and our Unit-II Vizag site has been Accredited certified by EDQ. Many customers have audited Unit-I Nellore plant and have approved as qualified Vendor. Company is totally focusing to be as an integrated company emerging in the Pharma market by improving and implementing best-in class methodologies to meet the World class customer requirements for their satisfaction with zero complaints and by implementing theALCOA Practices in the plants.

17. Policy on directors appointment and remuneration and other details

The Companys policy on directors appointment and remuneration and other matters provided in Section 178(3) has been disclosed in the Corporate Governance Report, which forms part of this report.

18. Board Evaluation

The Nomination and Remuneration Committee lays down the criteria for performance evaluation of independent directors, Board of Directors and Committees of the Board. The criteria for performance evaluation is based on the parameters like attendance and participation at the meetings of the Board and Committees thereof, contribution to strategic decision making, review of financial statements, business performance.

The evaluation of Board of Directors is performed by the Board after seeking all the inputs from the Directors and the Board Committees by seeking inputs from the Committee members.

19. Familiarisation program for Independent Directors

The Company has conducted familiarisation programs for the independent directors as required under the provisions of Companies Act, 2013.

20. Internal Financial Control Systems and their adequacy

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

21. Secretarial Standards

The company is in due compliance with the applicable secretarial standards.

22. Audit Committee

Your Company has a duly constituted Audit Committee and the Board has accepted all the recommendations of Audit Committee during the year under review. The members of the Audit Committee are:

a) Mr. G V L Prasad Chairman
b) Mr. Satish Khivsara Member
c) Mrs. Malati Tangirala Member

The details pertaining to meeting, role and responsibilities of Audit Committee are provided in the Corporate Governance Report, which forms part of this report.

23. Nomination and Remuneration Committee

Your Company has in place a duly constituted Nomination and Remuneration Committee which has

a) Mr. Satish Khivsara Chairman
b) Mr. G V L Prasad Member
c) Mrs. Malati Tangirala Member
d) Dr R T Ravi Member

Details pertaining to meetings, role and responsibilities of Nomination and Remuneration Committee are provided in the corporate Governance Report which forms part of this report.

24. Stakeholders Relationship Committee

Your Company has constituted a Stakeholders Relationship Committee as required under the provisions of SEBI Listing Regulations and the Companies Act, 2013. Members of the committee are

a) Mr. G V L Prasad Chairman
b) Mr. Satish Khivsara Member
c) Mr. Avinash Ravi Member
d) Dr R T Ravi Member

Details pertaining to meetings, role and responsibilities of Stakeholders Relationship Committee are provided in the corporate Governance Report which forms part of this report.

25. Loans and Investments

During the year under review, the company has not given any loans and not made any investments under the provisions of Section 186 of the Companies Act, 2013.

26. Particulars of Employees.

Pursuant to the provisions of Section 197 of the Companies Act 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, no employee of the Company is drawing salary of more than Rs. 1.02 crores (Rupees One Crore Two Lakhs) per financial year or Rs. 8.5 lakhs (Eight Lakh Fifty Thousand) per month, as the case may be for the year ended 31st March 2021.

Details of the remuneration drawn by the Key Managerial Personnel is provided in Annexure I to the Boards Report. The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary.

27. Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s DSMR and Associates, Practicing Company Secretaries, as Secretarial Auditors to undertake the secretarial audit of the Company . The Secretarial Audit Report is annexed herewith as Annexure-II to the Boards Report.

Qualifications in Secretarial Audit Report:

S. No Observations in Secretarial Audit Report Boards explanation/ comments
1 Non maintenance of 100% promoter shareholding in dematerialized form 1000 shares of Mrs. Hemalata Ravi and 19400 shares of Dr R T Ravi are under legal dispute in the court of law and hence the same could not be dematerialized and the circular given by SEBI vide No SEBI/ Cir/ISD/1/2012 dated March 30, 2012 gives exemption from 100% promoter(s) holding in demat form. Thus the company stands exempted.
2 Delay in filing of few Forms with Ministry of Corporate Affairs (MCA) There was an inadvertent delay in filing of Forms with the Ministry but the same has been filed before the date of this report.
3 Winding up cases against the Company The Company has paid all the debts due to the Vendors by entering into a Memorandum of Understanding with them. Accordingly there are no debts due by the Company to them and the winding up cases shall have to be appropriately withdrawn by the Vendors.
4. The company has received demand notice in Form-3 under INSOLVENCY AND BANKRUPTCY CODE, 2016 (IBC) on 7th August, 2019, which was filed by RR Innovatives. The Honble NCLT, Amaravati Bench has disposed of and withdrawn the case which came to the knowledge of the Company on 11th June, 2020.

28. Transactions with related parties

None of the transactions with related parties are material in nature as per the Related Party Transactions policy adopted by the Company. Information on transactions with related parties are given in Annexure-III in Form AOC-2 and the same forms the part of this report.

29. Fixed Deposits

Your Company has not accepted any fixed deposits and as such no principal or interest was outstanding as on the date of the Balance Sheet.

30. Extract of Annual Return:

Pursuant to Section 92(3) read with Section 134(3)(a) of the Act, the Annual Return as on March 31, 2021 is available on the Companys website-www.krebsbiochem.com

31. Directors Responsibility Statement

Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

i) In the preparation of the annual accounts, the applicable accounting standards have been followed and there are no material departures;

ii) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a fair and true view of the state of affairs of the Company at the end of the financial year;

iii) They have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

iv) They have prepared the annual accounts on a going concern basis.

v) They have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively.

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

32. Disclosures relating to Subsidiaries, Associates and Joint Ventures

The company doesnt have any subsidiary companies, Associate Companies and Joint Ventures during the year under review.

33. Disclosure Requirements

As per SEBI Listing Regulations, Corporate Governance Report with Auditors Certificate thereon and Management Discussion and Analysis are attached, which form part of this report.

34. Prevention of Insider Trading

The Company has also adopted a code of conduct for prevention of insider trading. All directors, senior management employees and other employees who have access to the unpublished price sensitive information of the company are governed by the Code. During the year under report, there has been due compliance with the code of conduct for prevention of insider trading. The said code is available in the companys website www.krebsbiochem.com.

35. Vigil Mechanism/Whistle Blower Policy

The Company has in place, whistle blower policy and no personnel have been denied access to the Chairman of the Audit Committee. The policy also provides for the safeguarding of whistle blowers. The whistle blower policy is available on website of the company www.krebsbiochem.com.

36. Energy conservation, technology absorption and foreign exchange earnings outgo.

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as "Annexure-IV" to this report.

37. Safety, Environment and Health

The Company considers safety, environment and health as the management responsibility. The employees are provided training programs at regular intervals on manufacturing facilities on safety and environment.

38. Significant or material orders passed against the company.

During the year under review, there were no significant or material orders passed against the company by regulators/ Courts/Tribunals impacting the going concern status and operations of the company in future.

39. Disclosure on Corporate Insolvency Resolution Process initiated under the Insolvency and Bankruptcy Code (IBC).

A Case against the Company has been registered by RR innovative Pvt Ltd in the National company law Tribunal, Amaravathi Bench invoking the Insolvency proceedings, accordingly an order has been received against the Company from the tribunal on 22nd May, 2020 admitting the application of RR innovative Pvt Ltd and appointing an Insolvency Resolution Professional (IRP) Mr.Rajesh Chhaparia, Vizag. The Company has made a settlement with RR innovative Pvt Ltd by paying the outstanding debt due as per the order and accordingly a withdrawal petition has been filed by the IRP vide which the National Company Law Tribunal has passed an order on 11th June, 2020 suspending it earlier order dated 22nd May, 2020.

40. Disclosures pertaining to the Sexual Harassment of Women at the workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has complied with the provision relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. There are no complaints registered during the year under review.

41. Details of utilization of funds raised through preferential allotment or qualified institutions placement as specified under Regulation 32 (7A)

FUND UTILISATION STATEMENT
PARTICULARS AMOUNT(RS.)
INFLOW (A)
75% RECEIVED AGAINST 104,490,000
CONVERSION OF SHARE WARRANTS
16,20,000 NOS
OUTFLOW (B)
ICD REPAID 100,000,000
SUNDRY CREDITORS 4,329,822
ADVANCE FOR CAPITAL WORKS 91,348
PURCHASE OF FUEL 68,830
TOTAL OUTFLOW (B) 104,490,000

42. Acknowledgments

Your Directors take this opportunity to express their sincere appreciation to the shareholders, customers, bankers, employees, suppliers and other business associates for the excellent support and co-operation extended by them. Your Directors gratefully acknowledge the on-going cooperation and support provided by the Central and State Governments, Stock Exchanges and SEBI and other Regulatory Bodies.

For and on behalf of the Board of
Krebs Biochemicals & Industries Limited
Sd/-
Dr. R T Ravi
Chairman
(DIN- 00272977)
Place: Hyderabad
Date: 30-07-2021