Lupin Ltd Directors Report.

To the Members

Your Directors have pleasure in presenting their report on business and operations of your Company for the year ended March 31, 2020.

Financial Results

Standalone

Consolidated

2019-20 2018-19 2019-20 2018-19
Revenue from Operations 110256.6 113563.2 153747.6 146645.6
Other Income 4751.9 2913.4 4837.6 3330.1
Profit before interest, depreciation and tax 23828.0 31441.2 28385.6 28937.3
Less: Finance Costs 525.9 354.7 3629.8 3024.9
Less: Depreciation and amortisation 5187.5 4263.0 9702.2 8460.5
Profit before share of Profit from Jointly Controlled Entity, exceptional items and Tax 18114.6 26823.5 15053.6 17451.9
Add: Share of Profit from Jointly Controlled Entity - - 39.4 37.5
Less: Exceptional Items 7592.1 3399.8 7520.7 3399.8
Less: Provision for taxation (including deferred tax) 3247.0 8035.4 11571.1 8879.4
Profit/(Loss) after tax from continuing operations 7275.5 15388.3 (3998.8) 5210.2
Profit/(Loss) after tax from discontinued operations - - 1301.0 944.6
Profit/(Loss) after tax and before non-controlling interest 7275.5 15388.3 (2697.8) 6154.8
Share of Profit/(Loss)attributable to Non-controlling Interest - - (3.9) 89.3
Net Profit/(Loss) attributable to Shareholders of the Company 7275.5 15388.3 (2693.9) 6065.5

Performance Review

Consolidated Revenue from Operations for the year ended March 31, 2020 was Rs. 153747.6 million, higher by 4.8% over the previous year. International business contributed 63%. Consolidated profit before exceptional items and tax was Rs. 15053.6 million. Exceptional items pertain to impairment of 15893.2 million related to certain acquired IPs, profit of Rs. 14121.0 million on divestment of the Companys entire stake in Kyowa Pharmaceutical Industry Co., Limited, Japan, settlement amount of Rs. 3791.8 million in respect of State of Texas lawsuit in the USA and loss of Rs. 1956.7 million on divestment of the Companys entire stake in Kyowa CritiCare Co., Limited, Japan. Exceptional items for the year ended March 31, 2019, pertained to provision for fine to European commission. Net loss after exceptional items was Rs. 2693.9 million.

COVID-19 Pandemic

Amidst the ongoing COVID-19 pandemic that has gripped the world, your Directors appreciate the stupendous efforts of the Lupin family in ensuring health and safety of employees across the globe as also maintaining continuity of supply of much-needed products for communities and patients the Company serves. The Company put into practice

the values imbibed by the beloved Chairman, Late Dr. Desh Bandhu Gupta and his uncompromising commitment to continue work and ensure that despite challenges, life-saving medicines manufactured by the Company are available across the world. With a view to facilitate the upkeep of good health for its employees across India, the Company extended a medical outreach program - L I B E R A T E (Lupins Initiative to Bring Covidl9 Education & provide Recommendations for Advocacy, testing & Treatment assistance to Employees) for those who wished to seek medical assistance during lockdown.

The Companys Global Giving Program directed its relief efforts towards mitigating the COVID-19 crisis.

In its fight against COVID, the Companys CSR arm Lupin Human Welfare and Research Foundation has been at the forefront for providing relief by supplying food, medicines, personal protective equipment etc. to the underprivileged, and frontline warriors, across regions. Various initiatives were undertaken to support the overburdened national and state healthcare systems in India and elsewhere in the world to supplement the relief efforts to tackle the ongoing COVID crisis. The Company has extended support and distributed essential commodities where the need is the most.

Dividend

With a view to compensate shareholders due to dividend becoming taxable effective April 1, 2020, your Directors recommended higher dividend of 300% ( 6/- per equity share) as against 250% ( 5/- per equity share) of the previous year. The total dividend amount is Rs. 2718.4 million.

Pursuant to Regulation 43A(1) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), Dividend Distribution Policy has been hosted on the website of the Company www.lupin.com, (web link: https://www.lupin.com/pdf/corporate-policies/ dividend-distribution-policy.pdf).

Share Capital

During the year, the paid-up share capital of the Company rose by Rs. 1 million consequent to the allotment of 504424 equity shares of Rs. 2/- each to eligible employees of the Company and its subsidiaries on exercising options under various stock option plans. Paid-up equity share capital as on March 31, 2020 was Rs. 906 million.

Credit Rating

ICRA Limited (ICRA) assigned the rating ICRA A1+ (pronounced ICRA A one Plus) for the Companys short-term credit facilities of Rs. 15000 million, indicating very strong degree of safety regarding timely payment of financial obligations.

Subsidiary Companies/Joint Venture

As on March 31, 2020, the Company had 26 subsidiaries and a joint venture.

As part of streamlining Japanese operations and aligning with the vision to focus on key markets and strategic priorities to achieve sustainable growth, the Company divested its entire stake in Kyowa Criticare Co., Ltd., Japan, and Kyowa Pharmaceutical Industry Co. Limited, Japan, effective September 30, 2019 and December 9, 2019, respectively. Consequently, both entities ceased to be subsidiaries of the Company.

As part of internal restructuring, on October 2, 2019, Nanomi B.V., Netherlands, wholly-owned subsidiary of the Company, was merged with Lupin Holdings B.V., Netherlands, wholly-owned subsidiary of the Company, effective April 1, 2019 and its name was changed to Nanomi B.V., Netherlands.

As part of reorganising business operations, Lupin Pharma LLC, Russia and Symbiomix Therapeutics, LLC, USA, wholly-owned subsidiaries of the Company, were liquidated effective April 9, 2019 and December 30, 2019, respectively.

The name of Lupin IP Ventures Inc., USA, was changed to Lupin Management, Inc., USA, effective March 10,

2020.

In compliance with the first proviso to Section 129(3) of the Companies Act, 2013 (Act) and Rules 5 and 8(1) of the Companies (Accounts) Rules, 2014, salient features of the financial statements, performance and financial position of each subsidiary and joint venture are given in Form No. AOC - 1 as Annexure A to this Report. Financial statements of subsidiaries and joint venture are available for inspection by Members at the Registered Office of the Company during business hours pursuant to the provisions of Section 136 of the Act. The Company shall provide a copy of the financial statements of its subsidiaries and joint venture to Members free of cost upon their request. These financial statements are also available on the Companys website www.lupin.com.

Pursuant to the provisions of Regulation 46(2)(h) of the Listing Regulations, policy for determining material subsidiaries has been hosted on the Companys website www.lupin.com (web link: https:// www.lupin.com/pdf/corporate-policies/policy-for- determining-material-subsidiaries.pdf).

Management Discussion and Analysis

As stipulated by Regulation 34(3) read with Schedule V(B) of the Listing Regulations, Management Discussion and Analysis forms part of this Annual Report.

Corporate Governance Report

Your Directors reaffirm their continued commitment to adhere to the highest standards of Corporate Governance. As stipulated by Regulation 34(3) read with Schedule V(C) of the Listing Regulations, Corporate Governance Report forms part of this Annual Report. Annexed to the said Report is the Auditors certificate as prescribed under Schedule V(E) of the Listing Regulations.

Business Responsibility Report

As stipulated by Regulation 34(2)(f) of the Listing Regulations, the Business Responsibility Report forms part of this Annual Report.

Corporate Social Responsibility (CSR)

With a holistic approach, the Companys CSR arm Lupin Human Welfare and Research Foundation (LHWRF) focuses on the four thematic areas: Economic, Social, Infrastructure Development and Natural Resource Management (NRM). LHWRF has a presence in 4546 villages located in 63 blocks of 23 districts spread across nine states in India.

It operates through 20 centres. Developing rural economy includes a family centered approach and initiation of actions to enable the upliftment of the poor. Other areas like disaster relief and mitigation were taken up with a view to attain sustainable development.

The Company broadly undertakes the following CSR activities: -

• Economic Development;

• Social Development;

• Rural infrastructure Development;

• Natural Resource Management;

• Learn & Earn Program; and

• Disaster Relief and Mitigation.

Pursuant to the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, during the year, the Company ought to have spent Rs. 555.1 million on CSR activities. The actual spend was Rs. 342 million. Despite best efforts, the Company has been unable to execute its ambitious plan of setting-up a state-of- the-art JCI and NABH accredited hospital in Mumbai as it could not identify a suitable plot. The Company aims to continuously increase its CSR spend and is constantly exploring new areas/activities, particularly deeper sustainable projects, to accelerate the spend. During FY 2020-21, the Company will also make CSR spends towards relief efforts for mitigating the COVID-19 pandemic, including contribution to the PM CARES Fund.

Details of CSR activities undertaken by the Company are given in Annexure B to this Report. The policy on CSR which has been approved by the Board and the same has been hosted on the Companys website www.lupin.com.

Directors Responsibility Statement

In compliance with the provisions of Section 134(3)

(c) read with Section 134(5) of the Act, to the best of their knowledge and belief your Directors confirm that: -

i) i n the preparation of the annual financial statements for the year ended March 31, 2020, the applicable accounting standards have been followed along with proper explanations relating to material departures;

ii) they had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of your Company at the end of the financial year March 31, 2020 and of the profit of your Company for that year;

iii) t hey 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) t he annual financial statements have been prepared on a going concern basis;

v) t hey had laid down proper internal financial controls and that the same are adequate and were operating effectively; and

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

Directors

As recommended by the Nomination and Remuneration Committee (NRC), the Board re-appointed Ms. Vinita Gupta, Chief Executive Officer, for a period of five years, effective May 28, 2020, subject to approval of the Members. Ms. Vinita is an employee of Lupin Management, Inc., USA, wholly-owned subsidiary of the Company.

Pursuant to the provisions of Section 152 of the Act, Mr. Nilesh Deshbandhu Gupta, Managing Director, retires by rotation at the forthcoming Annual General Meeting (AGM) and is eligible for re-appointment.

As recommended by the NRC, Mr. Ramesh Swaminathan, Executive Director, Global CFO & Head Corporate Affairs, was appointed as an Additional Director effective March 26, 2020. Pursuant to the provisions of Sections 149 and 152 of the Act,

Mr. Ramesh holds office up to the date of the forthcoming AGM. Mr. Ramesh brings to the Company rich experience of over 30 years. In addition to having worked with the Company for more than a decade in his earlier stint, he has also worked with reputed organizations in diverse industry sectors such as VST Industries Ltd, SPIC Group, Standard Chartered Bank, Henkel and L&T. Notices under Sections 152 and 160(1) of the Act, have been received from certain Members proposing his name for appointment as Director.

At the 34th AGM held on August 3, 2016,

Mr. Jean-Luc Belingard was appointed as an Independent Director to hold office till the conclusion of the 38th AGM. Pursuant to the provisions of Sections 149, 152 read with Schedule IV of the Act and Rules made thereunder and as recommended by the NRC, Mr. Belingard is being re-appointed as an Independent Director to hold office for a period of five years after the conclusion of the 38th AGM i.e. from August 12, 2020 till August 11, 2025.

His appointment is subject to approval by the Members vide a Special Resolution at the ensuing AGM. Mr. Belingard has consented for being appointed as an Independent Director and has confirmed that he is not disqualified from being appointed as a Director. He has also submitted declaration as

regards Independent status vis-a-vis the Company. Notices under Sections 152 and 160(1) of the Act, have been received from certain Members proposing his name for appointment as Director.

In compliance with the provisions of Section 149(7) of the Act and Regulation 25(8) of the Listing Regulations, all the Independent Directors have submitted declarations that they meet the criteria of independence as provided in Section 149(6) of the Act and Regulation 16(l)(b) of the Listing Regulations, respectively and that there has been no change in the circumstances affecting their status as Independent Directors of the Company.

During the year, eight Board meetings were held,

on May 15, 2019, June 10, 2019, August 7, 2019, August 21, 2019, November 6, 2019, November 11, 2019, February 6, 2020 and March 25, 2020, the details of which, are given in the Corporate Governance Report which forms part of this Annual Report.

Board Evaluation

Pursuant to the provisions of Section 134(3)(p) of the Act and Rule 8(4) of the Companies (Accounts) Rules, 2014, an annual performance evaluation was carried out by the Board of its own performance, Directors individually and Committees of the Board. Performance evaluation of the Board and Committees was done by the Board after seeking inputs from all Directors, inter-alia covering different criteria, viz. adequacy and composition of the Board, quality of deliberations, transparency, effectiveness of Board procedures, observance of governance and contributions of Directors at Board and Committee meetings. In evaluating the performance of individual Directors, criteria such as leadership qualities, qualifications, responsibilities shouldered, analytical skills, knowledge, participation in long-term strategic planning, inter-personal relationships and attendance at meetings was taken into consideration. In compliance with Regulation 17(10) of the Listing Regulations, the Board carried out performance evaluation of Independent Directors without the participation of the Director being evaluated. The performance evaluation was carried out based on parameters such as, initiative, contributions, independent judgement, understanding the business environment and understanding of strategic issues. Independent Directors are a diversified group of recognised professionals with wide horizon of knowledge, competence and integrity, who express their opinions freely and exercise their own judgements in decision-making. Overseas Independent Directors have international perspectives and bring them to bear upon during

Board deliberations. There is no conflict of interest of Independent Directors with the Company.

Audit Committee

All Members of the Audit Committee viz.

Dr. K. U. Mada, Chairman, Mr. Dileep C. Choksi and Dr. Kamal K. Sharma, are Non-Executive Directors.

Dr. Mada and Mr. Choksi are Independent Directors.

All recommendations made by the Audit Committee were accepted by the Board. The functions performed by the Audit Committee, particulars of meetings held and attendance of Members at the said meetings are given in the Corporate Governance Report, which forms part of this Annual Report.

Nomination and Remuneration Policy

The Board has on the recommendations of the NRC, formulated a Policy relating to the remuneration of Directors, key managerial personnel and other employees as stipulated by Section 178(3) of the Act and Regulation 19(4) of the Listing Regulations. The policy lays down the guiding principles, the philosophy and the basis for recommending payment of remuneration to the executive/non-executive Directors (by way of sitting fees and commission).

It includes criteria for determining qualifications, positive attributes and independence of directors and other matters. The functions of the NRC are disclosed in the Corporate Governance Report, which forms part of the Annual Report. In terms of proviso to Section 178(4) of the Act, the Nomination and Remuneration Policy has been hosted on the Companys website www.lupin.com (web link: https://www.lupin. com/pdf/corporate-policies/nomination-and- remuneration-policy-ll-final.pdf).

Related Party Transactions

No transaction with related parties conflicted with the interests of the Company. All transactions entered by the Company with related parties during the financial year, were in the ordinary course of business and on an arms length pricing basis. The Audit Committee periodically approves related party transactions. Material related party transactions were entered into by the Company only with its subsidiaries. Apart from remuneration, sitting fees and commission, there is no pecuniary transaction with any Director, which had potential conflicts of interest with the Company.

As approved by the Members vide Postal Ballot,

Dr. Kamal K. Sharma, Vice Chairman, also served as an Advisor from April 1, 2019 to September 30, 2019. Particulars of his remuneration as Advisor are given in Annexure H to this Report. As stipulated by Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014, disclosure of particulars of contracts/arrangements entered into by the Company with related parties are given in Form No.

AOC - 2, as Annexure C to this Report. In compliance with Regulation 46(2)(g) of the Listing Regulations, the policy on dealing with related party transactions, as approved by the Board, has been hosted on the Companys website www.lupin.com and web link for the same is https://www.lupin.com/pdf/corporate-policies/ policy-related-party-transactions.pdf.

Risk Management

The Company has a structured approach for handling risks. It has in place a Risk Management framework which defines roles and responsibilities at different levels. Risk Management team reviews the overall risks and identifies the critical risks that matter. The Risk Management Committee (RMC) formulated in compliance with Regulation 21 of the Listing Regulations, reviews at regular intervals, the overall risks at Company level and ensures that it has a robust monitoring mechanism along with adequate mitigation plans for the critical risks that matter based on their probability of occurrence, potential impact and volatility. The emerging risks are discussed periodically with the concerned operational and business teams which includes review of the mitigation plans. The Board has defined role and responsibilities of the RMC and has delegated to it, monitoring and reviewing the risk management plan. Constitution of the RMC, its terms of reference, details of meeting held and attendance thereat are given in the Corporate Governance Report, which forms part of the Annual Report.

Particulars of loans/guarantees/ investments/securities

Pursuant to the provisions of Section 134(3)(g) of the Act, particulars of loans, guarantees, investments and securities given under Section 186 of the Act are given in the notes to the Financial Statements forming part of this Annual Report.

Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo

Particulars pertaining to conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated in Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, are given in Annexure D to this Report.

Human Resources

Your Company strongly believes that human resources are its invaluable assets. The Company has the privilege of being recognised as Great Place to Work and it has retained its position of being the No. 1 Company in Pharma and Biotech Industry in 2019. After securing 2nd rank in 2013, in the same category, the Company secured the top position in 2014 and

has ever since, maintained its rank every year it participated. Your Company was named in the Top 50 companies of India. The Companys people-first culture, best-in-class work environment and innovative learning initiatives were the prime drivers behind these laurels.

The Company has in place an Internal Complaints Committee as mandated by the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Also, the employees are regularly sensitized about matters connected with prevention of sexual harassment.

Employees Stock Options

Pursuant to the provisions of Regulation 14(B) of the SEBI (Share Based Employee Benefits) Regulations, 2014, details of stock options as on March 31, 2020, are given in Annexure E to this Report.

Vigil Mechanism/Whistleblower Policy

As stipulated by Section 177(9) of the Act read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014 and Regulation 22 of the Listing Regulations, the Company has in place a strong vigil mechanism for Directors and employees to report concerns and provides adequate safeguards against victimization of persons who use the said mechanism. Details of the same are covered in the Corporate Governance Report which forms part of the Annual Report. Over the years, your Company established a reputation for doing business with integrity and has displayed zero tolerance for any form of unethical conduct or behaviour. The vigil mechanism provides direct access to the Chairperson of the Audit Committee. Whistleblower Policy has been hosted on Companys website www.lupin.com. Policies on Code of Conduct and Prevention of Sexual Harassment are on the internal portal of the Company.

Particulars of Employees Remuneration

Particulars of remuneration of employees required to be disclosed pursuant to the provisions of Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are given in Annexure F to this Report. Particulars of remuneration of employees for the year ended March 31, 2020 required to be furnished in terms of Rules 5(2) and 5(3) of the said Rules, forms part of this Report and shall be provided to Members upon written request pursuant to second proviso of Rule 5. Particulars of remuneration of employees are available for inspection by Members at the Registered office of the Company during business hours on all working days up to the date of the forthcoming AGM, pursuant to Section 136(2) of the Act.

Auditors

At the 34th AGM held on Wednesday, August 3, 2016, Members appointed B S R & Co. LLP, Chartered Accountants (Firm Regn. No. 101248W/W-100022), as Statutory Auditors of the Company, for a period of five years from the conclusion of the 34th AGM till the conclusion of the 39th AGM to be held in July/August 2021, subject to ratification of their appointment by Members at every AGM.

The requirement of seeking ratification of Members for continuance of appointment of Statutory Auditors at every AGM was withdrawn by the Companies Amendment Act, 2017.

Pursuant to the provisions of Sections 139(1) and 141 of the Act, the Company has received Certificate from B S R & Co. LLP, certifying that their appointment would be as per the conditions prescribed by the said Sections.

Internal Audit

Internal audit of Companys operations is conducted by the Corporate Internal Audit team and other reputed firms appointed from time to time.

The Company also appointed local Chartered Accountant firms to conduct audits of Carrying & Forwarding Agents and Central Warehouses of the Company in India. Internal audit findings are discussed at meetings of the Audit Committee and corrective actions taken.

Cost Audit

Pursuant to the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Amendment Rules, 2014 and as recommended by the Audit Committee, the Board of Directors at its meeting held on May 15, 2019, appointed Mr. S. D. Shenoy, Practising Cost Accountant (FCMA No. 8318), as Cost Auditor to conduct cost audit for the year ended March 31, 2020. Mr. Shenoy confirmed that he was free from disqualifications as specified under Section 141 read with Sections 139 and 148 of the Act, held a valid certificate of practice and that his appointment met the requirements of Sections 141(3) (g) and 148 of the Act. He also confirmed that he was independent and maintained an arms length relationship with the Company and that no orders or proceedings were pending against him relating to professional matters of conduct before the Institute of Cost Accountants of India or any court/competent authority.

In terms of Rule 14 of the Companies (Audit and Auditors) Rules, 2014, remuneration of the Cost Auditor is required to be ratified by Members. Accordingly, an Ordinary Resolution was passed by the Members at the 37th AGM held on August 7, 2019,

approving the remuneration of Mr. Shenoy for the year ended March 31, 2020.

The Company has duly maintained cost records as specified by the Central Government under Section 148(1) of the Act.

In compliance with Section 148(6) of the Act read with Rule 6(6) of the Companies (Cost Records and Audit) Rules, 2014, Cost Audit Report, in Form No. CRA-4 (XBRL mode), for the year ended March 31, 2019, under the head Drugs and Pharmaceuticals was filed with the Central Government on October 11,

2019, well within the prescribed time.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Act read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the Listing Regulations, Ms. Neena Bhatia, Practising Company Secretary (FCS No. 9492 CP. No. 2661) was appointed by the Board of Directors at its meeting held on May 15, 2019, to undertake Secretarial Audit of the Company for the year ended March 31, 2020. Secretarial Audit Report in prescribed Form No. MR-3 is given in Annexures G and G-1 to this Report. The Company continues to have an unqualified Secretarial Audit Report.

Annual Secretarial Compliance Report

Pursuant to Circular No. CIR/CFD/CMD/1/27/2019 dated February 8, 2019, issued by the Securities and Exchange Board of India (SEBI), Ms. Neena Bhatia, Practising Company Secretary (FCS No. 9492 CP. No. 2661), was appointed for issuing Annual Secretarial Compliance Report for the year ended March 31,

2020. The Report which was placed at the Board Meeting held on May 28, 2020, confirms that the Company has maintained proper records as stipulated under various Rules and Regulations and that, no action has been taken against the Company or its material subsidiaries or promoters/directors by SEBI/ BSE/NSE. The said Report shall be filed with Stock Exchanges within stipulated time.

In compliance with the said Circular, the Company submitted the Annual Secretarial Compliance Report for the year ended March 31, 2019 to BSE and NSE on May 28, 2019, within the stipulated time.

Compliance with Secretarial Standards

The Company continues to comply with Secretarial Standards on Board Meetings (SS-1) and General Meetings (SS-2), issued by the Institute of Company Secretaries of India.

Extract of Annual Return

As stipulated by the provisions of Sections 134(3)(a) and 92(3) of the Act read with Rule 12(1) of the

Companies (Management and Administration) Rules, 2014, an extract of the Annual Return in Form No. MGT-9 as on March 31, 2020, is provided as Annexure H to this Report. The same is available on the Companys website www.lupin.com (web link: https:// www.lupin.com/investors/extract-of-the-annual- return/).

Acknowledgements

Your Directors commend all employees of the Company for their dedication, commitment, hard work and contributions. The Board wishes to express their

deep gratitude to various departments of the Central and State governments, suppliers, distributors, banks, financial institutions, analysts, business associates, medical professionals, customers and members.

For and on behalf of the Board of Directors

Manju D. Gupta Chairperson

(DIN: 00209461)

Mumbai, May 28, 2020