Lyka Labs Ltd Directors Report.

To,

The Members,

Lyka Labs Limited

The Directors are pleased to present the Forty Second Annual Report together with merged Annual Audited Financial Statements of Lyka Healthcare Ltd a wholly owned subsidiary with Lyka Labs Limited for the Financial Year from 1st April 2020 (appointed date of merger) to 31st March, 2021 in terms of the NCLT Ahemdabad Order dated 12th October, 2020.

1. FINANCIAL RESULTS:

(Rs.in Lakhs)

Particulars For the Year ended 31.03.2021 *For the year ended 31.03.2020
Total revenue 6447.33 4333.92
Profit/(loss) before Interest, provision for depreciation & Taxes and Write offs 1663.59 (61.94)
Less: Interest 2555.28 1901.21
Operational Profit before Depreciation (891.69) (1963.15)
Less: Depreciation 804.97 776.69
Exceptional Items (Net) 142.87 2775.29
Less: Tax Expenses (393.64) 23.52
Less: Other Comprehensive Income (8.88) 40.48
Profit/(loss) for the year (1437.01) (5579.13)

* Previous financial year 2019-2020 figures are reinstated as per Indian Accounting Standards.

2. DIVIDEND:

Since the Company has notearnedprofits, Dividend is recommended for the financial year no ended on 31st March, 2021.

3. RESERVE:

Since the Company has not earned profits, no amount was transferred to Reserve for the financial year ended on 31 st March, 2021.

4. OPERATIONS:

During the financial year, the total Income from Operations was Rs 64.47 crores as against a total income of Rs 43.33 crores of the previous financialYear ended on 31st March, 2020. During the year under Report the company has earned operating profit of Rs 16.63 Crores before charging interest and depreciation as against loss of Rs 61.94 lakhs of the Previous Financial Year ended on 31st March 2020.

During the financial year, the overall performance of the Company has improved significantly compared to the previous financialyear. P2P and Domestic Sales were higher. Due to Covid 19, the company received major orders for Remdesivir Injections under Job work from renowned

Pharmaceutical Companies.

Its subsidiaries viz. Lyka BDR International Limited also increased its sales compared to the previous financial year in some of its international markets despite tight Lockdown conditions globally due to Pandemic. Lyka Exports Limited which had a slight setback in the first quarter due to Lockdown conditions, performed well during the remaining three quarters of the financial year.

5. KEY FEATURES:

The Company maintains high quality and GMP/GLP standards in manufacturing and testing of its products.

The Company manufactures pharmaceutical products such as Dry Powder, Liquid and Lyophilised Injections and external preparations and cosmetics covering various therapeutic areas.

The Company is also engaged in manufacturing on P2P basis and Job Work basis for Covid 19 medicines.

The Company’s R&D Centre is engaged in the development of new formulations and has successfully developed several products in the following product categories:

1. Injectables- Liquid Injections, Lyophilised Injections in anti -bacterial, antifungal, NSAIDS,

Proton Pump Inhibitors and Anaesthetics.

2. Topical preparations: Ointments/Creams and lotions.

Company’s Core Competencies lie in:

1. Lyophilisation Formulations/Sterile APIs.

2. New Product Development including Novel Drug Delivery Systems.

3. Quality Practices and Systems.

4. Experienced and responsive management.

6. FUTURE OUTLOOK:

Company is constantly exploring possibilities of entering into newer international markets with reputed partners and has also introduced new products in existing markets.

It is also modernising its existing manufacturing facilities to improve through put and reduce manufacturing costs thereby increasing profitability.

Company is also trying to add reputed customers to its clientele list in the Domestic P2P and Job work business.

The Company also expects to have Plant approvals from PICS and other Regulatory Authorities within the next financial year.

To meet the increase in demand for lyophilised products the company has embarked on an expansion project of its Lyophilization Plant at its Ankleshwar factory. This Project is likely to be completed in 9-12 months with a 50% enhancement in capacity for lyophilisation.

Company has received permission to manufacture and marketing of Liposomal Amphotericin B Injection 50 mg/vial from Government of India, Directorate General of Health Services, New

Delhi.

7. REGISTRATIONS:

The company has submitted new applications for Registration of Products in various Countries many of which are expected to be received in 2021-22. A total of 83 submissions have been made for new Registration/Renewals in various countries in the previous years out of which 32 Renewals/New Registrations were received in 2020-21. A further 25 New Registrations/

Renewals are expected to be received in 2021-22. This will enhance the product portfolio in the current year.

8. MERGER:

National Company Law Tribunal (NCLT), Ahmedabad has approved merger of Lyka Healthcare Limited a wholly owned subsidiary with Lyka Labs Limited vide its Order dated 12th October, 2020. This will help in reduction of administrative cost and increase the sales and profitability in the coming years.

9. SEBI ORDER ON GDR:

SEBI Vide its adjudication order dated 28th September,2020 imposed penalty of Rs 10 Lakhs u/s. 23E of Securities Contract (Regulation) Act, 1956 for not giving proper disclosures pertaining to GDR issue made by the Company in the year 2005. The penalty has since been paid by the Company.

10. SHARE CAPITAL:

Subsequent to the merger of Lyka Healthcare Ltd a wholly owned subsidiary with Lyka Labs Limited, the Authorised Share Capital of the Company has increased from Rs.42 crores to Rs.50 crores.

11. DIRECTORS:

A. BOARD DIVERSITY:

The Company recognizes and embraces the importance of a diverse board in its success. Diverse Board comprising of professionals from various fields helps in guiding the Company from time to time.

B. BOARD MEETING:

During the financial year four(4) Board Meetings were held. The particulars of meetings held and attended by each Director are detailed in the Corporate Governance Report which is marked as Annexure F of this Annual Report.

C. INDEPENDENT DIRECTORS MEETING:

As required under, the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosures Requirement) Regulations, 2015 the Company has to convene an Independent Directors Meeting once in a year. The Company has convened an Independent Directors Meeting on 30th March, 2021.

D. COMPOSITION OF THE BOARD AND APPOINTMENT AND CESSATION OF DIRECTORS:

The Company has appropriate mix of Executive, Non- Executive and Independent Directors. as on 31st March, 2021, the Board consist of Six Directors out of which two are Executive Directors, One is Non - Executive Director and Three are Independent Directors. an Independent Director of theDuringthe financial Company has resigned w.e.f 3rd July, 2020. The Board records its appreciation for services rendered by her.

E. DECLARATION BY INDEPENDENT DIRECTORS:

The Company has received necessary Declarations from each of the Independent Directors under Section 149(7) of the Companies Act, 2013, that they meet the criteria laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16(b) of the SEBI (Listing Obligation and Disclosure Requirements), Regulations 2015 (Listing Regulations 2015).

F. RETIREMENT BY ROTATION:

In accordance with the provisions of Section 152 of the Companies Act, 2013, Smt. Nehal N. Gandhi (DIN: 00021580), will retire by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment. Brief resume of the Director seeking re-appointment along with other details are disclosed in the Notice convening the Annual General Meeting.

G. COMPLETION OF TERM OF AN INDEPENDENT DIRECTOR:

The Second term of Shri. Atit N. Shukla who was appointed as an Independent Director in the 40th Annual General Meeting will complete in the ensuing Annual General Meeting.

H. INDEPENDENT DIRECTORS FAMILIARIZATION PROGRAMME:

The Independent Directors have visited plant at Ankleshwar, Gujarat and are familiarised with company’s operations. They are provided with quarterly and annual financial statements. They are also appraised with material events of the Company. They are also updated towards of legal cases filed against or by the Company. about the Compliances under various statutes in the Board Meeting.

I. EVALUATION OF DIRECTORS AND BOARD :

The Board has carried out performance evaluation of its own and Individual Directors pursuant to the provisions of the Companies Act, 2013 and applicable provisions of SEBI (Listing Obligation and Disclosure Requirements), Regulations 2015.

The performance evaluation is done once in a year. Performance evaluation is done on the basis of various criteria such as Active Participation, Financial Literacy, contribution by a Director, Positive Inputs, Effective Deployment of Knowledge and Expertise, Integrity and Maintenance of Confidentiality and Independence of Behavior and Judgement.

J. COMMITTEE OF BOARD:

Currently, the Board hasfive(5)Committees namely, Audit Committee, Nomination and Remuneration Committee, Stakeholder Relationship Committee, Share Transfer Committee and Risk Management Committee. A detailed note on composition of the Board and its committee is provided in the Corporate Governance Report which is marked as

Annexure F. 12. AUDITORS:

A. STATUTORY AUDITOR

The members of the Company at their 40th Annual General Meeting held on 18th September, 2019 appointed M/s. D Kothary & Co., Chartered Accountants (Firm Registration No. 105335W) as Statutory Auditor of the Company for a term of 5 years upto 45th Annual General Meeting. The Company has received their eligibility certificate pursuant to the provisions of section 139 and 141 of the Companies Act, 2013 read with Companies (Audit & Auditors) Rules, 2014.

B. BRANCH AUDITOR:

M/s. M.I. Shah & Co., Chartered Accountants (Firm Registration No. 119025W) were appointed as Branch Auditor of the Company in 38th Annual General Meeting for a term of 5 (five) years up to 43rd Annual General Meeting. Their appointment is proposed for ratification in the ensuing Annual General Meeting as Branch Auditor from conclusion of 42nd Annual General Meeting till conclusion of 43rd Annual General Meeting.

The Company hasreceived certificatefrom the Branch Auditors to the effect that they fulfill the eligibility criteria of the provisions of Section 141 of the Companies Act, 2013. The Audit Committee has recommended ratification of their appointment as Branch Auditors.

C. COST AUDITOR:

The Company has appointed M/s. Sarvottam Rege & Associates, Cost Accountants (Registration No. 104190) to audit the cost records of the Company for the Financial Year 2021-22. The remuneration payable to them is proposed to the Shareholders for their approval at the ensuing Annual General Meeting.

D. SECRETARIAL AUDITOR:

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 Kaushal Doshi & Associates, Practicing Company Secretaries to undertake the Secretarial Audit of the Company. The Secretarial Audit Report is annexed to this report as "Annexure A".

13. MATERIAL CHANGES AND COMMITMENT AFTER THE END OF THE FINANCIAL YEAR WHICH HAVE IMPACT ON FINANCIAL POSITION:

There are no material changes and commitment after the end of the Financial Year till the date of this report which have an impact on financial position.

14. EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATION OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS IN THEIR REPORT ON FINANCIAL STATEMENTS FOR THE FINANCIAL YEAR ENDED 31ST MARCH, 2021:

The Statutory Auditors has not made any qualifications, reservations or adverse remarks or disclaimers in their report on the Financial Statements for Financial Year 2020 21.

15. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

The information pertaining to particulars as prescribed under sub-section (3)(m) of Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, is attached to this report and annexed as "Annexure B".

16. STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY:

The Company has constituted Risk Management Committee and formulated Risk Management policy.

17. PARTICULARS OF LOAN, GUARANTEE AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013:

The Company has not provided any loan and guarantee during the year under review. The details of investments made under Section 186 of the Companies Act, 2013 are given in the notes to the Balance Sheet.

18. DETAILS OF ESTABLISHMENT OF WHISTLE BLOWER CUM VIGIL MECHANISM POLICY:

The Company has adopted Whistle Blower Policy/Vigil Mechanism. The details of establishment of such mechanism are disclosed on the website of the Company at www.lykalabs.com

19. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES:

The related party transactions during the financial year 2020-2021 are on arms length basis and in the ordinary course of business. The financial limits of related party transactions for the financial year 2021-2022 as recommended by Audit Committee and considered by the the Board is proposed for approval of the shareholders in the ensuing Annual General Meeting.

The related party transactions affected during the financial year 2020-2021 are disclosed in the notes to the Financial Statements. The particulars of contracts or arrangements with related parties referred to in Section 188 of the Companies Act, 2013, is attached to this report as "Annexure C".

20. COMPANY’S POLICY:

The highest ethical standards are followed by the Company in business transactions. The SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 and the Companies Act, 2013, mandated the formulation of certain policies. The Company has framed various Policies such as Nomination and Remuneration Policy, Policy on Materiality Subsidiaries and Related Matters, Policy on Materiality of Events, Related Party Transactions Policy, Risk Management Policy, Whistle Blower Policy, Code for Insider Trading etc which are displayed on the Company’s Website i.e. www.lykalabs.com

21. ANNUAL RETURN:

As per provision of Section 92(3) of the Companies Act, 2013, the Annual Return of the company is hosted on the website of the Company. the same can be assessed in weblink at http://lykalabs.com/annual-return-2021.pdf.

22. DIRECTORS’ RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013, the annual return of the company is hosted on the website the same can be assessed in

a. In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

b. The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that year;

c. The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. The Directors had prepared the annual accounts on a going concern basis;

e. The Directors had laid down internal financial controls to be followed by the company that such internal financial controls are adequate and were operating effectively; and

f. The Company has Proper system to ensure compliance with the provisions of all applicable laws were in place and that such system were adequate and operating effectively.

23. DETAILS OF SUBSIDIARY, JOINT VENTURE OR ASSOCIATE COMPANIES:

The Company has two subsidiaries namely Lyka BDR International Limited and Lyka Exports Limited. The details of their performance are as under:

a) LYKA BDR INTERNATIONAL LIMITED (LBDR)

Lyka Labs Limited is holding 65.22% of the Issued capital of Lyka BDR International Limited. During the financial year, the total revenue earned by the Company was Rs.26.79 Crores as against total revenue of previous year of Rs. 17.95 Crores. During the year, the Company has reported Net Profit of Rs. 3.66 Crores as against Net Loss of Rs.1.39 Crores of previous financial year.

b) LYKA EXPORTS LIMITED (LEL)

Lyka Labs Limited is holding 72.80% of Issued capital of Lyka Exports Limited. During the financial year, the Company has reported total revenue of Rs.12.69 Crores as against total revenue of Rs. 17.84 Crores of previous financial year. During the year, the Company has reported Net Profit of Rs. 0.73 Crores as against Net Loss of Rs.5.76 Crores of previous financial year.

The Performance and financial position of each of the above mentioned subsidiaries for the year ended 31st March, 2021 is attached in ‘Annexure D‘ and forms part of this report.

24. DISCLOSURE OF CORPORATE SOCIAL RESPONSIBILTY STATEMENT:

Corporate Social Responsibility is not applicable to the Company.

25. DEPOSIT:

During the financial year, the Company has not accepted any deposits under Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

The Company has repaid fixed deposits accepted under Companies Act, 1956 as per Company Law Board (CLB) order. As of 31st March, 2021, the company has unclaimed fixed deposits of Rs. 42 lakhs.

26. DEBENTURES:

During the financial year, the Company has not issued any Debentures under the Companies Act, 2013. As of 31st March, 2021, the Company has unclaimed debentures of Rs. 13 lakhs.

27. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS, COURTS AND TRIBUNAL IMPACTING THE GOING CONCERN STATUS AND COMPANY’S OPERATIONS IN FUTURE :

During the year under review, no order was passed by Regulators, Courts or Tribunals which have Significant & Material impact on the going concern status and company’s operations in future.

28. DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013 :

The Company is complying with the Provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. A Committee has been set up to redress complaints received regarding Sexual Harassments. No Complaints have been received by the Committee during the year under review.

29. INTERNAL FINANCIAL CONTROL:

The Company maintains a system of internal financial control, including suitable monitoring procedures in various functional areas. The system is reviewed from time to time to update the same with changing requirement. Internal Audit of Company’s financial accounts and related records is conducted by independent firms of Chartered Accountants.

30. PARTICULARS OF EMPLOYEES PURSUANT TO RULE 5(2) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014:

Disclosure with respect to the remuneration of Directors and Employees as required under Section 197 of the Companies Act, 2013 read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 have been annexed to this report as

"Annexure E".

31. CORPORATE GOVERNANCE :

A Report on Corporate Governance along with certificate from Practicing Company Secretary confirming the Compliance of the condition of Corporate Governance as stipulated in the Listing Regulations 2015 is annexed as "Annexure F" and forms an integral part of this Annual report.

32. MANAGEMENT DISCUSSION ANALYSIS REPORT:

Management Discussion and Analysis Report is annexed as "Annexure G".

33. GREEN INITIATIVE:

The Ministry of Corporate Affairs had taken Green Initiative approach in Reporting of Corporate Governance by allowing paperless compliances by Companies through electronic mode.

The Company supports Green Initiative approach appeals to its Shareholders, who are yet to register their Email addresses with RTA or Depository parties. that they should take necessary steps for registering the same and contribute towards Green Initiative.

34. ACKNOWLEDGEMENT:

Your Directors place on record their appreciation of the continued assistance, co-operation and support received from various Ministries of the Government of India, Government of

Maharashtra, Government of Gujarat, the Company’s Bankers, Customers, Shareholders and loyal & committed Employees for their unstinted support.

For and on behalf of the Board of

LYKA LABS LTD

Kunal N Gandhi

Chairman & Managing Director

(DIN:01516156)

Place: Mumbai

Date: 02nd June, 2021