Lyka Labs Ltd Directors Report.

To,

The Members,

Lyka Labs Limited

The Directors are pleased to present the Forty Third Annual Report together with Audited Financial Statements of Lyka Labs Ltd for the Financial Year from 1st April 2021 to 31st March 2022.

1. FINANCIAL RESULTS:

(Rs. in Lakhs)

Particulars For the Financial year ended 31st March, 2022 For the Financial year ended 31st March, 2021
Total Revenue 16706.86 6447.33
Profit before interest, provision for depreciation & taxes and write offs 10021.89 1663.59
Less: Interest 1,992.13 2555.28
Operational Profit/ (Loss) before Depreciation 8029.76 (891.69)
Less: Depreciation 1538.87 804.97
Exceptional Items (Net) 466.83 142.87
Less: Tax Expenses 2033.83 (393.64)
Add: Other Comprehensive Income 12.69 (8.88)
Profit/(Loss) for the year 4,002.92 (1437.01)

2. DIVIDEND:

The Company has earned net profit of Rs. 40.03 Crores for the financial year ended on 31st March, 2022. The Board decided to plough back the profit for Working Capital and Capital Expenditure requirements of the Company. The Board therefore does not recommend any dividend on Equity Capital for the Financial Year ended 31st March, 2022.

3. RESERVE:

The Company has not transferred any amount to reserve for the financial year ended on 31st March, 2022.

4. OPERATIONS:

During the financial year, the total Income was Rs. 167.07 Crores as against total income of Rs 64.47 Crores in the previous financial year. During the year under report, the company has earned profit of Rs. 100.22 Crores before charging interest and depreciation and taxes and write offs as against Profit of Rs. 16.63 crores of the Previous Financial year ended on 31st March 2021.

During the financial year under report, the overall performance of the Company has improved phenomenally compared to the previous financial year. Sales of P2P and Domestic sales were significantly higher. Due to second wave of Covid 19 and large number of incidences of Mucormycosis post covid nationally, the company received major Government Contracts for Liposomal Amphotericin Injection. The company?s profitability jumped significantly due to sales of this product.

5. KEY FEATURES:

The company continues to maintain high quality GMP/GLP standards in manufacturing and testing of its pharmaceutical products.

The company manufactures pharmaceutical products such as Dry Powder, Lyophilised Injections and External Preparations for several International Markets and the Domestic Market.

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

1. Injectables : Lyophilised Injection, Liquid Injections & Dry Powder Injections.

2. Topical Preparation: Ointment /Creams and Lotions.

Company?s Core competencies:

1. Lyophilisation - Formulations/Bulk 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 new international markets with reputed partners and is also introducing new products in existing markets. Company is also trying to add reputed customers to its clientele in the Domestic B2B business.

It has also embarked on a modernization plan of its existing manufacturing facilities to improve productivity and reduce manufacturing costs. To meet the increase in demand for lyophilised products, the company has embarked on an expansion project of its Lyophilisation Plant at Ankleshwar. The project is likely to be completed within 9-12 months with a 50% enhancement in capacity for Lyophilisation.

7. ACQUISITION OF SHARES BY IPCA LABORATORIES LTD (IPCA).

During the year under review, IPCA together with persons acting in concert have acquired 26.70% shares of Lyka Labs Ltd through Public Offer. Their total shareholding is 27.76% of the Paid-up Equity Capital of the Company. They have become Joint Promoters of Lyka Labs Ltd. Both IPCA and Promoters of LYKA entered Joint Management Control Agreement. The Joint participation between Lyka and IPCA will help the Company to grow the business globally.

8. REGISTRATIONS :

During the Financial Year 2021 - 22, the company has submitted 14 new applications for Registration of its Products. It has received registration of 8 products and renewal of 27 products. The registration for 17 products are expected in the coming year.

9. 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 year, five Board Meetings were held. The particulars of meetings held and attended by each Director are mentioned in the Corporate Governance Report

C. INDEPENDENT DIRECTORS MEETING:

As required under the provisions of the Companies Act, 2013 and LODR Regulations, 2015, the Company has to convene the Independent Directors Meeting once in a year. The Independent Directors Meeting was convened on 13th January, 2022.

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

The Company has appropriate mix of Executive, Non- Executive and Independent Directors. As on 31st March, 2022, the Board consist of six Directors, Two are Executive Directors, one is Non - Executive Director and three are Independent Directors. The term of Shri Atit N. Shukla as an independent Director ended on 30th July, 2021. Smt. Dhara P. Shah was appointed as an Additional independent Director on 4th August,2021 for a period of one year which will end on 3rd August 2022. Her appointment as an Additional Independent Director will be regularized at ensuing Annual General Meeting. Board as per recommendation of Nomination and Remuneration Committee has appointed her as an independent Director for a second term of three years commencing from 4th August, 2022 subject to approval of share-holders in ensuing Annual General Meeting. . Her brief resume along with other details are disclosed in the Notice convening the Annual General Meeting. The Second term of Mr. Vinod S. Shabhag as an Independent director will end at the conclusion of the ensuing Annual General Meeting.

E. DECLARATION BY INDEPENDENT DIRECTORS:

The Company has received declaration from each of 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 Requirement), 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 as a Director by rotation at the ensuing Annual General Meeting and being eligible, offers herself for re-appointment. Her brief resume along with other details are disclosed in the Notice convening the Annual General Meeting.

G. INDEPENDENT DIRECTORS FAMILIARIZATION PROGRAMME:

The Independent Directors are familiarized with company?s operations located at Ankleshwar, Gujarat. They are provided quarterly financial statements of the Company in the Board Meeting. They are also appraised about legal cases filed by and against the Company. Independent Directors have also visited plant at Ankleshwar and they were appraised about operation of the factory. They are also informed about material events of the Company.

H. EVALUATION OF DIRECTORS AND BOARD :

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

The performance evaluation is done once in a year. Performance evaluation is done on the basis of factors 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 judgment.

I. COMMITTEE OF BOARD:

Currently, the Board has five 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 forms part of the Board Report.

10. 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. The Company has received their eligibility certificates pursuant to the provisions of section 139 and 141 of the Companies Act, 2013 read with Companies (Audit & Auditors) Rules, 2014.

B. BRANCH AUDITOR:

The term of appointment of M/s. M.I. Shah & Co., Chartered Accountants (Firm Registration No. 119025W),for a period of 5 years as Branch Auditor is ending on the conclusion of the 43rd Annual General Meeting. M/s. D Kothary & Co., Chartered Accountants (Firm Registration No. 105335W) Statutory Auditor of the Company will conduct the Branch Audit of the Company.

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 2022-23. The remuneration payable to them is proposed to the Shareholders for their approval at the ensuing Annual General Meeting. The Audit Committee recommended their appointment as a Cost Auditor for Financial Year 2022 - 2023.

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".

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

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

12. 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, 2022:

The Statutory Auditors has not made any qualifications, reservation or adverse remarks or disclaimers in their report on the Financial Statement for Financial Year 2021- 22.

13. 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".

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

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

15. 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.

16. 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

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

The Related Party Transactions effected during the financial year are on Arm?s length basis and in the ordinary course of business. Approval of Audit Committee is obtained for Related Party Transactions. The Related Party transactions effected during the financial year are disclosed in the notes to the Financial Statement.

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".

18. 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 for all listed Companies. 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.

19. ANNUAL RETURN:

The extract of Annual Return pursuant to the provision of Section 92 of the Act read with Rule 12 of The Companies (Management and Administration) Rules, 2014, will be available on the website of the Company at www.lykalabs.com

20. DIRECTORS? RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013(the "Act") with respect to Directors Responsibility Statement, the Board hereby submits its responsibility statement:

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 and that such internal financial controls are adequate and were operating effectively; and

f. 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.

21. 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:

i) LYKA BDR INTERNATIONAL LIMITED (LBDR)

Lyka Labs Ltd is holding 65.22% of the Issued capital of Lyka BDR International Limited. During the year under review, the Company has reported total income of Rs. 20.30 crores as against total income of Rs. 26.79 crores of previous financial year and reported Net Loss of Rs. 2.08 crores as against Net profit of Rs. 3.64 crores earned in previous financial year.

ii) LYKA EXPORTS LIMITED (LEL)

Lyka Labs Ltd is holding 72.80% of Issued capital of Lyka Exports Limited. During the year under review, the Company has reported total income of Rs. 18.72 crores as against total income of Rs. 12.70 crores of previous financial year and reported Net profit of Rs. 0.65 crores as against Net profit of Rs. 0.73 crores earned in previous financial year.

The Performance and financial position of each of the above mentioned subsidiaries for the year ended 31st March, 2022 is attached in ‘‘Annexure D?? and forms part of this report.

22. CORPORATE SOCIAL RESPONSIBILTY (CSR) :

The Company has earned net profit of Rs 60.24 Crores before tax during the financial year ended 31st March, 2022 is more than Rs. 5 crores and as required under provision of Section 135 of the Companies Act, 2013, the Company has constituted Corporate Social Responsibility Committee consisting of three Directors of which one of the Director is Independent Director. The committee will frame Corporate Social Responsibility (CSR) policy.

The Company is required to spend in every financial year atleast 2% of the average net profit of the Company made during the three immediately preceding financial years. Since the average net profit during the three preceding financial years is not available, the Company does not spend any amount towards CSR in current financial year.

23. DEPOSIT:

During the year, the Company has not invited nor accepted any deposit under the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. As of 31st March, 2022, the company has unclaimed fixed deposits of Rs. 41.55 lakhs.

24. MERGER:

The Board has decided 01st April, 2022 as appointed date for merger of Lyka Exports Ltd a subsidiary with Lyka Labs Ltd. The Company will finalize the Scheme of Merger shortly and obtain the requisite approval of SEBI and other statutory authorities wherever applicable.

25. 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 or Court or Tribunal which have significant & Material impact on the going concern status and company?s operations in future.

26. 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.

27. INTERNAL FINANCIAL CONTROL:

The Company maintains a system of internal 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.

28. 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".

29. 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.

30. MANAGEMENT DISCUSSION ANALYSIS REPORT:

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

31. GREEN INITIATIVE:

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

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

32. 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 LIMITED
Kunal N Gandhi
Chairman & Managing Director
Place: Mumbai (DIN:01516156)
Date: 20th May, 2022