lyka labs Directors report

The Members,

Lyka Labs Limited

The Directors are pleased to present the Forty Fourth Annual Report together with Audited Financial Statements of Lyka Labs Limited for the financial year ended on 31st March 2023.

1. FINANCIAL RESULTS:

Standalone

( in Lakhs)

Particulars	For the financial year ended 31st March 2023	For the financial year ended 31st March, 2022
Total Revenue	8404.42	16706.86
Profit / (Loss) before Exceptional items	(603.43)	6490.89
Exceptional Items	717.41	466.83
Profit/(Loss) before tax	(1320.84)	6024.06
Less: Tax Expenses	(7.82)	2033.83
Profit/(Loss) after tax	(1328.66)	3990.23
Add: Other Comprehensive Income	(6.28)	12.69
Profit/(Loss) for the year	(1334.94)	4002.92

Consolidated

( in Lakhs)

Particulars	For the financial year ended 31st March 2023	For the financial year ended 31st March 2022
Total Revenue	9647.38	19617.90
Profit / (Loss) before Exceptional items	(577.67)	6576.57
Exceptional Items	739.44	651.88
Profit/(Loss) before tax	(1317.11)	5924.69
Less: Tax Expenses	(1.87)	2080.37
Profit/(Loss) after tax	(1315.24)	3844.32
Add: Other Comprehensive Income	(0.54)	14.01
Profit/(Loss) for the year	(1315.78)	3858.33

2. DIVIDEND:

The Board of Directors does not recommend dividend for the financial year ended on 31st March 2023.

3. RESERVE:

The Company has not transferred any amount to reserve for the financial year ended on 31st March 2023.

4. OPERATIONS:

During the year under review, the total revenue earned by the Company was Rs. 8404.42 Lakhs as against total revenue of Rs 16706.86 Lakhs in the previous year. The Company has reported net loss of Rs. 1334.94 Lakhs as against Net Profit of Rs. 4002.92 Lakhs of the previous financial year ended on 31st March 2022.

During the financial year under report, the Company has invested in building brands in the domestic human and veterinary business. The export business did not meet expectations, as most international Government tenders had exhausted their budgets. Certain markets also experienced foreign exchange fluctuations due to which the purchases were delayed.

5. MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

Management Discussion and Analysis Report for the financial year 2022-23 is as annexed hereto.

6. 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, Liquid Injections, Lyophilised Injections and External Preparations for several International Markets and the Domestic Market.

The Companys 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.

Companys 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.

7. FUTURE OUTLOOK:

The Company is constantly exploring possibilities of entering into new international markets with reputed partners and is also introducing new products in existing markets and focus on building its own marketing / distribution business within India.

The Company 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 initiated 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. This modernization will lead the Company into regulated markets (SRA), which will further increase the business possibilities. The Company is also creating a base for the branded business both in the veterinary and human business.

8. REGISTRATIONS:

During the financial year 2022 23, the Company has submitted 14 new applications for registration of its products. It has received registration of 5 products and renewal of 19 products. The registration for 27 products are expected in the coming year.

9. ACQUISITION:

The Company has acquired the animal healthcare business of the Agilis Healthcare Private Limited. The animal healthcare business will provide a good base / foundation for the Company to re-enter in the marketing of animal healthcare products and to increase overall revenue of the Company.

10. PREFERENTIAL ISSUE TO IPCA LABORATORIES LIMITED:

During the year under review, the Company has issued 20,00,000 equity shares of Rs. 10/- each at a price of Rs.139.50 per share to Ipca Laboratories Limited, an entity forming part of the Promoter Group of the Company, on a preferential issue basis.

Further, during the year under review, the Company has also issued 50,00,000 convertible warrants into shares, of Rs. 10/- each at a price of Rs.139.50 per warrant to Ipca Laboratories Limited, an entity forming part of the Promoter Group of the Company, on a preferential issue basis.

11. STATEMENT OF DEVIATION(S) AND VARIATION(S), IF ANY:

The Company has issued and allotted shares on the preferential basis on 15th March 2023. A statement of usage of the proceeds of the preferential issue pursuant to Regulation 32 (3) of the SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015; for the quarter ended 31st March 2023, was placed in the Audit Committee. The Committee noted that there is no deviation(s)/ variation (s), in the statement during the financial year ended on 31st March 2023.

12. NUMBER OF MEETINGS OF BOARD OF DIRECTORS:

The Board met seven times during the financial year on 20th May 2022, 8th August 2022, 5th September 2022, 9th November 2022, 21st January 2023, 7th February 2023, and 15th March 2023. The detailed information is provided in the Corporate Governance Report, which is annexed hereto.

13. CHANGES IN THE DIRECTORS:

The Second term of Mr. Vinod Shabhag as an Independent Director was completed on 1st August 2022. Ms. Nehal Gandhi was resigned w.e.f. 8th August 2022.

Ms. Dhara Shah, was re-appointed as an Independent Director for a second term of 3 years w.e.f. 4th August 2022.

Mr. Prashant Godha, Mr. Shashil Mendondsa and Mr. Babulal Jain were appointed as director by the Board of Directors. Mr. Babulal Jain was also appointed as the Chairman of the Company w.e.f. 8th August 2022. Mr. Prashant Godha retire by rotation at the ensuing Annual General Meeting and, being eligible, offer themselves.

14. CHANGES IN KEY MANAGERIAL PERSONNELS:

Mr. Piyush G. Hindia resigned as the Company secretary & Compliance Officer of the Company w.e.f. 9th November 2022.

Mr. Kishore P. Shah has been appointed as a Company Secretary & Compliance Officer of the Company w.e.f. 9th November 2022.

15. DECLARATION BY INDEPENDENT DIRECTORS:

The Company has received declaration from 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.

16. PERFORMANCE EVALUATION:

Pursuant to the provisions of Section 134 (2) (p) of the Companies Act, 2013 and under Regulation 17(10) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015; the Board of Directors has undertaken an annual evaluation of its own performance, performance of its various Committees and individual Directors.

17. COMMITTEES OF BOARD:

The Board has four Committees namely Audit Committee, Nomination and Remuneration Committee, Stakeholder Relationship Committee and Corporate Social Responsibility Committee. The detailed information is provided in the Corporate Governance Report, which is annexed hereto.

18. STATUTORY AUDITORS:

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 Auditors 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.

19. COST AUDITORS:

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 Company has maintained the cost accounts and cost records as specified by the Central Government under Sub-section (1) of Section 148 of the Companies Act 2013.

20. SECRETARIAL AUDITORS:

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 Secretary to undertake the Secretarial Audit of the Company for the financial year 2022-23. The Secretarial Audit Report is as annexed hereto.

21. 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.

22. 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 2023:

The Statutory Auditors has not made any qualifications, reservation or adverse remarks or disclaimers in their report on the Financial Statement for financial year 2022-23.

23. 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 annexed hereto as Annexure A.

24. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013:

The details of loans, guarantee and investment, if any made under Section 186 of the Companies Act, 2013 are provided in the financial statements attached to this report.

25. WHISTLE BLOWER POLICY / VIGIL MECHANISM:

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.

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

The Related Party Transactions effected during the financial year are on arms length basis and in the ordinary course of business. Approval of the 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 annexed hereto as Annexure B.

27. ANNUAL RETURN:

The 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.

28. 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 SEBI (Listing Obligation and Disclosure Requirement) Regulations 2015 is annexed and forms an integral part of this Annual report.

29. DEPOSITS:

The Company has not accepted deposits from public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014 during the year under review.

30. DIRECTORS RESPONSIBILITY STATEMENT:

Pursuant to the requirement under Section 134(5) of the Companies Act, 2013 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 the Companies Act, 2013 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. The Company has proper system to ensure compliance with the provisions of all applicable laws were in place and that such system was adequate and operating effectively.

31. SUBSIDIARY, JOINT VENTURE OR ASSOCIATE COMPANIES:

The Company has two subsidiaries i.e., Lyka BDR International Limited and Lyka Exports Limited. The Audit Committee and the Board of Directors reviews the financial statements. The minutes of the subsidiary Companies are placed before the Board of Directors.

The Company has in accordance with the Listing Regulations adopted the policy for determining material subsidiaries. The said policy is available on your Companys website at www.lykalabs.com.

In terms of proviso to sub section (3) of Section 129 of the Act, the salient features of the financial statement of the subsidiaries are set out in the prescribed form AOC-1, which is annexed hereto as Annexure C. In accordance with third proviso of Section 136(1) of the Companies Act, 2013, the Annual Report of the

Company, containing therein its standalone and the consolidated financial statements has been placed on the website of the Company at www.lykalabs.com. Further, as per fourth proviso of the said section, audited annual accounts of each of the subsidiary companies have also been placed on the website of the Company at www.lykalabs.com .

32. CORPORATE SOCIAL RESPONSIBILTY (CSR):

The committee has framed Corporate Social Responsibility Policy, which is placed on the website of the Company at www.lykalabs.com.

Pursuant to Section 135 of the Companies Act, 2013, a company is required to spend in every financial year at least 2% of the average net profit of the company made during the three immediately preceding financial years. Since the average net profit of the Company calculated during the three preceding financial years is negative, the Company does not require to spend any amount towards CSR activities in the financial year 2022-23.

33. SCHEME OF AMALGMATION:

As approved by the Board of Directors of the Company on 8th August 2022 the Scheme of Amalgamation filed to the BSE Limited and the National Stock Exchange Limited (‘Stock Exchanges).

There were many rounds of queries from the Stock Exchanges which were replied to their satisfaction.

Finally, both the Stock Exchanges issued their No Objection Certificate on 20th April 2023 and referred the Scheme to the SEBI.

Presently the Scheme is under review of the SEBI.

34. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS, COURTS AND TRIBUNAL IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE:

Through the SEBI order dated 5th June 2020, the Company had been restrained from accessing the Securities Market including by issuing prospectus, offer document or advertisement soliciting money from the public and is further prohibited from buying, selling or otherwise dealing in securities, directly or indirectly in any manner, for a period of three years from the date of the order i.e. 5th June 2020.

The Securities Appellate Tribunal, Mumbai Bench; wide its order dated 23rd November 2022 has reduced the above debarment period of the Company, from accessing the Capital Market and allowed to deal in the securities, from three years to the period already undergone.

In view of the order, the Company is free to access the Capital Market and deal in the Securities from 23rd November 2022.

35. 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.

36. 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 Companys financial accounts and related records is conducted by M/s. Bansi Khandelwal & Co., Chartered Accountants.

37. PARTICULARS OF EMPLOYEES PURSUANT TO RULE 5(1) 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 is annexed hereto as Annexure D.

38. SECRETARIAL STANDARDS:

The Company has complied with the Secretarial Standards on the meetings of Board of Directors (SS-1) and Secretarial Standards on the General Meetings (SS-2), as issued and amended by the Institute of Company Secretaries of India.

39. 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 Members, who are yet to register the email addresses that they should take necessary steps for registering the same and contribute towards Green Initiative.

40. ACKNOWLEDGEMENT:

The 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 Companys Bankers, Customers, Shareholders and loyal and committed Employees for their unstinted support.

For and on behalf of the Board

Lyka Labs Limited

Babulal Jain

Chairman DIN: 00016573

Mumbai; 23rd May 2023.

Annexure A

Information under Section 134 of the Companies Act, 2013 read with rule 8(3) of the Companies (Accounts) Rules, 2014, and forming part of the Directors Report for the period ended 31st March 2023 Energy Conservation measures taken

(1) The Company has taken several measures including reduction of transmission losses, rational organization of manufacturing activity and regular preventive maintenance.

(2) Additional investments and proposals are being implemented for reduction of energy consumption: The following measures are taken / being taken for:

- Replacement of obsolete systems with improved energy saving systems.

- Use of balancing equipments to optimize production.

- Reduction in contract demand.

- Improve the process parameters to consume less energy. - Own generation of steam.

(3) Impact of measures taken:

The adoption of energy conservation measures stated above is expected to save considerably in cost of production.

Sr. No.	Particulars	Year ended 31st March 2023 (12 months)	Year ended 31st March 2022 (12 months)
A.	POWER AND FUEL CONSUMPTION
1.	Electricity
a.	Purchased
	Units (in ‘000 kwh)	2923	3399
	Total Amount (Rs.in lakhs)	252.84	267.63
	Rate per unit (Rs./kwh)	8.65	7.87
b.	Own Generation
	i. Through Diesel Generator
	Units (in ‘000 kwh)	69	142
	Units per litre of Diesel (kwh)	2.77	3.30
	Cost/Unit (Rs./kwh)	34.08	24.45
2.	Coal
	Quantity	-	-
	Total Cost	-	-
	Average Rate	-	-
3.	Furnace oil & Diesel oil
	Quantity (kl.)	24.80	37.20
	Total Amount (Rs.in lakhs)	23.40	34.63
	Average Rate (Rs./Litre)	94.37	93.10
4.	Others – Steam
a.	Purchased
	Quantity (MT)	-	1262
	Total Amount (Rs.in lakhs)	-	62.36
	Rate per unit (Rs./kg)	-	4.94

 

Sr. No.	Particulars	Year ended 31st March 2023 (12 months)		Year ended 31st March 2022 (12 months)
b.	Own Generation
	Quantity (MT)		2514		585
	Units per litre of Furnace\Diesel (KG)		80.91		18.27
	Cost/Unit (Rs./kg)		3.22		4.38

B. CONSUMPTION PER UNIT OF PRODUCTION

	Bulk Drugs Per Tonne	Formulations per Million Pack	Bulk Drugs Per Tonne	Formulations per Million Pack
Electricity - Units (‘000 kwh)	473.23	171.52	414.23	105.67
Coal (M.Tonnes)	-	-	-	-
Furnace oil & Diesel oil (kl)	3.92	1.42	4.53	1.15
Steam (M.Tonnes)	397.65	144.13	331.56	57.35

Research and Development

Lyka Labs Limited is a reputed pharmaceutical and healthcare company.

The Company has a modern well-equipped Research and Development facility in Mumbai managed by a team of technically qualified and well-trained industry professionals.

Companys In-house R & D Centre at Mumbai is recognized by the Ministry of Science & Technology, Department of Scientific & Industrial Research and Government of India.

1. Specific areas in which R&D work is carried out by the Company are:

- Development of broad range of dosage forms such as conventional Solid oral dosage forms, Sustained release tablets, Liquid orals, Ready Mix granules, Derma products, Nutraceuticals & Cosmeceuticals.

- Development of Formulations with New Molecules and Development of Novel Drug Delivery Systems.

- DCGI approvals for new drug formulations.

- Development of Cosmeceutical products for ‘P to P business such as- Anhydrous Sunscreen, Oil Free Non-Comedogenic Sunscreen Gel, Skin Lightening Gel, Skin Lightening Cream, Oat

Moisturizing Lotion and Cream, Oat body wash, Foaming Face wash etc.

- Development of derma products for Export Market such as- Urea Cream, Azelaic Acid Cream, Sertaconazole Nitrate Cream, Miconazole Nitrate Cream etc.

- Upgradation of products and processes to improve quality, stability, shelf-life and thus reduce cost.

- Tie ups with Medical Institutions to carry out Clinical Trials, Dermal Toxicity, Skin Irritation and Sensitivity studies, Comedogenicity Study etc.

2. Benefits derived as a result of R & D efforts:

- The Company received DCGI permission for manufacturing and marketing of Topical Lotion for the treatment of Fungal Infections.

- The Company successfully completed the Clinical Trial of JAK, INHIBITOR for the treatment of Atopic Dermatitis.

- Clinical Trials will be conducted for Clinical Trial Protocol approval from CDSCO for the treatment of Neuropathic Pain

- Many derma products are under development for domestic Market, which will be commercialized after completing stability studies & subsequent DCGI approval/FDA approval.

- The Company derives long term benefits viz. better yield and Quality of the final product with cost effectiveness.

3. Future plans:

The company aims to consolidate its presence in the domestic market through focused development of various therapeutic segments such as:

a. Neuropathic Pain

b. Atopic Dermatitis

c. Treatment of Acne

d. Anti-Aging

e. Treatment of Fungal infections

f. Skin Lightening & Melasma

g. Moisturizing

h. Treatment of Psoriasis

4. Achievements / Recognition:

Recognition as in-house R & D Centre by Government of India, Ministry of Science & Technology

Department of Scientific and Industrial Research.

By the order of the Board

Lyka Labs Limited

Kunal Gandhi

Managing Director & CEO

(DIN:01516156)

Mumbai; 23rd May 2023.