mercury laboratories ltd share price Directors report

To,

The Members,

Mercury Laboratories Limited

Your Directors have pleasure in presenting the 42^nd Annual Report of Mercury Laboratories Limited (the Company) on the business and operations of the Company together with the audited financial statements for the financial year ended on March 31,2023.

1. FINANCIAL SUMMARY/PERFORMANCE OF THE COMPANY

The financial performance of the Company for the financial year ended March 31,2023 along with figures of previous financial year is summarized below:

(INR in Lakhs)

PARTICULARS	2022-23	2021-22
Revenue from Operations	7,533.37	5,792.38
Gross Profit before Depreciation Interest & Tax	1,028.98	780.61
Less: Interest	36.19	44.64
Less: Depreciation	248.33	245.28
Profit / (Loss) before Exceptional Items , Extra Ordinary Items & Tax	744.46	490.69
Exceptional Items	-	-
Extra-Ordinary Item	(4.83)	(12.75)
Profit / (Loss) before Tax	749.29	503.44
Less: Current Tax including Income Tax of Previous Year & Deferred Tax	191.41	147.25
Profit/(Loss) from Continuing Operations	557.88	356.19
Profit/(Loss) from discontinued operations	-	-
Tax expense of discontinued operations	-	-
Profit/(loss) from Discontinued operations (after tax)	-	-
Profit / (Loss) for the Period	557.88	356.19
Other Comprehensive Income
A (i) Items that will not be reclassified to profit or loss	21.82	12.43
( ii) Income tax relating to items that will not be reclassified to profit or loss	(5.49)	(3.46)
B (i) Items that will be reclassified to profit or loss	-
( ii) Income tax relating to items that will be reclassified to profit or loss	-	-
Total comprehensive income for the period	574.21	365.16
Opening balance in Retained Earnings	253.83	271.64
Profit available for appropriations	811.71	627.83
Dividend	42	24
Transfer to General Reserve	350	350
Surplus carried forward	419.71	253.83
*Earning Per Share
Basic	46.49	29.68
Diluted	46.49	29.68

*Equity Shares are at par value of INR 10 per share.

*From the current year, the company has presented actuarial gains / losses on Defined Benefit Plans as Other Comprehensive Income with tax effect thereon. Correspondingly the figures of previous year are recast to make them comparable.

2. Dividend:

The Board of Directors at their meeting held on May 05, 2023, recommended a final dividend of INR 3.50 per equity share of face value of INR 10 each, for the financial year ended 31^st March, 2023 absorbing INR 42.00 Lakhs, which will be, if approved by the members, paid to the Shareholders holding shares as on September 20, 2023 after business hours. The dividend, if declared, is subject to deduction of Tax at source in accordance with applicable provisions. The Dividend Distribution Policy of the Company is set out as Annexure-A. The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (here in after referred to as ‘SEBI Listing Regulations) is also available on the website of the Company at http://investor.mercurylabs.com/wp-content/uploads/2022/03/DIVIDEND- DISTRIBUTION-POICY-2.pdf

3. Transfer to Reserves:

Your Company transferred an amount of INR 350.00 Lakhs to the General Reserve during the Financial Year ended on March 31,2023.

4. Financial Performance and Operations Review:

During the year under review, the revenue from operations grew by 30.06% to INR 7,533 Lakhs (Rupees Seven Thousand Five Hundred Thirty-Three Lakhs only) from INR 5,792 Lakhs (Rupees Five Thousand Seven Hundred Ninety-Two Lakhs only) in 2021-2022. The Profit before Tax is increased by 48.83% to INR 749.29 Lakhs from INR 503.44 Lakhs. Net profit after tax (before OCI) increased by 56.62% as compared to previous year. The Company registered a net profit after tax (before OCI) of INR 557.88 Lakhs as compared to net profit of INR 356.19 Lakhs for the previous year ended 31^st March, 2022.

5. Future Prospects:

Goldman Sachs, leading global financial institution has published that Indian pharma industry to reach 57 billion dollars by 2025. The Indian pharmaceutical industry is expected to grow at 6-8% rate GDP in coming months. This growth will consist of engineering infrastructure, pharmaceutical, finance sectors.

We being Pharma sector, pharma industry is likely to reach 57 billion dollars by financial year 2025. Globally, the Indian pharma industry has a strong footprint in the generics segment and the pharma exports and domestic market contribute equally to the overall Indian pharma industry. This includes API formulations and others. Our pharmaceutical formulations and API will reach to each and every corner of the globe.

Our Management strongly believe that Pharmaceutical sectors will grow leaps and bounds in India as well as become Pharma HUB in the world. Management also see bright future for your company. We are also working very hard and ensure by managing quality products, engineering, new technology, cost effectiveness and focus on expenditure. This will help to competiveness in open market. Our priority of investment in capacity for new technology and build up new injectable plant to enhance good quality and quantitative more volume.

Our intention is to enter into regulatory market. To achieve this goal, we have taken systematically digitization across functions in respect of purchase, manufacturing, distribution, accounting. This will help to read the documents without error in the documentation process. We continue to build up right talented people to address the needs of our customers and realize our strategic priorities. The future belongs to organizations that are resilient and can quickly adjust to the reality of the market. Accordingly, Mercury Laboratories Limited will continue to stay focused on building on its agility to maximize value creation.

MANAGEMENT DISCUSSIONS AND ANALYSIS

As stipulated by regulation 34(3) read with Schedule V(B) of the SEBI Listing Regulations, Management Discussion and Analysis forms parts of this report.

a) Industry Structure and Development

Government of India aggressively work on ‘Make in India, by effective implementation of Ayushman Bharat Scheme, Upgrading all ESIC hospitals, Primary Health Centers and others. Government of India also introduced Production Linked Incentive - PLI Scheme for the Pharma Industries for 2 years. This will upgrade Pharma Industry particularly API of Pharma Industry and cater Indian Market. This will also help to reduce the dependency of API from international market. To achieve this, government has set aside incentive of INR 15 Cr. Affordability and quality of medicines are very important for domestic as well International market and to ensure this to enhance improve the quality, the government has come forward for technical upgradation in respect of quality by providing subsidy of INR 3000 crores by department of Pharmaceuticals during this year. We, Mercury Laboratories Limited, take up this seriously government objective of affordable and quality products by number of action in our company. We have upgraded technologically and further improve infrastructure, machinery, plant as well as environment friendly, energy saving and others. We have taken steps by introducing training to new comers, reference training for understanding system implementation, product details and record keeping. We are making all our effort to digitalize our system, records to improve the system. Your company has started implementing state of art upgrade technological to manufacture Small Volume Parenteral. This will further enhance quality of our injectable products in domestic as well as International market.

The Union Budget 2022-23 enhanced for health sector to INR 130,000 crores for the Atmanirbhar Swasth Yojana for the development of Primary, Secondary and Tertiary healthcare system, investing heavily on availability of additional facilities in the existing hospitals. Government also creating number of AIMS in most of the states.

Government of India also supports as a hand holder for medical college, nursing college, Pharmacy College to fill shortage gap in health sectors. Looking to all development, your company has taken up aggressively investing in some of the upgradation, expansion like additional facility in the existing plant so that we meet requirement of the market

b) Outlook, Risks and Concerns

Government of India introduced Drugs, Medical Device and Cosmetics Bill 2023 in the parliament. This will replace 83 years old Drugs & Cosmetics Act, 1940. The main focus of this bill is for effective implementation of Regulation and good quality drugs. This should also help pharma sector to grow in near future. However, Ukraine war and climate changes creates lot of food shortages, heat waves, flood, etc from time to time in all part of the world. This factor will severely affect the public by undesired diseases across the globe.

(c) World economic overview

Global growth is projected to fall from an estimated 3.5 percent in 2022 to 3.0 percent in both 2023 and 024. The rise in central bank policy rates to fight inflation continues to weigh on economic activity. The globe economy will remain weak due to Central Bank Policy to fight inflation the war in Ukraine and extreme related events. This will restrict more restricting monetary policy with further tightening Central Bank. The Chinese Economy, particularly real estate problem, infrastructure project in different part of the world will give negative spill over. However, under turbulence inflation will fall faster than expected. The priority of achieving sustained disinflation by ensuring financial stability. During this period the improvement of supply side will have fiscal consolidated data.

Global Pharma Market

The global Pharmaceutical market size was 209.85 billion dollars in 2021 is poised to grow 222.4 billion dollars in 2022 and further grow 352.98 billion dollars by 2030 with the growth of CAGR 5.9%. The Indian pharma market is expected to reach 130 billion dollars by 2030 and will be a leading provider of medicines to the world as spoke by Mr. Sudharshan Jain - Secretary of IPA. The Indian pharmaceutical industry is ranked 3^rd largest in the world for producing medicines by volume. This growth will be in sectors like Cardiac, Diabetic, hypertensive. We see India will take lead in branded generic drugs in all part of the globe by 2030.

Financial Performance and Operation Review

During the year, your Company continued to make significant progress across its strategic priorities with the highest ever revenue and EBITDA. During Financial Year 2022-23, the Company reported immense revenue growth of 30.06% from the previous year. The gross revenue of the Company was INR 7533.37 Lakhs for the year under review as compared to INR 5792.38 Lakhs for the previous year ended 31^st March, 2022. The Company registered a net profit (before OCI) of INR 557.88 Lakhs as compared to net profit of INR 356.90 Lakhs for the previous year ended 31^st March, 2022. Return on Net Worth has been increased to 12.98% from 11.00 % mainly due to increase in sales resulted in to higher profit

INR in Lakhs

Break-up of Sales	2022-23	2021-22	Growth / (Degrowth) In terms of %
Domestic	4,595.98	4,254.72	8.02%
Deemed Exports	1 ,029.72	584.69	76.11%
Direct Exports	1 ,907.67	952.97	100. 18%
Total	7,533.37	5,792.38

Details of significant changes in key Financial ratios given at Note No. 60 of the Notes to financial statements.

d) Internal Control System and its adequacy

The Company has adopted policies and procedures covering all financial, operating and compliance functions. Mercury Laboratories believes that internal control is a prerequisite for governance and that business plans should be exercised within a framework of checks and balances. The Company has adequate internal control system including suitable monitoring procedures commensurate with its size and the nature of the business. The internal control system provides for all documented policies, guidelines, authorization and approval procedures.

The Company has an internal audit department which carries out audits throughout the year. The statutory auditors while conducting the statutory audit, review and evaluate the internal controls and their observations are discussed with the Audit Committee of the Board. Further the Company has in place adequate Internal Financial Controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operations were observed.

d) Human Resources

At Mercury Laboratories, we recognize that our employees are the cornerstone of our success and integral to meeting our long-term business success goals. We are committed to investing in our people, providing them with the right set of skills, opportunities and an enabling environment to thrive. Company has maintained cordial and harmonious relations with employees across various locations. At the core of our success are our people and have been working towards keeping them engaged and inspired.

During the year under review, various trailing and development workshops were continued to be conducted to improve the competency level of employees with an objective to improve the operational performance of individuals. The company has built a competent team to handle challenging assignments. The Company strives to enhance the technical work, related and general skills of employees through dedicated training programs on a continuous basis. The Company has 537 employees as on March 31,2023.

e) Threats

Drug Price Control:

The Health Ministry keeps on revising the list of Drugs under price control. It is likely that the Government may bring more drugs and formulations under price control or change the mechanism of calculating the ceiling price of the drugs, which are under the ambit of the revised policy, which in turn will affect the net margins of the Company

Generics:

The Government of India is continuously bringing in policies to shift the market towards generic products. The implementation of this process requires action by all stakeholders. This may have impact on future business strategies of the Company.

Manufacturing & Supplying Risk:

Although a major portion of the Companys finished formulations and injectable are being manufactured at inhouse facilities, the Company also depends on its suppliers for sourcing of its raw materials. Any significant disruption at in-house facilities or any of its suppliers locations due to economic, political & social factors or any other event may impair the Companys ability to meet the markets demand on a timely basis. In addition, the Companys manufacturing capabilities could be impacted by quality deficiencies in the products, which its suppliers provide, leading to impact on its financial performance.

Currency fluctuation risks:

Foreign currency risks arise out of overseas operations and financing activities. Exchange rate volatility significantly impacts earnings and net equity because of invoicing in foreign currencies, expenditure in foreign currencies, foreign currency borrowings and translation of financial statements of overseas subsidiaries into Indian rupees. The Company has a defined foreign exchange risk management framework to manage these risks excluding translation risks.

International Taxation:

As the Company has potential tax exposure resulting from application of varying laws and interpretations, which include intercompany transactions with related parties in relation to various aspects of business. Although the Company believes its cross border transactions between affiliates are based on internationally accepted practices, tax authorities in various jurisdictions may have different views or interpretations and subsequently challenge the amount of profits taxed in their jurisdiction resulting into increase in tax liability including interest and penalties causing the tax expenses to increase.

f) Formulation and Developments

Company always considering Formulation and Development as crucial for sustain growth of the Company. Company always try to introduce newer and newer delivery system for ensuring products available as regards to time and enhancing therapeutic value.

To achieve this objective, we have experienced and qualified pharmacists whose activity is to maintain and find out newer and newer delivery system as well as re-engineering innovative process. This will help the Company to maintain material Consumption ratio.

g) Cautionary Statement

Certain statement in the management discussion and analysis may be forward looking within the meaning of applicable securities law and regulations and actual results may differ materially from those expressed or implied. Factors that would make differences to companys operations include competition, price realization, Drugs Price Controls, currency fluctuations, regulatory issues, changes in government policies and regulations tax regimes, economic development within India and the Countries in which the company conducts business and other incidental factors.

6. Directors Responsibility Statement

Your Directors state that:

a. In the preparation of annual accounts for the year ended March 31, 2023, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

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 a true and fair view of the state of affairs of the Company at March 31, 2023 and of the Profit of the Company for the year ended on that date;

c. The Directors have 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 have prepared the annual accounts on a going concern basis;

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

f. The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

7. Directors and Key Managerial Personnel

During the year under review, following changes occurred in the position of Directors / KMPs of the Company:

• At the 41^st Annual General Meeting of the Company held on September 27, 2022 the shareholders approved reappointment of Mr. Rajendra R Shah as a Managing Director of the Company for the period of three years w.e.f. April 01, 2023. In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Dilip R Shah, Director of the Company is liable to retire by rotation at the ensuing 42^nd Annual General Meeting and being eligible, offered himself for reappointment. The retirement of director by rotation at the ensuing Annual General Meeting is determined in accordance with the provisions of the Companies Act, 2013.

• There were no changes in Chief Financial Officer and Company Secretary of the Company during the year under review.

Necessary resolutions for re-appointment of the aforesaid directors and their detailed profiles have been included in the notice convening the ensuing AGM and details of proposal for appointment / reappointment are mentioned in the explanatory statement of the notice. Your directors commend their re-appointment.

During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company except Mr. Paresh J Mistry, Director of the Company who is being paid of holding position of Purchase Manager in the Company.

Key Managerial Personnel as at March 31,2023 are as under:

1. Mr. Rajendra R Shah, Managing Director

2. Mr. Ashish Vasavada, Chief Financial Officer

3. Ms. Krishna Shah, Company Secretary

8. Number of Meetings of the Board

Four Meetings of the Board were held during the year on May 26, 2022, August 09, 2022, November 11, 2022 & February 13, 2023. For details of the meetings of the Board, please refer to the Corporate Governance Report, which forms part of this report.

9. Nomination Remuneration Policy

The Policy on appointment and remuneration of directors, key managerial persons (KMP) and senior management including criteria for determining qualifications, positive attributes and directors independence as required under Section 178(3) of the Act, and Regulation 19 read with Schedule II Part D of SEBI Listing Regulations has been formulated by the Company. Policy on Nomination and Remuneration of Directors, Key / Senior Managerial Personnel may be accessed on the Companys website at: http://investor.mercurylabs.com/policies/

The remuneration paid to the Directors, Key Managerial Personnel and Senior Management is in accordance with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Act and Regulation 19 read with Schedule II of the SEBI Listing Regulations. Further details on the same are given in the Corporate Governance Report which forms part of this Annual Report.

10. Board Evaluation

Pursuant to SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the Director being evaluated.

The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and Individual Directors pursuant to the provisions of the Act and the Corporate Governance requirements as prescribed by Securities and Exchange Board of India (SEBI) under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, Information and functioning etc.

The performance of the Committees was evaluated by the Board after seeking inputs from the Committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

The Board and the Nomination and Remuneration Committee (NRC) reviewed the performance of the Individual Directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

In a separate meeting of Independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors was also discussed.

11. Internal Financial Control Systems and their adequacy

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

12. Audit Committee

The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report.

13. Share Capital

The paid-up Equity Share Capital of the Company as at March 31,2023 is I NR 120 Lakhs. The Company currently has no outstanding shares issued with differential rights, sweat equity or ESOS.

14. Risk Management

Risks are events, situations or circumstances which may lead to negative consequences on the Companys businesses. Risk management is a structured approach to manage uncertainty. A formal enterprise wide approach to Risk Management is being adopted by the Company and key risks is getting managed within a unitary framework.

Key business risks and their mitigation are considered in the annual/strategic business plans and in periodic management reviews. The Audit Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

15. Safety, Environment and Health

The Company considers safety, environment and health as the management responsibility. Regular employee training programs are carried out in the manufacturing facilities on safety, environment and health.

16. Particulars of Loans, Guarantees or Investments

The Company has not provided any loans and guarantees and no investments made pursuant to Section 186 of the Companies Act, 2013 during the year ended on March 31,2023. Details of loans, guarantees and investments covered under section 186 of the Act are given in the notes to the Financial Statements.

17. Particulars of contracts or arrangements with related parties:

There are no materially significant related party transactions made by the Company with related parties which may have potential conflict of interest with the Company at large. As a matter of policy, your Company carries out transactions with related parties on an arms length basis. Statement of these transactions is given at Note No. 48 of the Notes to financial statements.

Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act along with the justification for entering into such contract or arrangement in prescribed Form AOC-2 is furnished as Annexure-B to this report.

The Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions as approved by the Board is available on the Companys website and can be accessed at http://investor.mercurylabs.com/wp- content/uploads/2023/02/Related-Party-Transaction-Policy.pdf

18. Corporate Social Responsibility (CSR)

As Per Amendment and Section 135 of Companies Act, 2013, the Company has formulated Corporate Social Responsibility (CSR) Policy in accordance with Section 135 of the Companies Act, 2013 and reconstituted CSR Committee on May 14, 2015 with Mr. D. R. Zaveri and Mr. Bharat Mehta, Two Independent directors and Mr. Rajendra R Shah, Managing Director and Dilip Shah, Director of the Company.

Sr. No. Name of Director	Category
1 Mr. Rajendra R Shah	Chairman & Member
2 Mr. Divyakant Zaveri	Member
3 Mr. Bharat Mehta	Member
4 Mr. Dilip Shah	Member

Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company was adopted by the Board on the recommendation of the CSR Committee. The CSR policy of the Company is placed on the website of the Company at http://investor.mercurylabs.com/wp-content/uploads/2021/08/Corporate-Social- Responsibility-Policy.pdf

Report on Corporate Social Responsibility as per Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is prepared and the same is enclosed as Annexure-C to this Report.

19. Policy on prevention, prohibition and Redressal of sexual harassment at workplace

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure

In compliance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company had constituted an Internal Complaints Committee. The Committee has not received any complaint of sexual harassment during the financial year 2022-23. The policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at work place is placed on website of the Company http://investor.mercurylabs.com/wp-content/uploads/2019/11/Policy-on-Prevention-of-Sexual-Harassment-at- WorkPlace.pdf

20. Vigil Mechanism/Whistle Blower Policy

The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Companys Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. The Whistle Blower Policy is posted on the website of the Company http://investor.mercurylabs.com/wp-content/uploads/2022/03/Whistle_Blower_Policy_MLL-

1.pdf

21. Significant and material orders passed by the regulators or courts.

No significant material orders have been passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.

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

The information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134 (3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed as Annexure-D.

23. Particulars of Employees and Remuneration

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (‘Rules) are annexed to this report as ‘Annexure-E

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Rules, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said Rules forms part of this report and is provided in the ‘Annexure-E.

24. Auditors & Their Reports

(1) Statutory Auditors:

The term of appointment of M/s. R J Shah & Associates, Chartered Accountants as a statutory auditor had ended at the conclusion of 41^st AGM. During the year, the Audit Committee and the Board of Directors recommended to the Members for the Appointment of M/s. Naresh & Co., Chartered Accountants, Vadodara as statutory auditors of the Company. M/s. Naresh & Co have consented to act as Statutory Auditor of the Company for term of five consecutive years from the conclusion of the 41^st AGM till the conclusion of the 46^th AGM and their appointment would be within the limits specified under Section 141(3)(g) of the Act. They have further confirmed that they are not disqualified to be appointed as statutory auditor in terms of the provisions of the Act, and the provisions of the Companies (Audit and Auditors) Rules, 2014, as amended from time to time. The shareholders of the Company approved their appointment at 41^st Annual General Meeting of the Company held on September 27, 2022.

The Auditors Report for the financial year 2022-23 does not contain any qualification, reservation or adverse remark which requires any clarification/ explanation. The Auditors Report is enclosed with the financial statement in this Annual Report. There was no instance of fraud during the year under review, which required the statutory auditors to report to the Audit Committee and/or Board under Section 143(12) of the Act, and the rules made thereunder. No fraud has been reported by the Auditors to the Audit Committee or the Board. The Notes on accounts, referred to in the Auditors Report, are self-explanatory and therefore do not call for any further comments.

(2) Secretarial Auditors:

Pursuant to the provisions of the Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014, the Board of Directors of the Company had appointed M/s. Mitesh Rana & Co. a firm of Company Secretaries to carry out Secretarial Audit for the year ended on March 31,2023. The Secretarial Audit Report is annexed as ‘Annexure-F

The Auditors Report and the Secretarial Audit Report for the financial year ended March 31,2023 do not contain any qualification, reservation, adverse remark.

The Company has complied with the provisions of Secretarial Standards on Board Meetings and General Meetings issued by the Institute of Company Secretaries of India and approved by the Central Government.

The Board of Directors of your Company has appointed M/s. Mitesh Rana & Co., Company Secretaries, Vadodara to carry out Secretarial Audit of your Company for FY 2023-24.

(3) Cost Auditors:

Pursuant to the provisions of Section 148 read with Companies (Cost Records and Audit) Amendment Rules, 2014 and as recommended by the Audit Committee, the Board had appointed M/s. V.M. Patel & Associates, Practicing Cost Accountants, who have given their consent to act as Cost Auditors and laid on the table the consent letter received from them & confirmed that his appointment met the requirements of Section 141(3)(g) of the Act for the year 2023-24 and that he was free from disqualification as specified under section 141 read with Section 148 of the Act.

In terms of Rule 14 of the Companies (Audit and Auditors) Rule, 2014, remuneration payable to the cost auditors is required to be ratified by members. Accordingly, an ordinary resolution will be passed by members at the 42^nd Annual General Meeting approving the remuneration payable to M/s. V.M. Patel & Associates.

(4) Internal Auditors

The Board of Directors appointed M/s. K R & Associates, Chartered Accountant as Internal Auditors of the Company for financial year 2023-24.

25. Deposits:

The Company has no unpaid and / or unclaimed deposit. The Company has accepted deposit from Directors and the Shareholders and has complied with all applicable provisions of the Companies Act relating to acceptance and renewal of deposits.

The details relating to deposits, covered under Chapter V of the Act are as under:

Particulars	Amt. in INR (Lakhs)
Accepted during the year from the Directors and Members	None
Remained unpaid or unclaimed as at the end of the year	None
Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved (i) at the beginning of the year;(ii) maximum during the year; and (iii) at the end of the year;	None

26. Extract of Annual Return

A copy of Annual Return as required in accordance with Section 92(3) of the Act read with the Companies (Management and Administration) Rules, 2014, has been placed on Companys website at http://investor.mercurylabs.com/miscellaneous-shareholder-details/

27. Material Change & Commitments, if any

There is no material changes and commitments, that would affect financial position of the company from the end of the financial year of the company to which the financial statements relate and the date of directors report.

28. Corporate Governance Report

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 certifying compliance with conditions of corporate governance.

29. Independent Directors

The Independent Directors of the Company have given the declaration and confirmation to the Company as required under Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 confirming that they meet the criteria of independence and that they are not aware of any circumstances or situation which exists or may be reasonably anticipated that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

The Board of Directors of your company confirms that the Independent Directors fulfill the conditions specified in Section 149 (6) of the Act and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and are independent of the management.

30. Unclaimed Dividend Amounts and Transfer to IEPF

The Company has transferred dividend amounts which remained unpaid or unclaimed for a period of seven years from the date of their transfer to unpaid dividend account, from time to time, on due dates to the Investor Education and Protection Fund (IEPF) administered by the Central Government.

The Company has uploaded the details of unpaid and unclaimed dividends lying with the Company as on March 31, 2023 on the website of the Company.

During the year under review, the Company has transferred 8700 equity shares of INR 10/- (Rupees Ten only) each of 14 members whose dividend has remained unclaimed / unpaid for a consecutive period of 7 (seven) years to the demat account of IEPF after giving notice to the members and advertisement in newspaper to claim their shares and the Company has credited unclaimed dividend of INR 1,45,967 to the Investor Education and Protection Fund (IEPF) pursuant to Section 125(1) of the Act, pertaining to FY 2014-15. Details of shares transferred to IEPF Authority during financial year 2022-23 are also available on the website of the Company http://investor.mercurylabs.com/details-of- shares-to-iepf/

31. Familiarisation Program for Independent Directors

All Independent Directors are familiarised with the operations and functioning of the Company at the time of their appointment and on an ongoing basis. The details of the training and familiarisation program are provided in the Corporate Governance Report and is also available on the website of the Company athttp://investor.mercurylabs. com/wp-content/uploads/2023/06/Director-Familirazation-Programme_05.05.2023.pdf

32. Prohibition of Insider Trading

In compliance with The SEBI (Prohibition of Insider Trading) Regulations, 2015 ("PIT Regulations") as amended, the Company has framed a Code of Conduct to regulate, monitor and report trading by all the employees, directors, designated persons and their immediate relatives, connected persons and such employees of the Company who are expected to have access to the UPSI relating to the Company. The Code lays down guidelines, which advises them on procedure to be followed and disclosures to be made, while dealing in the shares of the Company. Company also maintains the structured digital database as mandated in the PIT Regulations.

33. Other Disclosures

i. During the year under review, there was no change in Companys nature of business

ii. The Company has not failed to implement any corporate action during the year under review;

iii. The disclosure pertaining to explanation for any deviation or variation in connection with certain terms of public issue, rights issue, preferential issue, etc. is not applicable to the Company;

iv. Company does not have any subsidiary, associate or joint venture Companies within the meaning of the Companies Act, 2013.

v. No application was made nor is any proceeding pending under the Insolvency and Bankruptcy Code, 2016

vi. The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

vii. No settlements have been done with banks or financial institutions.

34. Acknowledgment

The Board of Directors wish to place on record their appreciation for the continued support extended by the Bankers, Business Associates, clients, vendors and suppliers, Government Authorities, Employees at all levels and Stakeholders, in furthering the interest of the Company.

	On behalf of the Board of Directors of
	Mercury Laboratories Limited
Date: May 05, 2023	Rajendra R. Shah	Dilip R Shah
	Managing Director	Director
	DIN:00257253	DIN: 00257242
	Place: Vadodara	Place: USA