Neuland Laboratories Ltd Directors Report.

The Board of Directors are pleased to present the Companys Thirty Fifth Annual Report along with the Companys audited financial statements (standalone and consolidated) for the financial year ended March 31, 2019.

Financial Performance

The Companys financial performance (standalone) for the year ended March 31, 2019, is summarised below:

( र in lacs)
Particulars 2018-19 2017-18
Total Income 67,032.11 53,369.60
Profit before Finance Costs, Depreciation, Amortisation and Tax 6,135.83 5,456.51
Finance costs 1,566.31 1,892.13
Profit before Depreciation, Amortisation and Tax 4,569.52 3,564.38
Less: Depreciation & Amortisation 2,586.02 2,210.35
Profit before Tax 1,983.50 1,354.03
Less: Current tax 544.35 422.92
Deferred tax (175.19) (249.70)
Profit after Tax 1,614.34 1,180.81
Add: Other comprehensive income 14.99 19.54
Total comprehensive income for the year 1,629.33 1,200.35

For the financial year ended March 31, 2019, a Total Income of र67,032.11 lacs as against र53,369.60 lacs in the previous year.

For the year ended on March 31, 2019, the Company has reported Earnings Before Interest, Finance Cost, Depreciation & Amortization and Tax (EBIDTA) of र6,135.83 lacs as against the EBIDTA of र5,456.51 lacs during the previous year.

The Net Profit of the Company for the year 2018-19 was र1,629.33 lacs compared to र1,200.35 lacs during the previous year.

Business Review

The fiscal year under review saw your Company register good growth on the top line driven primarily by the GDS (Generic Drug Substances) business. However, the Company had to overcome challenges due to the raw material situation which led to escalating costs as well shortages of certain key intermediates. While this situation had a very significant impact on profitability, the company was able to maneuver the situation in its favor by ensuring customer requirements were met. Another factor which affected profitability was the subdued performance of the CMS business in first half of the financial year. However, the company has continued to add a number of new projects during the financial year and this bodes well for the future.

Dividend

Your Directors have recommended a final dividend of र1.20/- per equity share (12% dividend) to the members for their approval. The dividend, if approved, will be paid to members within the period stipulated by the Companies Act, 2013, as amended from time to time. The outflow on account of dividend (inclusive of tax on distributed profits) will be aggregating to र185.60 lacs.

Share Capital

During the year under review (a) 6,861,243 equity shares of र10/- each have been allotted to the shareholders of Neuland Health Sciences Private Limited (First Transferor Company) and Neuland Pharma Research Private Limited (Second Transferor Company) and 4,590,608 equity shares held by Neuland Health Sciences Private Limited in the Company before the amalgamation stand cancelled, pursuant to the approval of the Scheme of Amalgamation and Arrangement between the transferor companies and the Company, by the Honble National Company Law Tribunal, Hyderabad Bench vide its Order dated March 21, 2018; and (b) 1,675,000 equity shares were issued and allotted under Qualified Institutional Placement (QIP). Accordingly, the issued and paid up capital of the Company as at March 31, 2019 stands at र1,290.05 lacs.

During the year under review, the Company has not issued any shares with differential voting rights nor granted stock options nor sweat equity.

Manufacturing Facility (Unit 3)

During the year under review, your Company has started commercialization of products (intermediate for captive consumption) from Block 1 of Unit III, manufacturing facility located at Gaddapotharam village, Jinnaram Mandal in Sanga Reddy District. It is a multi-product facility and has five production blocks for advance intermediate and API manufacturing.

Consolidated Financial Statements

The Audited Consolidated Financial Statements of your Company as on March 31, 2019, which forms part of the Annual Report, have been prepared as per the applicable Indian Accounting Standard (IndAS) on Consolidated Financial Statements (IndAS-110) as notified by the Ministry of Corporate Affairs.

The annual accounts of the subsidiary companies are kept for inspection by any member at the Registered Office of the Company as well as at the Registered Office of the respective subsidiary companies and also available on the website of the Company, www.neulandlabs.com. Any member interested in a copy of the accounts of the subsidiaries may write to the Company Secretary at the Registered Office of the Company.

Subsidiaries

Your Company has two subsidiaries, Neuland Laboratories K.K., Japan and Neuland Laboratories Inc. USA, working on market development. Your Company does not have any joint venture or associate companies. Further there has been no material change in the nature of business of the subsidiaries.

A report on the performance and financial position of the subsidiaries, set out in the prescribed form AOC-1 in terms of proviso to sub section (3) of Section 129 of the Companies Act, 2013, as amended from time to time, is provided as Annexure to the consolidated financial statements and hence not repeated here.

Documents uploaded on the Website

The following documents are available on the website of the Company (www.neulandlabs.com) in compliance with Companies Act, 2013, as amended from time to time:

• Unpaid dividend details as per Section 124(2)

• Corporate Social Responsibility Policy as per Section 135(4)(a)

• Financial Statements of the Company and Consolidated Financial Statements along with relevant documents as per third proviso to section 136(1).

• Separate audited accounts in respect of subsidiaries as per fourth proviso to section 136(1)

• Details of vigil mechanism for directors and employees to report genuine concerns as per proviso to section 177(10)

• Policy on Material Subsidiaries

• The terms and conditions of appointment of independent directors as per Schedule VI to the Act.

Corporate Governance Report, Management Discussion & Analysis and Other Information Required under the Companies Act, 2013 and Listing Agreement

As per SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015, as amended from time to time Corporate Governance Report with Certificate from a Practicing Company Secretary thereon and Management Discussion and Analysis report are attached and form part of this report.

Directors and Key Managerial Personnel

During the year under review, the following changes have taken place in the Board of Directors:

Pursuant to the approval accorded by the shareholders by means of Postal Ballot, the Company has:

• Re-appointed Dr Davuluri Rama Mohan Rao, as the Chairman & Managing Director of the Company for a further period of 5 years with effect from April 1, 2019.

• Appointed Mr. Homi Rustam Khusrokhan, as a Non-Executive Independent Director of the Company for a period of five consecutive years with effect from February 12, 2019.

• Re-appointed Mr. Parampally Vasudeva Maiya, Mr. Humayun Dhanrajgir and Dr. William Gordon Mitchell as Non-Executive Independent Directors of the Company for a period of five consecutive years with effect from April 1, 2019 and Mrs. Bharati Rao as Non-Executive Independent Director of the Company for a period of five consecutive years from May 9, 2019.

In accordance with the provisions of Section 152 of the Companies Act, 2013, as amended from time to time, Dr Christopher M Cimarusti shall retire by rotation and being eligible offers himself for re-appointment.

Dr. Davuluri Rama Mohan Rao, Chairman & Managing Director, Mr. Davuluri Sucheth Rao, Vice Chairman & CEO, Mr. Davuluri Saharsh Rao, Joint Managing Director, Mr. Amit Agarwal, Chief Financial Officer and Ms.Sarada Bhamidipati, Company Secretary & Compliance Officer, are the Key Managerial Personnel of the Company as on the date of this Report.

Listing at Stock Exchanges

The equity shares of your Company continue to be listed and traded on the BSE Limited and National Stock Exchange of India Limited. The Annual Listing fee for the year 2019-20 has been paid to both the stock exchanges.

Directors Responsibility Statement

Pursuant to Section 134(3)(c) of the Companies Act, 2013, as amended from time to time, your Directors confirm that to the best of their knowledge and belief and according to the information and explanation obtained by them:

a. in the preparation of the annual financial statements for the year ended March 31, 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b. such accounting policies as mentioned in the Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2019 and of the profit of the Company for the year ended on that date;

c. proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, as amended from time to time, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the annual financial statements have been prepared on a going concern basis;

e. proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; and

f. systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Board Meetings

During the year under review, five Board Meetings and four Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report, which forms part of this report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013, as amended from time to time.

Composition of various Committees

Details of various committees constituted by the Board as per the provisions of Companies Act, 2013, as amended from time to time, and SEBI (LODR) Regulations, 2015, as amended from time to time, and their meetings are given in the Corporate Governance Report which forms part of this report.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure requirements) Regulations, 2015, the annual evaluation of the performance of the Board, its Committees and of individual directors has been carried out by the Board. The process was carried out by circulating questionnaires on the Board and Committees functioning on certain parameters. The performance evaluation of the independent directors was carried out by the entire Board, except the director being evaluated. The performance evaluation of the non-Independent Directors including Executive Directors was carried out by the Independent Directors.

Independent Directors

The Independent Directors met on February 12, 2019, without the presence of Non-Independent Directors and members of the management. The Independent Directors discussed matters pertaining to the Companys affairs and reviewed the performance of non-independent directors, the Chairman and the Board as a whole, and assessed the quality, quantity and timeliness of flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform their duties.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence prescribed under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements), 2015.

Disclosures by Directors

None of the Directors of your Company is disqualified as per provisions of Section 164(2) of the Companies Act, 2013, as amended from time to time. Your Directors have made necessary disclosures to this effect as required under Companies Act, 2013, as amended from time to time.

Audit Committee

The composition of the Audit Committee and its terms of reference are included in the Report on Corporate Governance annexed. All the recommendations made by the Audit Committee were accepted by the Board of Directors.

Nomination and Remuneration Committee

The details of the Nomination and Remuneration Committee are set out in the Report on Corporate Governance, forming part of this Report.

Your Company has a Nomination and Remuneration Policy as required under section 178 of the Companies Act, 2013, as amended from time to time, for selection and appointment of Directors, Key Managerial Personnel, Senior Management and their remuneration.

Remuneration Policy

Pursuant to Section 178(3) of the Companies Act, 2013, and on recommendations of Nomination and Remuneration Committee, the Board adopted a remuneration policy for Directors, Key Management Personnel (KMPs) and Senior Management. Your Companys Policy on directors appointment and remuneration includes criteria for determining qualifications, positive attributes, independence of a director and other matters provided under section 178(3) of the Act and the Policy is available on the website of the Company, www.neulandlabs.com.

Code of Conduct for Board of Directors and Senior Management Personnel

The Directors and members of Senior Management have affirmed compliance with the Code of Conduct for Board of Directors and Senior Management Personnel of the Company. A declaration to this effect has been signed by the Chairman & Managing Director and forms part of the Annual Report.

Vigil Mechanism/ Whistle Blower Policy

Your Company has a Vigil Mechanism / Whistle Blower Policy which serves as a mechanism for its Directors and employees to report genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Code of Conduct without fear of reprisal. The policy also provides access to the Chairperson of the Audit Committee under certain circumstances. The Whistle Blower Policy is available on the website of the Company at www.neulandlabs.com. A brief note on the Whistle Blower Policy is also provided in the Report on Corporate Governance, which forms part of this Annual Report.

Prevention of Insider Trading

Pursuant to SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2018, the Board of Directors have approved Code of Internal Procedures and Conduct for Regulating, Monitoring and Reporting of Trading by Designated Persons and their Immediate Relatives along with Code of Fair Disclosures, effective April 1, 2019.

Disclosure as per Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013

The Company is committed to ensure that there is no scope for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder. The Company has not received any complaints on sexual harassment during the calendar year 2018.

Employee Stock Option Scheme

As on March 31, 2019, no employee stock options are available in the Company and hence no disclosures are required to be made under Regulation 14 of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (‘the Regulations).

Statutory Auditors

In terms of Section 139 of the Companies Act, 2013 ("the Act"), and the Companies (Audit and Auditors) Rules, 2014, made thereunder, the term of the present Statutory Auditors of the Company, M/s. Walker Chandiok & Co LLP, Chartered Accountants (Registration No. 001076N/N500013), will be expiring at the conclusion of the 35th Annual General Meeting of the Company.

The Board of Directors had at its meeting held on May 16, 2019, upon the recommendation of Audit Committee have appointed of M/s MSKA & Associates (Firm Registration No: 105047W), Chartered Accountants, as the Statutory Auditors of the Company to hold office from the conclusion of the thirty fifth Annual General Meeting until the conclusion of the fortieth Annual General Meeting

M/s MSKA & Associates, Chartered Accountants, Hyderabad, have confirmed that the appointment, if made, would be within the prescribed limits under Section 141 of the Companies Act, 2013. Accordingly, the appointment of M/s MSKA & Associates, Chartered Accountants, Hyderabad, as the Statutory Auditors, is being proposed as an Ordinary Resolution.

The financial statements have been audited by M/s. Walker Chandiok & Co LLP, Chartered Accountants, Statutory Auditors of the Company. The Board would like to place on record its appreciation to M/s Walker Chandiok & Co LLP, Chartered Accountants, for giving their valuable insights and suggestions for the past five years, and also wishes them all success in their endeavours.

Auditors Report

There are no qualifications, reservations or adverse remarks made by Walker Chandiok & Co LLP, Statutory Auditors, in their report for the financial year ended March 31, 2019.

Pursuant to provisions of Section 143(12) of the Companies Act, 2013, as amended from time to time, the Statutory Auditors have not reported any incident of fraud to the Audit Committee during the year under review.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time to time, the Company has appointed M/s.P.S.Rao & Associates, Company Secretaries, to conduct the Secretarial Audit of the Company. The report on the Secretarial Audit for the financial year ended March 31, 2019 is annexed to the Corporate Governance Report and forms part of this report. There are no qualifications, reservations or adverse remarks made by the Secretarial Auditor in their report.

Cost Auditors

Pursuant to Section 148 of the Companies Act,2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, as amended from time to time, subject to the approval of the Central Government, if any required, the Audit Committee has recommended and the Board of Directors had appointed M/s. Nageswara Rao & Co. (Registration No. 000332), Cost Accountants, Hyderabad, being eligible and having sought reappointment, as Cost Auditors of the Company, to carry out the cost audit of the products manufactured by the Company during the financial year 2019-20.

Insurance

Your Company has taken necessary steps to mitigate risks and obtained appropriate insurances and the Board is kept appraised of the risk assessment and minimization procedures. The assets of the Company have been adequately covered under insurance. The policy values have been determined taking into consideration the value of the assets of the Company.

Material Changes

There have been no material changes and commitments affecting the financial position of the Company between the end of the financial year of the Company to which the financial statements relate and the date of the report. Further, it is hereby confirmed that there has been no change in the nature of business of the Company.

Energy Conservation, Technology Absorption and 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 Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, as amended from time to time, is annexed herewith as Annexure 1.

Extract of Annual Return

Pursuant to Section 92(3) and Section 134(3)(a) of the Companies Act, 2013, as amended from time to time, extract of the Annual Return as on March 31, 2019 in form MGT-9 is enclosed as Annexure 2 to this report.

Particulars of Employees and related disclosures

The information relating to remuneration and other details as required pursuant to Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is provided as an Annexure 3 to this report. In terms of the provisions of Section 197 of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules are provided in the Annual Report, which forms part of this Report.

Pursuant to the provisions of the first proviso to Section 136(1) of the Act, the Annual Report is being sent to the members and other persons entitled thereto, excluding the information in respect of employees of the Company containing the particulars as specified in Rule 5 (2) of the said Rules. The said information is available for inspection on all working days, during business hours, at the Registered Office of the Company up to the date of the ensuing Annual General Meeting. Any member interested in obtaining such information, may write to the Company Secretary and the same will be furnished on request.

Related Party Transactions

All contracts / arrangements / transactions entered into by the Company during the financial year with related parties were in the ordinary course of business and at an arms length basis.

During the year, the Company has not entered into any material contract or arrangements with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. There were no materially significant related party transactions which could have potential conflict with interest of the Company at large.

The Policy on materiality of Related Party Transactions and on dealing with Related Party Transactions as approved by the Board may be accessed on the Companys website, www.neulandlabs.com.

The particulars of transactions with related parties in the prescribed format is annexed to this report, as Annexure 5. Members may refer to Note No.38 to the standalone financial statement which sets out related party disclosures pursuant to Ind AS.

Particulars of Loans, Guarantees and Investments

The particulars of loans, guarantees and investments have been disclosed in the financial statements.

Deposits from Public

The Company has not accepted any deposits from the public and as such no amount of principal or interest on deposits from the public was outstanding as on the date of the Balance Sheet.

Significant and Material Orders passed by the Regulators or Courts

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

Risk Management

The Board oversees Companys processes for determining risk tolerance and review managements action and comparison of overall risk tolerance to established levels. The framework is designed to enable risks to be identified, assessed and mitigated appropriately. Major risks identified by the businesses and functions are systematically addressed through appropriate actions on a continuous basis. For details, please refer to the Management Discussion and Analysis report which forms part of this Report.

Internal Financial Controls

Internal Financial Controls are an integral part of the risk management process, addressing financial and financial reporting risks. The internal financial controls include have been embedded and documented in the business processes. The controls in place include essential components of internal financial controls required under the Companies Act, 2013, as amended from time to time, and also the internal financial controls over financial reporting as per the Guidance Note on Audit of Internal Controls over Financial Reporting as issued by Institute of Chartered Accountants of India.

Assurance on the effectiveness of internal financial controls is obtained through management reviews, continuous monitoring by functional owners as well as testing of the internal financial control systems by the internal auditors during the course of their audits. We believe that these systems provide reasonable assurance that our internal financial controls are designed effectively and are operating as intended.

The Company has in place adequate internal financial controls with reference to financial statements. During the year under review such controls were tested and no reportable material weakness in the design or operation were observed.

Corporate Social Responsibility

The Company has formulated a Corporate Social Responsibility Policy (CSR Policy) which is available on the website of the Company at www.neulandlabs.com. The Company has initiated CSR activities as per the CSR Policy and such activities are as per Schedule VII to the Companies Act, 2013, as amended from time to time. Annual report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been appended as Annexure 4 and forms an integral part of this Boards Report.

Human Resources & Industrial Relations

Your Companys relations with its employees continue to be cordial. Dedicated work by the workmen, supervisors and executives of your Company made it possible to achieve success under trying and difficult circumstances.

Acknowledgement

The Board of Directors would like to place on record its sincere appreciation for the continued support and guidance received from the banks, financial institutions, statutory and regulatory authorities, stock exchanges and depositories for their continued support and guidance. The Board places on record its appreciation to the shareholders of the Company for their continued support and to its valued customers and vendors for their continued patronage. The Board of Directors also wish to place on record its deep sense of appreciation for the committed services by the Companys employees at all levels.

For on and behalf of the board
Hyderabad Dr Davuluri Rama Mohan Rao
May 16, 2019 Chairman and Managing Director
(DIN: 00107737)

Annexure 1

FORM - A

Disclosure of particulars with respect to conservation of energy (to the extent applicable)

A. Power & Fuel Consumption

2018-19 2017-18
1. Electricity
a. Purchased
Unit in lacs (kWh) 258 239
Total Amount (D in lacs) 1,842 1,741
Rate/Unit (D /kWh) 7.14 7.28
b. Own generation (Unit in lacs) kWh 6.6 5.2
(Through Diesel Generator)
Units per litre of Diesel Oil 3.00 3.00
Cost/Unit (D/kWh) 24.19 20.95
2. Coal
Quality "C" Grade used in Steam Boiler
Quantity (Tonnes) 12,229 11,975
Total cost (D in lacs) 679 930
Average rate (D /Tonne) 5,832 7,764

B. Consumption per Unit of Production Electricity (Units) & Coal (in Tonnes)

Since the Company manufactures different types of bulk drugs and its intermediates, it is not practicable to give consumption per unit of production.

FORM - B Research and Development

a. Specific areas in which R&D was carried out by your Company

i. Development of non-infringing patentable processes for active pharmaceutical ingredients in the therapeutic categories of anti-asthmatic, Vasodilator, anti-fungal, Haemostatic, anti-glaucoma, anti-hyperlipoproteinemic, anti-hypertensive, antipsychotic, antiemetic, anti-Parkinson, anti-depressant, benign prostatic hyperplasia, antibacterial, anti- Alzheimer and anti-coagulant.

ii. Development of efficient and cost-effective processes (Life cycle management) to reduce total variable cost and cycle time for existing products within the scope of DMF.

iii. Development of analytical methods and their validations.

iv. Generation of intellectual property and international regulatory filings.

v. Study of impurity profiles, synthesis including metabolites of active pharmaceutical ingredients.

vi. Evaluation of genotoxic impurities and their control in active pharmaceutical ingredients. vii. Development of analytical methods for genotoxic impurities quantification.

b. Benefits derived as a result of the above:

i. The above research has resulted in commercializing/ scaling up of a number of products.

ii. Life cycle management of the existing manufacturing processes for APIs (anti-hypertensive, anti-bacterial, anti-ulcer etc.) resulted in lower production costs, reduced cycle times, and customer retention.

iii. Levitracetam: Developed the manufacturing process for the intermediate of Levtracetam as a part of back integration and freedom from dependency of external vendors. This back integration has enabled us to put our product across the globe at a very affordable and competitive price.

iv. Completed the validation of Sugammadex

v. During the financial year 2018-19, CMS division has worked on 31 projects. Most of the project deliverables are route feasibility / scouting / development / plant scale-ups for molecules which belong to different therapeutic categories (Anti-tuberculosis, antihypertensives, anticonvulsant, analgesic, anticholelithogenic, schizophrenia, chronic obstructive pulmonary disease, treatment of amyotrophic lateral sclerosis (ALS) etc). This demonstrates the expertise that Neuland has that can handle variety of molecules of different therapeutic segments. Besides the above, a complex peptide projects like Plecanatide has been successfully completed and scaled up in the plant.

vi. Received two patent awards (IP excellence of India-2018 & IP gems of India-2018) from De-Science for implementing best practices of IP in India.

vii. During the financial year 2018-19, Neuland has secured 7 granted patents (5 API process patents and 2 peptide technology related patents) in various geographies (Canada, India, Japan & Australia)

viii. Neuland has filed 20 patent applications of which 19 were in India and 1 in US for the FY 2018-19.

c. Future plan of action:

i. To develop processes for new bulk drugs of various therapeutic categories identified after an extensive analysis of the market and development of cost-effective processes for the existing products.

ii. Undertake more of custom manufacturing projects

iii. Implementation of QBD during in process development

iv. To file 8-10 DMFs/CEPs every year v. Identified 6 new products for development in 2019-20

vi. Cost improvement in 8 products is planned to be taken up

d. Expenditure on R&D:

(D in lacs)
2018-19 2017-18
Capital 485.97 366.43
Recurring 1,663.22 1,405.07
Total 2,149.19 1,771.50

Technology Absorption, Adaptation and Innovation

a. The technologies developed by R&D division of the Company towards the quality and yield improvement of existing products and also development of technology for new bulk drugs have been commercialized and adopted by the manufacturing facility of the Company.

b. In case of improved technology (imported during the last 5 years reckoned from the beginning of the financial year), the following information may be furnished.

a. Technology imported : Nil
b. Year of import : Nil
c. Has technology fully been absorbed : Nil
d. If not fully absorbed, areas where this has not taken place, reasons therefore and future plans of actions : Nil

Technology Transfer

The Process Engineering Lab (PE Lab) has the following capabilities:

For Process safety and Process optimization studies:

• Thermal screening unit

• Reaction calorimeter

• Parallel synthesizer

For Particle Engineering studies:

• Multimill

• Spray dryer

• Fluidized bed dryer

• Compaction (Available at U-2)

• Sono-crystallization (Tie-up with NIIT Warangal)

• Air Jet mill/ Micronizer (Fluid-Air & Nitrogen)

• With Oxygen content analyser & Alarm during Oxygen deficiency

• Stability data generation for micronized API Technology upgradation / Innovation / Patent filing

• Using same process improved and ensured the consistency in the bulk density in every batch of Labetelol.

Foreign Exchange Earnings and Outgo

Foreign exchange earned in terms of actual inflows and foreign exchange outgo in terms of actual outflows during the year ended March 31, 2019:

a. Foreign exchange earned in terms of actual Inflows र48,349.19 lacs.

b. Foreign exchange outgo in terms of actual Outflows र16,807.91 lacs.

For on and behalf of the board
Hyderabad Dr Davuluri Rama Mohan Rao
May 16, 2019 Chairman and Managing Director
(DIN: 00107737)

Annexure 5

FORM NO. AOC -2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.

Form for Disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub section (1) of section 188 of the Companies Act, 2013 including certain arms length transaction under third proviso thereto.

1. Details of contracts or arrangements or transactions not at Arms length basis.

There were no contracts or arrangements or transactions entered into during the year ended March 31, 2019, which were not at arms length basis.

2. Details of contracts or arrangements or transactions at Arms length basis.

Name of the Related party Nature of relationship Duration of contract Salient terms Amount
(D Lacs)
Mrs. Vijaya Rao Relative of KMP 5 years from July 1, 2014 – Ongoing Refer Note 1 68.28
Dr. Christopher M Cimarusti Non-Executive Non-Independent Director (Office of place of profit) 5 years from May 20, 2016 - Ongoing Refer Note 2 29.02

Note 1: The Company had entered into three separate Lease agreements with Mrs. Vijaya Rao on July 1, 2014. Under each agreement, the Company is required to pay lease rentals of र1.50 lacs per month and र10,000/- towards amenities and maintenance charges from the date of the agreements, subject to an annual increase by 5%.

Note 2: Dr. Christopher M Cimarusti has been paid Consultancy fee of USD 2,000 per day for each day spent at the Companys facilities. These payments were made in accordance with the approval of the shareholders in the Annual General Meeting held on August 12, 2016.

For on and behalf of the board
Dr Davuluri Rama Mohan Rao
Chairman and Managing Director
(DIN: 00107737)