Neuland Laboratories Ltd Directors Report

<dhhead>Directors’ Report</dhhead>

The Board of Directors are pleased to present the Company’s Forty First Annual Report (second Integrated Annual Report) and the Company’s audited financial statements (standalone and consolidated) for the financial year ended March 31, 2025.

FINANCIAL PERFORMANCE

The Company’s financial performance (standalone) for the year ended March 31, 2025, is summarised below:

(Rs.in lakhs)

Particulars	2024-25	2023-24
Total Income	1,49,734.59	1,57,112.48
Profit before Finance Costs, Depreciation, Amortisation and Tax	34,280.75	47,446.55
Finance costs	829.59	1,399.72
Profit before Depreciation, Amortisation and Tax	33,451.16	46,046.83
Less: Depreciation & Amortisation	6,554.19	5,969.91
Profit before exceptional items and tax	26,896.97	40,076.92
Exceptional items	7,640.36	-
Profit before tax	34,537.33	40,076.92
Less: Current tax	7365.30	9,958.57
Deferred tax	1229.49	158.73
Profit after Tax	25,942.54	29,959.62
Add: Other comprehensive income	(21.19)	140.79
Total comprehensive income for the year	25,921.35	30,100.41

For the financial year ended March 31, 2025, a Total Income of Rs.1,49,734.59 lakhs as against Rs.1,57,112.48 lakhs in the previous year.

For the year ended on March 31, 2025, the Company has reported Earnings Before Interest, Finance Cost, Depreciation and Amortisation and Tax (EBIDTA) of Rs.34,280.75 lakhs as against the EBIDTA of Rs.47,446.55 lakhs during the previous year.

The Net Profit of the Company for the year 2024-25 was Rs.25,942.54 lakhs compared to Rs.29,959.62 lakhs during the previous year.

BUSINESS REVIEW

During the year under review, your Company consolidated its position as a leading CDMO for innovators even as the generic business continues to grow. While we saw a decline in revenues based on the lifecycle of the products, the Company has good visibility of growth over the short to medium term. The Company continues to attract customers on the basis of its strong quality track-record, customer-centricity and agility. The focus for the GDS business continues to be in products where the Companys presence makes a significant difference to customers. The filing of the first Peptide DMF is a significant milestone and in line with the Companys plans in this growing area. The Company is continuing to improvise both its business development approach even as it strengthens in line with the growing opportunities. The Company continued to focus on developing deeper connections with customers and listening through formal customer feedback surveys.

The Company’s commitment to strong governance, sustainability and the environment continues to be reinforced through the work on Enterprise Risk Management and Environmental, Social and Governance overseen by the Risk and Sustainability Committee of the Board. The Company improved its scores as it was rated by external agencies on Sustainability. As in previous years, the Company is building capabilities in line with the strategic priorities and anticipated business needs. Along with technical & infrastructural needs, the capability building is increasingly focussed on people and building a pipeline of talent for the long-term. The Company is also getting better focussed in terms of its internal communication so as to build a strong organisation aligned on the vision and values.

DIVIDEND

Your directors are pleased to recommend a final dividend of Rs.12/- (120%) per equity share on face value of Rs.10/- each of the Company, for the financial year ended March

31, 2025. The final dividend, if approved at the 41^st Annual General Meeting, will be paid to members within the period stipulated by the Companies Act, 2013 (‘the Act’), as amended from time to time. The outflow on account of final dividend is estimated to be Rs.1,539.59 lakhs.

In terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations), the dividend distribution policy, is available on the Company’s website at - https://www.neulandlabs.com/ sites/neulandlabs/files/neuland-labs/Investors/corporate-governance/policies-and-documents/dividend-distribution-policy.pdf

SHARE CAPITAL

The equity shares of your Company continue to be listed and traded on the BSE Limited and National Stock Exchange of India Limited. The paid-up equity share capital of the Company as on March 31, 2025 is Rs.1,290.05 lakhs. During the year under review, the Company has not issued any shares with differential voting rights nor granted stock options nor sweat equity.

OUTLOOK

The Company is committed to securing long-term growth and sustainability by ensuring visibility on customer order flow for the short term and implementing processes for short-term execution. Effective project management will be crucial for delivering projects and new products, as well as for keeping cost improvement programs and other strategic initiatives on track. While maintaining a strong focus on quality, the Company aims to deepen existing relationships and attract new customers. By taking actions across the entire value chain, the Company strives to deliver value to all stakeholders and establish itself as a leading API partner enabling a healthier world.

CONSOLIDATED FINANCIAL STATEMENTS

The Audited Consolidated Financial Statements of your Company as on March 31, 2025, which forms part of the Integrated Annual Report, have been prepared pursuant to the provisions of SEBI Listing Regulations as amended from time to time, and also 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, https://www.neulandlabs.com/ en. 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 Act as amended from time to time, is provided as Annexure to the consolidated financial statements and hence not repeated here.

CORPORATE GOVERNANCE REPORT, MANAGEMENT

DISCUSSION&ANALYSISANDOTHERINFORMATION

REQUIRED UNDER THE COMPANIES ACT, 2013 AND

SEBI LISTING REGULATIONS

As per the Act and SEBI Listing Regulations, as amended from time to time, Corporate Governance Report and

Management Discussion and Analysis report are attached and forms part of this report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL Appointments

During the year, the members of the Company at the Annual General Meeting (AGM) held on July 31, 2024, approved the re-appointments of Dr. Davuluri Rama Mohan Rao and Mr. Davuluri Sucheth Rao, as a Director liable to retire by rotation respectively.

Retirement and Resignations

Dr. Nirmala Murthy (DIN: 00734866) has retired as an Independent Director of the Company with effect from close of business hours on May 7, 2025, after completion of her second term of directorship.

The Board placed on record its sense of deep appreciation for the services rendered by Dr. Murthy to the Company.

Re-appointment of Directors

The Board of Directors on the recommendation of the

Nomination and Remuneration Committee, have approved the following, subject to approval of the members sought in the Notice of the 41st AGM:

Re-appointment of Mr. Davuluri Saharsh Rao as Whole Time Director designated as Vice-Chairman &Managing Director of the Company and remuneration thereof, effective June 1, 2025.

Retirement by Rotation

Pursuant to the provisions of Section 152(6) (d) of the Act read with Companies (Appointment and Qualification of Directors) Rules, 2014 and Articles of Association of the Company, Mr. Davuluri Saharsh Rao (DIN: 02753145) and Dr. Christopher M. Cimarusti (DIN: 02872948) will retire by rotation at the ensuing AGM and being eligible has offered themselves for re-appointment. The Board recommends their re-appointment in the ensuing AGM of the Company.

Changes in Key Managerial Personnel (KMP)

During the year under review, there were no changes in the KMP of the Company. As on the date of this report, the Company has the following KMP as per Sections 2(51) and 203 of the Act:

Sl. No. Name of KMP	Designation
1 Dr.Davuluri Rama Mohan Rao	Executive Chairman
2 Mr. Davuluri Sucheth Rao	Vice Chairman & Chief
	Executive Officer
3 Mr. Davuluri Saharsh Rao	Vice Chairman &
	Managing Director
4 Mr. Abhijit Majumdar	Chief Financial Officer
5 Ms. Sarada Bhamidipati	Company Secretary &
	Compliance Officer

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 2025-26 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, 2025, 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, 2025 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, six Board 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 Act, and SEBI Listing Regulations, as amended from time to time.

COMPOSITION OF VARIOUS COMMITTEES

Details of various committees constituted by the Board as per the provisions of the Act and SEBI Listing Regulations 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 Act and SEBI Listing Regulations 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 11, 2025, without the presence of non-Independent Directors and members of the management. The Independent Directors, inter alia, discussed matters pertaining to the Company’s 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 Act and SEBI Listing Regulations, as amended. Further, they have affirmed compliance to the code of conduct for Independent

Directors as prescribed in Schedule IV of the Act. The terms and conditions of appointment of Independent Directors is available on the website of the Company.

DISCLOSURES BY DIRECTORS

None of the directors of your Company is disqualified as per the provisions of Section 164(2) of the Act. Your directors have made necessary disclosures to this effect as required under the Act.

AUDIT COMMITTEE

During the year under review, four Audit Committee Meetings were convened and held. The details of the committee meeting and 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 Nomination and Remuneration Policy of the Company includes Board Diversity as part of the policy and is available on the website of the Company at https://www. neulandlabs.com/sites/neulandlabs/files/neuland-labs/ Investors/corporate-governance/policies-and-documents/ NominationandRemuerationPolicy22042025.pdf. The policy covers selection and appointment of Directors, Key Managerial Personnel, Senior Management and their remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under section 178(3) of the Act and SEBI Listing Regulations.

CORPORATE SOCIAL RESPONSIBILITY

The Company has in place a Corporate Social Responsibility Policy which is available on the website of the Company at https://www.neulandlabs.com/sites/neulandlabs/files/ neuland-labs/Investors/corporate-governance/policies-and-documents/corporate-social-responsibility-csr-policy. pdf. The CSR expenditure of the Company for FY 2024-25 as per Section 135 of the Act and the Companies (Corporate Social Responsibility Policy) Rules 2014, as amended from time to time, was Rs.491.52 lakhs. After setting-off Rs.11.68 lakhs from the excess CSR expenditure spend for FY 2023-24 the Companys total CSR obligation for FY 2024-25 was Rs.479.84 lakhs.

The Company has spent an amount of Rs.426.85 lakhs towards CSR projects and administrative overheads for FY 2024-25. In addition, an amount of Rs.98.19 lakhs was transferred to Unspent account, in April 2025 towards identified and ongoing CSR projects for FY 2024 - 25 due for completion in FY 2025 - 26.

The total CSR expenditure for FY 2024 - 25 was Rs.525.04 lakhs which includes CSR projects spend, administrative expenditure and amount transferred to Unspent CSR account, which is in excess of Rs 33.52 lakhs over the total CSR obligation for FY 2024-25.

Annual report on CSR activities as required under Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 read with Section 134(3) and 135(2) of the Act, has been appended as Annexure-1 and forms an integral part of this Report.

INTEGRATED REPORT

The Company continues with its integrated reporting journey in the current financial year. This is the second year of publication of the Integrated Annual Report of the Company in line with the Integrated Reporting Framework, now part of the IFRS Foundation.

The Global Reporting Initiative reported in this Integrated Annual Report have been subject to Reasonable Assurance. The Assurance Report issued by TUV India Private Ltd has been annexed to this Integrated Annual Report.

The Integrated Annual Report consists of both financial and non-financial information to demonstrate how various ‘capitals’ are utilised to create value, thereby enabling stakeholders to make informed decisions and gain a comprehensive understanding of the Company’s long-term perspective and value creation for all stakeholders.

This year’s Integrated Annual Report is structured around

Environmental, Social, and Governance ("ESG") commitments and their integration into the Company’s business strategy. The Company’s commitment to sustainable operations, supported by empowered people and governance, underpins the seamless growth and development of the Company’s business.

The Board acknowledges its responsibility for the integrity of the report and the information contained therein.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT

In accordance with Regulation 34(2)(f) of the SEBI Listing Regulations, the Business Responsibility and Sustainability Report (BRSR), is forming part of this report as Annexure-2.

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 by the Vice Chairman & Chief Executive Officer, forms part of this Report.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

Your Company has a Vigil Mechanism/Whistle Blower Policy which serves as a mechanism for its directors, employees and stakeholders to report genuine concerns about unethical behaviour, actual or suspected fraud or violation of the Code of Conduct without fear of reprisal. Audit Committee of the Company oversees the implementation of the Whistle Blower Policy. During the year, Company has not received any protected disclosure. The Whistle Blower Policy is available on the website of the Company, at https://www.neulandlabs.com/en/investors/corporate-governance/policies-and-documents. A brief note on the Whistle Blower Policy is also provided in the Report on Corporate Governance, which forms part of this Report.

PROHIBITION OF INSIDER TRADING

Pursuant to Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, the

Company has adopted the 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. Periodically, insider trading awareness sessions are conducted for the benefit of designated persons. Trading window closures, when the designated persons are not permitted to trade in the securities of the Company, are intimated in advance to all concerned.

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. During the year under review and as on the date of this report, the Company had received 3 sexual harassment complaints. The Complaints were taken through the due process with necessary actions executed for a satisfactory closure.

EMPLOYEE STOCK OPTION SCHEME

As on March 31, 2025, there are no employee stock options 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 and Sweat Equity) Regulations, 2021.

STATUTORY AUDITORS

M/s. M S K A & Associates (Firm Registration No: 105047W), Chartered Accountants, were re-appointed as the Statutory Auditor of the Company at the 40th AGM of the Company held on July 31, 2024, to hold the office till the conclusion of the 45th AGM to be held in the year 2029.

AUDITORS’ REPORT

There are no qualifications, reservations or adverse remarks made by M/s. M S K A & Associates, Statutory Auditors, in their report for the financial year ended March 31, 2025.

Pursuant to provisions of Section 143(12) of the Act, 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 Act 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, a firm of Company Secretaries in Practice, to conduct the Secretarial Audit of the Company. The report of the Secretarial Audit for the financial year ended March 31, 2025, 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.

Further, in terms of the SEBI (Listing Obligations & Disclosure Requirements) (Third Amendment) Regulation, 2024, the Board has recommended appointment of M/s. P.S. Rao & Associates as the Secretarial Auditors of the Company for a term of five consecutive financial years commencing from April 1, 2025 till March 31, 2030. The appointment will be subject to shareholder’s approval at the ensuing AGM. M/s. P.S. Rao & Associates have consented to the said appointment and confirmed that they are not disqualified to be appointed as Secretarial Auditors of the Company in terms of Regulation 24(A) of SEBI Listing Regulations.

COST AUDITORS

Pursuant to Section 148 of the Act 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 re-appointment, as Cost Auditors of the Company, to carry out the cost audit of the products manufactured by the Company during the financial year 2025-26.

REPORTING OF FRAUD

During the year, the Statutory Auditors, Cost Auditors and Secretarial Auditors have not reported any instances of frauds committed in the Company by its officers and employees under Section 143(12) of the Act details of which needs to be mentioned in this Report.

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 minimisation 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 Act read with Rule, 8 of the Companies (Accounts) Rules, 2014, as amended from time to time, is annexed herewith as Annexure-3.

ANNUAL RETURN

Pursuant to Section 92 and Section 134 of the Act, the Annual Return as on March 31, 2025 in form MGT-7 is available on the website of the Company at www.neulandlabs.com.

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 Annexure-4 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 with the related parties during the financial year were in the ordinary course of business and at an arm’s length basis.

During the year, the Company has not entered into any contract or arrangement with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. Further, 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 Company’s website at https://www.neulandlabs.com/en/investors/corporate-governance/policies-and-documents.

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

During the year the Company has not given any loans and guarantees under Section 186 of the Act and the investments made by the Company are in compliance with the provisions of Section 186 of the Act.

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 and material orders passed by the Regulators/Courts which would impact the going concern status of the Company and its future operations.

TRANSFER TO RESERVES

No amount was proposed to be transferred to the general reserve during the financial year 2024-25.