Panacea Biotec Ltd Directors Report.

 

Dear Members,

Your Directors feel pleasure in presenting the 37th Annual Report on the business and operations of the Company together with the Audited Standalone and Consolidated Financial Statements and the Auditors Reports thereon for the financial year ended March 31, 2021.

Financial Results

The highlights of standalone and consolidated financial results of the Company are as under:

(Rs. in million)

Particulars Standalone Consolidated
FY 2020-21# FY 2019-20#* FY 2020-21# FY 2019-20#*
Revenue from operations 3,435.55 4,896.78 6,248.05 5,440.62
Other Income 207.48 439.05 99.77 296.87
Total Income 3,643.03 5,335.83 6,347.82 5,737.49
Profit / (Loss) before Interest, Tax, Depreciation & Amortization (EBITDA) 4.88 (622.31) 766.29 313.59
Profit / (Loss) before exceptional items and tax (128.80) (1,205.74) (1,450.30) (1,619.47)
Exceptional items - (153.97) - (153.97)
Profit / (Loss) before Tax (PBT) (128.80) (1,359.71) (1,450.30) (1,773.44)
Profit / (Loss) after Tax (PAT) (144.41) (1,530.70) (1,476.58) (1,942.96)
Total Comprehensive Income (130.60) (1,518.41) (1,468.38) (1,915.42)

 

# Include figures for the discontinued operations

* Previous years figures have been re-grouped, re-classified and/or restated wherever necessary

Performance Highlights

During the year ended March 31, 2021, your Company has registered revenue from continuing and discontinued operations of Rs.3,435.55 million as against Rs.4,896.78 million during the previous financial year from continuing and discontinued operations. Further, Panacea Biotec as a Group has registered consolidated revenue from operations of Rs.6,248.05 million as against Rs.5,440.62 million during previous financial year. In view of the completion of demerger of real estate undertaking including investment in Radhika Heights Limited into the Companys then wholly owned subsidiary, Ravinder Heights Limited ("RVHL") with effect from September 10, 2020, the financial results of the said real estate undertaking for the financial year 2019-20 and for the period from April 01, 2020 to September 10, 2020, that is considered as disposal group, has been presented as discontinued operations in the Standalone and Consolidated Financial Statements of the Company in accordance with the applicable accounting standards. In view of the completion of transfer of pharmaceutical formulations business to the Companys wholly owned subsidiary, Panacea Biotec Pharma Limited ("PBPL") with effect from February 01, 2020, the financial results of the pharma business upto January 31, 2020, that were considered as disposal group, were presented as discontinued operations in the Standalone Financial Statements of the Company for financial year 2019-20 in accordance with the applicable accounting standards. The Company earned revenue from operations of Rs. Nil from such discontinued operations as against Rs.3,315.93 million during previous financial year. The Companys revenue from continuing operations has increased to Rs.3,435.55 million from Rs.1,580.85 million during previous financial year, registering a growth of around 117% over previous year. On standalone basis, the Company has earned EBITDA of Rs.4.88 million during financial year 2020-21 as against negative EBITDA of Rs.622.31 million during previous financial year. The Companys loss before exceptional items and tax has significantly reduced to Rs.128.80 million as compared to loss of Rs.1,205.74 million during previous financial year. The loss after tax for financial year has also reduced significantly to Rs.144.41 million as against loss of Rs.1,530.70 million during previous financial year.

Panacea Biotec as a Group has earned EBITDA of Rs.766.29 million during financial year 2020-21, an increase of over 144% as compared to EBITDA of Rs.313.59 million during previous financial year. Loss before exceptional items and tax has reduced to Rs.1,450.30 million as compared to loss of Rs.1,619.47 million during previous financial year. The loss after tax for financial year has also reduced to Rs.1,476.58 million as against loss of Rs.1,942.96 million during previous financial year.

A detailed discussion on operations of the Company for the year ended March 31, 2021 is given in the Management Discussion and Analysis Report forming part of the Annual Report.

Credit Rating

During the year under review, the Company has not availed any bank facility and has consequently not carried any credit rating.

Dividend and Transfer to Reserves

In view of losses during the year under review, the Board of Directors has not recommended any dividend on the Equity as well as Preference Shares of the Company. Accordingly, there has been no transfer to general reserves.

As per the requirements of Regulation 43A of SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015 ("SEBI LODR Regulations"), the Company has adopted a Dividend Distribution Policy which may be accessed on the Companys website at the link: https://www.panaceabiotec. com/statutory-policies.

Share Capital

During the year under review, the issued, subscribed and paid up Share Capital of the Company, has reduced from Rs.224.25 million (comprising of Rs.61.25 million equity share capital divided into 6,12,50,746 Equity Shares of Re.1 each and Rs.163.00 million preference share capital divided into 1,63,00,000 0.5% Non-Convertible Cumulative Non-Participating Redeemable Preference Shares ("NCCRPS") of Rs.10 each) to Rs.222.62 million (comprising of Rs.61.25 million equity share capital divided into 6,12,50,746 Equity Shares of Re.1 each and Rs.161.37 million preference share capital divided into 1,61,37,000 NCCRPS of Rs.10 each), on account of cancellation of preference share capital of Rs.1.63 million divided into 1,63,000 NCCRPS of Rs.10 each, pursuant to the order of the Honble National Company Law Tribunal, Chandigarh Bench ("NCLT") dated September 09, 2020 sanctioning the Scheme of Arrangement for demerger of real estate business of Panacea Biotec Limited ("Demerged Company") with and into Ravinder Heights Limited ("Resulting Company") and their respective shareholders and creditors in terms of sections 230 to 232 and section 66 and other applicable provisions of the Companies Act, 2013 ("Scheme") which became effective from September 10, 2020. Similarly, the authorised share capital of the Company has also reduced from Rs.1,225.0 million to Rs.1,223.37 million.

During the year under review, the Company has not issued any equity shares with differential rights / sweat equity shares under Rule 4 & Rule 8 of the Companies (Share Capital and Debentures) Rules, 2014.

Significant Events during the year under review / current year

The Company has from time to time during the year under review and current year informed its stakeholders about the key developments that took place by disseminating necessary information to the stock exchanges and through various other means of communication. Some of key events are mentioned below: a) Completion of Phase I/II study of DengiALL: During the year under review, your Company has successfully completed Phase I/II study to evaluate the safety and immunogenicity of DengiALL, a single-dose live-attenuated tetravalent dengue vaccine candidate, which aims to reduce the impact of dengue fever, especially in the endemic regions. b) Completion of Phase I study of NucoVac: During the year under review, your Company has successfully completed Phase I study to evaluate the safety and immunogenicity of its Pneumococcal Conjugate Vaccine candidate, NucoVac and has applied for Phase II / III clinical trials. c) Collaboration with Russian Direct Investment Fund for Covid - 19 vaccine: Your Company in cooperation with Russian Direct Investment Fund ("RDIF") has agreed to produce upto 100 million doses of Covid - 19 vaccine in India per year. The Company has initiated the production of the said vaccine against coronavirus at Panacea Biotecs facilities at Baddi, Himachal Pradesh, India. Production of such vaccine at Companys sites will help facilitate supply thereof in India as well as to international partners of RDIF. The vaccine is based on a proven and well-studied platform of human adenoviral vectors and uses two different vectors for the two shots in a course of vaccination, providing immunity with a longer duration than vaccines using the same delivery mechanism for both shots. d) Scheme of Arrangement for demerger of real estate business: During the year under review, the Honble NCLT, Chandigarh Bench vide its order dated September 09, 2020 has sanctioned the Scheme of Arrangement ("Scheme") between Panacea Biotec Limited and Ravinder Heights Limited ("RVHL") and their respective shareholders and creditors for demerger of real estate business of the Company comprising of Radhika Heights Limited alongwith its step down subsidiaries and two real estate properties, into RVHL. The appointed date of the Scheme was April 01, 2019 and the Scheme became effective on and from September 10, 2020. Earlier, the Board of Directors of the Company had, at its meeting held on May 30, 2019 and equity shareholders & unsecured creditors of the Company at their respective NCLT convened meetings held on January 28, 2020, approved the Scheme, subject to applicable approvals. Pursuant to the Scheme, RVHL had, in its Board Meeting held on October 06, 2020, issued and allotted 6,12,50,746 Equity Shares of Re.1 each and 1,63,000 0.5% Cumulative Non-Convertible and Non-Participating Redeemable Preference Shares of Rs.10/- each to the Companys equity and preference shareholders, respectively, whose names appeared in the register of members / record of the depositories as a beneficial owner as on the Record Date i.e. September 22, 2020 in the following manner: i. 1 (One) equity share of face value of Re.1/- each credited as fully paid-up for every 1 (One) equity share of face value of Re.1/- each held in the Company; and ii. 1 (One) 0.5% cumulative non-convertible and non-participating redeemable preference share of face value of Rs.10/- each credited as fully paid-up for every 100 (One Hundred) 0.5% cumulative non-convertible and non-participating redeemable preference shares of face value of Rs.10/- each held in the Company.

The new Equity Shares issued and allotted by RVHL to the shareholders of the Company in accordance with the Scheme got listed and admitted to trading on the BSE Limited ("BSE") and National Stock Exchange of India Limited ("NSE") w.e.f. December 18, 2020. e) Cancellation of Warrants: During the previous year, the Company had on April 08, 2019, issued and allotted 71,11,111 convertible warrants ("Warrants") at a price of Rs.180/- each on a preferential basis to India Resurgence Fund - Scheme 1, India Resurgence Fund - Scheme 2 and Piramal Enterprises Limited ("Warrant Holders"), carrying the entitlement of conversion of 1 Equity Share of face value of Re.1/- each at a premium of Rs.179/- per share against each Warrant, within the period starting on the date which was 10 business days prior to the date falling 18 months from the date of allotment of such Warrants and ending on the date falling 18 months from such date of allotment, i.e. during the period starting from September 23, 2020 and ending on October 07, 2020.

However, during the year under review, since the Warrant Holders did not exercise the conversion option within the aforesaid period, the Warrants stood cancelled / lapsed and the upfront amount of ~Rs.320.00 million (equivalent to 25% of total consideration) as received by the Company from the Warrant Holders, towards allotment of the said Warrants was forfeited in accordance with the terms of the said Warrants and as per the provisions of Regulation 169(3) of Chapter V of SEBI ICDR Regulations. f) During the year under review, the Company received a warning letter from USFDA relating to the Pharmaceutical Formulations facility of the Companys wholly owned subsidiary, Panacea Biotec Pharma Limited ("PBPL") located at Baddi, Himachal Pradesh. The Company / PBPL has taken multiple steps after its inspection conducted during February, 2020 to address the observations received during the inspection. This letter did not materially affect the Companys existing business in US. The Company had addressed all the concerns and complied with all the requirements and has already submitted its response to USFDA in consultation with International Consultants. PBPL expects completion of the closeout process in due course. Apart from the updates mentioned above, there were no significant events after the end of the financial year ended March 31, 2021.

Panacea Biotec Limited - Employee Stock Option Plan 2020 ("ESOP 2020"/ "Plan") With a view to motivate the key employees seeking their contribution to the corporate growth, to create an employee ownership culture, to attract new talents, and to retain them for ensuring sustained growth, the Board of Directors of the Company, had at its meeting held on February 14, 2020, proposed implementation of ‘Panacea Biotec Limited-Employee Stock Option Plan 2020 ("ESOP 2020"/ "Plan") to cover eligible employees of the Company and its subsidiary company, in or outside India.

The Shareholders have approved the Plan as well as grant of employee stock options to the employees of the Company and its subsidiary company by passing special resolutions through postal Ballot on July 17, 2020.

However, no options have been granted under the ESOP 2020 till date.

Significant and material orders impacting the going concern status and Companys operations in future

During the year under review, no significant and material orders were passed by any regulator or court or tribunal which may impact the going concern status and your Companys operations in future.

During the financial year 2011-12, a search operation was conducted by Income Tax Department in the premises of the Company and hence the Company re-filed the income tax returns for the Assessment Years ("AY") 2006-07 to 2012-13. During the financial year 2014-15, the Income Tax Department completed the assessment of the said years, disallowed certain expenses and issued demand of Rs.3,294.9 million (including interest) on various grounds. The Company preferred appeals before CIT (Appeals) and after several hearings in the matter and on the basis of facts of the matter, the appeals were decided in favour of the Company and the entire demand of Rs.3,294.9 million was cancelled. However, CIT (Appeals) made certain disallowances of Rs.60.2 million with respect to AY 2010-11 & AY 2011-12 against which the Company has filed appeals before the Income Tax Appellate Tribunal ("ITAT"). The Income Tax Department has also filed appeals before ITAT against the orders of CIT (Appeals). The appeals before ITAT are pending at present. Based on the expert opinion, the Company believes that it has merit in these cases.

Report on Corporate Governance

Your Company has always placed thrust on managing its affairs with diligence, transparency, responsibility and accountability. Your Directors support the broad principles of Corporate Governance and lays emphasis on its role to align and direct the actions of the Company in achieving its objectives. The report on Corporate Governance for the year under review, as stipulated under Regulation 34 read with Schedule V of SEBI LODR Regulations is presented in a separate section and forms an integral part of the Annual Report. The certificate from the Practicing Company Secretary confirming compliance with the conditions of Corporate Governance is attached thereto and forms part of the Annual Report.

Management Discussion and Analysis Report

Management Discussion and Analysis Report for the year under review, as required pursuant to Regulation 34 read with Schedule V of SEBI LODR Regulations, is presented in a separate section and forms an integral part of the Annual Report.

Business Responsibility Reporting

The Business Responsibility Report for the year under review, as required pursuant to Regulation 34 of SEBI LODR Regulations, is presented in a separate section and forms an integral part of the Annual Report.

Subsidiaries, Associates and Joint Ventures A. Subsidiaries

As on March 31, 2021, your Company had 3 wholly owned subsidiary ("WOS") companies, viz. Panacea Biotec Pharma Limited ("PBPL"), Meyten Realtech Private Limited ("Meyten") and Panacea Biotec (International) S.A. ("PBS") and 1 indirect WOS company, viz. Panacea Biotec Germany GmbH ("PBGG"), the WOS of PBS.

PBPL is engaged in the research, development, manufacturing and sale of pharmaceutical formulations in India and international markets. The Company holds 10,00,000 equity shares of Re.1 each with an investment of Rs.1.00 million in PBPL as on March 31, 2021.

Meyten was incorporated on April 12, 2019 for the purpose of proposed demerger of specified Leasing Business of Radhika Heights Limited (WOS of the Company till September 10, 2020) into Meyten. The Composite Scheme of Arrangement amongst Radhika Heights Limited ("RHL"), Meyten and Cabana Structures Limited, a WOS of RHL has been filed with the Honble NCLT on December 15, 2020 and its approval is awaited. The Company holds 1,00,000 equity shares of Re.1 each with an investment of Rs.0.10 million in Meyten as on March 31, 2021. PBS was earlier engaged in the business of trading of pharmaceutical products and is currently not pursuing any business. Since, no further activity is envisaged to be undertaken by PBS, it has been decided to liquidate PBS. The Company holds 6,000 equity shares of CHF 100 each with an investment of Rs.34.36 million in PBS as on March 31, 2021.

PBGG is engaged in marketing of pharmaceutical products including the Companys products in Germany. PBGG is proposed to be converted into direct WOS of the Company / PBPL.

Further, pursuant to the order of the Honble NCLT dated September 09, 2020 sanctioning the above mentioned Scheme of Arrangement which has become effective from September 10, 2020, RHL alongwith its subsidiaries and two real estate properties, has been demerged into RVHL and RVHL, RHL and its subsidiaries (viz. Cabana Construction Private Limited, Cabana Structures Limited, Nirmala Buildwell Private Limited, Nirmala Organic Farms Resorts Private Limited, Radicura Infra Limited and Sunanda Infra Limited) have ceased to be the subsidiaries of the Company w.e.f. September 10, 2020.

B. Joint Ventures and Associates

Your Company has 2 joint ventures, viz. Adveta Power Private Limited ("Adveta") and Chiron Panacea Vaccines Private Limited (Under Liquidation) ("CPV") and 1 associate company, viz PanEra Biotec Private Limited ("PanEra"). Adveta and PanEra have been considered as subsidiaries for the purpose of consolidation of accounts pursuant to the provisions of Indian Accounting Standards ("Ind AS").

Adveta: The Companys 50:50 joint venture with PanEra, was granted in-principle approval by Govt. of Arunachal Pradesh for allotment of two Power Projects of 80 MW and 75 MW in Arunachal Pradesh in financial year 2012-13. Adveta has in the past initiated taking preliminary steps in connection with the implementation of projects. However, no major investment has been made in this regard nor is envisaged during the current financial year. Further, as per the terms agreed with IndiaRF, the Company intends to dispose of its investments in Adveta in due course of time.

CPV: During the year, the Liquidators have completed the voluntary winding-up of CPV and the final Liquidators Statement of Account has been submitted with the O_cial Liquidator. The Company has received an amount of Rs.55.88 million (including initial share capital of Rs.22.96 million and TDS of Rs.2.47 million deducted on surplus). Further, activities for closure of winding-up process are in progress.

PanEra: PanEra was granted in principle approval by Govt. of Himachal Pradesh for allotment of a hydro-power project of 4 MW in Himachal Pradesh in earlier year. PanEra will be taking necessary steps in connection with the implementation of the project in due course of time. However, no major investment has been made in this regard nor is envisaged during the current financial year. Further, as per the terms agreed with IndiaRF, the Company intends to dispose of its investments in PanEra in due course of time. The Company has formulated a Policy for determining material subsidiaries which may be accessed on the Companys website at the link: https://www.panaceabiotec. com/statutory-policies. As on March 31, 2021, Panacea Biotec Pharma Limited is the material subsidiary of the Company pursuant to SEBI LODR Regulations. Radhika Heights Limited which was earlier a material subsidiary of the Company has ceased to be subsidiary w.e.f. September 10, 2020.

Financial Details of Subsidiaries, Associates and Joint Ventures

A separate statement containing the salient features of financial statements of the Companys Subsidiaries, Associates and Joint Ventures, in the prescribed Form AOC-1, forms part of the Annual Report and hence not repeated here for the sake of brevity. This statement also provides details of performance and financial position of each of the Subsidiaries, Associates and Joint Ventures. The contribution of the Subsidiaries, Associates and Joint Ventures to the overall performance of your Company is outlined in Note No. 51 of the Consolidated Financial Statements for the year ended March 31, 2021.

The separate audited Financial Statements of the Subsidiaries shall be kept open for inspection at the Companys Registered/ Corporate Office during working hours for a period of 21 days before the date of the ensuing Annual General Meeting ("AGM") of the Company and are also available on the website of the Company at www.panaceabiotec.com. The same will also be made available upon request of any member of the Company who is interested in obtaining the same.

Consolidated Financial Statements

The Consolidated Financial Statements of the Company and its Subsidiaries, Associates and Joint Ventures, prepared in terms of Section 129 of the Companies Act, 2013 ("the Act"), Regulation 33 of SEBI LODR Regulations and in accordance with Ind AS 110 read with Ind AS 28 and 31 as specified in the Companies (Indian Accounting Standards) Rules, 2015 ("Ind AS Rules") and provisions of Schedule III to the Act, are attached herewith and the same together with Auditors Report thereon, forms part of the Annual Report.

Indian Accounting Standards, 2015

The annexed financial statements comply in all material aspects with Indian Accounting Standards notified under Section 133 of the Act, Companies (Indian Accounting Standards) Rules, 2015 and other relevant provisions of the Act.

Listing of Equity Shares

The Equity Shares of the Company continue to be listed on NSE and BSE. The requisite annual listing fees for the financial year 2021-22 have been paid to these Exchanges.

Public Deposits

During the year under review, your Company has not invited or accepted any deposits from the public / members pursuant to the provisions of Sections 73 and 76 of the Act read with Companies (Acceptance of Deposits) Rules, 2014 and therefore, no amount of principal or interest was outstanding in respect of deposits from the Public as on the balance sheet date. The details of loans received from directors of the Company have been disclosed in Note No. 45 to the Standalone Financial Statements forming part of the Annual Report. Further, in compliance with provisions of the Companies (Acceptance of Deposits) Rules, 2014, the director of the Company, from whom money is received during the year under review, has furnished to the Company, a declaration in writing to the effect that the amount is not being given by him out of funds acquired by him by borrowing or accepting loans or deposits from others.

Directors and Key Managerial Personnel i) Cessation of Directors: During the year under review, Mrs. Sunanda Jain (DIN: 03592692) and Mr. Sumit Jain (DIN: 00014236), Whole-time Directors, have ceased to be directors of the Company w.e.f. October 07, 2020.

Further, during the current year, Mr. Ashwini Luthra (DIN: 05103137), an Independent Director of the Company, departed for his heavenly abode on July 11, 2021.

Your Directors place their sincere appreciation towards the invaluable contributions, guidance and support received from them during their tenure as Directors towards the progress of the Company. Further, your directors pray the almighty that the departed soul of Mr. Ashwini Luthra rest in peace. ii) Re-appointment of Independent Director: During the year under review, Mr. Mukul Gupta (DIN: 00254597) has been reappointed as an Independent Director w.e.f. April 01, 2021 for a second term of five (5) consecutive years up to March 31, 2026. In the opinion of the Board, he is a person with integrity and possesses requisite expertise and experience for re-appointment as an independent director of the Company. Further, he is exempted from the requirement to undertake online pro_ciency self-assessment test conducted by the Indian Institute of Corporate Affairs in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014. iii) Appointment of Non-Executive Nominee Director: During the year under review, the appointment of Mr. Shantanu Yeshwant Nalavadi (DIN: 02104220), who was appointed as Non-Executive Nominee Director by the Board of Directors w.e.f. December 10, 2019, was approved by the shareholders at the Annual General Meeting held on December 24, 2020. iv) Re-appointment of Executive Directors: The Board of Directors has in its meeting held on July 23, 2021, on the recommendation of Nomination and Remuneration Committee of the Board ("NRC"), re-appointed Mr. Soshil Kumar Jain (DIN: 00012812), Dr. Rajesh Jain (DIN: 00013053), Mr. Sandeep Jain (DIN: 00012973) and Mr. Ankesh Jain (DIN: 03556647) as Whole-time Director designated as Chairman, Managing Director, Joint Managing Director and Whole-time Director designated as Director Sales & Marketing, respectively for a further period of three (3) years w.e.f. April 01, 2022 on similar terms of remuneration, subject to approval of shareholders, as their current term of office will expire on March 31, 2022. The terms and conditions for their re-appointment are contained in the Explanatory Statement forming part of the Notice of the ensuing AGM of the Company. v) Directors Retiring by Rotation: In accordance with the provisions of Section 152 of the Act and Article 124 of the Article of Association of the Company, Dr. Rajesh Jain (DIN: 00013053), Managing Director of the Company is liable to retire by rotation. Being eligible, he has offered himself for re-appointment as director at the ensuing AGM. vi) Profile of Directors seeking appointment / re-appointment: The brief resume of the Directors seeking re-appointment along with other details as stipulated under Regulation 36(3) of the SEBI LODR Regulations and Secretarial Standards issued by The Institute of Company Secretaries of India, are provided in the Notice convening the ensuing AGM of the Company and the Corporate Governance Report forming part of the Annual Report. vii) Declaration of independence: Your Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence provided in Section 149(6) of the Act & Regulation 16 of the SEBI LODR Regulations and there has been no change in the circumstances which may affect their status as Independent director during the year under review. viii) Registration in Independent Directors Data Bank: The Company has received confirmation from all its Independent Directors that they have registered themselves in the Independent Directors Data Bank of Indian Institute of Corporate Affairs at Manesar, for a period of 5 years, in compliance with the provisions of sub-rule (1) of rule 6 of Companies (Appointment and Qualification of Directors) Rules, 2014.

Your Directors recommend re-appointment of the above said directors in the ensuing AGM. Apart from the above, there is no other change in the directors and Key Managerial Personnel ("KMP") during the year under review and thereafter.

Board Evaluation

In terms of the provisions of the Act and Regulation 19(4) of SEBI LODR Regulations, the Board has adopted a formal mechanism for evaluating its performance as well as that of its Committees and individual directors, including the Chairman of the Board. The exercise was carried out through a structured evaluation process covering various aspects such as Board composition & quality, strategic & risk management, board functioning, etc. which are brie_y stated in the Corporate Governance Report, forming part of the Annual Report.

Performance evaluation of independent directors was conducted by the Board of Directors excluding the director being evaluated on the criteria such as ethics and values, knowledge and pro_ciency, behavioral traits etc.

The Board of Directors has expressed its satisfaction with the evaluation process.

Board Meetings

During the year under review, five (5) Board Meetings were held on June 16, 2020, June 29, 2020, September 03, 2020, November 11, 2020 and February 12, 2021. The intervening gap between two Board Meetings was within the maximum period prescribed under the Act. The detailed information is furnished in the Corporate Governance Report, forming part of the Annual Report.

Audit Committee

The Audit Committee of the Board of Directors consisted entirely of Independent Directors. The details of the composition and number of meetings of the Audit Committee are furnished in the Corporate Governance Report, forming part of the Annual Report. During the year under review, all the recommendations made by the Audit Committee were accepted by the Board.

Policy on Directors appointment & remuneration

Pursuant to the provisions of Section 178(3) of the Act, Regulation 19(4) of SEBI LODR Regulations and as per the recommendations of NRC, the Board has adopted a policy for appointment and remuneration of the Directors, Key Managerial Personnel, Senior Management Personnel and other employees of the Company. The components of remuneration policy are brie_y stated in the Corporate Governance Report, forming part of the Annual Report. This policy may be accessed on the Companys website at the link: https://www.panaceabiotec. com/statutory-policies.

Energy Conservation, Technology Absorption & Foreign Exchange

As required under Section 134 of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 ("Accounts Rules), the particulars regarding conservation of energy, technology absorption and foreign exchange earnings & outgo, are given in Annexure A hereto and forms part of this Report.

Annual Return

As required pursuant to Section 134 and 92(3) of the Act, the Annual Return of the Company as on financial year ended on March 31, 2021 is available on Companys website at: https:// www.panaceabiotec.com/annual-return.

Related Party Transactions

As per the provisions of the Act and SEBI LODR Regulations, your Company has formulated a policy on Related Party Transactions which is available on Companys website at the link: https://www.panaceabiotec.com/statutory-policies. The policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and the Related Parties.

This policy specifically deals with the review and approval of material related party transactions keeping in mind the potential or actual conflicts of interest that may arise because of entering into these transactions. All related party transactions are placed before the Audit Committee for its review and approval. Wherever applicable, prior approval is obtained for related party transactions on a quarterly basis for transactions which are of repetitive nature and / or entered in the ordinary course of business and are at arms length basis.

During the year under review, all related party transactions entered into were in the ordinary course of business and on an arms length basis. The Company has not entered into any material related party transactions, i.e. transactions exceeding 10% of the annual consolidated turnover as per the last audited financial statements. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Act read with Rule 8(2) of the Accounts Rules in the prescribed Form AOC-2 is not applicable. Suitable disclosures as required under Accounting Standard AS-18 have been made in the notes to the Financial Statements forming part of the Annual Report.

Particulars of Employees and Related disclosures

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 ("Managerial Personnel Rules") are provided in Annexure B hereto and the same forms part of this Report.

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

Auditors and Audit Reports i) Statutory Auditors and Audit Report: Pursuant to the provisions of Section 139 of the Act and the rules framed thereunder, M/s. Walker Chandiok & Co. LLP, Chartered Accountants (Regn. No. 001076N/N500013), were re-appointed as Statutory Auditors of the Company for a second term of five (5) consecutive years to hold office from the conclusion of the 35th AGM of the Company held on September 30, 2019 till the conclusion of the 40th AGM of the Company. Pursuant to Section 141 of the Act, the Statutory Auditors have confirmed they are not disqualified from continuing as Auditors of the Company.

The Auditors Report does not contain any qualification, reservation or adverse remark on the financial statements for the year ended March 31, 2021.

The management response to the observations/comments contained in the Auditors Report and Annexure thereto has been suitably given in the respective Notes to the Financial Statements referred to therein.

Further, the Key Audit Matter as contained in the Auditors Report on the Standalone Financial Statements is also mentioned as Key Audit Matter in the Auditors Report on the Consolidated Financial Statements in similar manner. The management response thereto has been suitably given in the respective Notes to the Financial Statements referred to therein.

The notes to accounts and other observations, if any, in the Auditors Report are self-explanatory and therefore, do not call for any further comments.

ii) Cost Accounts and Auditors: The Company is required to maintain cost records as specified by the Central Government under Section 148(1) of the Act and accordingly, such accounts and records have been duly made and maintained by the Company in compliance with the provisions of the Act.

Pursuant to the provisions of Section 148 of the Act, M/s. GT & Co., Cost Accountants (Firms Registration Number: 000253), were appointed as the Cost Auditors to conduct the audit of the Companys Cost Records for the financial year ended March 31, 2021 and their remuneration has also been ratified by the shareholders in the 36th AGM of the Company held on December 24, 2020.

The cost audit for the said period has been completed and the Cost Auditors Report will be submitted with the Central Government within the prescribed time. The Cost Audit Report for the financial year 2019-20 was filed on October 01, 2020.

Based on the recommendations of the Audit Committee, the Board of Directors has re-appointed M/s. GT & Co., Cost Accountants, as cost auditors of the Company for the financial year 2021-22 pursuant to the provisions of Section 148 of the Act. As required, the item for ratification of remuneration of cost auditor has been included in the Notice of the ensuing AGM for shareholders approval. iii) Secretarial Auditors and Secretarial Audit Report: Pursuant to the provisions of Section 204 of the Act read with Rule 9 of the Managerial Personnel Rules, the Board of Directors has appointed M/s. R&D Company Secretaries, Practicing Company Secretaries to conduct the Secretarial Audit of the Company for the financial year ended March 31, 2021. The Secretarial Audit Report issued by them is annexed as Annexure D to this Report.

The Secretarial Audit Report does not contain any qualification, reservation or adverse remarks.

As per the requirements of the SEBI LODR Regulations, the material unlisted subsidiary of the Company, Panacea Biotec Pharma Limited has also appointed the Secretarial Auditors viz. M/s. R&D Company Secretaries, Practicing Company Secretaries to conduct the Secretarial Audit for the financial year ended March 31, 2021. The Secretarial Audit Report issued by them is annexed as Annexure E to this Report. The said Secretarial Audit Report does not contain any qualification, reservation or adverse remarks.

In addition to the above and in compliance with SEBI Circular No. CIR/CFD/CMD/1/27/2019 dated February 08, 2019, a report on secretarial compliance issued by M/s. R&D Company Secretaries for the year ended March 31, 2021 has been submitted to stock exchanges.

Dealing with COVID-19 Pandemic

The continuing outbreak of current novel coronavirus (Covid-19) pandemic including several waves and mutation of virus globally and in India is causing significant disturbance and slowdown of economic activity. In view of the Covid-19 pandemic, several restrictions were imposed by governments across the globe on the travel, goods movement and transportation considering public health and safety measures, which has adversely impacted the Companys operations since late March 2020. However, the Companys operations including its supply chain is being handled by the Company in an effective manner by applying various approaches on case to case basis and ensuring that its products reaches up to the last point.

Since Panacea Biotec is engaged in the business of manufacturing of pharmaceutical products, accordingly, the operations at manufacturing facilities and warehouses kept on going, albeit with limited number of workers in the initial days during the lockdown, however, the same increased gradually after obtaining requisite government approvals. For ensuring the health and well-being of its employees, wherever feasible, the Company has implemented Work from Home for its employees. Also, the Company took several measures such as sanitization of premises on regular basis, video training sessions for employees to create awareness about the spreading of virus and prevention of same, strict follow of social distancing norms at its offices and plants etc. Furthermore, various steps were taken by the Company to render support to employees.

Inspite of the uncertainties due to the pandemic, the Company has adapted to the changing business environment and has responded suitably to fulfill the unmet therapeutic needs of its customers.

Material changes and commitments affecting the financial position

As required under Section 134(3) of the Act, the Board of Directors inform the members that during the financial year, there have been no material changes, except as disclosed elsewhere in the Annual Report:

in the nature of Companys business;

in the Companys subsidiaries or in the nature of business carried out by them; and

in the classes of business in which the Company has an interest.

Further, except as disclosed elsewhere in the Annual Report, there have been no material changes and commitments which can affect the financial position of the Company between the end of the financial year and the date of this Report.

Secretarial Standards

The Directors state that applicable Secretarial Standards i.e. SS-1 and SS-2, relating to ‘Meetings of the Board of Directors and ‘General Meetings, respectively have been duly followed by the Company.

Transfer to Investor Education and Profitection Fund

During the year under review, no amount was required to be transferred by the Company to the Investor Education and Profitection Fund.

Directors Responsibility Statement

The Directors hereby confirm that: a) in the preparation of the annual financial statements for the financial year ended March 31, 2021, the applicable Accounting Standards have been followed along with proper explanation relating to material departures; b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2021, and of the loss of the Company for the year ended March 31, 2021; c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the 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 were adequate and operating effectively.

Details in respect of frauds reported by auditors

During the year under review, there were no frauds reported by the auditors to the Audit Committee or the Board under Section 143(12) of the Act.

Particulars of loans, guarantees or investments

The Company has made investments or extended loans / guarantees to its wholly owned subsidiaries for their business purposes. The details of loans, guarantees and investments covered under the provisions of Section 186 of the Act along with the purpose for which such loan, guarantee or security was proposed to be utilised by the recipient, have been disclosed in the notes to the Financial Statements forming part of the Annual Report.

Risk Management

The Company has formulated a Risk Management Policy and monitors the risk management plan on a periodic basis. The Company has defined a structured approach to manage uncertainty and to make use of these in the decision making in business decisions and corporate functions.

The Company has regularly invested in insuring itself against unforeseen risks. The Companys stocks and insurable assets like building, plant & machinery, computer equipment, office equipment, furniture & fixtures, lease hold improvements and upcoming projects have been adequately insured against major risks. The Company has also taken appropriate product liability insurance policies for conducting clinical trials and for insuring its products (manufactured and sold) with an extension of unnamed vendor liability and add on cover of public liability inclusive of pollution liability to cover the risk on account of claims, if any, filed against the Company.

Pursuant to recent amendment dated May 05, 2021 in Regulation 21 of SEBI LODR Regulations, the Board has, in its meeting held on July 23, 2021, constituted the Risk Management Committee comprising of the Directors / Officers of the Company as members of the Committee. The Risk Management Committee will further play an important role to oversee the risk management framework which encompass risk identification, its likely impact on the Company and mitigation plan to address such risk. The details of the composition and terms of reference are furnished in the Corporate Governance Report, forming part of the Annual Report.

Internal Control System

Your Company has established a system of internal controls to ensure that assets are safeguarded and transactions are appropriately authorized, recorded and reported. The detailed explanation is provided in the Management Discussion and Analysis Report, forming part of the Annual Report.

Internal Financial Controls

The Company has designed and implemented a process driven framework for Internal Financial Controls ("IFC") within the meaning of the explanation to Section 134(5)(e) of the Act. For the year ended on March 31, 2021, the Board is of the opinion that the Company has sound IFC commensurate with the size, scale and complexity of its business operations. The IFC operates effectively and no material weakness exists. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and / or improved controls whenever the effect of such gaps have a material effect on the Companys operations.

Vigil Mechanism

As required pursuant to the provisions of Section 177(9) of the Act read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, Regulation 22 of SEBI LODR Regulations and Regulation 9A of Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015, your Company has adopted a Vigil Mechanism / Whistle Blower Policy with a view to provide its employees an avenue to raise any sensitive concerns regarding any unethical behavior or wrongful conduct and to enable employees to report instances of leak of unpublished price sensitive information and to provide adequate safeguards for Profitection from any victimization. This Policy is available on the website of the Company and can be accessed at: https:// www.panaceabiotec.com/statutory-policies. This Policy, inter-alia, provides a direct access to the Chairman of the Audit Committee.

Your Company hereby afirms that no director / employee has been denied access to the Chairman of the Audit Committee and that no complaint has been received during the year under review.

Corporate Social Responsibility

The provisions of Section 135 of the Act and the Rules made thereunder regarding Corporate Social Responsibility are not attracted to the Company as the Company does not fall under the threshold limit of net worth of Rs.5,000 million or more, or turnover of Rs.10,000 million or more, or a net profit (as defined under Section 198 of the Act) of Rs.50 million or more during the financial year. However, the Company has been, over the years, pursuing Corporate Social Responsibility by putting continuous efforts in the areas of health, education and patient awareness / assistance programs towards the development of happier and healthier society.

Prevention of Sexual Harassment at Workplace

The Company has in place a Policy on Prevention of Sexual Harassment in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) are covered under this policy. Your Company has complied with the provisions relating to constitution of Internal Complaints Committee under The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 for dealing with the complaint, if any, relating to sexual harassment of women at workplace. No case has been reported during the year under review.

Acknowledgements

Your Directors acknowledge with gratitude the co-operation and assistance received from the UN Agencies, Central Government, State Governments and all other Government agencies and encouragement they have extended to the Company. Your Directors also thank the shareholders, financial institutions, banks / other lenders, customers, vendors and other business associates for their confidence in the Company and its management and look forward for their continuous support. The Board wishes to place on record its appreciation for the dedication and commitment of the employees at all levels which has continued to be our major strength.

For and on behalf of the Board
Place : New Delhi Soshil Kumar Jain
Dated : July 23, 2021 Chairman