RPG Life Sciences Ltd Directors Report.

Your Directors have pleasure in presenting the annual report and audited statement of accounts of the Company for the year ended on March 31,2021.

1. FINANCIAL RESULTS

The summary of financial performance of the Company for the year under review is given below:

(Rs. in crores)
Particulars 2020-21 2019-20
A Operations
Total Income 390.05 376.30
Profit before depreciation, interest and tax 70.84 59.88
Less: Interest 0.79 1.75
Less: Depreciation 16.47 16.36
Profit before exceptional items for the year before tax 53.58 41.77
Exceptional items Gain/(Loss) - (5.32)
Profit before tax 53.58 36.45
Tax (including deferred tax) 13.58 7.44
B Profit for the year after tax 40.00 29.01
C Other Comprehensive income net of tax (0.12) (0.17)
D Total comprehensive income 39.88 28.84
E Appropriations:
Dividend on equity shares - 6.62
Dividend Distribution Tax - 2.18

2. DIVIDEND

Your Directors recommend a dividend of Rs.7.20 (90%) per equity share of Rs.8/- each for the financial year ended March 31,2021.

3. OPERATIONS

The Company earned a total income of Rs.390.05 crores for the year as compared to Rs.376.30 crores during the previous year and a profit after tax from existing operations of Rs.40.00 crores, as against Rs.29.01 crores during the previous year. The increase in sales and net profit was mainly due to improved performance of International Formulations business.

The Companys Formulation facility at Ankleshwar, Plant (F1) has WHO GMP, Nigeria and Kenya Health Authority certifications and Plant (F2) has WHO GMP, EU GMP, TGA Australia GMP, Health Canada, Kenya, Ethiopia, Nigeria and Sudan Health Authority certifications. API facility at Navi Mumbai plant has WHO GMP and TGA Australia certifications.

Domestic Formulations Business:

Performance

During the year under review, the Domestic Formulations business achieved sales revenue of Rs.235.42 crores, higher than 1.5% over the previous year. The divisions performance improvement was a result of prescription generation, augmented product portfolio through new product launches and line extensions and control on sales hygiene and market inventories. Sales of legacy products in antidiarrheal, anti-ulcerant, pain management and cardiovascular therapeutic areas, amongst others, which constitute 63% of the Domestic formulations registered flat growth. As a part of Life Cycle Management strategy of legacy products, Romilast BL and Aldactone T new line extensions were launched.

Specialty business which contributes 37% of domestic formulations, grew by 4% with the help of greater digital reach and connect with specialty customers. The Company focused on launching new product viz. T-JAKi and driving active promotion in the immunosuppressant range of products in Rheumatology and Gastroenterology. Azoran 75 mg new line extension was launched. Reduction in transplants and chemo therapies had negative impact on sales of related products.

As per the data compiled by Pharmatrac, a market researcher, the Company achieved 68th rank in sales value terms in the country during the year.

Outlook

In the current year, the Company will continue its emphasis on strengthening its Focus brands. The Company will continue its strategy of demand generation, introducing of new products and line extensions, identifying alternate therapies for existing products, skill building of field force and control of sales hygiene parameters.

International Formulations Business:

Performance

The International Formulations business achieved sales revenue of Rs.80.15 crores in FY 21, registering growth of 15% as against the previous year mainly on account of expanding the base business with existing customers, new customer development and new product offering viz. Sodium Valproate, Nicorandil, Propantheline Bromide and Azathioprine in new strength of 75 mg and 100 mg. In June 2020, the Company commercialized a complex generic product, Prolonged Release Sodium Valproate formulation, for a UK customer after its successful approval by UK MHRA.

Outlook

The International Formulations business is focused on increasing the penetration of existing and new products in multiple countries within EU along with UK, Australia, Canada, Myanmar and other Emerging Markets. The Company is also actively scouting for opportunities for geographic expansion through strategic partnerships in various international markets in India and South East Asian markets - Sri Lanka, Vietnam, Philippines, Egypt and increasing the penetration of the current product assets - Azathioprine, Nicorandil, Sodium Valproate PR and Mycophenolate Mofetil, globally.

Active Pharmaceutical Ingredients (API/Bulk Drugs) Business:

Performance

With sales of Rs.67.89 crores, API business was marginally higher by 0.8% as against the previous year, due to higher sales of its flagship APIs like Azathioprine, Haloperidol and Quinfamide to both international and domestic customers.

Outlook

API business continues to be of strategic importance in the overall growth of the Company. Backward integration in products ensures lesser dependency on procuring APIs from external sources and increased reliability of supplies thus playing a crucial role in the current competitive and external environment. The Governments focus on developing APIs and reducing the dependence on imports, further augments the strategic importance of the business. The Company is also working on scouting opportunities in Russia, South Korea, China, Brazil and MENA markets.

This business could see increase with overseas companies looking at India as a global hub for supply of APIs.

4. INDIAN ACCOUNTING STANDARDS (IND AS)

As notified by the Ministry of Corporate Affairs, the Company adopted Indian Accounting Standards (‘Ind AS) with effect from April 01,2017.

5. EXTRACT OF ANNUAL RETURN

Pursuant to Sections 92 and 134 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the Annual Return as on March 31, 2021, is available on Companys Website www.rpglifesciences.com.

6. DISCLOSURE UNDER SECRETARIAL STANDARDS ON MEETINGS OF BOARD OF DIRECTORS (SS-1):

During the year under review, the Company has complied with all applicable Secretarial Standards.

7. MEETINGS OF THE BOARD

The details of Board Meetings held during the year are given in the Corporate Governance Report.

8. MEETINGS OF AUDIT COMMITTEE

The details of Audit Committee meetings and composition of the Committee are given in the Corporate Governance Report.

9. DIRECTORS RESPONSIBILITY STATEMENT

The Directors confirm that -

a) in the preparation of the annual accounts for the financial year ended March 31, 2021, the applicable accounting standards had been followed and there was no material departures;

b) the Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year as at March 31,2021 and of the profit and loss of the Company for that period;

c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors had prepared the annual accounts on a going concern basis;

e) the Directors, had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

f) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

10. STATEMENT ON DECLARATION OF INDEPENDENT DIRECTORS

The Company has received declaration from each of the Independent Directors under Section 149 (6) and (7) of the Companies Act, 2013 and Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 as amended from time to time. There has been no change in the circumstances affecting their status as Independent Directors of the Company.

The Board is of the opinion that the Independent Directors of the Company possess requisite qualifications, experience and expertise and they hold highest standards of integrity. As per the proviso to Rule 6(4) of the Companies (Appointment and Qualification of Directors) Rules, 2014, all the Independent Directors of the Company are exempted from undertaking the online proficiency selfassessment test.

11. PECUNIARY RELATIONSHIP OR TRANSACTIONS OF THE NON-EXECUTIVE DIRECTORS AND DISCLOSURES ON THE REMUNERATION OF THE DIRECTORS

All pecuniary relationship or transactions of the NonExecutive Directors vis-a-vis the Company, along with criteria for such payments and disclosures on the remuneration of the Directors along with their shareholding are disclosed in Corporate Governance Report which forms part of this Report.

12. NOMINATION AND REMUNERATION POLICY

The Companys policy on Directors appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a Director and other matters provided under Section 178 (3) is annexed with this Report as Annexure A.

13. EXPLANATION AND COMMENTS ON AUDITORS AND SECRETARIAL AUDIT REPORT

There is no qualification, disclaimer, reservation or adverse remark made by the Statutory Auditors in Auditors Report.

As per the provisions of Section 143 (12) of the Companies Act, 2013 read with rule 13 of the Companies (Audit & Auditors) Rules, 2014, the Statutory Auditors have not reported any instances of fraud to the Central Government and/or Audit Committee.

Further, there is no qualification, disclaimer, reservation or adverse remark made by the Company Secretary in practice in Secretarial Audit Report.

14. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The Loans, Guarantees and Investments made by the Company are within the limits prescribed under the provisions of Section 186 of the Companies Act, 2013 and the details are given in the notes to the Financial Statements.

15. RELATED PARTY TRANSACTIONS

There were no contracts or arrangements or transactions entered into by the Company with related parties referred to in sub-section (1) of Section 188 of the Companies Act, 2013 during the course of business which were not at arms length basis.

Suitable disclosure as required by the Indian Accounting Standards (IND AS 24) has been made in the notes to the Financial Statements. The policy on Related Party Transactions as approved by the Board is uploaded on the Companys website www.rpglifesciences.com.

16. TRANSFER TO RESERVES

The Company has not transferred any sum to the General Reserve during the financial year ended March 31,2021.

17. MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments, affecting the financial position of the Company which have occurred between the end of the financial year on March 31, 2021 to which the financial statements relate and the date of this report.

18. CONSERVATION OF ENERGY,

TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 (3) of Companies (Accounts) Rules, 2014, are given in Annexure B to this report.

19. RISK MANAGEMENT

The details of Risk Management Committee (RMC) and its terms of reference are set out in the Corporate Governance Report.

The Company has a robust Risk Management framework to identify, evaluate business risks and opportunities.

This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Companys competitive advantage.

The business risk framework defines the risk identification and its management approach across the enterprise at various levels including documentation and reporting. The framework help in identifying risks trend, exposure and potential impact analysis at Companys business.

20. CORPORATE SOCIAL RESPONSIBILITY (CSR)

In accordance with the provisions of Section 135 read with Schedule VII of the Act, the Company, as a part of its Corporate Social Responsibility ("CSR") initiative, has adopted a CSR Policy outlining various CSR activities to be undertaken by the Company in the area of health, water, sanitation, promoting education, skill development etc. The CSR policy of the Company is available on the Companys website i.e. www.rpglifesciences.com under ‘Investors tab.

During the year under review, the Company has contributed Rs.39.34 Lakhs to RPG Foundation, the implementing agency towards CSR activities and Rs.12.23 Lakhs was transferred to a separate Bank Account viz. ‘RPG Life Sciences Limited Unspent Corporate Social Responsibility Account FY 2020-21 to be disbursed in the future towards approved projects pursuant to CSR rules dated January 22, 2021. The Board has constituted a CSR Committee inter alia to recommend on the CSR projects/ programs, recommend the amount on each CSR activity and to monitor such CSR activities, being undertaken by the Company. The report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is set out as Annexure C.

21. DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review, Mr. Bhaskar Iyer was appointed as an Independent Director by the Members at the Annual General Meeting of the Company held on August 20, 2020 for his first term of five consecutive years from October 30, 2019 to October 29, 2024.

Mr. Rajat Bhargava was appointed as an Additional and Non-Executive Director on the Board of the Company w.e.f. January 25, 2021.

Mr. Harsh V. Goenka retires by rotation and being eligible offers himself for re-appointment at the ensuing Annual General Meeting.

Mr. Mahesh Narayanaswamy, Vice President - Finance was relieved from discharging the responsibilities and duties of CFO w.e.f. August 3, 2020. The Board placed on record its appreciation for the services rendered by Mr. Narayanaswamy during his tenure with the Company.

Mr. Vishal Shah was appointed as Chief Financial Officer of the Company w.e.f. August 3, 2020.

In accordance with provisions of Section 149 and other applicable provisions of Companies Act, 2013, your Directors are seeking re-appointment of Ms. Zahabiya Khorakiwala for five consecutive years from July 27, 2021 to July 26, 2026. In the opinion of the Board she possesses requisite qualification, experience and expertise and holds highest standards of integrity. Details of the said Director are mentioned in the Explanatory Statement under Section 102 of the Companies Act, 2013 of the 14th Annual General Meeting.

At the Board Meeting held on April 30, 2021, Mr. Yugal Sikri was re-appointed as the Managing Director of the Company with effect from October 1, 2021 to April 30, 2024 subject to approval of shareholders.

None of the Directors and Key Managerial Personnel (KMP) is related to any other Director of the Company.

Mr. Yugal Sikri, Managing Director, Mr. Vishal Shah, Chief Financial Officer and Mr. Rajesh Shirambekar, Head - Legal and Company Secretary are Key Managerial Personnel of the Company within the meaning of Section 203 of the Companies Act, 2013.

22. SUBSIDIARY COMPANIES

There were no Companies which have become or ceased to be our subsidiaries, joint ventures or associate companies during the year.

23 FIXED DEPOSITS

The Company has not accepted any fixed deposit from public during the year under review under Chapter V of the Companies Act, 2013. As on March 31,2021, no deposit was lying unclaimed or unpaid with the Company.

24. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Companys operations in future.

25. CHANGE IN THE NATURE OF BUSINESS

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

26. INTERNAL FINANCIAL CONTROL

Details in respect of adequacy of internal financial controls with reference to the Financial Statements are stated in Management Discussion and Analysis which forms part of this annual report.

27. INFORMATION PURSUANT TO SECTION 197 (12) OF THE COMPANIES ACT, 2013 AND RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL REMUNERATION) RULES, 2014

1 The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year; Mr. Harsh V. Goenka (Chairman) 1.47
Dr. Lalit S. Kanodia 1.55
Mr. Mahesh S. Gupta 2.38
Mr. Manoj Maheshwari 1.47
Mr. Narendra Ambwani 2.31
Ms. Zahabiya Khorakiwala 0.81
Mr. Bhaskar Iyer 2.09
Mr. Sachin Nandgaonkar 2.11
Mr. Rajat Bhargava 0.61
Mr. Yugal Sikri (Managing Director) 94.12
2 The percentage increase in remuneration of each director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year; Mr. Harsh V. Goenka (Chairman) Nil
Dr. Lalit S. Kanodia Nil
Mr. Mahesh S. Gupta Nil
Mr. Manoj Maheshwari Nil
Mr. Narendra Ambwani Nil
Ms. Zahabiya Khorakiwala Nil
Mr. Bhaskar Iyer Nil
Mr. Sachin Nandgaonkar Nil
Mr. Rajat Bhargava Nil
Mr. Yugal Sikri 15%
Mr. Mahesh Narayanaswamy 10%
Mr. Vishal Shah Nil
Mr. Rajesh Shirambekar 8%
3 The percentage increase in the median remuneration of employees in the financial year; 8.9%*
4 The number of permanent employees on the rolls of Company; 1107 employees as on March 31,2021
5 Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration; • Average Salary increase of non-managerial employees is around 8.4%.
• Average Salary increase of managerial employees is around Q
• There are no exceptional circumstances in increase of managerial remuneration.
6 Affirmation that the remuneration is as per the remuneration policy of the Company. Remuneration paid during the year ended March 31,2021 is as per the Remuneration Policy of the Company.

Notes:

*The percentage increase in the median remuneration of employee has been calculated after excluding Managing Directors remuneration.

28. WHISTLE BLOWER POLICY

The Audit Committees terms of reference inter-alia include vigil mechanism which also incorporates a Whistle Blower Policy in terms of Section 177(10) of the Companies Act, 2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Company has adopted Whistle Blower Policy. The Whistle Blower mechanism provides for Directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of Companys Code of Governance and Ethics. The Whistle Blower Policy is uploaded on the Companys website www.rpglifesciences.com.

29. FAMILIARISATION PROGRAMMES FOR INDEPENDENT DIRECTORS

The Company conducts familiarization programme for Independent Directors and the details are uploaded on the website of the Company on the below mentioned link: https://rpglifesciences.com/website/code policies forms.php

30. FORMAL ANNUAL EVALUATION OF BOARD AND ITS COMMITTEES

Pursuant to provisions of Section 134 of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Nomination and Remuneration Committee laid down a criteria for evaluating Board effectiveness by assessing performance of the Board as a whole, performance of individual Director and Committees of the Board namely Audit Committee, Nomination and Remuneration Committee, Stakeholders Relationship Committee, Corporate Social Responsibility Committee and Risk Management Committee. The Board approved the criteria laid down by Nomination and Remuneration Committee for evaluating Board effectiveness and engaged a third party agency to conduct Board effectiveness survey during the year under review. The Board has carried out annual performance evaluation of its own performance, the Directors individually and of its Committees as mandated under the Act and Listing Regulations.

31. AUDITORS

Statutory Auditors:

The members of the Company at its Annual General Meeting held on July 24, 2017 appointed M/s. BSR & Co. LLP, Chartered Accountants (Firm Registration No.101248W/W-100022), as Statutory Auditors of the Company, for a period of 5 (five) consecutive years from the conclusion of the tenth AGM till the conclusion of the fifteenth AGM. The auditors confirmed that their appointment shall be in compliance with Sections 139 and 141 of the Companies Act, 2013.

Internal Auditors:

M/s. Deloitte Touche Tohmatsu India LLP, are the Internal Auditors of the Company.

Secretarial Auditors:

M/s. Parikh Parekh & Associates, Practicing Company Secretaries, are the Secretarial Auditors of the Company. The Secretarial Audit Report required pursuant to subsection (3) of Section 134 and Section 204 (1) of the Companies Act, 2013, is given in Annexure D to this report.

Cost Auditors:

The Company maintains cost records as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013.

Pursuant to the provisions of Section 148(3) of the Companies Act, 2013, M/s. Kirit Mehta & Co. (Registration No. 000353), Cost Accountants, was appointed to conduct audit of cost records of Pharmaceutical Activities for the year ended March 31,2021. Cost Audit reports would be submitted to the Central Government within the prescribed time. Pursuant to Rule 6 of the Companies (Cost Records and Audit) Rules, 2014, cost audit reports for Pharmaceutical Activities for the year ended March 31,2020 was filed with the Central Government on August 21,2020.

32. EMPLOYEES STOCK OPTION PLAN

The Company has no employee stock option scheme.

33. PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The particulars of employees in compliance with the provisions of Section 134 (3) (q) read with Rule 5 (2) and 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 will be provided to the shareholder upon request. The said information is open for inspection and any Member interested in obtaining a copy of the same may write to the Company.

34. MANAGEMENT DISCUSSION AND ANALYSIS, BUSINESS RESPONSIBILITY REPORT AND CORPORATE GOVERNANCE REPORT

In compliance with Regulation 34 read with Schedule V of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis, Business Responsibility Report and Corporate Governance Report, as approved by the Board of Directors, together with a certificate from a Practicing Company Secretary confirming the compliance with the requirements of Corporate Governance policies are set out in the Annexures forming part of this annual report.

35. DISCLOSURE UNDER SEXUAL HARASSMENT OF WOMEN AT THE WORK PLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Internal Complaints Committee has been set up to redress complaints.

During the financial year 2020-21, the Company has not received any complaints of sexual harassment.

36. MATERIAL TRANSACTIONS WITH RELATED PARTIES

The Company has not entered into any transaction with related parties during the year under review which requires reporting in Form AOC-2 in terms of Companies Act, 2013 read with Companies (Accounts) Rules, 2014.

37. SAFETY

The Company conducts regularly Safety audit and Environment audit through competent authorities for its manufacturing facilities located at Navi Mumbai and Ankleshwar. The Company also organises various safety awareness programmes to impart safety training to its employees.

38. AWARDS

The Company has been recognised by ‘Great Place to Work Institute and is ranked 85 amongst Indias 100 Best Companies to Work for the year 2020 (participation by more than 1000 companies) and one of Indias Best Workplaces in Biotechnology & Pharmaceuticals segment through the study conducted by ‘Great Place to Work Institute which validates the progressive culture of the organization.

39. APPRECIATION

Your Directors record their appreciation of the valuable services rendered by all employees of the Company, their gratitude to the banks for their assistance and to the Companys shareholders, customers and suppliers for their continued support.

For and on behalf of the Board of Directors
Place: Mumbai Harsh V. Goenka
Date: April 30, 2021 Chairman