Sanofi India Ltd Directors Report.

To the Members of the Company

Your Directors have pleasure in presenting the Audited Accounts of your Company for the financial year ended 31st December 2021.

Rs in million

Financial Results 2021 2020
Revenue from operations 29,566 29,019
Other income 744 898
Total income 30,310 29,917
Profit before exceptional items and tax 7,684 7,189
Profit before tax 12,576 6,772
Tax expense 3,132 1,996
Profit for the year 9,444 4,776
Other comprehensive income (Net of tax) (33) (88)
Total comprehensive income for the year 9,411 4,688

The financial results for the year ended 31st December 2021 are not comparable with that of year ended 31st December 2020 due to completion of the slump sale transaction on 29th May 2020, which resulted in transfer of Ankleshwar manufacturing facility and few products to Zentiva Private Limited.

During the previous year, on 29th May 2020, the Company closed the transaction of slump sale and transfer of its Ankleshwar manufacturing facility to Zentiva Private Limited. The final consideration after working capital adjustments was fixed at Rs 3,001 million, out of which an amount of Rs 2,728 million was received during the year 2020 and the balance Rs 273 million has been received during the current year 2021 after full transfer of the products.

During the year, the Board of Directors of the Company at its meeting held on 27th July 2021 approved a transaction for the slump sale and transfer of the Companys Nutraceuticals business, on a going concern basis to Universal Nutriscience Private Limited for a consideration of Rs 5,870 million including debt like obligations, subject to customary working capital adjustments. The transaction was closed on September 30, 2021. Subsequent to the closing, the final consideration of Rs 5,860 million (after working capital adjustments) has been received in full and during the year ended December 31, 2021, the Company has accounted for gain of Rs 4,892 million (comprising debt like obligation taken over by the purchaser Rs 196 million, intangible assets adjusted Rs 827 million and transaction costs Rs 337 million), which has been disclosed as an exceptional item.

The Nutraceuticals business of the Company comprised 16 brands and 30 SKUs. These along with related business assets and liabilities including contracts, intellectual property rights, inventory, and all employees associated with this business were transitioned to Universal Nutriscience Private Limited.

Transfer to Reserves

Your Company does not propose to transfer any amount in the general reserves of the Company.

Dividend

Your Directors at their meeting held on 23rd February 2022 has recommended payment of final dividend of Rs 181 per equity share of Rs 10 for the year ended 31st December 2021 and one-time special dividend of Rs 309 per equity share of Rs 10 for the year ended 31st December 2021, considering the sale of Nutraceutical business of the Company and the cash requirements of the Company. The dividend will be paid after approval of members at the ensuing Annual General Meeting (AGM) of the Company. The dividend, if approved by the members at the AGM scheduled on 26th April 2022, will result in cash outflow of Rs 11,285 million.

Pursuant to the requirements of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations), the Dividend Distribution Policy of the Company is available on the Companys website link https://www.sanofiindialtd.com/en/investors/corporate-policies

Unpaid/Unclaimed Dividend

In terms of the provisions of Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016/Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001 (including amendments and modifications, thereof), Rs 3.23 million of unpaid/ unclaimed dividends were transferred during the year 2021 to the Investor Education and Protection Fund.

Divestment of Soframycin? and

Sofradex? Businesses

During the year under review, the Sanofi Group decided to sell some of its old brands along with their trademarks. These included brands Soframycin? and Sofradex?, which were manufactured (through a third-party manufacturing arrangement) and distributed by your Company in India.

Sanofi Group entered into a transaction with Encube Ethicals Private Limited which involved transfer of the Soframycin? and Sofradex?, brands, trademarks and associated technical know-how/ manufacturing dossiers (registered IP) to Encube Ethicals Private Limited. As part of this transaction, the Company also sold certain assets namely marketing intangibles, customer lists/database, trade channel knowledge/wholesaler lists, vendor/supplier database, pharmacovigilance/medical database that are related to this distribution business conducted by the Company (collectively called unregistered IP) and product inventory to Encube Ethicals Private Limited, through an Asset Purchase Agreement, for a consideration of Rs 1368.5 million. The Audit Committee of your Company approved the valuation and the Board approved the said transaction at their meetings held on 25th November 2021. The transaction was completed on 31st January 2022 and your Company has received the entire consideration.

Directors and Key Managerial Personnel (KMP)

During the year under review, Mr. Vaibhav Karandikar (DIN: 09049375) was appointed as Whole Time Director of the Company w.e.f. 23rd February 2021.

Further, Mr. Cyril Grandchamp-Desraux (DIN: 07719763) informed the Board vide his letter dated 24th November 2021, that he would like to resign as the Non-Executive Director of the Company due to personal reasons with immediate effect.

The Board noted and accepted this resignation at its meeting held on 25th November 2021. The Board places on record its deep appreciation of his contribution in the development of the Company.

Mr. Rajaram Narayanan (DIN: 02977405) informed the Board vide his letter dated 12th January 2022, that he would like to step down as Managing Director of the Company effective close of business hours on 10th April 2022, to pursue an external opportunity.

The Nomination and Remuneration Committee and the Board noted and accepted the resignation at the meeting(s) held on 13th January 2022. Mr. Rajaram Narayanan joined the Company in 2014 as General Manager and was later elevated as Country Lead & Managing Director. In these roles, he led the strategic reorientation of the Company, sharpening its focus on core areas, developing new business models, building future talent and driving digital transformation across all areas of the business. During his tenure as Managing Director, the Company has been recognised as a Top Employer for four consecutive years and has received several recognitions for its initiatives in HR practices, Communications, CSR (Corporate Social Responsibility) and Public health. The Board places on record immense appreciation for his contribution towards the growth of the Company.

Mr. Girish Tekchandani resigned as Company Secretary and Compliance Officer of the Company w.e.f. close of business hours on 31st August 2021. Based on the recommendations of the Nomination and Remuneration Committee, the Board of Directors at their meeting held on 26th October 2021, appointed Ms. Radhika K. Shah as the Company Secretary and Compliance Officer w.e.f. 1st November 2021.

As on the date of this Report, Mr. Rajaram Narayanan, Managing Director; Mr. Vaibhav Karandikar, Whole Time Director & Chief Financial Officer; Mr. Cherian Mathew, Whole Time Director and Ms. Radhika K. Shah, Company Secretary & Compliance Officer are designated as the Key Managerial Persons of the Company.

Mr. Aditya Narayan, Chairman and Mrs. Usha Thorat, Chairperson of the Audit Committee and Nomination and Remuneration Committee, were re-appointed for their second term of five consecutive years, commencing from 30th April, 2021, at the Annual General Meeting held on 27th April, 2021.

The Company has received declarations from all Independent Directors that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 (the Act) and the Listing Regulations and they have registered themselves with the Independent Directors Database maintained by the IICA (The Indian Institute of Corporate Affairs). In the opinion of the Board, the Independent Directors fulfill the conditions specified in these regulations and are independent of the management.

Mr. Cherian Mathew (DIN: 08522813) is liable to retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment. The Board of Directors recommend his re-appointment to the members.

Management Discussion and Analysis

As required by Regulation 34(2) of the Listing Regulations, a Management Discussion and Analysis Report forms part of this Report.

The state of the affairs of the business along with the financial and operational developments has been discussed in detail in the Management Discussion and Analysis Report.

Conservation of Energy, Technology Absorption and Foreign Exchange

Earnings and Outgo

Information on conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to Section 134(3)(m) of the Act, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is given in Annexure - A to this Report.

Cash Flow and Consolidated Financial Statements

As required under Regulation 34 of the Listing Regulations, a Cash Flow Statement is part of the Annual Report.

The Company does not have any subsidiaries and hence not required to publish Consolidated Financial Statements.

Subsidiaries, Associate Companies And Joint Ventures

Your Company does not have any subsidiaries, joint ventures or associate companies.

Corporate Governance Report

As required under Regulation 34 of the Listing Regulations, a Report on Corporate Governance along with a Certificate of Compliance from the Statutory Auditors is part of this Report.

Business Responsibility Report The Business Responsibility Report for the year ended 31st December 2021, as stipulated under Regulation 34 of the Listing Regulations is given in Annexure - B to this Report.

Meetings of the Board

Eight meetings of the Board were held during the year. Dates of the meetings are given in the Report on Corporate Governance. The maximum interval between any two meetings did not exceed 120 days, as prescribed by the Act and Listing Regulations.

Familiarisation Programme for

Independent Directors

The Directors are regularly informed during meetings of the Board and Committees on the business strategy, business activities, manufacturing operations and issues faced by the pharmaceutical industry. The Directors when they are appointed are given a detailed orientation on the Company, pharmaceuticals industry, regulatory matters, business, financial matters, human resource matters and corporate social responsibility. The details of Familiarisation programmes provided to the Directors of the Company are mentioned in the Corporate Governance Report and on the Companys website link https://www.sanofiindialtd.com/en/investors/corporate-policies .

Performance Evaluation of the Board

During the year under review, the performance evaluation of the Board, Committees and Directors was conducted based on the criteria, framework and questionnaires approved by the Nomination and Remuneration Committee and the Board. The details of the performance evaluation exercise conducted by the Company are set out in the Corporate Governance Report.

Nomination and Remuneration Policy & Remuneration of Directors, Key Managerial Personnel and Senior Management

The Nomination and Remuneration Policy of the Company is performance driven and is designed to motivate employees, recognise their achievements, and promote excellence in performance. The Policy provides guidance on selection and nomination of Directors to the Board of the Company; appointment of the Senior Management Personnel of the Company; and remuneration of Directors, Key Management Personnel and other employees. The remuneration paid to the Directors, Key Managerial Personnel and Senior Management is in accordance with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Act and the Listing Regulations. Further details form part of the Corporate Governance Report and a Statement of Disclosure of Remuneration pursuant to Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided as Annexure - C to this Report.

The statement showing particulars of employees pursuant to Section 197 of the Companies Act,

2013 (the Act) read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this report. However, the above-mentioned statement is not being sent to the Members along with this Annual Report in accordance with the provisions of Section 136 of the Act. Any person interested in receiving the said information may write to the Company Secretary stating their Folio No./ DPID.

Audit Committee

Details pertaining to composition of the Audit Committee are included in the Report on Corporate Governance. All the recommendations made by the Audit Committee were accepted by the Board.

Vigil Mechanism

As per the provisions of Section 177(9) of the Act and Regulation 22 of the Listing Regulations, the Company is required to establish a Vigil Mechanism. The Companys Code of Conduct, Whistle-blower and other Governance Policies lays out the defining principles of highest ethical standards. The details of the Whistleblower Policy are provided in the Report on Corporate Governance forming part of this Report.

Related Party Transactions

All related party transactions which were entered into during the year under review were on arms length basis and in the ordinary course of business. There were no materially significant related party transactions made by the Company with the Promoters, Directors and KMP which may have a potential conflict with the interests of the Company at large.

The Company has formulated a policy on materiality of related party transactions and also on dealing with related party transactions. The policy is available on the Companys website link https://www.sanofiindialtd.com/en/investors/corporate-policies. Pursuant to Clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of contracts / arrangements entered into by the Company with related parties referred to in sub section (1) of Section 188 of the Act including certain arms length transactions under third proviso thereto are required to be disclosed in Form AOC-2.

The Form AOC-2 envisages disclosure of material contracts or arrangements or transactions at arms length basis. The details of the material related party transactions in financial year ended 31st December 2021, as per the Policy on dealing with related parties adopted by the Company are disclosed in Annexure - D to this Report.

Your Company has entered into material related party transactions with sanofi-aventis Singapore Pte. Ltd. for the purchase and sale of products and services and with Sanofi Healthcare India Private Limited (SHIPL). These transactions were in the ordinary course of business and at arms length duly certified by the third-party experts. The transactions were within the limits approved by the members.

In view of the prevailing interest rate scenario and overall reduction in bank rates, the Board at its meeting held on 23rd February 2021 approved reduction in interest rate payable by SHIPL from 7.5% to 5.5% per annum with effect from 15th April 2021. Further, the Board at its meeting held on 26th October 2021 revised the interest rates to 5.55% and also approved extension of tenure of loan to SHIPL till 15th April 2023 with all other terms remaining same including the continuation of the corporate guarantee by Sanofi group.

Your Company had originally entered into Related Party Transaction(s) with Sanofi Synthelabo (India) Private Limited (SASY) and Sanofi Pasteur India Private Limited (SPIPL), These existing Related Party Transactions with SASY and SPIPL were in the ordinary course of business and were at arms length, as per the provisions of the Companies Act, 2013 and the rules made thereunder, and have been approved of by the Companys Audit committee.

These transactions were not material related party transactions for purposes of the Listing Regulations.

The National Company Law Tribunal (NCLT) vide its Order dated 20th April 2021 approved the merger of SASY and SPIPL with SHIPL. The said merger was effective from 1st June 2021 and resulted in the transfer of all of the contracts/ arrangements originally entered into with each of SASY and SPIPL to SHIPL. As a result, the contracts/ arrangements originally entered into with SASY and SPIPL respectively, are now deemed to be contracts/ arrangements with SHIPL. The Company was not a party to the aforesaid merger, and the contracts / arrangements originally entered into with SASY and SPIPL have now been assigned to SHIPL due to operation of law (upon effectiveness of the above merger).

Individually, the value of transactions between Company with SASY and the Company with SPIPL was within the threshold limit of 10% of the Companys annual consolidated turnover as prescribed under the Regulation 23(1) of the Listing Regulations. However, due to the merger of the aforesaid entities, transactions which were originally entered into with SASY and SPIPL (Transferor Companies) have now been aggregated with transactions SHIPL (Transferee Company) as a result of operation of law, and as a result, the transactions of the Company with SHIPL, for FY 2021, have crossed the threshold limit of 10% of the Companys annual consolidated turnover as prescribed under the Regulation 23(1) of the Listing Regulations.

The Company has sought approval of members through Postal Ballot for the contracts/ arrangements/ transactions entered into for the FY 2021 and for entering into contracts/ arrangements/ transactions related to purchase, sale, transfer or receipt of products, goods, active pharmaceutical ingredients, materials, services or other obligations, if any, on such terms and conditions as may be mutually agreed upon between the Company and SHIPL a Related Party as defined under Section 2(76) of the Act and

Auditors

M/s. Price Waterhouse & Co. Chartered Accountants LLP (Firm Registration Number 304026E / E300009) were appointed as Statutory Auditors of your Company to hold office from the conclusion of the Sixty-first AGM held in the year 2017, until the conclusion of the Sixty-sixth AGM to be held in the year 2022.

Subject to the approval of members at the AGM, the Audit Committee at its meeting held on 22nd February 2022 and the Board at its meeting held on 23rd February 2022, recommended re-appointment of M/s. Price Waterhouse & Co. Chartered Accountants LLP for a further period of 5 years until the conclusion of the Seventy-first AGM to be held in 2027.

The Company has received written consent and certificate of eligibility in accordance with Sections 139, 141 and other applicable provisions of the Act and Rules issued thereunder, from of M/s. Price Waterhouse & Co. Chartered Accountants LLP. They have confirmed to hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India (ICAI) as required under the Listing Regulations.

The Audit Committee and the Board is of the opinion that continuation of M/s. Price Waterhouse & Co. Chartered Accountants LLP as Statutory Auditors will be in the best interests of the Company and therefore, the members are requested to consider their re-appointment as Statutory Auditors of the Company, for a term of five years, from the conclusion of the ensuing Annual General Meeting, till the Annual General Meeting to be held in the financial year 2027, at such remuneration mutually agreed and approved by the Board.

The resolution seeking re-appointment of M/s. Price Waterhouse & Co. Chartered Accountants LLP as Statutory Auditors for a period of 5 years until the conclusion of the Seventy-first AGM to be held in 2027 has been included in the Notice of the Sixty-sixth Annual General Meeting for approval of the members.

The Statutory Auditors have issued an unqualified audit report on the annual accounts of the Company for the year ended 31st December 2021.

Reporting of Fraud by Auditors

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

Prevention of Sexual Harassment Policy

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

An Internal Committee has been set up to redress complaints received regarding sexual harassment.

All employees (permanent, contractual, temporary, trainees) are covered under this policy.

During the year 2021, the Company did not receive any complaint of alleged sexual harassment. As on 31st December 2021 no complaints related to sexual harassment are pending for disposal.

Secretarial Audit

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Directors had appointed M/s. Makarand M. Joshi & Co., a firm of Company Secretaries in Practice, to undertake the Secretarial Audit of your Company for the year ended 31st December 2021.

The Secretarial Auditors have issued an unqualified audit report for the year ended 31st December 2021.

Their report is annexed herewith as Annexure - F to this Report.

The Annual Secretarial Compliance Report has been submitted to the stock exchanges within 60 days of the end of the financial year.

Secretarial Standards

The Company has complied with Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) issued by the Institute of Company Secretaries of India.

Annual Return

As required under Section 92(3) of the Act, Annual Return is hosted on the website of the Company www.sanofiindialtd.com.

Material Changes and Commitments after the Financial Year

No material changes and commitments have occurred after the closure of the financial year ended 31st December 2021 till the date of this Report, which would affect the financial position of your Company.

There has been no change in the nature of business of your Company.

Significant and Material Orders Passed by the Regulators / Courts / Tribunals

No significant or material orders were passed by the Regulators or Courts or Tribunals which impacts the going concern status and Companys operations in future.

Acknowledgements

Your Directors place on record their deep appreciation to employees at all levels for their hard work, dedication and commitment. In the period of extreme uncertainty due to the public-health and economic disruption created by the COVID-19, the employees and associates of your Company have extended splendid support and made significant contribution to ensure uninterrupted supply of medicines to needy patients.

The Board also places on record its appreciation for the support and co-operation that your Company has been receiving from the medical fraternity, suppliers, distributors, retailers, business partners, government departments both at central & state level and all other stakeholders.

By Authority of the Board
Aditya Narayan
Chairman
DIN: 00012084
23rd February 2022