Strides Pharma Science Ltd Directors Report.

Dear Members,

Your Directors have pleasure in presenting the 29th (Twenty-Ninth) Boards Report, along with the Audited Financial Statements for the financial year ended March 31, 2020.

1. Financial Summary

The financial performance of the Company on consolidated and standalone basis for the Financial Year ended March 31, 2020 as compared to previous year is summarised below:

Consolidated Basis

Standalone Basis

Particulars

2019-20

2018-19

2019-20

2018-19

INR (Rs.)

USD ($)*

INR (Rs)

USD ($)**

INR (Rs)

USD ($)*

INR (Rs)

USD ($)**

1.1 Financial
Continuing Operations
Income

28,050.84

372.32

22,192.14

320.74

17,743.13

235.51

16,520.43

238.77

Operating Profit (EBIDTA)

5,690.11

75.53

2,831.51

40.92

3,102.00

41.17

2,536.49

36.66

Net Profit (PAT)

433.57

5.75

892.54

12.90

1,116.99

14.83

1,144.10

16.54

Other Equity

24,378.52

323.58

25,591.55

369.87

30,856.04

409.56

31,672.49

457.76

Non-Controlling Interest

672.38

8.92

1,529.54

22.11

-

-

-

-

1.2 Profits
Operating Profit (EBIDTA)

5,690.11

75.53

2,831.51

40.92

3,102.00

41.17

2,536.49

36.66

Less:
Finance Cost

1,557.20

20.67

792.87

11.46

667.13

8.85

540.92

7.82

Depreciation & Amortisation

1,737.02

23.06

1,173.89

16.97

916.29

12.16

830.02

12.00

Exceptional Items

776.80

10.31

(216.17)

(3.12)

-

-

35.24

0.51

Profit Before Tax

1,619.09

21.49

1,080.92

15.62

1,518.58

20.16

1,130.31

16.34

Share of profit / (loss) of joint ventures and associates

(1,072.29)

(14.23)

(456.96)

(6.60)

-

-

-

-

Profit Before Tax

546.80

7.26

623.96

9.02

1,518.58

20.16

1,130.31

16.34

Less: Tax Expenses

113.23

1.50

(268.58)

(3.88)

401.59

5.33

(13.79)

(0.20)

Profit After Tax

433.57

5.75

892.54

12.90

1,116.99

14.83

1,144.10

16.54

Profit/ (Loss) from Discontinued Operations

(127.61)

(1.69)

2,406.21

34.78

-

-

(40.43)

(0.58)

Total Profit

305.96

4.06

3,298.75

47.68

1,116.99

14.83

1,103.67

15.95

Other Comprehensive Income
Items that will not be reclassified to profit/ (loss)

(138.92)

(1.84)

3.03

0.04

(17.57)

(0.23)

(4.53)

(0.07)

Items that may be reclassified to profit/ (loss)

509.62

6.76

(639.02)

(9.24)

(336.08)

(4.46)

97.60

1.41

Total Other Comprehensive Income (Net of Tax)

Total Comprehensive income

370.70

4.92

(635.99)

(9.19)

(353.65)

(4.69)

93.07

1.35

676.66

8.98

2,662.76

38.48

763.34

10.13

1,196.74

17.30

Dividend on Equity Shares
Final & Interim Dividend (including taxes)

(1,563.01)

(20.75)

(179.10)

(2.59)

(1,563.01)

(20.75)

(179.10)

(2.59)

Notes:

* 1 US$ = 75.34 (Exchange Rate as on March 31, 2020)

** 1 US$ = 69.19 (Exchange Rate as on March 31, 2019)

Previous year figures have been regrouped/ restated whereever necessary to make them comparable with those of the current year.

2. Companys Performance

FY 2019-20 was a stellar year of performance for the Company, as it achieved significant milestones with its contrarian strategies and perspectives on the business.

The Company showcased a strong performance by executing all strategic and financial targets. This was in spite of the turbulence in operations which came on the last day of the financial year, in the form of a US FDA notification, directing all manufacturers of Ranitidine to withdraw their products from the market, an event beyond anyones control.

During the year, we laid a strong foundation for sustainable margins in future led by regulated markets. Profitability, Efficiency and Growth (PEG) continued to be our focus area and we have consistently demonstrated this across all parameters.

In FY 2019-20, on a consolidated basis, your Company reported a revenue of 27,637 Million (29,127 Million*) as compared to 21,936 Million in FY 2018-19, registering a growth of 26% (33%*) on year- on-year basis. EBITDA for the year stood at 5,276 Million (6,514 Million*) as against 2,575 Million in the previous year, an increase of 105% (153%*) leading to a stable EBITDA margin expansion of 19.1% (22.4%*), which is a new milestone for Strides.

Regulated markets

On the business front, the regulated markets vertical comprising our businesses in the US and other regulated markets, including the UK, the EU, Canada, Australia and South Africa, witnessed an encouraging growth, while achieving a critical scale.

US business

The US business contributed 15,422 Million (16,912 Million*) to the total revenues pie of FY 2019-20, registering a growth of 47% (61%*) over the last year. Performance was primarily driven by niche product selections, improved market share in the base portfolios, consistent product launches and a stable price environment across several products in the Companys portfolio. Strides growth model for the US business focuses on delivering low-volume, low- competition, high-technology barrier products built around modified releases, soft-gel capsules (SGCs), topicals and liquids. The Company integrates its high-volume products with APIs driving cost leadership to achieve significant market share.

During the year, the Company acquired the US FDA approved sGc production unit in Florida and intends to expand additional dosage format suites at the site for helping tap the opportunities under various federal government procurement programmes.

Other regulated markets

The other regulated markets business continued to scale up sequentially to become the fastest growing market for the Company, registering a growth of 47% year-on-year. It contributed 8,361 Million to FY 2019-20 revenues, with growth attributed to increased market shares, product launches and optimisation of portfolio. During FY 2019-20, front- end driven markets like the UK, the EU and South Africa demonstrated a sustained performance.

In Europe, the pharma market is extremely diverse and provides region-specific opportunities. UK is the Companys anchor market for continental Europe and represents an opportunity worth US$11 Billion in generics. Company is strengthening its presence in the Nordics and Western Europe with IP-led partnerships and B2B focused strategy around niche molecules with limited competition. During the year, we acquired 70% stake in Fairmed Healthcare AG, a Switzerland based generic pharma company to deepen footprint in the DACH region (Austria, Germany and Switzerland). Additionally, we are now gearing up to expand presence in Central and Eastern Europe (CEE) and the Mediterranean countries through partnerships.

Company has also scaled up its supplies to Australia. Growth momentum for this market is expected to continue in the coming years gaining from operating leverage and a large pipeline of approved products with market fungibility.

In South Africa, the Company is building a strong base with portfolio maximisation to improve its IP landscape. We are leveraging the distribution of products through pharmacy chains and mail order systems and participating in the local antiretroviral (ARV) and non-ARV opportunities through a steady growth in regional footprint.

Canadas pharma market represents an opportunity of US$7 Billion. For Strides, it serves as an organic growth lever as the Company is building a greenfield business in the country across generics, private- label OTCs and the branded OTC extension from its portfolios in other markets.

Emerging Markets and Institutional Business

On the other end of spectrum, the Company continues to operate with a cautious and calibrated approach in the Emerging Markets and Institutional Business. Our Emerging Market business includes our Africa operations, except South Africa and institutional business.

Emerging Markets and Institutional business had its year of reset resulting in a tepid performance. Though the business has picked up sequentially in Q4 FY 2019-20, year-on-year basis, the business reported a 33% decline in revenues. Emerging Markets and Institutional Business contributed 3,853 Million to the total revenues of FY 2019-20.

This vertical aims to attain a leadership position in key African markets, building a robust branded generics portfolio for the treatment of chronic therapies, including Womens Health, Central Nervous System (CNS), Cardiovascular, Diabetes, Dermatology and Probiotics.

While the Company is well poised to achieve planned outcomes on the antiretroviral (ARV) and malarial business, it does see that the macro factors, including the outbreak of COVID-19 could result in a reduced focus/donor pool for ARV, Malaria and other infectious diseases.

Several antiviral drugs may be repurposed for COVID-19 in FY21, which could result in opportunities for the business. It is therefore important to monitor events in this vertical, which could compliment growth of branded generics, along with new launches in the Institutional Business.

FY 2019-20 highlights

Aligned with the growth strategy, during the year, the Company executed several corporate actions, including the acquisition of a US FDA-approved soft gel manufacturing facility in the US, acquisition of controlling stake in Fairmed Healthcare AG, a joint venture with Sihuan Pharmaceuticals for the China market and divestment of the Australia business, amongst others. During the year, the Company re-entered the sterile injectables segment with an incremental investment upto a maximum of ~US$ 40 Million in Stelis Biopharma.

On the compliance front, the Companys manufacturing facility at Alathur successfully completed US FDA inspection with zero 483s, the second consecutive inspection with such an encouraging outcome. Puducherry remediation activity remains on track, awaiting indication from the US FDA on inspection timelines. Besides, the Company also successfully completed US FDA inspection at its newly acquired manufacturing site in Florida, USA.

On the R&D front, during FY 2019-20, the Company primarily focused on new formulations and portfolio maximisation, wherein it evaluated its existing product basket for extension to other geographies with minimum efforts.

Strides received approval for seven ANDAs and filed for four more in the US. It has 20 new product filings for other regulated markets. The Companys R&D spend during the year stood at 939 Million. Going forward, it is targeting 30-35 filings annually across different geographies. This will be facilitated by its linear structure and belief in churning out more filings with less resources.

Company is progressing steadily with the outcomes from the reset strategy across each of the business verticals, both in terms of course correction and execution. Company has entered the next financial

year with a clearer conviction that its Reset and Resurgent strategy is in play and will continue to be its pillars of success. In FY21, its focus areas shall broadly be on growth, strengthen profitability, cash flows and sustainability.

A detailed analysis of each of the businesses of the Company is provided in the Management Discussion and Analysis Report.

3. Corporate Updates

During the year under review, your Company has undertaken the following key corporate actions:

Joint Ventures and Acquisitions

a) Joint Venture with Sihuan Pharmaceuticals

In July 2019, Strides Pharma Global Pte. Limited (SPG), a step down subsidiary of the Company in Singapore, entered into a joint venture arrangement with Sun Moral International (HK) Limited, Hong Kong (Sun Moral) to fast track its entry into China, the second largest pharmaceuticals market in the world.

Sun Moral is a wholly owned subsidiary of Sihuan Pharmaceutical Holdings Group Ltd., one of Chinas leading pharmaceutical companies.

As part of transaction, Sihuan Strides (HK) Ltd, the JV Company is formed, wherein SPG holds 49% stake and the balance stake is held by Sun Moral.

SPG has licensed four products to the JV with an option to expand the portfolio subsequently.

Sihuan shall leverage its strong salesforce and distribution across mainland China to market the products.

b) Acquisition of US FDA approved soft gel manufacturing facility in the US

In August 2019, Strides Pharma Inc (SPI), a step-down subsidiary of the Company in the US, acquired a US FDA approved soft gel manufacturing facility in Florida, USA from Micelle BioPharma Inc. The facility is one of the very few manufacturing facilities in the US with a soft-gel capsule manufacturing suite for formulations with containment needs.

The facility has received Establishment Inspection Report (EIR) from the US FDA in January 2020.

SPI plans to expand additional dosage format suites for select large volume products at the Florida facility. The facility is also expected to help tap opportunities under various federal government procurement programs, including procurements administered by the Department of Veterans Affairs (VA).

c) Acquisition of 70% equity stake in Fairmed Healthcare AG, Switzerland

In September 2019, Strides Pharma Global Pte. Limited (SPG), a step-down subsidiary of the Company in Singapore acquired 70% equity stake in Fairmed Healthcare AG (Fairmed), a Switzerland based generic pharma company.

The acquisition enabled Strides to further strengthen its Other Regulated Markets Business by providing strong foothold in continental Europe with a direct presence in the DACH region (Austria, Germany and Switzerland).

Strides vast international product portfolio and Fairmeds market access in the DACH region is a highly complementary combination to pivot an extensive growth in the coming years.

Scheme of Amalgamations

During the year, the Board initiated two Scheme of Amalgamations to facilitate consolidation of operations and to optimise group structure. Gist of the said schemes and status is as under:

a) Merger of Arrow Remedies, Fagris Medica and Strides Emerging Markets into the Company

In July 2019, Board of Directors of the Company approved the Scheme of Amalgamation for merger of its direct/ indirect wholly owned subsidiaries viz., Arrow Remedies Private Limited (Arrow), Fagris Medica Private Limited (Fagris) and Strides Emerging Markets Limited (SEML) (collectively Transferor Companies) into Strides Pharma Science Limited (the Company) pursuant to the provisions of Section 230 to 232 of the Companies Act, 2013 (Scheme).

Appointed Date for the said amalgamation is April 1, 2019 or such other date as the National Company Law Tribunal (NCLT) or such other competent authority may direct in relation to the amalgamation of Transferor Companies into the Company.

As the Registered Office of SEML is situated in Bengaluru and Registered Office of Arrow, Fagris and the Company is situated in Mumbai, two separate applications for approval of the Scheme were filed before the Bengaluru and Mumbai Benches of the National Company Law Tribunal (NCLT).

Pursuant to the above, Honble NCLT Benches of Bengaluru and Mumbai, dispensed with the meeting of equity shareholders and unsecured creditors of the Transferor Companies. Further, in relation to the Company, the Honble NCLT Mumbai Bench inter-alia directed to (i) convene the meeting of equity shareholders for seeking approval of the Scheme; and (ii) issue notice of the said meeting to the secured creditors.

The meeting of the unsecured creditors of the Company was dispensed by the Honble NCLT Mumbai bench.

Accordingly, General Meeting of the Company was convened under the direction of the Honble National Company Law Tribunal, Mumbai Bench on February 20, 2020, wherein the Scheme of Amalgamation was approved by Members of the Company.

The Scheme is awaiting final approval from the Honble NCLT Bengaluru and Mumbai Bench.

Upon the Scheme becoming effective:

1) All the assets, liabilities, employees, contracts, etc of the Transferor Companies shall be transferred to the Company and the Transferor Companies shall stand dissolved, without winding up.

2) Since the Company is the ultimate holding company of the Transferor Companies, there shall not be any issue of shares as consideration to the shareholders of the Transferor Companies.

3) The investments in the share capital of the Transferor Companies, appearing in the books of account of the Company and its indirect wholly-owned subsidiary, shall stand cancelled.

The amalgamation will enable the Company to consolidate and effectively manage the Transferor Companies and the Company in a single entity, eliminate duplication of operating and administrative expenses, simplify the group structure and enable the efficient use of infrastructure facilities and optimum utilisation of the available resources.

b) Scheme of Amalgamation of Vivimed Life Sciences into the Company In January 2020, Board of Directors of the Company approved the Scheme of Amalgamation for merger of its wholly owned subsidiary, Vivimed Life Sciences Private Limited (Vivimed) into the Company pursuant to the provisions of Section 230 to 232 of the Companies Act, 2013 (Scheme).

Appointed Date for the said amalgamation is October 1, 2020 or such other date as the National Company Law Tribunal (NCLT) or such other competent authority may direct in relation to the amalgamation of Vivimed with Strides.

The Scheme is subject to approval of the shareholders and creditors of respective companies and approval of the Honble NCLT

and other statutory/ regulatory approvals, as may be required.

The Company is in the process of making necessary applications with the appropriate authorities in this matter.

Divestments

Update on the divestment of Australian business

During FY 2018-19, the Company had received Members approval for divestment of its Australia business. The transaction was pending for completion of other closing conditions, including the merger of Arrow Pharmaceuticals, Australia and Apotex Australia and closure of 10 year preferred supply contract.

In July 2019, post receipt of requisite approval, Strides Pharma Global Pte. Limited (SPG), a step down subsidiary of the Company in Singapore, entered into definitive agreements for divestment of the Australia business.

Effective July 10, 2019, SPG has divested its entire shareholding in its subsidiaries viz., Strides Arcolab (Australia) Pty Ltd., Australia and Generic Partners Holding Co Pty Ltd., Australia to Arrotex Australia (Arrotex).

Aggregate consideration for the transaction was AUD 406 Million (including a deferred consideration of AUD 106 Million) reduced by bank debt settlement of AUD 22.47 Million. Proceeds net of transaction cost was used to pare down debts.

As part of the transaction, SPG has retained access to IPs of over 140+ products and has concurrently entered into a preferred supplier agreement with Arrotex.

The said transaction has enabled the Company to strengthen its balance sheet and has been EPS accretive.

Other Updates

Incremental Investment in Stelis Biopharma Private Limited (Stelis)

The Board of Directors of the Company at their meeting held in September 2019 approved an additional investment upto ~US$40 Million into Stelis, over a period of 24 months for a controlling stake.

This investment shall enable Stelis to achieve its objective of becoming a compelling global player in the biopharmaceutical space and to accelerate Strides re-entry into the sterile injectable business.

As at March 31, 2020, the Company holds ~47.81% stake in Stelis on a fully diluted basis.

4. Board of Directors and Key Managerial Personnel of the Company

Board of Directors and Key Mangerial Personnel (KMP) of the Company as at the date of this Report

The Board of the Company comprises of Eight Directors - Two Executive Directors and Six NonExecutive Directors of whom Four are Independent Directors, details of which is provided below:

# Name Designation
Non-Executive Directors
1 Arun Kumar Non-Executive Director & Chairperson of Board
2 Deepak Vaidya Non-Executive Director & Chairperson of Stakeholders Relationship Committee
3 S Sridhar Independent Director & Chairperson of Audit Committee
4 Bharat D Shah Independent Director & Chairperson of Nomination & Remuneration Committee
5 Homi Rustam Independent Director &
Khusrokhan Chairperson of Risk Management Committee
6 Dr. Kausalya Santhanam Independent Director & Chairperson of CSR Committee
Executive Directors
7 Dr. R Ananthanarayanan* Managing Director & CEO
8 Badree Komandur* Executive Director - Finance & Group CFO
Company Secretary
9 Manjula Ramamurthy* Company Secretary

*KMP of the Company

Details relating to changes in the Board of Directors and KMP are provided in the Corporate Governance Report, which forms part of this Report.

Appointment, Re-appointment & Retirement by Rotation of Directors

Proposal for appointment and re-appointment of the following personnel as Director shall be placed before Members of the Company at the ensuing Annual General Meeting (AGM):

1) Re-appointment of Mr Arun Kumar, retiring director, as Non-Executive Director of the Company.

2) Appointment of Dr. Kausalya Santhanam as an Independent Director of the Company for a period of 5 years effective from December 11, 2019.

3) Appointment of Dr. R Ananthanarayanan as the Managing Director & CEO of the Company for a period of 5 years effective January 9, 2020.

4) Re-appointment of Mr. Badree Komandur as the Executive Director - Finance & Group CFO of the Company for a further period of 3 years effective May 18, 2020.

Your Directors recommend their appointment/ reappointment on the Board of the Company.

Disclosures pertaining to Directors being appointed/ re-appointed as required under the Companies Act, 2013 and the SEBI Listing Regulations is provided in the explanatory statement to the Notice convening the 29th AGM of the Company for reference of the Members.

Meetings of the Board and Board Committees

Details of meetings of the Board and Board Committees and their respective composition are provided in the Corporate Governance Report, which forms part of this Annual Report.

5. Share Capital

As at March 31, 2020, the Authorised Share Capital of the Company stood at 1,767,500,000/- divided into 176,750,000 equity shares of 10/- each.

Issued, Subscribed and Paid-up Equity Share Capital of the Company as at March 31, 2020, stood at 895,654,640/- divided into 89,565,464 equity shares of 10/- each.

There has been an increase in the paid-up equity share capital of the Company during the financial year under review on account of allotment of 15,988 equity shares consequent to exercise of stock options by employees.

6. Dividend

Interim Dividend for FY 2019-20

The Board of Directors of the Company paid an interim dividend of 12/- per equity share (i.e. 120%) of face value of 10/- each, consequent to divestment of Companys Australia Business.

Final Dividend for FY 2019-20

Based on the Companys performance, the Directors are pleased to recommend for approval of the Members, a final dividend of 2/- per equity share (i.e. 20%) of face value of 10/- each for the financial year ended March 31, 2020.

The total dividend for the financial year ended March 31, 2020 (including the proposed final dividend) amounts to 14/- per equity share.

Dividend payout has been determined in accordance with the Dividend Distribution Policy of the Company.

Details of book closure date and record date for the purpose final dividend is provided under the head

General Shareholders Information in the Corporate Governance Report.

In terms of Regulation 43(A) of the SEBI Listing Regulations, the Dividend Distribution Policy is available on the Companys website and can be accessed at http ://www.strides. com/investor-

committeboard.html

7. Transfer to Reserves

Appropriations to general reserve for the Financial Year ended March 31, 2020 as per Consolidated and Standalone Financial Statements are as follows:

 

(Rs in Million)

Particulars

Consolidated Basis

Standalone Basis

Net Profit for the year

363.91

1,116.99

Other Comprehensive Income

378.52

(353.65)

Balance of Reserve at the beginning of the year

25,591.55

31,672.49

Adjustment on adoption of Ind AS 116

(266.35)

(38.95)

Securities premium on allotment of ESOP shares

22.17

22.17

Acquisitions of NonControlling Interest

(148.27)

-

Dividend Payout (including taxes)

(1,563.01)

(1,563.01)

Balance of Reserve at the end of the year

24,378.52

30,856.04

cnu ui Lite year

Note-excluding non-controlling interest

For complete details on movement in Reserves and Surplus during the Financial Year ended March 31, 2020, please refer to the Statement of Changes in Equity included in the Consolidated and Standalone Financial Statements.

8. Subsidiary, Joint Ventures and Associate Companies

Details of Subsidiaries, Joint Ventures and Associate entities as at March 31, 2020 are provided herein below:

Nature of Relationship

India

Overseas

Total

Subsidiaries

05

36

41

Joint Ventures

-

01

01

Associates

02

10

12

Total

07

47

54

List of Subsidiaries, Joint Ventures and Associate entities which have become or ceased to be part of the Group forms part of Form AOC 1, enclosed as Annexure 1 to this Report.

Accounts of Subsidiaries

In accordance with Section 129 (3) of the Companies Act, 2013, the Company has prepared a consolidated financial statement.

A statement containing salient features of the financial statements of the Companys subsidiaries, joint ventures and associate companies as required in Form AOC 1 is enclosed as Annexure 1 to this Report.

9. Corporate Governance and Management Discussion and Analysis

As per SEBI Listing Regulations, Corporate Governance Report along with the Auditors Certificate thereon, and the Management Discussion and Analysis Report forms part of this report.

Draft Auditors Report had qualification with respect to delay in appointment of woman independent director.

Management wishes to state that the Company had commenced efforts to fill up the vacancy immediately on its occurrence.

However, given the qualification, expertise and industry specific knowledge required for the position, the process took more time than expected. Appointment of Woman Independent Director was formalised effective December 11, 2019.

We confirm that currently Companys Board composition is in compliance with the requirements under Companies Act, 2013 and the SEBI Listing Regulations.

10. Employee Stock Option Scheme

During the year under review, Company had 2 Employees Stock Option Plans viz., Strides Arcolab Employees Stock Option Plan 2015 and Strides Employees Stock Option Plan 2016.

Statement giving detailed information on stock options granted to Employees under the Companys Employee Stock Option Plans as required under Section 62 of the Companies Act, 2013 read with Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 and Regulation 14 of SEBI (Share Based Employee Benefits) Regulations, 2014 is enclosed as Annexure 2 to this Report and is also available at http://www.strides.com/investor-financial.html

11. Particulars of Employees

The statement containing particulars in terms of Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this report and is appended herewith as Annexure 3 to this report.

The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of 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.

Considering the first proviso to Section 136(1) of the Companies Act, 2013, the Annual Report, excluding the aforesaid information, is being sent to the Members of the Company and others entitled thereto. The said information is available for inspection at the registered office of the Company during business hours on working days of the Company up to the date of the ensuing AGM. Any Member interested in obtaining a copy thereof, may write to the Company Secretary in this regard.

12. Corporate Social Responsibility (CSR)

Strides community interventions primarily focuses on Health & Hygiene, Education, Employability & Livelihood, which are projects in accordance with Schedule VII of the Companies Act, 2013.

CSR Policy of the Company is available on its website and can be accessed at http://www.strides. com/investor-committeboard.html

A detailed report on the CSR activities undertaken during the FY 2019-20 is enclosed as Annexure 4 to this Report.

13. Loans, Guarantees or Investments

Details of Loans granted, Guarantees given and Investments made during the year under review, covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Note no. 39 to the standalone financial statements in the Annual Report.

14. Contracts or Arrangements with Related Parties

All the transactions with related parties are in the ordinary course of business and at arms length basis. Further, there are no materially significant related party transactions made by the Company which may have potential conflict with the interests of the Company.

The information on transactions with related parties pursuant to section 134(3)(h) of the Companies Act 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014 is attached as Annexure 5 to this Report.

All the transactions with related parties are disclosed in Note no. 44 to the standalone financial statements in the Annual Report.

Policy for Governance of Related Party Transactions is available on the Companys website at http:// www.strides.com/investor-committeboard.html

15. Auditors and Audit Reports Secretarial Audit Report

M/s. Gopalkrishnaraj H H & Associates, a firm of Company Secretaries in Practice (Certificate of Practice No: 4152) is the Secretarial Auditor for the Company.

The Secretarial Audit for the FY 2019-20, inter-alia, included audit of compliance with the Companies Act, 2013 (Act), and the Rules made under the Act, SEBI Listing Regulations and applicable Regulations prescribed by SEBI amongst others.

The Secretarial Audit Report is enclosed as Annexure 6 to this report and has an observation regarding delay in appointment of Woman Independent Director within October 31, 2019.

Management wishes to state that the Company had commenced efforts to fill up the vacancy immediately on its occurrence. However, given the qualification, expertise and industry specific knowledge required for the position, the process took more time than expected. Appointment of Woman Independent Director was formalised effective December 11, 2019.

We confirm that currently Companys Board composition is in compliance with the requirements under Companies Act, 2013 and the SEBI Listing Regulations.

Statutory Auditors

M/s. B S R & Co. LLP, Chartered Accountants (Firm Registration no. 101248W/ W-100022) were appointed as Statutory Auditors of the Company for a period of 5 years at the 26th AGM of the Company to hold office till the conclusion of the 31st AGM of the Company.

The Auditors Report for the financial year ended March 31, 2020, is enclosed along with the financial statements in the Annual Report. The Auditors Report for the year ended March 31, 2020, does not contain any qualifications, observations or adverse remarks.

Internal Auditors

M/s. Grant Thornton India LLP are the Internal Auditors of the Company.

During the year under review, Internal Auditors were satisfied with the management response on the observations and recommendations made by them during the course of their audit.

Cost Auditors

Pursuant to Section 148(1) of the Companies Act, 2013, Company is required to maintain cost records and accordingly such accounts and records are made and maintained.

Pursuant to Section 148(3) and the Companies (Cost Records and Audit) Rules, 2014, M/s. Rao, Murthy & Associates, Cost Accountants (Firm Registration No.: 000065), were appointed as the Cost Auditors of the Company for the Financial Year 2019-20.

16. Internal Financial Controls

The Company has in place adequate framework for Internal Financial Controls as required under Section 134 (5)(e) of the Companies Act, 2013.

During the year under review, such controls were tested and no material weaknesses in their design or operations were observed.

17. Risk Management

The Company has a risk management framework for the identification and management of risks.

In line with the requirement under the SEBI Listing Regulations, the Company has constituted a Risk Management Committee (RMC) effective April 1, 2019, comprising of members of the Board and Senior Management personnel. Composition of RMC is provided in the Corporate Governance Report, which forms part of this Report.

RMC is entrusted with the responsibility of overseeing strategic, operational and financial risks that the organisation faces, along with the adequacy of mitigation plans to address such risks.

Additional details relating to Risk Management are provided in the Management Discussion and Analysis report forming part of this Report.

18. Other Disclosures

Nature of Business of the Company

There has been no change in the nature of business of the Company during the year under review.

Deposits

The Company has not accepted any deposits covered under chapter V of the Companies Act, 2013. Accordingly, no disclosure or reporting is required in respect of details relating to deposits.

Whistle Blower Policy

Pursuant to provisions of section 177(9) of the Companies Act, 2013 and SEBI Listing Regulations, the Company has a Whistle Blower Policy in place.

The said Policy provides appropriate avenues to the directors, employees and stakeholders of the Company to make protected disclosures in relations to the matters concerning the Company. The said Policy also establishes adequate mechanism to enable employees to report instances of leak or suspected leak of unpublished price sensitive information.

Audit Committee of the Company oversees implementation of the Whistle Blower Policy. During the year, Company has not received any protected disclosure.

Strides Whistle Blower Policy is available on the Companys website and can be accessed at http:// www.strides.com/investor-committeboard.html

Policy on Directors Appointment and Remuneration (Strides Nomination and Remuneration Policy)

The policy of the Company on Directors appointment and remuneration, including the criteria for determining qualifications, positive attributes, independence of a director and other matters, as required under Section 178 of the Companies Act, 2013 is available on the its website and can be accessed at http://www.strides.com/ investor-committeboard.html

Disclosure on compliance with Secretarial Standards

The Company complies with all applicable mandatory secretarial standards issued by the Institute of Company Secretaries of India.

Insurance

The assets/ properties of the Company are adequately insured against loss due to fire, riots, earthquake, terrorism, amongst others and against other perils that are considered necessary by the management.

Reporting of Fraud

No frauds were reported by the Auditors as specified under Section 143 of the Companies Act, 2013 for the Financial Year ended March 31, 2020.

Significant and material orders passed by the Regulators or Courts

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

Extract of Annual Return

Extract of Annual Return in Form MGT - 9 is enclosed as Annexure 7 to this Report and is available at http://www.strides.com/investor-financial.html

Conservation of Energy, R&D, Technology Absorption and Foreign Exchange Earnings/

Outgo

Details of Energy Conversation, R&D, Technology Absorption and Foreign Exchange Earnings/ Outgo are enclosed as Annexure 8 to this Report.

Policy on prevention of Sexual Harassment at workplace

Your Company has in place a Policy on Prevention of Sexual Harassment in line with the requirements of The Sexual Harassment of Women at the work place (Prevention, Prohibition & Redressal) Act, 2013 (PoSH Act). Strides has adopted a gender- neutral policy.

In terms of the PoSH Act, your Company has also constituted Internal Complaints Committee (ICC). Adequate workshops and awareness programmes against sexual harassment are conducted across the organisation.

A disclosure relating to PoSH is provided in the Corporate Governance Report, which forms part of this Report.

19. Declaration by Independent Directors

In accordance with Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of the SEBI Listing Regulations, each independent director has confirmed to the Company that he or she meets the criteria of independence as laid down in Section 149 (6) of the Companies Act, 2013 and Regulation 16(1) (b) of the SEBI Listing Regulations.

20. Board Evaluation

Evaluation of all the Directors, Committees, Chairperson of the Board, and the Board as a whole was conducted for the year. Evaluation parameters and the process have been explained in the Corporate Governance Report, which is part of this report.

21. Material changes and commitments, if any

There were no material changes and commitments affecting the financial position of the Company which occurred between the end of the Financial Year to which this financial statement relates and the date of this report.

22. Directors Responsibility Statement

Pursuant to the requirement under section 134 (3) (c) of the Companies Act, 2013 with respect to the Directors Responsibility Statement, Board of Directors of your Company state that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) 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 at the end of the financial year and of the profit and loss of the Company for that period;

(c) directors have 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) directors have prepared annual accounts of the Company 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;

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

23. Acknowledgement

Your Directors take this opportunity to thank all its stakeholders, employees, medical professionals, business partners, government & other statutory bodies, banks, financial institutions, analysts and members for their continued support and valuable cooperation.

Date: May 20, 2020

Dr. R Ananthanarayanan

Badree Komandur

Place: Bengaluru

Managing Director & CEO

Executive Director - Finance & Group CFO

Adjustment on adoption of Ind AS 116

DIN: 02231540

DIN: 07803242