Sun Pharma Advanced Research Company Ltd Directors Report

Dear Members,

The Board of Directors presents the Companys Nineteenth (19^th)Annual Report and the Companys Audited Standalone and Consolidated Financial Statements for the financial year ended March 31, 2024.

FINANCIAL RESULTS

The Companys financial performance for the year ended March 31, 2024 is summarized below:

	Standalone		Consolidated
Particulars	Year ended March 31, 2024	Year ended March 31, 2023	Year ended March 31, 2024	Year ended March 31, 2023
Total Income	10,501.46	24,965.75	10,501.46	24,965.75
Profit/(Loss) before Finance Cost, Depreciation & Tax	(37,432.24)	(20,317.80)	(37,262.68)	(20,317.80)
Finance Cost	165.52	763.47	169.46	763.47
Depreciation	1,212.76	1,177.08	1,251.05	1,177.08
Profit/ (Loss) before Tax	(38,810.52)	(22,258.35)	(38,683.19)	(22,258.35)
Tax Expense - Current	-	-	163.42	-
Tax Expense – Deferred	-	-	(125.22)	-
Profit/ (Loss) after Tax	(38810.52)	(22,258.35)	(38,721.39)	(22,258.35)
Gain on remeasurement of the defined benefit plans	18.74	135.39	18.74	135.39
Gain on translating the financial statements of foreign operations	-	-	0.68	-
Total Comprehensive Income/ (Loss)	(38,791.78)	(22,122.96)	(38,701.97)	(22,122.96)
Balance brought forward from Previous Year	(1,59,181.34)	(1,37,058.38)	(1,59,181.34)	(1,37,058.38)
Balance carried to Balance Sheet	(1,97,973.12)	(159,181.34)	(1,97,883.99)	(159,181.34)

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY, BETWEEN THE END OF THE FINANCIAL YEAR AND THE DATE OF THIS REPORT

There were no material changes and commitments, affecting the financial position of the Company, which have occurred between the end of the financial year ended March 31, 2024 and the date of this Report.

CONSOLIDATED FINANCIAL STATEMENT

The consolidated financial statements of the Company and its subsidiary for FY 2023-24 are prepared in compliance with the applicable provisions of the Companies Act, 2013 ("the Act") and as stipulated under Regulation 33 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations") as well as in accordance with the Indian Accounting Standards notified under the Companies (Indian Accounting Standards) Rules, 2015. The audited consolidated financial statements together with the Independent Auditors Report there on form part of this Annual Report.

DIVIDEND

In view of the losses incurred during the year, your directors have not recommended any dividend for the year under review.

DIVIDEND DISTRIBUTION POLICY

In compliance with the requirements of Regulation 43A of the SEBI Listing Regulations, the Board of Directors of the Company has formulated a Dividend Distribution Policy, which is available on the website of the Company and may be accessed through the web link https://sparc.life/statutory-disclosures/ policies-and-codes/

ANNUAL RETURN

The Annual Return as required under Section 134(3) and Section 92(3) of the Act in form MGT-7 is made available on the website of the Company and can be accessed through the web link https://sparc.life/statutory-disclosures/shareholders-meeting/

SUBSIDIARY/ JOINT VENTURE/ ASSOCIATE COMPANY

As on March 31, 2024, the Company has one Wholly Owned Subsidiary namely SPARCLIFE Inc. incorporated at Delaware, USA on September 25, 2023. There are no associates or joint venture companies within the meaning of Section 2(6) of the Act.

Pursuant to the provisions of Section 129(3) of the Act, a separate statement containing the salient features of the financial statements of the Companys subsidiary in prescribed Form AOC – 1 is attached as Annexure 1.

Further, pursuant to the provisions of Section 136 of the Act, the audited Standalone and Consolidated Financial Statements of the Company are available on the Companys website at https:// sparc.life/statutory-disclosures/shareholders-meeting/.

SHARE CAPITAL

During the year under review there was no change in the capital structure of the Company. The paid-up capital of the Company as at March 31, 2024 is Rs. 32,45,21,588/-.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year, following were the changes in Key Managerial Personnel:

1. Mr. Dinesh Lahoti resigned from the position of Company Secretary and Compliance Officer w.e.f. the close of business hours of September 11, 2023.

2. Ms. Kajal Damania has been appointed as the Company Secretary and Compliance Officer effective from September 22, 2023.

After the year end and up to the date of the Report, following were the changes:

1. Mr. Sudhir V. Valia (DIN:00005561), Non-Executive, Non-Independent Director of the Company would retire and cease to be the Director upon conclusion of 19th Annual General Meeting of the Company to be held on August 12, 2024.

2. The Board of Directors at its meeting held on July 15, 2024, on the recommendation by Nomination and Remuneration Committee, has approved the appointment of Ms. Vidhi Dilip Shanghvi (DIN: 06497350) as a Non-Executive, Non-Independent Director effective from July 15, 2024, subject to the approval of the members at the ensuing 19th Annual General Meeting of the Company.

3. The Board of Directors at its meeting held on May 24, 2024, on the recommendation by Nomination and Remuneration Committee, has approved the re-appointment of Dr. Robert J. Spiegel as an Independent Director of the Company for a second term of five years with effect from June 1, 2025 to May 31, 2030, subject to approval of the members at the ensuing 19th Annual General Meeting of the Company.

4. The Board of Directors at its meeting held on May 24, 2024, on the recommendation by Nomination and Remuneration Committee and Audit Committee , accepted the resignation of Mr. Chetan Rajpara from the position of Chief Financial Officer and KMP of the Company w.e.f. the close of business hours of June 5, 2024. The Board placed on record its appreciation for the valuable contribution and the significant impact Mr. Chetan Rajpara made to the organization during his tenure as Chief Financial Officer of the Company.

5. The Board of Directors at its meeting held on May 24, 2024, on the recommendation by Nomination and Remuneration Committee and Audit Committee appointed Mr. Anup Rathi as the Chief Financial Officer and KMP of the Company effective from June 6, 2024.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirements under section 134(5) read with section 134(3)(c) of the Act, with respect to Directors Responsibility Statement, it is hereby confirmed that:

a) In the preparation of the annual accounts for the financial year ended March 31, 2024, 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, 2024 and of the loss of the Company for the year ended on that date;

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 such internal financial controls are adequate and operating effectively; and

f) The Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act read with Rule 5 of the (Appointment and Qualification of Directors) Rules, 2014 and Regulation 16(1)(b) of the SEBI Listing Regulations.

In terms of the requirements under the SEBI Listing Regulations, the Board has identified list of key skills, expertise and core competencies of the Board, including the Independent Directors, details of which are provided in the Corporate Governance Report forming part of this Annual Report.

Further, in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, all the Independent Directors have registered themselves with the Independent Directors Databank. .

In the opinion of the Board, all the Independent Directors of the Company satisfy the criteria of independence as defined under the Act, rules framed thereunder and the SEBI Listing Regulations, and that they are independent of the Management of the Company. .

POLICY ON DIRECTORS AND SENIOR MANAGEMENT APPOINTMENT AND REMUNERATION

For the purpose of selection of any Director, the Nomination and Remuneration Committee identifies persons of integrity who possess relevant expertise, experience and leadership qualities required for the position and also takes into consideration recommendation received, if any, from a board member. The Committee also ensures that the incumbent fulfils such other criteria with regard to age and other qualifications as laid down under the Act or other applicable laws.

The Board, on the recommendation of the Nomination and Remuneration Committee, has framed a policy for selection, appointment and remuneration of Directors. The summary of Remuneration Policy is disclosed in the Corporate Governance Report, which forms a part of this Report.

The Policy as approved by the Board is available on the website of the Company and can be accessed through the web link https://sparc.life/statutory-disclosures/policies-and-codes/

FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS

In compliance with the requirements of Regulation 25(7) of the SEBI Listing Regulations, the Company has put in place a Familiarization Program for the Independent Directors to familiarize them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model etc. The details of the

Familiarization Program conducted are available on the website of the Company and can be accessed through the web link https://sparc.life/statutory-disclosures/policies-and-codes/

EVALUATION OF PERFORMANCE OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTOR

The Company believes that the process of performance evaluation at the Board level is pivotal to its Board Engagement and Effectiveness. The Policy and criteria for Board Evaluation is duly approved by NRC which is in line with the SEBI Guidance Note on Board Evaluation. This process is conducted through structured questionnaires which cover various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committees, Members strengths and contribution, execution and performance of specific duties, obligations and governance.

The Board reviewed the performance of the individual Non-Independent Directors on the basis of criteria such as qualifications, experience, knowledge & competency, fulfilment of functions, ability to function as a team, initiative, availability and attendance, commitment (as a Director) and contribution. The performance of each individual Independent Director was reviewed, based on the additional criteria of independence and independent views & judgment. Similarly, the performance of the Chairman was evaluated based on additional criteria such as effectiveness of leadership and ability to steer the meetings, impartiality, commitment (as Chairman) and ability to keep shareholders interests in mind.

In a separate meeting of Independent Directors, performance of non-independent directors, performance of the Chairman taking into account the views of other non-executive Directors and performance of the Board as a whole was evaluated.

Performance evaluation of the Board, its various Committees and individual Directors including Independent Directors and Chairman was found satisfactory. The Board also assessed the fulfillment of the independence criteria as specified in Listing Regulations, by the Independent Directors of the Company and their independence from the management.

Information as per Section 197(12) of the Act, read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexed as Annexure 2 to this Report. Further, pursuant to section 136 (1) of the Act, the Annual Report and the accounts are being sent to the members excluding the information under rule 5(2) & 5(3) of the aforesaid rules. In terms of section 136 of the Act, the said information is available for inspection at the Registered Office of the Company. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary of the Company either at the Registered/ Corporate Office address or by email to secretarial@sparcmail.com

ONLINE DISPUTE RESOLUTION:

Pursuant to SEBI vide Circular Nos. SEBI/HO/OIAE/OIAE_IAD-1/P/ CIR/2023/131 dated July 31, 2023, and SEBI/HO/OIAE/ OIAE_IAD-1/P/CIR/2023/135 dated August 4, 2023,the Company has established a common Online Dispute Resolution Portal ("ODR Portal") for resolution of disputes arising in the Indian Securities Market.

Pursuant to above-mentioned circulars, post exhausting the option to resolve their grievances with the RTA/ Company directly and complaint may be raised on SEBI Complaints Redress System ("SCORES") which can be accessed at https://www.scores.gov. in and the same can also be accessed through the web link https://sparc.life/statutory-disclosures/shareholders-corner/

HUMAN RESOURCES

SPARC presently has a workforce of 409 dedicated individuals – 85% of which are highly qualified and experienced scientists in various fields.

The team has attracted, developed and retained some highly experienced talent ensuring the workforce is skilled and motivated. From implementing innovative initiatives around talent development and engagement to nurturing talent through comprehensive learning initiatives, the Company has invested in cultivating a culture of excellences with a high focus on performance.

The organization is committed to and looks forward to invest in people and thus leveraging strategies that drive sustainable growth and enhance our competitive edge.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

In accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, SPARC is committed to fostering a safe, respectful and a harassment-free workplace environment. SPARC strongly believes in gender neutrality and encourages hiring resources from all genders ensuring we create an environment free of any form of discrimination and harassment.

During the financial year ended March 31, 2024, there was no complaint received for sexual harassment. Also, there are no complains pending as at the end of the financial year.

The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The organization conducted awareness programs aimed at promoting a culture of respect and inclusivity. We continue to remains dedicated to maintaining a zero-tolerance approach towards sexual harassment and ensuring the safety and well-being of all our employees.

AUDITORS

Statutory Auditors

The shareholders at their 17th Annual General Meeting of the Company had approved the re-appointment of S R B C & Co. LLP, Chartered Accountants, (Firms Regn. No. 324982E/E300003), as the Statutory Auditors of the Company for a second term of five years, to hold office up to the conclusion of the 22nd Annual General Meeting of the Company.

The Auditors Report for the financial year ended March 31, 2024, has been issued with an unmodified opinion, by the Statutory Auditors. Further, the Statutory Auditors of the Company have not reported any fraud as specified under Section 143(12) of the Act.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Act, and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board had appointed KJB & Co. LLP, Company Secretaries to undertake the Secretarial Audit of the Company for the financial year 2023-24.

The Secretarial Audit Report in the Form No. MR-3 for the financial year ended March 31, 2024 is annexed as Annexure 3. The Secretarial Audit Report does not contain any qualification, reservation, adverse remark or disclaimer and no frauds were reported by the Auditors to the Audit Committee or the Board, in terms of section 143(12) of the Act.

The Annual Secretarial Compliance Report for the financial year 2023-24 has been obtained from the Secretarial Auditor of the Company and the said Report has been submitted to the stock exchanges within the time prescribed under the SEBI Listing Regulations.

SECRETARIAL STANDARDS

The Company has complied with all the applicable Secretarial Standards as amended from time to time issued by the Institute of Company Secretaries of India and notified by the Ministry of Corporate Affairs.

LOANS, GUARANTEES & INVESTMENTS

The particulars of loans, guarantees and investments have been disclosed in the financial statements forms part of this Annual Report.

RELATED PARTY TRANSACTIONS

All contracts/arrangements entered by the Company during the year with the related parties were in the ‘Ordinary Course of Business and on an ‘Arms Length Basis and in accordance with the provisions of the Act and rules made thereunder, the SEBI Listing Regulations and the Companys Policy on Related Party Transactions.

As required under Section 134(3)(h) of the Act, details of transactions entered with related parties under the Act exceeding ten percent of the annual turnover as per the last audited financial statements are given in Form AOC-2 provided as Annexure 4.

The policy on Related Party Transactions as approved by the Board is available on the website of the Company and may be accessed through the web link https://sparc.life/statutory-disclosures/policies-and-codes/

BOARD MEETINGS

Six Board Meetings of the Board of Directors were held during the financial year. The dates of the Board meeting and the attendance of the Directors at the said meetings are provided in the Corporate Governance Report, which forms a part of this Annual Report.

COMMITTEES OF THE BOARD

As on March 31, 2024, the Board has 7 (seven) Committees, namely, Audit Committee, Stakeholders Relationship Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Risk Management Committee , Fund Management Committee and Securities Allotment Committee. The details pertaining to the meetings and composition of the Committees of the Board are included in the Corporate Governance Report, which forms a part of this Annual Report.

During the year under review, all recommendations made by the Committees (including Audit Committee) were accepted by the Board.

RISK MANAGEMENT

The Board of Directors has developed and implemented a comprehensive Risk Management Policy, which lays down the procedure to identify, monitor and mitigate the key elements of risks that threaten the existence of the Company. Further, in compliance with the requirements of Regulation 21 of the Listing Regulations as amended from time to time, the Board of Directors of the Company has constituted a Risk Management Committee to oversee risk mitigation measures in the Company.

The details of composition of Risk Management Committee are included in the Corporate Governance Report which forms a part of this Annual Report.

The Risk Management Committee reviews, at regular intervals, the status of key risks and steps taken by the Company, to mitigate such risks.

INTERNAL FINANCIAL CONTROLS

InternalFinancialControlsareanintegralpartoftheriskmanagement process which in turn is a part of Corporate Governance addressing financial reporting risks. The Company has in place a well-defined organizational structure and adequate internal controls for efficient operations which is cognizant of applicable laws and regulations, particularly those related to protection of intellectual properties, resources, assets, and the accurate reporting of financial transactions in the financial statements. The Company upgrades these systems on continuous basis.

CORPORATE SOCIAL RESPONSIBILITY

In compliance with the requirements of Section 135 of the Act read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors has constituted a Corporate Social Responsibility Committee. The details of membership of the Committee and the meeting(s) of the Committee held during the year are given in the Corporate Governance Report which forms a part of this Annual Report.

The CSR Policy of the Company as approved by the Board on the recommendation of the Corporate Social Responsibility Committee is available on the website of the Company and may be accessed through the web link https://sparc.life/statutory-disclosures/policies-and-codes/

Since the Company has incurred losses during the three immediately preceding financial years, the Company was not required to spend on CSR activities during the financial year ended March 31, 2024. However, in compliance with the requirements of Companies (Corporate Social Responsibility Policy) Rules, 2014, the Annual Report on ‘CSR Activities as per prescribed format, is annexed as Annexure 5.

PUBLIC DEPOSITS

The Company has not accepted any public deposit during the year, under the provisions of the Act and the rules framed thereunder.

CREDIT RATING

The credit rating of the securities/instruments/loans, credit facilities and other borrowings of the Company as on March 31, 2024 was as follows:

Name of the rating agency	Product	Long Term Rating
Acuite Ratings & Research Ltd	Bank Loan Ratings	ACUITE AA, Stable, Reaffirmed

MANAGEMENT DISCUSSION AND ANALYSIS

Pursuant to Regulation 34 of the SEBI Listing Regulations, the Management Discussion and Analysis Report on the operations of the Company forms an integral part of this Report and gives detail of the overall developments, performance and state of affairs of the Companys businesses, during the financial year 2023-24 and the same is given in a separate part of this Annual Report.

CORPORATE GOVERNANCE REPORT

The Company is committed in maintaining the highest standards of corporate governance and adherence to the corporate governance requirements set out by the Securities and Exchange Board of India (SEBI) and the Companies Act, 2013. The Company strives to achieve fairness for all stakeholders and to enhance long-term value to Shareholders. In compliance with Regulation 34 of the SEBI Listing Regulations, a report on Corporate Governance and the Certificate from the Statutory Auditors of the Company confirming compliance with the conditions of Corporate Governance are attached to the report on Corporate Governance which forms part of this Annual Report.

BUSINESS RESPONSIBILITY AND SUSTANABILITY REPORT

The Business Responsibility and Sustainability Report of the Company for the year ended March 31, 2024, in the prescribed format as required under Regulation 34(2)(f) of the Listing Regulations, forms part of this Report and is also available on the website of the Company and may be accessed through the web link https://sparc.life/statutory-disclosures/ shareholders-meeting/

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed as Annexure 6.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS

There are no significant or material orders passed by the Regulators or Courts or Tribunals during the year which may impact the going concern status of the Companys future operations.

WHISTLE BLOWER POLICY/ VIGIL MECHANISM

To emphasis our commitment to integrity, SPARC maintains a robust whistle blower policy or vigil mechanism. The Company is focused around creating value for all the stakeholders and ensure highest level of honesty, integrity and ethical behavior in all its operations.

The Company gives priority to this vision for all its employees through the ‘SPARC Whistle Blower Policy.

SPARC empowers employees to report suspected or actual occurrence of illegal, unethical or inappropriate events (behavior or practices) that may affect Companys working or interest / image.

During the financial year ended March 31, 2024, there was no information regarding any wrong doing which has been registered.

The Policy is available on the website of the Company and may be accessed through the web link https://sparc.life/statutory-disclosures/policies-and-codes/

ACKNOWLEDGEMENTS

Your Directors wish to thank all stakeholders, business partners, bankers, medical professionals and business associates for their continued support and valuable co-operation. The Directors also express their gratitude to investors for the faith that they continue to repose in the Company.