Torrent Pharmaceuticals Ltd Directors Report.


The Shareholders

The Directors have the pleasure of presenting the Forty Eighth Annual Report of your Company together with the Audited Financial Statement for the year ended 31st March, 2021.


1. 2020-21: An unprecedented year:

• The COVID-19 pandemic and its resurgence has posed an unprecedented challenge to global economy and corporations. While the pharmaceutical sector is relatively insulated from the pandemic and lockdowns, it did have impact on the industrys growth trajectory.

• Employees safety and business continuity has been at the core of our day to day focus during these times. Torrent has taken all appropriate proactive measures to ensure continuity of supplies to patients. It laid the highest emphasis on safety of its employees and their families through a number of employee centric and safety related initiatives.

2. India business:

• The Indian Pharmaceutical Market registered a rather muted growth of 2.1% owing to pandemic induced lockdowns and economic slowdown. Torrent outperformed the market with growth of 6.1% due to high chronicity of its portfolio.

• Torrent continued its focus on new introductions during the year, launching several important introductions in key markets: therapy;

Brivaracetam in the Central Nervous System therapy;

Obeticholic Acid within the Gastro Intestinal therapy;

NDDS Tapentadol Nasal spray in Pain Analgesic therapy.

• At the year end, field force productivity is 8.4 Lakhs per month, an improvement of 17% over previous year.

• Torrent is ranked 8th in the IPM with 10 brands with sales of more than Rs 100 crores.

3. US business:

• US revenues were impacted on account of pending new approvals, due to OAI / WL classification of its facilities at Dahej,

Indrad and Levittown, US.

• For all the three facilities, Torrent has already completed its CAPAs and submitted the closure report. Torrent continues to await guidance from the USFDA on the next steps and re-inspection of the facilities.

• Despite a lack of new approvals, Torrent continued to strengthen its pipeline and has filed 12 ANDAs (PY 12) during the year.

3 products were launched during the year.

• Torrent is ranked amongst top 3 players in 25 molecules.

4. Brazil business:

• Torrent continues to be ranked the no. 1 Indian Pharmaceutical company in Brazil.

• Brazil sales in constant currency grew by 11% during the year vs market growth of 8.9% backed by new launches & growth in BGx and GGx segments.

• Torrent will maintain its high focus of chronic therapies in Brazil, similar to the Indian portfolio and will enter new therapies which would be important growth levers.

5. Germany business:

• Torrent is ranked the no. 5th generic company and no. 1 Indian Pharmaceutical company in Germany.

• Germany sales were stable and were impacted by the pandemic induced lockdowns & market slow down and temporary supply disruption caused due to upgradation of quality management systems.

• Torrent has resolved the supply related issues and has regained its market share. Torrent continues to expand its market coverage through new launches, while expanding its non-tender and OTC business.

6. Rest of the World:

• ROW markets registered strong growth at 17%.

• Torrent will continue its focus on key ROW markets to develop them as growth engines of the future.

7. The state-of-the-art Oral Oncology manufacturing facility in Gujarat, which will cater to both regulated and non-regulated markets, is on track and regulatory approvals are being initiated.

8. Financial performance:

• EBITDA margins improved by 292 bps over last year. Margins were complemented by improvement levers inherent to Torrents business model and certain cost savings & efficiencies resulting from pandemic linked lockdowns across different markets during the year.

• Leverage (Net Debt-to-EBITDA) reduced to 1.6x as of 31st March, 2021 compared to 2.2x as of 31st March, 2020.

Financial Results

The summary of Standalone (Company) and Consolidated (Company and its subsidiaries) operating results for the year and appropriation of divisible profit is given below:

(Rs in crores except per share data)

Standalone Consolidated
2020-21 2019-20 2020-21 2019-20
Sales & Operating Income 6,451 6,168 8,005 7,939
Profit Before Depreciation, Net Finance Cost, Exceptional Items & Tax 2,311 2,148 2,537 2,284
Less: Depreciation & Amortisation 610 607 658 654
Less: Net Finance Cost 335 424 353 443
Profit Before Exceptional Items & Tax 1,366 1,117 1,526 1,187
Less: Exceptional Items - - - -
Less: Tax Expense 228 178 274 162
Net Profit for the Year 1,138 939 1,252 1,025
Balance brought forward 2,093 1,884 1,893 1,616
Other Comprehensive income and other adjustments 7 (11) 0 (14)
Balance available for appropriation 3,238 2,812 3,145 2,627
Appropriated as under:
Transfer to General Reserve - - - -
Dividend 338 609 338 609
Tax on Distributed Profits for Dividend - 110 - 125
Balance Carried Forward 2,900 2,093 2,807 1,893
Earnings Per Share ( per share) 67.24 55.46 73.98 60.55

Consolidated Operating Results

The consolidated sales and operating income increased to Rs 8,005 crores from Rs 7,939 crores in the previous year showing a growth of 1%. The consolidated operating profit for the year was Rs 2,537 crores as against Rs 2,284 crores in the previous year registering growth of 11%. The consolidated net profit stood at1,252 crores compared to Rs 1,025 crores in the previous year registering growth of 22%.

Management Discussion and Analysis (MDA)

The details of operating performance of the Company for the year, the state of affairs and the key changes in the operating environment have been analysed in the Management Discussion and Analysis section which forms a part of the Annual Report.


i) Dividend

The Board had in its meeting held on 18th May, 2021 revised the existing Dividend Distribution Policy to increase the distribution of dividend to 40% of its annual consolidatednetprofit after tax without taking into account non-cash charges relating to the business acquisitions. The revised policy is available on the website

During the year under review, an interim dividend of Rs 20/- per equity share of face value of Rs 5/- each (@ 400%) amounting to Rs 338 crores was paid to the shareholders. Further, the Board considered it prudent torecommendthefinal dividend for 2020-21 as per the revised Dividend Distribution Policy and accordingly recommended a final dividend of Rs 15/- per equity share of face value of Rs 5/- each (@ 300%) amounting to Rs 254 crores for approval to shareholders at the 48th Annual General Meeting (AGM) of the Company. Hence, the total dividend paid / payable with respect to the year under review was of Rs 35 per equity share (@700%) amounting to Rs 592 crores.

ii) Transfer to Reserves

The Board of Directors of the Company has decided not to transfer any amount to the Reserves for the year under review.

Human Resources

At Torrent, we value our employees and believe that Torrents success is an outcome of the collective contribution of all our employees.

The Human Resource Development team continuously strives to create a conducive work environment that aims to influence the employees ability, motivation and designs opportunities for one to perform. This ensures the long-term viability of this valuable resource. The Company continues to invest in meritocracy, which allows the organisation to develop employees who become ready to accept new challenges in the future. A sound system has been designed that has resulted in improved implementation of the HR processes leading to better work environment and greater employee job satisfaction.

During the Pandemic period, health and safety of employees were the most important priority for the Organisation. Safety awareness programmes / counselling sessions played an important part to spread necessary knowledge and helped employees to cope-up with the challenge of working amidst the COVID pandemic. Focused efforts were undertaken to improve employee connect. Regular surveys were conducted to understand the difficulties faced by the employees and their families and the same were resolved in time. Fresh expertise, both seasoned and new recruits to the workforce, were acquired and aligned to the Organisations ethos through consistent initiatives. The HR team continued to coordinate training and development activities that have assisted in the nurturing of talent, as well as sharpening of new management skills. On the Job training, meaningful interactions with senior professionals and development programmes, aid employees to build the right competencies in their work arena, be it technical, managerial or behavioural. Periodic job rotation programmes are undertaken enabling every employee to understand the nuances of the function, thereby developing to take a bigger role in the future. This helps to empower everyone in the Organisation leading to job enrichment and satisfaction. On the Industrial front, the Company continued to foster cordial Industrial Relations with its workforce during the year.

Various gender diversity initiatives, such as exi-shift hours have aided female workers in balancing work and other duties. Special events promoting a womans personal and career development are often planned, with an emphasis on fitness, well-being, and a stress-free life. The consistency in performance and commitment of our employees helps both the leadership and the employees to regularly achieve Companys objectives and improve overall Companys performance.

The Company has a diverse workforce of 12,531 employees as on 31st March, 2021 vis--vis 12,881 employees as on 31st March, 2020.

Vigil Mechanism

The Company has built a reputation for doing business with honesty and integrity over the years, and has shown zero tolerance for any sort of unethical behaviour or wrongdoing. The Organisation has in effect a rigorous vigil system to report unethical conduct in order to promote professionalism, fairness, dignity, and ethical behaviour in its staff and stakeholders, the particulars of which are covered in the Corporate Governance Report.

The said system also safeguards the employees who use the vigil mechanism from being victimised and provides them direct access to the Audit Committee. In addition, the Companys Code of Business Conduct defines essential corporate ethical practices that form the Companys belief structure and business operations, as well as representing the Companys valued principles.

Whistle-blower Policy and Code of Business Conduct have been hosted on Companys website

Internal complaints committees have been established for all administrative units / offices to redress complaints received regarding sexual harassment as part of the Policy for the Prevention of Sexual Harassment of Women at Workplace. During the year, no complaints were received under this policy.

Corporate Social Responsibility

During the year 2020-21, the Company incurred CSR expenditure of Rs 22.29 crores, which is 2.56% of the average net profit of the past three financial years as against statutory requirement of 2%. Additionally,1.39 crores was utilised by the CSR implementing agency out of the surplus arising from funds invested temporarily pending the expenditure. This has resulted in total CSR expenditure of Rs 23.68 crores for the year. The CSR activities undertaken by the Company were under the thrust areas of Community Healthcare, Sanitation & Hygiene, Education & Knowledge Enhancement and Social Care & Concern. The Board in its meeting held on 18th May, 2021 revised the existing CSR Policy of the Company to harmonise with the amendments carried out by the Ministry of Corporate Affairs in the Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014.

The brief details of the major CSR activities are described hereunder:

REACH: Driven by the belief of Chairman Emeritus, Sudhir Mehta ‘Children are the future of our nation and this future must be well preserved, the flagship CSR program of the Group "REACH" Reach EAch CHild was initiated in the year 2016 under the aegis of Tornascent Care Institute, a section 8 company. REACH has three major pillars:


(b) JATAN and


Salient achievements are:

"Shaishav", the first pillar of the programme, targets to establish baseline health status of children in age group of 6 months to 6 years, through medical camps in 351 villages surrounding the industrial establishments of the Group. Till date 71,387 children have been screened, and by providing appropriate treatment more than 80% Malnourished children, more than 90% Anaemic children and 73% children having chronic illnesses were provided appropriate treatment with very encouraging outcomes. During 2020-21, inspite of massive challenges posed by COVID-19 pandemic, maintained an optimum balance of serving the community and at the same time avoiding any exposure by adopting ‘Minimum Human Intervention Model, weight assessment of 5,307 Malnourished children was carried out, Mauji Biscuits were provided to beneficiaries and encouraging results have been observed. Similarly on, Anaemic front, Iron supplement were provided to 6,765 children without reassessment.

"Jatan", the second pillar of the programme, encompasses provision of healthcare services to children upto 18 years. There are three primary paediatric health centres (PPHCs) with basic laboratory and day care facility at Dahej, Balasinor and Indrad, while fourth centre near SUGEN Power Plant was converted into 150 bed paediatric hospital ‘Balsangam (part of ‘Rangtarang hospital complex) in 2019-20. Due to outbreak of COVID-19 pandemic and consequent nationwide lockdown in H1 2020-21, telephonic conversations with 46,000 parents of the beneficiaries across all four PPHCs were arranged for spreading awareness of consumption of healthy diet to boost immune system and maintain proper hygiene to reduce risk of COVID-19.

With all precautions like sanitizing, social distancing and avoiding direct exposure to the patients, PPHC facilities at Balasinor and Indrad were started from September, 2020 and 7,225 beneficiaries were served in 2020-21. From September, 2020 onwards, started audio visual consultation of patients at PPHC facilities near SUGEN Power Plant and Dahej and 4,099 beneficiaries have been served in 2020-21.

Under "Muskaan", the third pillar of the programme, counselling and support was provided to rural adolescent girls around SUGEN, Dahej and Indrad centres covering menstrual hygiene and sanitation, by providing free health and hygiene kits. However, due to COVID-19 pandemic, this activity was not carried out till August, 2020 and with appropriate safety measures and also to avoid beneficiaries going back to using conventional practice, health and hygiene kits were provided to around 5,000 beneficiaries in 125 villages.

Shiksha Setu: The Teaching and Learning Programme, conducted through UNM Foundation (amalgamated with Tornascent Care Institute w.e.f. 26th April, 2021 having appointed date as 1st April, 2020) completed fifth year of Phase II. This programme covers 13 government primary schools located near SUGEN, Chhatral, Chhapi, Memadpur and Ahmedabad having 4,500+ students and 150+ teachers of 1st to 8th standard. During 2020-21, practice assignments prepared for students containing questions and activities based on skills of previous standards and current curriculum. These assignments were based on learning outcomes prescribed in National

Curriculum Framework on the expected skills / Knowledge for each standard, and the same was well received by 4500+ students from 3rd to 8th standard and 120+ teachers. Various virtual workshops on important concepts of Maths, Science and Computer as per revised curriculum were organised for teachers of 6th to 8th standard, in which 78+ teachers from 36 schools of Shiksha Setu / Chappi/ Memadpur / other schools (around project schools) participated and benefitted. Continuous interaction was carried out with teachers, students and parents to provide support, counsel and address specific concerns regarding education.

Development and Maintenance of Public Parks: The Company along with one of Indias best known landscape design firm developed an approach for development of urban public parks. Six small sized parks measuring approx. 33,000 sq. mt. have been fully developed and opened for public use since 2018-19 and one small sized park was fully developed and opened for public use in 2020-21. Another two large parks measuring approx. 66,975 sq. mt. are under development and will be opened for public in 2021-22, if situation caused due to COVID-19 allows. Maintenance of above public parks is also funded from CSR funds of the Company.

Community Healthcare : Sumangal - a daycare Clinic for Adults (the erstwhile ‘Swadhar), a community healthcare facility was integrated into ‘Rangtarang hospital complex, which caters to medical requirements of nearby 500 villages by providing specialized consultations in the areas of dental care, ophthalmology, dermatology, gynaecology, physiotherapy and orthopedic. Due to outbreak of COVID-19 pandemic and consequent nationwide lockdown, a method of Minimum Human Intervention (Audio calls / Tele- Consultation) evolved wherein there is no / minimum contact with the community and hence, all the safety precautions followed to the maximum extend possible and hence, the community is still being served and there is a constant rapport with the community. This model maintains an optimum balance between serving the beneficiaries and not putting any employee at the risk of exposure to COVID-19. The Report on CSR activities is annexed herewith as Annexure B.

Environment, Health & Safety

The Company firmly believes and is committed in inculcating a proactive and well matured HSE culture across the group. Sustainable future is essential in ensuring the health and well-being of our colleagues, the people who use our products and the communities we touch. With the sense of this purpose, we are in pursuit of a Safe, Secure & Healthy workplace for our employees, surrounding communities as well as all interested parties associated with our business operations directly or indirectly.

The Companys EHS function is efficiently driven by established EHS Policy which is applied uniformly to all its manufacturing facilities and R&D centre. Policy is being regularly evaluated and updated with consideration of International Organisation for Standardisation (ISO) and other global requirements to ensure that the Companys EHS systems remains globally oriented and best in class.

Our sincere and focused endeavours in EHS domain has substantially brought down incidents and thus leading to safe and healthy working environment for our work force at large. We always remain deeply concerned about the cause of the environment protection and in this direction, Company has undertaken initiatives, where we have achieved measurable reduction in waste generation utilisation of waste as an alternative fuel in cement industries. Conservation of energy (saving of 40 MT / Day of steam consumption by installation of Heat pumps in place of conventional hot water system at Indrad manufacturing facility), usage of renewable energy (cumulatively generation of 2.5 million KWH energy by installation of Solar Power panels of 1688 KW capacity at Indrad and Oncology (upcoming) manufacturing facilities and R&D Centre). These activities have reduced our environmental impact / carbon footprint significantly.

Our workplace environment is designed to make our employees feel valued, respected, empowered and inspired to achieve our EHS goals. Our continuous ongoing efforts in environment sustainability has reduced our water consumption, hazardous waste and energy consumption.

We are striving for continuously bringing down the waste quantity to incineration facilities. This year, we have achieved disposal of 65-70% high calorific value hazardous waste for co-processing / pre-processing in cement industries (as an alternate fuel) instead of incineration. We have targeted to dispose-off 90% of total such waste generation for co-processing in upcoming years. As a part of waste to energy concept, we are using canteen food waste and biological waste from ETP for generation of bio gas which has significantly reduced annual waste disposal under landfill category. Majority of the Companys manufacturing facilities are accredited with ISO 14001:2015 (Environment Management Systems) and ISO 45001:2018 (Occupational Health & Safety Management system).

Rain water harvesting systems are installed at manufacturing facilities with 57 state of art injection wells with large sunken catchment area of approx. 25,000 sq mt and 10 nos. of inverted umbrella system (Ulta Chhata). Approximate 40% of dense and lust green belt area has been developed across all locations.

Under the Plastic Waste Management Rules, 2016, the Company is registered as a Brand Owner with Central Pollution Control Board (CPCB). The Company has initiated Extended Producer Responsibility (EPR) programme under these Rules. 1000 MT / Annum plastic waste was collected from Pan India during the year under review and recycled and co-processed in cement industries.

During the year, Company at all its facilities has implemented a COVID-19 guidelines and strictly adhered to it to de-risk employees health and uninterrupted and consistent productivity. Department wise core steering team were formed who had individually supervised the COVID-19 protocols deliberately. The Company as a responsible corporate had comprehensively worked in strategising and implementing various government and IPA (Indian Pharmaceuticals Alliance) guidelines to curb the spread of pandemic disease at large.

All the manufacturing facilities and R&D Centre are being regularly audited internally and externally by In-house cross functional teams, global customers, regulators and external third party auditors which helps us in achieving benchmark / highest levels of compliance.

This also helps us to review our system through third eye and thus helps us to understand risk / opportunities / area of improvisation of our process / manufacturing facilities at large. The Companys Contractors are well covered under various HSE Drives. It is essential for all contractors to undergo HSE training and follow stipulated guidelines. All contractors are encouraged to maintain safety standards by abiding Companys guidelines and procedures.

Moreover, the Company has in place the "Conviction of Safety Policy" which provides for substantial compensation to the personnel (Employees as well as Contractors) and their families, who are adversely affected by any accident.

The Company is constantly striving up to standardise Health, Safety and Environment Management System (HSEMS) to reach the goal of zero injuries. Various objectives are being taken and achieved for continual improvement in areas of productivity, quality & HSE.


(a) Share Capital

As on 31st March, 2021 the Authorised Capital of the Company is Rs 150 crores, divided into 25 crores Equity Shares of Rs 5/- each and 25 Lakhs Preference Shares of Rs 100/- each.

(b) Deposits and Loans, Guarantees and Investments

The Company has neither accepted nor renewed any deposits. None of the deposits earlier accepted by the Company remained outstanding, unpaid or unclaimed as on 31st March, 2021.

Details of Loans, Guarantees and Investments by Company under the provisions of Section 186 of the Companies Act, 2013, during the year, are provided in Note 10 and 11 to the Standalone Financial Statements.

(c) Debentures and other debt instruments

The Company has raised an amount of Rs 395 crores by way of issue of Non-Convertible Debentures on private placement basis during the year. The outstanding amount of Non-Convertible Debentures issued by the Company is Rs 1,559.28 crores as on 31st March, 2021.

During the year the Company issued Commercial Papers (CPs) aggregating to Rs 100 crores on private placement basis.

(d) Contracts or Arrangements with Related Parties

All Related Party transactions are entered in compliance to the provisions of law, the Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions and were entered with the approval of Audit Committee, Board and Shareholders if and as applicable. The particulars of material contracts and arrangements entered into with the related parties in accordance with the Related Party Policy of the Company and pursuant to the provisions of Section 188(1) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014 are annexed herewith as Annexure A.

(e) Internal Financial Control System

The Company has a formal framework of Internal Financial Control (IFC) in alignment with the requirement of Companies Act, 2013 and has also laid down specific responsibilities on the Board, Audit Committee, Independent Directors and Statutory Auditors with regard to IFC.

Accordingly, the Company has a well-placed, proper and adequate IFC system which ensures:

• The orderly and efficient conduct of its business,

• Safeguarding of its assets,

• The prevention and detection of frauds and errors,

• The accuracy and completeness of the accounting records and

• The timely preparation of reliable financial information.

The Board reviews the effectiveness of controls documented as part of IFC framework, and take necessary corrective actions wherever weaknesses are identified as a result of such reviews. This review covers entity level controls, process level controls, fraud risk controls and Information Technology environment.

Based on this evaluation, no significant events had come to notice during the year that have materially affected, or are reasonably likely to materially affect, our IFC. The management has also come to a conclusion that the IFC and other financial reporting was effective during the year and is adequate considering the business operations of the Company. The Statutory Auditors of the Company has audited the IFC with reference to Financial Reporting and their Audit Report is annexed as Annexure B and Annexure A to the Independent Auditors Report under Standalone Financial Statements and Consolidated Financial Statements respectively.

(f) Material changes affecting the Company

No material changes and commitments have occurred after the close of the year till the date of this Report which may affect the financial position of the Company.


The Companys manufacturing facilities, properties, equipment and stocks are adequately insured against all major risks including loss on account of business interruption caused due to property damage. The Company has appropriate liability insurance covers particularly for product liability, clinical trials and cyber liability. The Company has also taken Directors and Officers Liability Policy to provide coverage against the liabilities arising on them.

Business Risk Management

Risk Management is an integral part of our strategy for stakeholders value enhancement and is embedded in to governance & decision-making process across the organisation. The Company has implemented an integrated risk management framework to ensure effective responses to strategic, operational, financial and compliance risks faced by the organisation.

As a part this framework, all the risks are discussed and deliberated with the concerned functional heads and business process owners to continually identify, assess, mitigate and monitor risks across the entity, its business functions and units. The Risk Management Committee meets periodically to assess and deliberate on the key risks and adequacy of mitigation plan. It has formulated a comprehensive ‘Risk Register, which is continuously updated to capture new risks / threats augmenting from changes in internal / external environment. Inputs from risk assessment are also embedded in to annual internal audit programme. Key risks and mitigation measures are summarised in Management Discussion and Analysis section of the Annual Report.

Subsidiaries & Joint Ventures

As of 31st March, 2021, the Company has 14 subsidiaries, out of which 2 are step down subsidiaries. Norispharm GmbH, a wholly owned subsidiary of Torrent Pharma GmbH was liquidated w.e.f. 16th March, 2021.

The highlights of performance of major subsidiaries of the Company have been discussed and disclosed under the Management Discussion and Analysis section of the Annual Report. The contribution of each of the subsidiaries in terms of the revenue and profit is provided in Form AOC-1, which forms part of the Annual Report.

The details of two associate companies of the Company is also shown in the AOC-1. These associate companies are Section 8 companies and primarily floated with another company of the Torrent group to carry out the CSR activities. UNM Foundation, an associate Company of the Company has been amalgamated with Tornascent Care Institute another associate Company of the

Company by the order of NCLT filed with Ministry of Corporate Affairs on 26 th April 2021 with appointed date as 01st April 2020. The annual accounts of the subsidiary companies will be made available to any Member of the Company seeking such information at any point of time and are also available for inspection by any Member of the Company at the Registered Office of the Company on any working day during business hours up to the date of the AGM. The annual accounts of the subsidiary companies are also available on the website of the Company at

Directors and Key Managerial Personnel

(a) Board of Directors

The Board of Directors of the Company is led by the Executive Chairman and comprises six other Directors as on 31st March, 2021, including one Whole-time Director, four Independent Directors which includes two Women Director and one Non-Executive Director (other than Independent Directors).

All the Independent Directors of the Company have furnished declarations that they meet the criteria of independence as prescribed under the Companies Act, 2013 and under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations").

During the year under review, Dr. Chaitanya Dutt has completed his tenure as Director (Research & Development) of the Company and also stepped down as the Director of the Company with effect from 31st December, 2020.

The Board places on record its deep appreciation for the guidance and support provided by him for the overall growth of the Company during his tenure as a member of the Board and its Committees.

As per the provisions of the Companies Act, 2013, Samir Mehta, Executive Chairman (holding DIN: 00061903), retires by rotation at the ensuing AGM and being eligible has offered himself for re-appointment.

The Board has recommended:

• the re-appointment of Ameera Shah as an Independent Director of the Company for the second term of 5 (five) consecutive years effective from 2nd August, 2021;

• the re-appointment of Nayantara Bali as an Independent Director of the Company for the second term of 5 (five) consecutive years effective from 7th March, 2022; for the approval of shareholders in the ensuing AGM. The brief resume and other relevant documents of the Directors being re-appointed are given in the Explanatory Statement to the Notice convening the AGM, for your perusal.

(b) Meetings of Board of Directors

Regular meetings of the Board are held to review performance of the Company, to discuss and decide on various business strategies, policies and other issues. A calendar of Board / Committee meetings for the year is prepared and circulated to the Directors well in advance to enable them to plan their schedule for effective participation in the meetings. During the year, five meetings of the Board of Directors were convened and held on 26 th May, 2020, 30th July, 2020, 26th October, 2020, 8th February, 2021 and 2nd March, 2021. The intervening gap between two consecutive meetings was not more than one hundred and twenty days. Detailed information on the meetings of the Board is included in the Corporate Governance Report which forms part of the Annual Report.

(c) Audit Committee

The composition of the Audit Committee is in compliance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of the Listing Regulations. The composition of the Committee as on 31st March, 2021 is given below:

Name of Director Category of Directorship
Shailesh Haribhakti, Chairman Independent Director
Haigreve Khaitan Independent Director
Ameera Shah Independent Director
Nayantara Bali Independent Director

During the year, the Board has accepted all the recommendations made by the Audit Committee.

(d) Appointment of Directors

(i) Criteria for Appointment of Directors

The Board of Directors of the Company has identified following criteria for determining qualification, positive attributes and independence of Directors:

1) Proposed Director ("Person") shall meet all statutory requirements and should: • possess the highest ethics, integrity and values;

• not have direct / indirect conflict with present or potential business / operations of the Company; • have the balance and maturity of judgement;

• be willing to devote sufficient time and energy;

• have demonstrated high level of leadership and vision, and the ability to articulate a clear direction for an organisation;

• have relevant experience (in exceptional circumstances, specialisation / expertise in unrelated areas may also be considered);

• have appropriate comprehension to understand or be able to acquire that understanding

Relating to Corporate Functioning

Involved in scale, complexity of business and specific market and environment factors affecting the functioning of the company.

2) The appointment shall be in compliance with the Board Diversity Policy of the Company.

The key qualifications, skills and attributes which the Board is collectively expected to have for the effective discharge of their duties are explained in Corporate Governance Report of the Company.

(ii) Process for Identification / Appointment of Directors

• Board members may (formally or informally) suggest any potential person to the Chairman of the Company meeting the above criteria. If the Chairman deems fit, necessary recommendation shall be made by him to the Nomination and Remuneration Committee (NRC).

• Chairman of the Company can himself also refer any potential person meeting the above criteria to the NRC.

• NRC delibrates the matter and recommends such proposal to the Board.

Board considers such proposal on merit and decide suitably.

(e) Familiarisation Programme of Independent Directors

The Independent Directors have been updated with their roles, rights and responsibilities in the Company by specifying them in their appointment letter along with necessary documents, reports and internal policies to enable them to familiarise with the Companys procedures and practices. The Company endeavours, through presentations at regular intervals, to familiarise the Independent Directors with the strategy, operations and functioning of the Company and also with changes in the regulatory environment having a significant impact on the operations of the Company and the pharmaceutical industry as a whole. Site visits to various plant locations and CSR sites get organised for the Directors to enable them to understand the operations of and CSR activities carried out by the Company. The Independent Directors also meet with senior management team of the Company in formal / informal gatherings. The details of such familiarisation programmes for Independent Directors are posted on the website of the Company and can be accessed at

(f) Board Evaluation

The Evaluation of Board, its Committees, Individual Directors (Independent and Non Independent Directors) and Chairperson was carried out as per the process and criteria laid down by the Board of Directors based on the recommendation of the NRC:

• The obtaining and consolidation of feedback from all directors for the evaluation of the Board and its Committees and Individual Directors (i.e. Independent and Non Independent Directors) were co-ordinated by the Chairman of the Board. The feedback on evaluation of the Board and its Committees was discussed in their respective meetings and the feedback on the evaluation of Individual Directors was discussed individually with them.

• The evaluation of Chairperson was co-ordinated by the Chairperson of the Independent Directors meeting.

• The Independent Directors met on 8th February, 2021 with respect to the above process.

(g) Key Managerial Personnel

There was no change in the Key Managerial Personnel during the year under review other than the directors as already captured in this report.

(h) Directors Responsibility Statement

In terms of Section134(3)(c) of the Companies Act, 2013, in relation to financial 31st March, 2021, the Board of Directors state that:

i. the applicable Accounting Standards have been followed in preparation of the financial statements and there are no material departures from the said standards;

ii. reasonable and prudent accounting policies have been used in preparation of the financial statements and that they have been consistently applied and that reasonable and prudent judgements and estimates have been made in respect of items not concluded by the year end, so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2021 and of the profit for the year ended on that date;

iii. proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the financial statements have been prepared on a going concern basis;

v. proper internal financial controls were in place and were adequate and operating effectively; proper systems to ensure compliance with the provisions of applicable laws were in place and were adequate and operating effectively.


(a) Remuneration Policy

The Remuneration policy covers the remuneration for the Directors (Chairman, Managing Director, Whole-time Directors, Independent Directors and other non-executive Directors) and other employees (under senior management cadre and management cadre). The Policy has been formulated with the following key objectives:

• To ensure that employee remuneration is in alignment with business strategy & objectives, organisation values and long-term interests of the organisation.

• To ensure objectivity, fairness and transparency in determination of employees remuneration.

• To ensure the level and composition of remuneration are reasonable and sufficient to attract, retain and motivate a high performance workforce and are in compliance with all applicable laws.

It covers various heads of remuneration including benefits for Directors and employees. It also covers the process followed with respect to annual performance reviews and variables considered for revision in the remuneration. The said Policy is available on the website of the Company

(b) Criteria for Remuneration to Non-Executive Directors (NEDs):

1. The payment of commission to the Directors of the Company who are neither in the whole time employment nor Managing Director(s) (NEDs) is approved by the shareholders of the Company and is subject to the condition that total commission paid to the NEDs shall not exceed the percentage limits of the net profit of the Company as specified in the Companies Act, 2013 (presently 1% of the net profit), calculated in accordance with Section 197 read with Section 198 and any other applicable provisions of the Companies Act, 2013.

Further, as per the Regulation 17(6)(ca) of the Listing Regulations, approval of the shareholders by special resolution shall be required every year, in which the annual remuneration payable to a single NED exceeds fifty per cent of the total annual remuneration payable to all NEDs, giving details of the remuneration thereof.

2. The Board or its Committee specifically authorised for this purpose, determines the manner and extent upto which the commission is paid to the NEDs within the limit as approved by the shareholders. The commission is determined based on the participation of the Directors in the meetings of Board and / or Committees thereof, as well as on industry practice, performance of the Company and contribution by the Directors, etc.

3. Payment of Commission is made annually on determination of profit.

4. Sitting fees of Rs 1 Lakh is paid to Independent Directors for each meeting of the Board or any Committee thereof attended by them.

5. Independent Directors are reimbursed for all the expenses incurred for attending any meeting of the Board or Committees thereof and which may arise from performance of any special assignments given by the Board.

(c) Remuneration to Managerial Personnel

The details of remuneration paid to the Managerial Personnel forms part of the Corporate Governance Report.

(d) Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, disclosures pertaining to remuneration and other details are provided in the Annexure C to this Report.


(a) Statutory Auditors

B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022), were appointed as the Statutory Auditors of the Company to hold office for five years from the conclusion of Forty Fourth AGM held with respect to the financial year 2016-17, up to the conclusion of the Forty Ninth AGM to be held with respect to the financial year 2021-22.

(b) Cost Auditors

In terms of the Section 148 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, the Company has prepared and maintained the cost accounts and records for the year 2020-21.

The Company has appointed M/s. Kirit Mehta & Co., Cost Accountants, Mumbai (Firm Registration No. 000353) as the Cost Auditors of the Company for audit of cost accounting records of its activities (Formulation & Bulk Drugs activities) for the financial year ended 31st March, 2021. The Cost Audit Report to the Central Government for the financial year ended 31 st March, 2020 was filed on 25th August, 2020, within the statutory timeline. Further, the Board of Directors has appointed M/s. Kirit Mehta & Co. as the Cost Auditor of the Company for the financial year 2021-22 and fixed their remuneration, subject to ratification by the shareholders in the ensuing AGM of the Company.

(c) Secretarial Auditor

The Board, pursuant to Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, had appointed M/s. M. C. Gupta & Co., Company Secretaries, as the

Secretarial Auditors of the Company to conduct the Secretarial Audit as per the provisions of the Companies Act, 2013 for the year 2020-21.

M/s. M. C. Gupta & Co. have carried out the Secretarial Audit accordingly and their report in Form MR-3, is annexed with this Report as Annexure-D. There were no qualification / observations in the report.

During the year 2020-21, the Company has complied with all the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

Corporate Governance

As required by Regulation 34 read with Schedule V of the Listing Regulations, a separate Report on Corporate Governance forms part of the Annual Report. The Report on Corporate Governance also contains certain disclosures required under the Companies Act, 2013. A certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause E of Schedule V of the Listing Regulations forms part of this Report as Annexure-E.

Annual Return

In terms of Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company is available on the website of the Company at the link Annual_Return_2020-21.pdf

Conservation of Energy, Technology Absorption, etc

A statement containing the necessary information on Conservation of energy, Technology absorption and Foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed to this Report as Annexure-F.

Appreciation and Acknowledgements

Your Directors appreciate the trust reposed by the medical fraternity and patients in the Company and look forward to their continued patronage. The Directors are also grateful and pleased to place on record their appreciation for the excellent support, guidance and cooperation extended by the Government of India and various State Governments specifically the Governments of Gujarat, Himachal Pradesh, Sikkim, Madhya Pradesh and Andhra Pradesh, Central and State Government Bodies and Authorities, Financial Institutions and Banks. The Board also expresses its appreciation of the understanding and support extended by the shareholders and the commitment shown by the employees of the Company.

For and on behalf of the Board of Directors
Ahmedabad Samir Mehta
18th May, 2021 Executive Chairman