Wockhardt Ltd Directors Report.

Dear Members,

The Board of Directors are delighted to present the Twenty Second Annual Report of the Company along with the Audited Financial Statements for the year ended 31st March, 2021.

FINANCIAL RESULTS AND HIGHLIGHTS

(Rs. in Crore)
Particulars Year ended March 31, 2021 Year ended March 31,2020
Consolidated
Continuing Operations
Total Revenue from Continuing Operations 2,841 2,883
Profit before Depreciation, Finance Cost & Tax from Continuing Operations 69 158
Profit/(Loss) before Tax from Continuing Operations (568) (342)
Tax expense - Credit/(charge) of Continuing Operations 272 204
Profit/(Loss) after Tax before Other Comprehensive Income from Continuing Operations (296) (138)
Discontinued Operations
Profit/(Loss) from Discontinued Operation before Tax 1484 145
Tax expense of Discontinued Operations - (charge)/credit (499) (50)
Profit/(Loss) from Discontinued Operations 985 95
Profit/(Loss) for the year 689 (43)
Total Comprehensive Income 685 57
Standalone
Continuing Operations
Total Revenue from Continuing Operations 1028 933
Profit before Depreciation, Finance Cost & Tax from Continuing Operations (97) (90)
Profit/(Loss) before Tax from Continuing Operations (624) (484)
Tax expense - Credit/(charge) of Continuing Operations 232 158
Profit/(Loss) after Tax before Other Comprehensive Income from Continuing Operations (392) (326)
Discontinued Operations
Profit/(Loss) from Discontinued Operations before Tax 1484 145
Tax expense of Discontinued Operations - (charge)/credit (499) (50)
Profit/(Loss) from Discontinued Operations 985 95
Profit/(Loss) for the year 593 (231)
Total Comprehensive Income 593 (227)

The consolidated total revenue of the Company for the financial year ended 31st March, 2021 stood at Rs.2,894 crore as compared to Rs.3,364 crore of previous year. Earnings before interest, tax, depreciation and amortization (EBITDA), for the year ended 31st March, 2021, are Rs.(47) crore vis-a-vis Rs.245 crore during previous year. The Total Comprehensive Income for the year stood at Rs.685 crore vis-a-vis Total Comprehensive Income of Rs.57 crore of previous year. The above figures include Discontinued Operations figures.

On Standalone basis, the Company registered total revenue of Rs.1,028 crore from Continuing Operations as compared to Rs.933 crore during previous year and Rs.54 crore from Discontinued operations as compared to Rs.481 crore during previous year. Total Comprehensive Income for the year stood at Rs.593 crore vis-a-vis Rs.(227) crore of previous year.

STATE OF COMPANYS AFFAIRS

Financial year 2020-21 has seen some major developments for your Company.

Wockhardt in FY 21 became 1st Indian Pharmaceutical Company to launch a New Chemical Entity (NCE) in India in the Anti-Infective space

During the year, your Company launched 2 new antibiotics, EMROK (IV) and EMROK O (Oral), for acute bacterial skin and skin structure Infections including diabetic foot infections and concurrent bacteraemia. Earlier in January 2020, Indian Drug Controller, DCGI approved the same based on the Phase 3 study involving 500 patients in 40 centres across India. The new drug will target superbug like Methicillin resistant Staphylococcus aureus (MRSA), which is a leading cause of rising antimicrobial resistance (AMR).

Antimicrobial Resistance (AMR) is a major public health problem globally. India carries one of the largest burdens of drug-resistant pathogens worldwide. Infections caused by drug-resistant organisms could lead to increased mortality and prolonged duration of hospitalization, causing a huge financial burden to the affected persons, health-care systems, and hinder the goals of sustainable development. Two million deaths are projected to occur in India due to AMR by the year 2050. World Health Organisation (WHO) in 2017 has listed Methicillin resistant S. aureus (MRSA) as a high priority pathogen due to high prevalence of resistance, mortality rate, and burden on community & health care settings. In 2018, a national study conducted by the Indian council of Medical research (ICMR) and Anti-microbial resistant surveillance network (AMRSN) group highlighted the high prevalence of 38.6% of MRSA in India. A recent Indian study reports that 1 in 6 patients infected with multidrug resistant Gram positive infections die in intensive care units.

The size of Indian Antibiotic market is approx. Rs.16,000 Crore, growing at 7% and is one of the largest therapeutic segment, with a 12% market share of the Indian Pharmaceutical Market.

Covid-19 Vaccine Manufacturing in CP Pahrmaceuticals, United Kingdom, a step down subsidiary of the Company

In a major development during the year, the Company in Q2 announced agreement with the UK Government to fill finish COVID-19 vaccines. The manufacturing was undertaken at CP Pharmaceuticals, a subsidiary of Wockhardt based in Wrexham, North Wales. As per the terms of the agreement the company has reserved manufacturing capacity to allow for the supply of multiple vaccines to the UK Government in its fight against COVID19, including AZD1222, the vaccine co-invented by the University of Oxford and licensed by AstraZeneca. In November 2020 Prime Minister of United Kingdom, Mr. Boris Johnson visited the manufacturing facility.

This agreement was subsequently expanded from 18 to 24 months i.e until August 2022.

Your Company has also been exploring opportunities to tie up with various vaccine developers for manufacturing and/or providing fill-finish facilities for Covid 19 dosages.

Part Divestment of India Domestic Branded Business

During the year, your Company transferred the business comprising 62 products and line extensions along with related assets and liabilities, contracts, permits, intellectual properties, employees, marketing, sales and distribution of the same in the Domestic Branded Division in India, Nepal, Bhutan, Sri Lanka and Maldives, and the manufacturing facility at Baddi, Himachal Pradesh, where some of the products which are being transferred were manufactured (together the "Business Undertaking"), to Dr. Reddys Laboratories Limited ("DRL") for a consideration of Rs.1,850 crore, subject to adjustments specified in the Business Transfer Agreement (BTA) dated 12th February 2020.

In the aftermath of the COVID-19 pandemic, government restrictions, and recognising consequent reduction in the revenue from the sales of the Products forming part of the aforesaid BTA during March & April, 2020 your Company decided to allow flexibility to assess the impact of the COVID-19 pandemic on the valuation of the Business Undertaking, and the Company and DRL have executed an amendment agreement in terms of which the agreed consideration of Rs.1,850 crore to be paid as per following:

a) an amount equal to Rs.1,550 crore to be paid on the Closing Date under the BTA which has been paid by DRL to the Company on June 09, 2020;

b) an amount equal to Rs.67 crore which has been deposited by DRL in an escrow account, which shall be released subject to adjustments for, inter alia, Net working capital, employee liabilities and certain other contractual and statutory liabilities); - Out of which Rs.4 crore is pending as on date.

c) an amount equal to Rs.300 crore ("Holdback Amount"), which shall be held back by DRL on the Closing Date for assessment of the impact of the COVID-19 pandemic on the Business Undertaking, and shall be released as follows: If the revenue from sales of the products forming part of the Business Undertaking by DRL during the 12 months post-closing exceeds Rs.480 crore, DRL will be required to pay to the Company, from out of the Holdback Amount, an amount equal to 2 (two) times the amount by which the revenue exceeds Rs.480 crore.

Due to the restrictions on movement into and within the state of Himachal Pradesh on account of the Covid-19 Pandemic, the approval of the Government of Himachal Pradesh for the transfer of the land underlying the manufacturing facility at Baddi, Himachal Pradesh ("Baddi Facility"), as required under the Himachal Pradesh Tenancy and Land Reforms Act, 1972, is pending as of date. Accordingly, the Company and DRL have agreed that the Baddi Facility, shall only be transferred once the approval of the Government of Himachal Pradesh is received and in the meanwhile, the Company and DRL will enter into interim arrangements for management of the Baddi Facility by DRL.

Divestment of French Business:

During the year, Wockhardt France (Holdings) S.A.S. (WFH), a Step down Subsidiary of the Company divested the Marketing Authorisations (MAH) of the products along with their Trademarks (collectively known as Business Assets) for a consideration of Euro 11 Million.

WFH had business/marketable assets in the form of pharmaceutical marketing authorizations (MAH) of the branded generic products that has seen significant competition and price erosion over the years as a generic business. Considering soaring competition in the generic market and limited scope for further growth or to introduce new products in the market it was prudent to divest Business Assets.

WFH received price consideration on 18th December 2020 and outstanding loan in the Business was repaid in full.

Key milestone achieved in Breakthrough Anti-infective NCEs (WCK 6777)

In Q1, your company received the Qualified Infectious Disease Product1 (QIDP) designation for WCK 6777 from the United States Food and Drug Administration (US FDA). WCK 6777 is a once-a-day combination antibiotic based on Wockhardts NCE Zidebactam, which imparts WCK 6777 novel mechanism of p-lactam enhancer. Driven by the enhancer action, WCK 6777 overcomes an array of problematic bacterial resistance mechanisms such as metallo-p-lactamases, KPC and OXA carbapenemases. Further, Zidebactam has the unique ability to overpower other tough resistance mechanisms such as reduced drug uptake and drug efflux encountered in contemporary multidrug (MDR) resistant Gram negative pathogens.

Your Companys strategic focus continues to be on Research and Development (R&D). With New Chemical Entity (NCE) WCK 6777 of your Company getting QIDP designation from the US FDA, Wockhardt became the only Company in the world to hold QIDP Status for six antibiotics. Three of them are targeting Gram Negative pathogens and the other three are effective against Gram positive difficult-to-treat "Superbugs". R&D endeavours in the pharmaceutical business not only have long gestation period but demands heavy investments; and your Company, year-on-year, continues to invest substantial part of topline on R&D. During the year, R&D expenses stood at Rs.172 crore (6.23% of consolidated revenue) vis-a-vis. Rs.208 crore of previous year.

Being a research based global Pharmaceutical and Biotech company, your Company has strong focus on developing intellectual property. During the year, the Company has filed 22 patent applications and 41 patents were granted during the year. Accordingly, the Company as on 31st March, 2021, cumulatively filed 3,187 patents and holds 763 patents worldwide.

During the year, under review the following key events had taken place:

• Russian GMP audit was carried out at Biotech H14/2 OSD, API and Formulation (Injectable) Facilities.

• State FDA and WHO (GMP) audit was carried out at Bhimpore Daman and Biotech API Facilities.

• BPOM, Indonesia audit (virtual audit) was carried out at Biotech Formulation (Injectable) Facility.

During the year, the following approvals post successful audits were received from various authorities:

• State FDA and WHO (GMP) approval for Bhimpore, Daman facility.

• PMDA-Japan approval for Ankleshwar facility.

1 QIDP status is granted to drugs, identified by CDC (Centre for Disease Control, USA), that act against pathogens which have a high degree of unmet need in their treatment. QIDP status provides fast track clinical development and review of the drug application by US FDA for drug approval. The drug is also awarded five-year extension of market exclusivity. QIDP was constituted under Generating Antibiotic Incentives Now (GAIN) Act in 2012 as part of the FDA Safety and Innovation Act to underline the urgency in new antibiotics development.

Your Company, during the year also, continued its long-term strategic initiatives in value creation through cost containments, fostering culture of cost-consciousness, budgetary controls to improve efficiencies and working capital optimization which gave positive impact. Nonetheless, ongoing expenditures on remedial measures (for US FDA related matter) continued to impact the profitability of the Company.

Current status of QIDP products: Spurring Clinical development of NCEs in different territories:

WCK 5222: An abridged Phase III global study protocol finalized in consultation with US FDA, EMA and Chinese FDA (NMPA). The study is estimated to commence in September, 2021.

WCK 4282: Protocol for Global Phase III study has been discussed and approved by FDA and EMA. Chinese NMPA has agreed with the Clinical development plan and clinical study protocol . The study is being planned in 1000 patients globally and it is estimated to commence in December, 2021.

WCK 4873: Biotechnology Industry Research Assistance Council (BIRAC) grant for India Phase III study approved and first milestone received. The study enrolment commenced in February, 2021.

WCK 771 & WCK 2349: Both WCK 771 (IV), the brand name EMROK and WCK 2349 (Oral), brand name EMROK O were launched in June, 2020. Both the products have been well received by the intensivists and senior infectious disease specialists. Both the products are available across the country in all the major hospitals

WCK 6777: Successful submission of WCK 6777 US IND application and received QIDP designation from US FDA. Phase I studies scheduled to commence in 2022 in USA.

All the above NCEs have distinction of QIDP status by US FDA.

There is no change in the nature of business of the Company or any of its Subsidiaries.

COVID 19 PANDEMIC IMPACT & RESPONSE

The first quarter of 2020 saw an unprecedented outbreak of COVID-19 pandemic which caused an all-round disruption of economies around the world and dampened the already bleak economic prospects. It has proved to be one of the most damaging events of human history and believed to have deep and cascading impact across the entire economic chain. Another significant disruption was in the area of Global supply chain wherein China is the key link and was being heavily impacted by the Pandemic.

The second half of the year showcased the resilience of the Pharmaceutical Industry with significant outcome of efforts on vaccine development with multiple vaccine approvals. The launch of vaccination in some countries in End 2020 raised hopes of an eventual end to the pandemic. Moreover, economic data released after the October 2020 World Economic Organisation (WEO) forecast suggest stronger-than-projected momentum on average across regions in the second half of 2021.

Your Company had undertaken proactive steps from the inception of the pandemic across all facets of business operations & safety of its people. Anticipating the onset of major crisis in time to come and in the best interest of all the internal stakeholders in focus, your Company quickly took decision to enable work from home (WFH) for its associates, as early as third week of March 2020.

The Corporate IT Team quickly swung into action leveraging technology to enable WFH. Timely training sessions on remote connectivity were held in parallel before WFH rollout; access to laptop devices, connectivity to SAP, Email and GXP applications, access to various user folders were enabled. Collaborative tools like Zoom and MS Teams for making the collaboration more effective and productive while working from home were introduced. Post roll out, a dedicated IT Help Desk was created to cater to the WFH needs of associates.

Security standards were verified through third party audit. Covid Health assessment app was rolled out to assess the health of the associates. To strengthen the system, security face recognition and a contactless, IR-Based wrist temperature monitoring solution was evaluated and implemented at all manufacturing locations, R&D centre and Corporate office.

CREDIT RATING

During the year 2020-21, CARE Ratings Limited (CARE Ratings) has revised the Companys ratings for Long-Term Bank Facilities (Fund Based) as "CARE BBB-; Stable" from "CARE BB+; Under credit watch with positive implications"; and for Short Term Bank Facilities (Non Fund Based) as "CARE A3" from "CARE A4+; Under credit watch with positive implications".

CARE Ratings has also assigned a rating for the Companys Non-Convertible Debentures issue aggregating to Rs.200 crore as "CARE BBB-; Stable".

Further, India Rating & Research Private Limited has also revised the Companys ratings for Long-Term Loan Facilities to "IND BBB-/Stable" from "IND BB+/ RWE (Rating Watch Evolving)" and for Short-Term Loan Facilities to "IND A3" from "IND A4+/RWE (Rating Watch Evolving)".

DIVIDEND AND RESERVES

The Board of Directors of your Company do not recommend any dividend on the equity shares of the Company for the year ended 31st March, 2021; and no amount has been transferred to the General Reserve of the Company.

DIVIDEND DISTRIBUTION POLICY

Dividend Distribution Policy of your Company aims at striking the right balance between the quantum of dividend paid to its shareholders and the amount of profits retained for its business requirements, present and future. The intent of the Policy is to broadly specify various external and internal factors that shall be considered while declaring dividend and the circumstances under which the shareholders of the Company may or may not expect dividend.

The Policy is available on the website of the Company, weblink thereto is http://www.wockhardt.com/files/dividend- distribution-policy.pdf

SHARE CAPITAL

Pursuant to the allotment of 46,150 equity shares of Rs.5 each against exercise of stock options granted under Wockhardt Employees Stock Option Scheme - 2011 (the Scheme), the paid-up equity share capital of the Company increased from Rs.55,36,75,015 to Rs.55,39,05,765 during the year under review.

During the year under review, the Company redeemed 160,000,000 0.01% Non-Convertible Cumulative Redeemable Preference Shares (NCRPS Series 5) of Face value of Rs.5 each and 500,000,000 4% Non-Convertible Non-Cumulative Redeemable Preference Shares (NCCRPS) of Face value of Rs.5 each along with the accumulated dividend and redemption premium, if any on 19th October, 2020 on predetermined terms and conditions as decided earlier at the time of issuance/extension of said Preference Shares, before the extended due date of the redemption as per the agreed terms of issuance/extension of the said Preference Shares.

There were no issue of equity shares with differential voting rights and sweat equity shares during the year 2020-21. The Company does not have any scheme to fund its employees to purchase the shares of the Company. Further, no shares have been issued to employees of the Company except under the Scheme mentioned above.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review, Mr. Akhilesh Gupta (DIN: 00359325) was appointed as an Additional Director (Non-Executive, Independent) with effect from 29th August, 2020. The resolution for his appointment as a Non-Executive, Independent Director for a term upto 28th August, 2025 is placed for the approval of Members of the Company at the ensuring Annual General Meeting.

In terms of the provision of:

• Section 149 and other applicable provisions of the Act and SEBI Listing Regulations, Mr. Vinesh Kumar Jairath (DIN: 00391684), Independent Director of the Company, holds office upto 9th November, 2021 and being eligible, offers himself for re-appointment. Considering the performance evaluation, the resolution for his re-appointment as recommended by the Nomination & Remuneration Committee and the Board for another term upto 9th November, 2026, as Independent Directors, is placed for the approval of Members of the Company at the ensuring AGM.

• Section 152 of the Act, Dr. Huzaifa Khorakiwala (DIN: 02191870), Executive Director retires by rotation as Director at the ensuing AGM and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

All the Independent Directors have furnished Declaration of Independence stating that they meet the criteria of independence as provided under Section 149(6) of the Companies Act, 2013 (the Act) and Regulation 16 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing Regulations) and there has been no change in the circumstances which may affect their status as Independent Directors during the year. Independent Directors have also submitted declaration that they have registered themselves on the online data bank of Indian Institute of Corporate Affairs (IICA) in accordance with the Companies (Appointment and Qualification of Directors) Fifth Amendment, Rules, 2019.

In accordance with the provisions of Section 2(51) and 203 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Dr. Murtaza Khorakiwala, Managing Director, Mr. Manas Datta, Chief Financial Officer and Mr. Gajanand Sahu, Company Secretary & Compliance Officer are the Key Managerial Personnel (KMP) of your Company.

None of the directors are disqualified under Section 164(2) of the Companies Act, 2013. Further, they are not debarred from holding the office of Director pursuant to order of SEBI or any other authority.

The term of Mr. Baldev Raj Arora (DIN: 00194168) as an Independent Director was upto 27th May, 2020. Considering his age, Mr. Arora decided not to seek re-appointment for 2nd term as an Independent Director of the Company. Mr. Arora has made contribution for the sustainable growth and success of the Company.

MEETINGS

During the financial year 2020-21,6 (six) meetings of the Board of Directors and 4 (four) meetings of the Audit Committee were held. Details of these meetings and other Committees of the Board/General Meeting are given in the Report on Corporate Governance forming part of this Annual Report.

AUDIT COMMITTEE

As on 31st March, 2021, the Audit Committee comprises of Mr. Aman Mehta as Chairman; and Mr. Davinder Singh Brar, Dr. Sanjaya Baru, Mrs. Tasneem Mehta, Mr. Vinesh Kumar Jairath and Mr. Akhilesh Gupta as its Members.

All the Members of the Committee are Independent Directors and recommendations made by the Audit Committee were accepted by the Board of Directors of the Company. Further, the Committee has carried out the role assigned to it. Other details about the Audit Committee and other Committees of the Board are provided in the Report on Corporate Governance forming part of this Annual Report.

Mr. Akhilesh Gupta was inducted as a member of the Audit Committee w.e.f. 29th August, 2020.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Companies Act, 2013, the Directors state that:

(a) i n the preparation of Annual Accounts for the year ended 31st March, 2021, the applicable Accounting Standards have been followed and that no material departures have been made from the same;

(b) such Accounting Policies as mentioned in the Notes to the Financial Statements for the year ended 31st March, 2021 have been selected and applied consistently and judgments and estimates have been made 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 loss of the Company for the year ended 31st March, 2021;

(c) proper and sufficient care has been taken for the 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;

(d) the Annual Accounts for the year ended 31st March, 2021 have been prepared on a going concern basis;

(e) the internal financial controls to be followed by the Company have been laid down and that such internal financial controls are adequate and operating effectively; and

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

STATUTORY AUDITORS AND AUDITORS REPORT

M/s. B S R & Co. LLP, Chartered Accountants, were appointed as the Statutory Auditors of the Company at the Annual General Meeting (AGM) of the Company held on 14th August, 2019, for a term of five years i.e. till the conclusion of ensuing 25th AGM (to be held during calendar year 2024).

The reports of the Statutory Auditors on Standalone and Consolidated Ind AS Financial Statements forms part of this Annual Report. The Auditors Report does not contain any qualification, reservation and adverse remark.

COST AUDIT

Pursuant to the provisions of Section 148 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, as amended from time to time and as recommended by the Audit Committee, the Board of Directors of the Company appointed M/s. Kirit Mehta & Co., Cost Accountants as Cost Auditors to conduct the cost audit of the Company for the financial year 2021-22. The Company has received consent from M/s. Kirit Mehta & Co. to act as Cost Auditors. Further, pursuant to the aforesaid provisions of the Act, the remuneration payable to M/s. Kirit Mehta & Co. for conducting the cost audit of the Company for the financial year ending on 31st March, 2022 needs to be ratified by the Members of the Company and resolution for the said ratification is placed for approval of Members of the Company at the ensuing AGM.

The Cost Auditors Report for the financial year ended 31st March, 2020 did not contain any qualification, reservation and adverse remark, and the same was duly filed with the Ministry of Corporate Affairs within the due date.

SECRETARIAL AUDIT AND COMPLIANCE WITH SECRETARIAL STANDARDS

The Board of Directors of your Company has appointed Mr. Virendra Bhatt, Practising Company Secretary as Secretarial Auditors to conduct Secretarial Audit of the Company for the year ended 31st March, 2021. The Secretarial Audit Report issued by Mr. Virendra Bhatt does not contain any qualification, reservation and adverse remark. The Secretarial Audit Report is annexed as Annexure I to this Report.

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

ANNUAL RETURN

Pursuant to the provision of Section 92 of the Companies Act, 2013, copy of the annual return is available at www.wockhardt.com.

EMPLOYEE STOCK OPTIONS

Pursuant to SEBI (Share Based Employee Benefits) Regulations, 2014 and other applicable laws, if any, the required disclosures as on 31st March, 2021 are annexed as Annexure II to this Report.

During the year under review, there were no changes in the Employee Stock Option Scheme and the same is in compliance with the said Regulations.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Pursuant to the provisions of Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, CSR Policy as recommended by the CSR Committee and approved by the Board is uploaded on the website of the Company www.wockhardt.com.

The average Net Profit of the Company for the immediately preceding 3 financial years calculated as per Section 198 of the Companies Act, 2013 was negative. Hence, no amount was required to be spent on CSR activities during the financial year 2020-21. However, considering the pandemic situation and as a continuing corporate governance practice, the Company contributed Rs.2.12 crore to Wockhardt Foundation, the CSR arm of the Company, for spending on CSR activities in the areas of healthcare, education etc.

The details on CSR activities as required under Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended from time to time, is annexed as Annexure III to this Report.

POLICY ON APPOINTMENT AND REMUNERATION OF DIRECTORS

Your Company has been following well laid down policy on appointment and remuneration of Directors, KMP and Senior Management Personnel.

The appointment of Directors is made pursuant to the recommendation of Nomination and Remuneration Committee (NRC). The remuneration of Executive Directors comprises of Basic Salary, Perquisites & Allowances, and follows applicable requirements as prescribed under the Companies Act, 2013. Approval of shareholders for payment of remuneration to Whole-time Directors is sought, from time to time.

The remuneration of Non-Executive Directors comprises of sitting fees & commission, if any, in accordance with the provisions of Companies Act, 2013; and reimbursement of expenses incurred in connection with attending the Board meetings, Committee meetings, General meetings and in relation to the business of the Company. During the year under review, the Company has not paid any commission to the Non-Executive Directors.

A brief of the Remuneration Policy on appointment and remuneration of Directors, KMP and Senior Management is provided in the Report on Corporate Governance forming part of this Annual Report. Further, the Policy is available on the website of the Company and the weblink thereto is http://www.wockhardt.com/pdfs/wl-remuneration-policy.pdf

NRC have also formulated criteria for determining qualifications, positive attributes and independence of a Director and the same have been provided in the Report on Corporate Governance forming part of this Annual Report.

PERFORMANCE EVALUATION OF DIRECTORS

The Nomination and Remuneration Committee of the Board of Directors of the Company have laid down criteria for performance evaluation of the Board of Directors including Independent Directors. Pursuant to the requirement of the Companies Act, 2013, the SEBI Listing Regulations and considering criteria specified in the SEBI Guidance Note on Board Evaluation, the Board has carried out the annual performance evaluation of entire Board, Committee and all the Directors based on the parameters as detailed in the Report on Corporate Governance forming part of this Annual Report. The parameters of performance evaluation were circulated to the Directors in the form of questionnaire.

INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS

The Company has adequate internal financial control procedures commensurate with its size and nature of business. These controls include well defined policies, guidelines, Standard Operating Procedures (Sops), authorization and approval procedures and technology intensive processes. The internal financial controls of the Company are adequate to ensure the accuracy and completeness of the accounting records, timely preparation of reliable financial information, prevention and detection of frauds and errors, safeguarding of the assets and that the business is conducted in an orderly and efficient manner.

M/s. Ernst and Young, during the year, reviewed self-assessment tool on adequacy of Internal Financial Control (IFC) process of the Company in accordance with the requirement of the Companies Act, 2013. There were no material observations noted in this review.

The Company, during the year, continued with its past practice of a co-sourced model for internal audit. The Companys internal audit team is assisted by M/s. Ernst and Young who carry out internal audit reviews in accordance with the approved internal audit plan. Internal audit team reviews the status of implementation of internal audit recommendations. Summary of critical observations, if any and recommendations under implementation are reported to the Audit Committee.

During the year under review, there were no instances of fraud reported by the Auditors under Section 143(12) of the Companies Act, 2013.

RISK MANAGEMENT

As on 31st March, 2021, Risk Management Committee comprises of Dr. H. F. Khorakiwala as Chairman; and Mr. Davinder Singh Brar, Independent Director, Dr. Murtaza Khorakiwala, Managing Director and Mr. Manas Datta, Chief Financial Officer as its members. During the year under review, the Risk Management Committee met for 2 (two) times and the details of these meetings are given in the Report on Corporate Governance forming part of this Annual Report.

Enterprise Risk Management (ERM) framework encompasses practices relating to the identification, analysis, evaluation, mitigation and monitoring of the strategic, external and operational controls risks in achieving key business objectives. The Company identifies and tries to mitigate risks that matter on an ongoing basis. Risk Management Policy approved by the Board is in place. Risk management is embedded in the strategic business decision making.

Strategic Risks comprises of risks inherent to Pharmaceutical Industry and competitiveness, Companys choices of target markets, business models and talent base. Your Company periodically assesses risks in new initiatives, the impact of strategy on financial performance, competitive landscape, growth models and attracting and retaining talented workforce.

External Risks arising out of uncontrollable factors in the external environment due to various developments, especially the unprecedented COVID-19 pandemic, in the regulatory environment in which your company operates, unfavourable trends in the macroeconomic environment including currency fluctuations, Country specific risks, economic and political environment, technology disruptions etc. are actively assessed to take appropriate risk mitigation.

Operational controls risks encompasses risks of disruptions to supply chain, manufacturing operations due to the COVID-19 pandemic, non-compliance to policies, information security, data privacy, intellectual property, individuals engaging in unlawful or fraudulent activity or breaches of contractual obligations that could typically result in penalties, financial loss, litigation and loss of reputation; are reviewed on an ongoing basis.

The current key risk relates to regulatory risk on overseas operations and business. This is arising out of regulatory audits at Companys manufacturing locations, which is being adequately addressed through strengthening of current processes and controls by Companys internal quality assurance and manufacturing teams and through the help of reputed external consultants. There are no risks, which in the opinion of the Board, threaten the existence of your Company. Other details about Risk Management have also been elaborated in the Report on Corporate Governance forming part of this Annual Report.

INSURANCE

All properties and insurable interests of the Company including buildings, plant & machinery and stocks have been adequately insured.

GREEN INITIATIVE

Your Company regularly undertakes green initiatives to preserve environment, which includes energy saving, water conservation and usage of electronic mode in internal processes & control, statutory and other requirement. Shareholders are also requested to register their e-mail IDs with the Depositories/ RTA/ Company, as the case may be, for receiving all communication from the Company electronically.

POLICIES

For better conduct of operations and in compliance with regulatory requirement, your Company has framed and adopted certain policies. In addition to the Companys Code of Business Conduct and Ethics, key policies/code that have been adopted by the Company are as follows:

Name of the Policy Brief Description Web Link
Policy for determining Materiality of Events This policy aims to determine Materiality of events/ information. http://www.wockhardt.com/files/policy- determining-materiality-of-events.pdf
Archival Policy The policy deals with archival of the Companys records and documents. http://www.wockhardt.com/files/archival- policy.pdf
Policy for determining Material Subsidiaries The policy determines the material subsidiaries and material non-listed Indian subsidiaries of the Company and to provide the governance framework for them. http://www.wockhardt.com/files/policy-on- material-subsidiaries-17-12-2515.pdf
Policy on Materiality of and Dealing with Related Party Transactions The policy regulates all transactions between the Company and its related parties. http://www.wockhardt.com/files/policy-on- rpt-01-4-19.pdf
Vigil Mechanism/Whistle Blower Policy The Company has adopted the Vigil Mechanism for directors and employees to report concerns about unethical behaviour, actual or suspected fraud, or violation of the Companys code of conduct. http://www.wockhardt.com/files/whistle- blower-policy-04-03-20.pdf
Code of Practices & Procedures for Fair Disclosure of Unpublished Price Sensitive Information The Code determines principles for fair disclosure of Unpublished Price Sensitive Information. http://www.wockhardt.com/files/code-of- fair-disclosur-of-upsi-2-4-19.pdf
Corporate Social Responsibility Policy The policy outlines the Companys strategy to bring about a positive impact on society through programs relating to education, healthcare, environment etc. http://www.wockhardt.com/pdfs/csr-policy.pdf
Remuneration Policy This policy formulates the criteria for determining qualification, competencies, positive attributes and independence for the appointment of directors and also the criteria for determining the remuneration of the directors, key managerial personnel and other employees. http://www.wockhardt.com/pdfs/wl- remuneration-policy.pdf
Dividend Distribution Policy The policy determines the parameters/ basis for declaration of dividend. http://www.wockhardt.com/files/dividend- distribution-policy.pdf
Policy on Preservation of Records The policy deals with periodicity of retention of the Company records and documents. Available on internal portal
Risk Management Policy The Policy is intended to institutionalize the risk management framework of the Company which includes identification, review and reporting of material risks.
Forex Risk Management Policy The policy defines, identify, measure, manage, mitigate and review potential risks pertaining to fluctuations in Foreign Exchange.
Code of Conduct for Regulating, Monitoring and Reporting Trading by Designated Persons The policy provides the framework in dealing with securities of the Company by designated persons.
Policy for Inquiry in case of Leak/ Suspected Leak of Unpublished Price Sensitive Information (UPSI) The Policy is intended to set procedure to conduct inquiry in case of leak or suspected leak of UPSI in violation of SEBI (Prohibition of Insider Trading) Regulations, 2015, and Code of Conduct for Regulating, Monitoring and Reporting Trading by Designated Persons.
Anti-bribery and Anti-corruption Policy The policy provides for prevention, deterrence and detection of fraud, bribery and other corrupt business practices in order to conduct the business activities with honesty, integrity with highest possible ethical standards.
Human Right Policy Policy aims at social & economic dignity and freedom, regardless of nationality, ethnicity, gender, race, economic status or religion. Also focuses to uphold international human rights standards.
Stakeholder Engagement Policy Policy aims to create a sustainable environment that involves relevant Stakeholders, who may be affected by or can influence organisations decisions.
Policy on Safety, Health and Environment The policy provides the provision of a safe and healthy work place for every employee and care for the environment to make the world a better place to live in.
Acceptable usage Policy for IT System The policy outlines the acceptable use of computing equipment and information security awareness.
HR Policy Handbook This encompasses work timings, Leave Policy, No Smoking in Company Premises, Employee Benefit related guidelines, Policy on prevention of Sexual Harassment at work place, etc.

PARTICULARS OF LOANS, INVESTMENTS AND GUARANTEES UNDER SECTION 186 OF THE COMPANIES ACT, 2013

In accordance with the approval of the Shareholders sought by way of Postal Ballot on 15th March, 2018 under Section 186 of the Companies Act, 2013, the Company can give loans, guarantees and/or provide security(ies) and/or make investments upto Rs.6,000 crore. The particulars of loans, investments and guarantees are provided under Note 36 and Note 6 in the Notes to the Financial Statements.

PARTICULARS OF CONTRACTS/ ARRANGEMENTS WITH RELATED PARTIES

During the financial year 2020-21, all contracts/ arrangements/ transactions entered into by the Company with its related parties were reviewed and approved by the Audit Committee. Prior omnibus approvals were obtained from the Audit Committee for related party transactions which were of repetitive nature, entered in the ordinary course of business and on an arms length basis. No transaction with any related party was in conflict with the interest of the Company.

The Company did not enter into any related party transaction with its Key Managerial Personnel. The details of related party transaction are provided under Note 43 in the Notes to the Financial Statements.

The particulars of contracts/ arrangements with related parties in Form AOC-2 are provided in Annexure IV to this Report. VIGIL MECHANISM

Pursuant to the requirements laid down under Section 177 of the Companies Act, 2013 and Regulation 22 of the SEBI Listing Regulations, the Company has well laid down Vigil Mechanism. The details of the same are provided in the Report on Corporate Governance forming part of this Annual Report. During the year, the Company did not receive any complaint under Vigil mechanism.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of the Act, and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 have been annexed to this report as Annexure V.

In accordance with the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said rules, which includes the name of top 10 employees in term of remuneration drawn forms part of this Report. Pursuant to the provisions of Section 136(1) of the Companies Act, 2013, the Boards Report is being sent to the Shareholders of the Company excluding the said statement. Any shareholder interested in inspection or obtaining a copy of the statement may write to the Company Secretary and the same will be furnished on request.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The 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 provided in Annexure VI to this Report.

SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANY

As on 31st March, 2021, the Company has total 32 Subsidiaries. However, during the year under review, the Company does not have any joint venture or associate company.

There were no companies who ceased to be Subsidiaries of the Company during the financial year under review.

In accordance with Section 129(3) of the Companies Act, 2013, a statement containing salient features of the Subsidiaries of the Company is provided in Form AOC-1 annexed as Annexure VII to this Report.

CONSOLIDATED FINANCIAL STATEMENT

The Consolidated Financial Statement of your Company for the financial year 2020-21 are prepared in compliance with applicable provisions of the Companies Act, 2013 read with the Rules issued thereunder, applicable Accounting Standards and provisions of the SEBI Listing Regulations.

A copy of the Audited Financial Statements of the Subsidiaries shall be made available for inspection at the Registered Office of the Company during business hours. The Audited Financial Statement of the Company including Consolidated Financial Statement and Financial Statements of its Subsidiaries are also available on the website of the Company. Any Shareholder interested in obtaining a copy of the separate Financial Statement of the Subsidiary(ies) shall make specific request in writing to the Company Secretary and the same will be furnished on request.

DEPOSITS

During the year under review, your Company has not accepted any Fixed Deposits under Chapter V of the Companies Act, 2013 and as such, no amount on account of Principal or Interest on Deposits from Public was outstanding as on 31st March, 2021.

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

The Company strongly believes in providing a safe and harassment free workplace for each and every individual working for the Company through various interventions and practices. It is the continuous endeavor of the Management of the Company to create and provide an environment to all its Associates that is free from sexual harassment. Pursuant to the requirement of the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 ("Act"), the Company has constituted Internal Committees (IC) across all the locations which are responsible for redressal of complaints related to sexual harassment at respective locations. The Company arranged various interactive awareness workshops in this regard for the Associates at all the manufacturing sites & Corporate Office during the year under review. During the year 2020-21, the Company has not received any Complaints in the matter.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS/COURT

There are no significant and material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and operations of the Company during the year under review. However, Members attention is drawn on the following:

a) Writ Petition filed against Notification No. S.O. 4379(E) dt 07.09.2018 ("Impugned Notification") Aceclofenac + Paracetamol + Rabeprazol on 14th September, 2018. The judgement is passed by Honble High Court, Delhi with a view that the impugned notification cannot be sustained. The same is set aside. The matter is remanded to DTAB/ Sub-committee constituted by it to examine the issue regarding the said FDC in accordance with the directions issued by the Honble Supreme Court in Pfizer Ltd. (supra). The DTAB/ Sub-committee shall submit a report to the Central Government. The Central Government may take an informed decision whether to restrict or approve the said FDC. No decision is taken by Central Government in the matter so far.

b) The Company has earlier filed the caveat before Honble Supreme Court, and the Union of India (Uol) has filed a Special Leave Petition (SLP) in Supreme Court of India against the Judgment passed by the Delhi High Court, quashing the notification issued by the Uol wherein it stipulated the prohibition of the manufacture, sale and distribution of certain FDCs being manufactured by the Company. The Honble Supreme Court has, after hearing the parties, dismissed the SLP filed by Uol on 14th October, 2019.

MATERIAL CHANGES AND COMMITMENTS OCCURRED AFTER THE END OF FINANCIAL YEAR

There are no material changes and commitments between the end of the financial year of the Company and as on the date of this report which can affect the financial position of the Company.

BUSINESS RESPONSIBILITY REPORT

In compliance with Regulation 34(2)(f) of the SEBI Listing Regulations, the Business Responsibility Report forms part of this Annual Report.

CORPORATE GOVERNANCE & MANAGEMENT DISCUSSION & ANALYSIS REPORT

A Report on Corporate Governance along with a Certificate from Practicing Company Secretary confirming the compliance of the conditions of Corporate Governance and Management Discussion and Analysis Report, forms part of this Annual Report.

ACKNOWLEDGEMENTS

Your Directors wish to place on records their sincere appreciation and acknowledge the dedication & contribution made by the employees of the Company at all levels. Your Directors wish to place on record their appreciation to all the Stakeholders of the Company viz. customers, members of medical profession, investors, banks, regulators for their unrelenting support during the year under review.

For and on behalf of the Board of Directors
Dr. H. F. KHORAKIWALA
Chairman
DIN: 00045608
Place : Mumbai
Date : 27th May, 2021