Zim Laboratories Ltd Directors Report.

The Board of Directors of your Company has pleasure in presenting the Board Report pursuant to Section 134(3) of the Companies Act, 2013, comprising the prescribed particulars and information as per the Companies (Management and Administration) Rules, 2014 and the Companies (Accounts) Rules, 2014 in respect of year ended 31.03.2021 as follows :-

a) Number of Meetings of the Board : 08

b) Directors Responsibility Statement:-

Pursuant to Section 134(5) of the Companies Act, 2013 (Act) your Directors hereby state that:-

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

ii) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

iii) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

iv) the directors had prepared the annual accounts on a going concern basis ;

v) the directors have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively ;

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

c) Declaration by Independent Directors under Sub Section 6 of Section 149 :-

The Company has received necessary declarations from each Independent Director under section 149 (7) of the Companies Act, 2013 and Regulation 25 (8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

d) Nomination and Remuneration Policy:-

The Composition of Nomination and Remuneration Committee is as follows:

i) Dr. V. V. Parashar - Chairman.

ii) Dr. Naresh Gaikwad

iii) Mrs. Kavita Loya

iv) Dr. Anwar Siraj Daud, Chairman of the Board.

The criteria laid down in the Companies Act, 2013 and Rules framed there-under are complied with while appointing the Directors including Independent Directors. The Nomination and Remuneration Policy has been formulated and approved by the Nomination and Remuneration Committee, placed as Annexure III.

e) Explanations or comments on qualification/reservation/adverse remark/disclaimer made by :-

1. Statutory Auditor - Not applicable since there is no qualification,reservation,adverse remark or disclaimer by auditor.

2. Secretarial Auditor - Not applicable since there is no qualification,reservation,adverse remark or disclaimer by auditor.

f) Particulars of loans, guarantees or investments under Section 186 :-

a) Loan : NIL
b) Guarantee : NIL
c) Investment : NIL

g) Particulars of contracts or arrangements with Related parties pursuant to Section 188(1)

During the year, no transaction with related parties conflicted with the interests of the Company. All transactions entered into

by the Company with related parties during the financial year were in the ordinary course of business and at an arms length basis. Statements of transactions with related parties are periodically placed before the Audit Committee and are approved by the committee. Particulars of contracts or arrangements with related parties referred to in Section 188 (1) of the Companies Act, 2013, in the prescribed Form AOC - 2, is appended herewith as Annexure IV to the Boards Report.

h) Annual Return:

The Annual Return of the Company as on 31st March, 2021 in Form MGT - 7 in accordance with Section 92(3) of the Act read with the Companies (Management and Administration) Rules, 2014, is available on the website of the Company at https:// www.zimlab.in/annual_reports/

i) The state of Companys affairs:-

This part has been covered under Management Discussion & Analysis Report which forms part of the Annual Report.

j) The amount proposed to be carried to reserve : NIL
k) The amount of dividend payment recommended : NIL
l) Material changes and commitments, if any affecting the financial position of the company which have occurred between the end of the financial year and the date of the report. : NIL

m) Conservation of energy, technology absorption, foreign exchange earnings and outgo: -

A. Conservation of energy:

(i) The steps taken or impact on conservation of energy:

Your company is striving continuously to conserve every form of energy by adopting innovative measures to reduce wastage and optimize consumption. Notable measures for energy conservation were as follows:

• Old utility piping has been upgraded for better efficiency in steam and compressed air distribution

• For ensuring optimum temperature and having a tangible savings in utility cost, temperature controllers have been installed in core areas.

• Electrical light fixtures have been changed to LED/Induction fixtures.

• Lights have been converted to day-night sensors for auto ON/OFF.

(ii) The steps taken by the Company for utilizing alternate sources of energy: The warehouse have been shifted to an on- grid solar system in place of conventional power source from MSEB.

(iii) The capital investment on energy conservation equipments: 36.10 Lakhs

B. Technology Absorption: -

i) The efforts made towards technology absorption: 1) An automatic cartonator machine has been installed which will improve the quality and yield on secondary packing.
2) Extruder and Spheroniser have been installed for improvement in pellet manufacturing.
3) Tablet and Capsule inspection machine added for better quality of output.
4) The inclusion of Fluid Bed Processor (from Glatt) will significantly improve the process timing which will improve the yield of the products.
5) The Company has filed the regulatory dossier for approval of Rizatriptan orally dissolving film in Europe. Rizatriptan orally dissolving film is a product developed using our Thinoral technology which yields instantly wettable, rapidly dissolving, and stable films. The product is used in the treatment of migraine which is invariably associated with symptoms like nausea and vomiting.
ii) The benefits derived like product improvement, cost reduction, product development or import substitution: 1) Offers basket of products under various therapeutic classes. Many products are in the pipeline for future introduction in emerging and regulated market. 2) To maintain the relevance and provide value addition to our existing clients, ZIM products are evaluated against the innovator products analytical data package, stability data package and clinical data package. 3) Offers technologically advanced differentiated products which are convenient and safe for administration to patients. 4) To mitigate the risk of sourcing API for top selling products, initiatives on alternate vendor qualification were also undertaken during the year. 5) Continuous alternate vendor development process is in place was initiated to mitigate cost fluctuations, risk of uninterrupted supply and the risk of sourcing API and excipients for top products.
iii) In case of imported technology (imported during the last 3 years reckoned from the beginning of the financial year):
a. The details of technology imported : Cartonator for Secondary Packing of the products.
b. The year of import : FY 2019-20
c. Whether the technology has been fully absorbed : Yes
d. If not fully absorbed, areas where absorption has not taken place, and the reasons thereof. : Not applicable
iv) The expenditure incurred on Research and Development : Revenue expenses 1386.65 lakhs Capital expenses 92.84 lakhs
C) Foreign Exchange earnings and outgo :
i) Foreign exchange earned during the year : 21,397.53 Lakhs
ii) Expenditure in foreign exchange : 1,274.44 Lakhs

n) Risk Management Policy :

This part has been covered under Management Discussion & Analysis Report which forms part of the Annual Report.

o) Corporate Social Responsibility (CSR) :-

The Composition of Corporate Social responsibility Committee is as follows :

(i) Mr. Suprakash Chakravarty - Chairman.

(ii) Mr. Padmakar Joshi

(iii) Dr. Anwar Daud

(iv) Mr. Zulfiquar Kamal

The policy approved by the Board is as follows:-

1 Major project to be implemented in phases, in a period of 5 to 10 years 60% to 70%
2 Sanitation and water supply 5% to 10%
3 Educational and vocational skill development activities 5% to 10%
4 Contribution to other organizations engaged in activities covered under notified CSR projects 5% to 10%

Annual Report on CSR Activities is annexed as Annexure - I to the Board Report.

P) Board Evaluation

Pursuant to the provisions of section 134(3)(p) of the Act read with rule 8(4) of the Companies (Accounts) Rules, 2014 an annual evaluation was carried out by the Board of its own performance as also of its committees and individual Directors. The evaluation was done by the Board after seeking inputs from all Directors, inter-alia covering different aspects viz. composition and structure of the Board, attendance including participation of the Directors at the Board and Committee meetings, observance of governance, quality of deliberation and effectiveness of the procedures adopted by the Board. In evaluating the performance of the individual Directors, criteria such as qualification, knowledge, attendance at meetings and participation in long term strategic planning, leadership qualities, responsibilities shouldered, interpersonal relationships and analytical decision making ability were taken into consideration. In Compliance with regulation 17(10) of the listing regulations, the Board carried out performance evaluation of Independent Directors without the participation of the Directors being evaluated.

The Performance Evaluation of the Chairman and Managing Director was carried out by the Independent Directors. The evaluation process has been explained in the Corporate Governance Report. The Board reviewed the evaluation results as collated by the Nomination and Remuneration Committee.

q) Financial Highlights

( in lakhs)

Particulars Standalone Consolidated
FY 2021 FY 2020 FY 2021 FY 2020
Revenue 30,362.94 27,431.97 30,726.33 27,773.92
Other Income 244.90 465.65 233.69 452.08
Total Income 30,607.84 27,897.62 30,960.02 28,226.00
Operating expenditures 26,681.81 25,453.76 26,750.10 25,512.53
Profit before interest, depreciation and tax 3,926.03 2,443.86 4,209.92 2,713.47
Less : Finance costs 1,088.56 1,265.45 1,089.82 1,265.45
Depreciation and amortisation 1,461.38 1,327.15 1,578.90 1,441.16
Profit/ (Loss) before exceptional item and tax 1,376.09 (148.74) 1,541.20 6.86
Exceptional Items- loss (518.08) - (518.08) -
Profit/(Loss) before tax 858.01 (148.74) 1,023.12 6.86
Tax expense 296.39 (322.80) 291.37 (322.80)
Profit/(Loss) after tax 561.62 174.06 731.75 329.66
Opening balance in Retained Earnings 9,352.38 9,253.79 9,506.56 9,252.37
Less : Adjustment towards lease payments - 3.63 - 3.63
Add : Adjustment towards fair value of ESOP - 52.65 - 52.65
Profit available for appropriation 9,914.00 9,476.87 10,238.31 9,631.05
Less : Appropriations
Dividend - 80.90 - 80.90
Dividend distribution tax - 16.63 - 16.63
Transfer from other comprehensive income 38.50 26.96 38.50 26.96
Closing balance in Retained Earnings 9,875.50 9,352.38 10,199.81 9,506.56

r) Change in nature of business if any. : NIL

s) The details of Directors or Key Managerial Personnel who were appointed or have resigned during the year : NIL

t) Names of Companies which have become its subsidiaries, during the year: NIL

u) Details relating to deposits covered under Chapter V of the Act. : NIL

v) The details of deposits which are not in compliance with the requirements of Chapter V of the Act. : Company has not accepted any deposits during the year.

w) The details of significant and material orders passed by the regulators or courts or tribunals impact the going concern status and Companys operations in future. : NIL

x) The details in respect of adequacy of internal financial controls with reference to the financial statements.: The details are separately covered under Management Discussion & Analysis Report which form part of the Annual Report.

y) Details of Employee Stock Option Scheme as on 31.03.2021

Pursuant to Section 62 read with Rule 12 of Companies (Share Capital and Debentures) Rules, 2014, following are the details of ZIM Employee Stock Option Scheme :

i) Option Granted : 1,83,665
ii) Option vested : 1,83,665
iii) Option Exercised : 1,83,665
iv) The total number of shares arising as a result of exercise of option : 1,83,665
v) Option Lapsed : NIL
vi) The exercise price : 10/-
vii) Variation of terms of options : NIL
viii) Money realised by exercise of option : 18,36,650.00
ix) Total number of options in force : NIL

z) Report on performance and financial position of wholly-owned subsidiaries viz :

1. ZIM Laboratories FZE, Sharjah.

2. ZIM Health Technologies Limited, India.

3. SIA ZIM Laboratories Limited, Latvia.

In compliance with the first proviso to section 129(3) of the Companies Act, 2013 and Rule 5 and 8(1) of Companies (Accounts) Rules, 2014, salient features of the financial statements, performance and financial position of each subsidiary is given in Form AOC-I as Annexure VII.

aa) Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

The following is the summary of sexual harassment complaints received and disposed off during the year 2020-21.

No. of complaints received : NIL

No. of complaints disposed off : NIL

(ab) Disclosure under Section 148 (1) of the Companies Act, 2013

The Company has maintained proper books of accounts as required pursuant to the Rules made by the Central Government for the maintenance of Cost records under sub-section (1) of section 148 of the Act in respect of Companys products.

(ac) In compliance with Regulation 34 read with Schedule V of the Listing Regulations, a Report on Corporate Governance for the year under review is annexed as Annexure V to this report.

(ad) The Secretarial Audit Report for the financial year ended 31st March, 2021 is annexed as Annexure II to this report.

(ae) Particulars of Employees and Related Disclosures

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and remuneration of Managerial Personnel) Rules, 2014, is annexed as Annexure VI.

(af) Acknowledgements

We take this opportunity to thank the employees for their dedicated service and contribution to the Company.

We also thank our banks, business associates and other stakeholders for their continued support to the Company.

For and on behalf of the Board of Directors
Place: Nagpur (Anwar Siraj Daud)
Date: 06.09.2021 Chairman
DIN:00023529