Unichem Laboratories Ltd

Dear Members,

The Board of Directors are pleased to present the audited financial statements of the Company for the financial year ended 31st March 2025.

(Rs. in crores)

In compliance with the provisions of Section 129(3) of the Companies Act, 2013 ("the Act"), the audited consolidated financial statements of the Company forms an integral part of this Annual Report.

The fiscal year 2024-25 has been noteworthy for Unichem, being the first full year after becoming part of Ipca group, had shown record achievements in revenue and margins. Building upon a robust performance from the preceding year, we have continued our growth trajectory. Our revenue had crossed over 2,000 crores and margin had grown to 58.2%. The results are the testimony towards successful business transformation which happened in the previous financial year.

The consolidated revenue from operations for the financial year under review stood at 2,110.97 crores compared to 1,785.11 crores in the previous financial year, reflecting a growth of 18.3%. Profit before tax increased to 154.59 crores, as against loss of 84.96 crores in the preceding year while Profit after tax is 137.52 crores an increase of 231.28 crores from a loss of 93.76 crores in the previous financial year.

The Company continues to maintain a strong focus on international markets, with exports contributing 98.02% to the total sales revenue.

The standalone revenue from operations for the financial year under review stood at 1,735.70 crores, compared to 1,442.16 crores in the previous financial year, reflecting a growth of 20.4%. Profit after tax increased to 162.96 crores, an increase of 255.14 crores from a loss of 92.18 crores in the preceding year. The performance achieved amid various economic and geopolitical dynamics, highlights our resilience and customer-centric approach.

During the year, the Company had completed the capacity expansion of Phase I of API plant at Pithampur of approximately 210 KL with an investment of nearly 200 crores which will be used mainly for captive purposes.

There have been no material changes or commitments affecting the financial position of the Company that have occurred between the end of the financial year and the date of this Report. Furthermore, there has been no change in the nature of the Company's business during the year under review.

Unichem Laboratories Limited became a subsidiary of Ipca Laboratories Limited in the previous fiscal year. Ipca Laboratories Limited is having a vast set-up at Kandivali (West), Mumbai and to derive synergy and effective co-ordination between parent and subsidiary, the Company relocated its Registered Office effective 1st September 2024, from Unichem Bhavan, Prabhat Estate, Off S.V. Road, Jogeshwari (West), Mumbai 400 102 to 47, Kandivli Industrial Estate, Kandivli (West), Mumbai 400 067.

Consequently, the premises situated at Jogeshwari, Mumbai was lying vacant with no ongoing business activity and the Board decided to divest the said property. A memorandum of understanding had been signed with a developer to sell this property comprising of approximately 3.4 acres of land and building attach thereto for a consideration of 279 crores subject to requisite regulatory approvals and permission. The book value of the said property was approximately 2.21 crores while the ready reckoner value was 157.87 crores.

The Company has six subsidiaries and one associate company as on 31st March 2025. In compliance with applicable regulatory requirements, the financial data of these entities is provided in the prescribed Form AOC-1, which is annexed to the consolidated financial statements.

For further details pertaining to impairment of investments in the associate company and wholly owned subsidiaries, please refer to Note Nos. 6, 37 and 41 of the standalone financial statements.

During the year under review, the Company acquired nine Abbreviated New Drug Applications (ANDAs) from Bayshore Pharmaceuticals LLC, USA ("Bayshore USA"), a wholly owned step-down subsidiary of Ipca Laboratories Limited (the holding company), for a total consideration of USD 2,650,000.

Additionally, the Company's wholly owned subsidiary, Unichem Pharmaceuticals (USA) Inc. ("Unichem USA"), acquired the generic formulations marketing and distribution business of Bayshore USA as a going concern through a slump sale. This business was transferred on a debt-free basis for a consideration of USD 10,000,000.

During the year it was decided that 100% share capital of Unichem Laboratories Ltd, Ireland, a wholly owned subsidiary company, which was continuously incurring losses and the Company had written off its entire investment in its books of accounts be transferred to Ipca Laboratories Limited, holding company of Unichem at a valuation of 4 (four) crores based on the independent valuation report.

Similarly, the Company decided to close the manufacturing facility of its wholly owned subsidiary, Niche Generics Limited ("Niche UK"), located at Baldoyle, Dublin, Ireland due to persistent operational losses and the high cost of operations. The facility, which was being operated on leased premises, was nearing the end of its lease term in FY 2027 and had become commercially unviable. The products which were being manufactured at this facility will continue to be manufactured at plant facilities of your company located in India.

The audited financial statements of all subsidiaries are available on the Company's website at www.unichemlabs.com and can also be inspected at any time at the Registered Office of the Company during business hours in accordance with the provisions of Section 136 of the Act. Shareholders interested in obtaining a copy of the accounts of the subsidiaries may write to the Company Secretary at the Company's registered office or email to shares@unichemlabs.com.

Unichem Pharmaceuticals (USA) Inc. qualifies as a material subsidiary in accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") and the Company's Policy on Material Subsidiaries. The said policy is available on the Company's website at: https://www.unichemlabs.com/pdf/policies/policy-on-material-subsidiaries.pdf

In order to conserve resources, the Board of Directors has not recommended any dividend on the Equity Shares for the financial year. In accordance with the Listing Regulations, the Company has adopted a Dividend Distribution Policy, which is available on its official website at https://www.unichemlabs.com/pdf/policies/dividend-distribution-policy.pdf

The authorised and paid-up share capital of the Company remained unchanged during the year under review.

The Unichem Employee Stock Option Scheme 2018 ("Scheme") continues to be in effect and is administered by the Nomination and Remuneration Committee ("NRC"). No modifications were made to the Scheme during the financial year under review.

In compliance with Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021, the requisite disclosures relating to the Scheme are available on the Company's website at https://www.unichemlabs.com/annual-report.php

M/s. Alwyn Jay & Co., Secretarial Auditors, have issued a certificate confirming that the Scheme has been implemented in compliance with the applicable regulations and the resolution approved by the shareholders at the general meeting. The certificate will be available for inspection by the members at the forthcoming Annual General Meeting ("AGM").

The Company's banking facilities are rated by ICRA. During the year, ICRA upgraded the Company's long-term credit rating to A+ (pronounced ICRA A Plus) from A (pronounced ICRA A), reflecting a stable outlook. The rating upgrade demonstrates your Company's healthy improvement in its revenues as well as significant improvement in margins due to its improved cost structure and increased capacity utilisation.

In compliance with Regulation 34(2), read with Part B of Schedule V of the Listing Regulations, a detailed assessment of the sector in which your company operates and overall financial and operational status is presented in the Management Discussion and Analysis, which forms an integral part of this Report and is annexed herewith as Annexure A.

The Board of Directors reaffirms its unwavering commitment to upholding exemplary corporate governance and ethical standards. The Company remains dedicated to maintaining the highest levels of corporate governance.

The Corporate Governance Report for the year forms an integral part of this report as Annexure B, accompanied by a certificate from M/s. N. A. Shah Associates LLP, Statutory Auditors, confirming compliance with the corporate governance norms prescribed under the Listing Regulations.

The Company's Board comprises distinguished professionals from diverse backgrounds, each bringing a wealth of expertise, domain knowledge, and experience. This optimal mix of Executive and Independent Directors ensures a balanced approach, combining business acumen with independent judgment in the Board's decision-making processes.

During the year under review, none of the Non-Executive Directors had any pecuniary relationships or engaged in transactions with the Company, except for the receipt of sitting fees.

In accordance with Section 152 of the Act, and the Company's Articles of Association, Dr. Prakash A. Mody is scheduled to retire by rotation at the forthcoming AGM and, being eligible, has offered himself for re-appointment. The Board of Directors, recognizing his valuable contributions, recommends his re-appointment. A resolution seeking shareholders' approval for his re-appointment, along with pertinent details as required, is included in the Notice convening the AGM.

All IDs have confirmed their ongoing compliance with the independence criteria specified in Section 149(6) of the Act and Regulation 16(b) of Listing Regulations. Further, in terms of Section 150 of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, the Independent Directors of the Company have confirmed that they have registered themselves with the databank maintained by the Indian Institute of Corporate Affairs (IICA) and have passed the proficiency test, if applicable to them. There have been no changes in circumstances affecting their status as IDs of the Company. Additionally, they have affirmed adherence to the Code of Conduct for IDs.

Based on the disclosures provided, none of the IDs are disqualified or debarred from serving as Directors under Section 164 of the Act or SEBI order, or any other relevant authority. The Board has reviewed and assessed the veracity of the aforesaid declarations, as required under Regulation 25(9) of the Listing Regulations. The Board confirms that the IDs maintain independence from management.

The Board recognizes that the IDs possess the necessary qualifications, experience, and expertise across various domains, including manufacturing, operations, finance, human resources, strategy, sales and marketing, auditing, and risk management. Moreover, they maintain exemplary standards of integrity.

A detailed matrix of the skills, expertise, and competencies of all Directors, including IDs as well as details of the familiarization programme for Directors are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.

During the year, Mr. Sandip Ghume, Deputy Chief Financial Officer & Key Managerial Personnel, resigned effective 30th June 2024 and Mr. Sanjay Jain had been appointed as Chief Financial Officer effective from 8th August 2024.

As of the date of this report, the Key Managerial Personnel of the Company are:

Mr. Pabitrakumar Bhattacharyya, Managing Director;

Mr. Pradeep Bhandari, Head Legal & Company Secretary; and

Mr. Sanjay Jain, Chief Financial Officer.

In compliance with the Act and the Listing Regulations, the Board has conducted its annual performance evaluation, encompassing the Board itself, its Committees and individual Directors including the Chairman of the Board. This exercise was carried out through a structured questionnaire prepared separately for the Board, Committees, Chairman and individual Directors. Further details are provided in the Corporate Governance Report, which forms an integral part of this Annual Report.

Based on the recommendation of the NRC, the Board has established a policy governing the selection, appointment, and remuneration of Directors, Key Managerial Personnel (KMP), and Senior Management. This policy was amended during the year and is accessible on the Company's website at: https://www.unichemlabs.com/pdf/policies/nomination-and-remuneration-policy.pdf

The Company recognizes its employees as invaluable assets and is committed to attracting, retaining, and motivating talented personnel. Compensation packages including salaries, benefits, perquisites, and allowances are structured to reflect individual performance, with annual increments tied to performance evaluations. This approach aligns with the Company's Remuneration Policy, designed to ensure fair and competitive compensation practices.

i. Whole-time/ Managing Director

The remuneration structure for Whole-time Director comprises both fixed and variable components. The fixed component includes salary, perquisites, and allowances, while the variable component consists of commission, as specified in term of appointment. Salaries are determined based on the recommendations of the NRC and approved by the Board of Directors, with subsequent endorsement by the Shareholders, within the limits prescribed by the Act and its accompanying Rules.

Non-Executive Directors receive remuneration in the form of sitting fees for their participation in Board and Committee meetings, in accordance with the provisions of the Act, and the accompanying rules. Apart from these sitting fees, no additional remuneration is provided to Non-Executive Directors.

The remuneration package for KMP, Senior Management and other employees primarily includes basic salary, perquisites, allowances, and performance incentives, such as Employee Stock Options where applicable. Perquisites and retirement benefits are provided in accordance with the Company's established policies. In formulating these remuneration packages, the Company takes into account the prevailing employment landscape and remuneration practices among industry peers to ensure competitiveness and alignment with market standards.

During the year under review, there were no significant or material orders passed by any regulatory authorities, courts, or tribunals that could impact the Company's going concern status or its future operations.

The Corporate Governance Report outlines the terms of reference and composition of the CSR Committee. The Company has also formulated a CSR Policy. Furthermore, in accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014, as amended, the Annual Report on CSR activities is annexed as Annexure C and forms an integral part of this Report. The CSR Policy is available on the website at https://unichemlabs.com/pdf/policies/corporate-social-responsibility-CSR-policy.pdf

M/s. N. A. Shah Associates LLP, Chartered Accountants (Firm Registration No. 116560W/W100149) ("M/s. N. A. Shah"), continue to serve as the Statutory Auditors of the Company.

At the 59th AGM held on August 9, 2022, the Members re-appointed M/s. N. A. Shah for a second term of five consecutive years, commencing from the conclusion of the 59th AGM and continuing until the conclusion of the 64th AGM, scheduled to be held in the year 2027.

The Notes to the Financial Statements referred to in the Auditor's Report are self-explanatory and do not warrant any further comments.

The Auditor's Report for the financial year under review does not contain any qualifications, reservations, adverse remarks, or disclaimers. M/s. N. A. Shah have confirmed that they remain eligible to continue as the Statutory Auditors of the Company. They have also affirmed that their firm has undergone the peer review process conducted by the Institute of Chartered Accountants of India (ICAI) and holds a valid certificate issued by the ICAI's Peer Review Board.

Further, during the year under review, the Auditors have not reported any matter under Section 143(12) of the Act. Accordingly, no disclosure is required under Section 134(3)(ca) of the Act.

In compliance with the provisions of Section 148(1) of the Act, the Company maintains the requisite cost records, which are subject to audit by Cost Auditors. Pursuant to Section 148(6) of the Act read with Rule 6(6) of the Companies (Cost Records and Audit) Rules, 2014, the Cost Audit Report for the financial year ending 31st March 2025, in Form CRA-4 (XBRL format), will be filed with the Ministry of Corporate Affairs within the prescribed timeline.

Based on the recommendation of the Audit Committee, the Board of Directors has appointed M/s. Kishore Bhatia & Associates, Practicing Cost Accountants, as the Cost Auditors of the Company for the FY 2026. The said firm has confirmed that their appointment is in accordance with the applicable provisions of the Act and the rules framed thereunder. They have also provided confirmation of their eligibility to act as the Cost Auditors of the Company for the year ending 31st March 2026.

In accordance with Section 148 of the Act and the Companies (Audit and Auditors) Rules, 2014, the remuneration proposed to be paid to the Cost Auditors for the FY 2026 is subject to ratification by the members of the Company. Accordingly, the Board recommends the remuneration for approval of the members at the forthcoming AGM. The relevant resolution seeking ratification forms part of the Notice of the AGM.

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, and Regulation 24A of the Listing Regulations, the Board of Directors has appointed M/s. Alwyn Jay & Co., Practicing Company Secretaries, to carry out the Secretarial Audit of the Company for the financial year ending 31st March 2025.

The Secretarial Audit Report, issued by M/s. Alwyn Jay & Co., is annexed to this Report as Annexure D. The Report is free from any qualifications, reservations, or adverse remarks and is self-explanatory, requiring no further clarification.

Additionally, M/s. Alwyn Jay & Co. have issued the Secretarial Compliance Report for the financial year ending 31st March 2025. This Report confirms the Company's compliance with all applicable laws, rules, and regulations, and further affirms that no enforcement actions have been initiated against the Company, its material subsidiaries, or its promoters/directors by SEBI or the Stock Exchanges during the year. The Company has duly uploaded the said Report on the websites of BSE and NSE within the prescribed timelines.

In compliance with the SEBI (Listing Obligations and Disclosure Requirements) (Third Amendment) Regulations, 2024, the Board of Directors has, based on the recommendation of the Audit Committee, proposed the appointment of M/s. Alwyn Jay & Co., Practicing Company Secretaries, as the Secretarial Auditors of the Company for a term of five consecutive financial years commencing from 1st April 2025 to 31st March 2030. The said appointment is subject to the approval of the shareholders at the forthcoming AGM. M/s. Alwyn Jay & Co. have provided their consent for the proposed appointment and confirmed their eligibility in accordance with the applicable provisions, along with a valid peer review certificate.

Further, during the year under review, the Statutory Auditors, Internal Auditors, Secretarial Auditors, and Cost Auditors have not reported any instance of fraud committed by the Company's officers or employees under Section 143(12) of the Act. Accordingly, there are no disclosures required in this regard in the Board's Report.

During the FY 2025, the Company has complied with all applicable Secretarial Standards, as amended, issued by the Institute of Company Secretaries of India.

During the year, seven meetings of the Board of Directors were convened, the details of which are provided in the Corporate Governance Report.

The Board has constituted five committees, namely the Audit, Nomination and Remuneration, Corporate Social Responsibility, Stakeholders' Relationship and Risk Management. All recommendations made by these committees have been accepted by the Board. Detailed information regarding the composition of each committee, meeting frequency, and other relevant particulars is provided in the Corporate Governance Report.

During the year under review, the Company has ensured compliance with the applicable regulatory requirements pertaining to RPTs. Omnibus approval of the Audit Committee is obtained for the related party transactions which are repetitive in nature. Prior approvals from the Audit Committee and/or the Board of Directors were obtained, wherever necessary, before entering into any such transactions. All related party transactions were conducted at arm's length and, where not in the ordinary course of business, necessary approval from the Board was duly obtained. Details of RPTs undertaken during each quarter were placed before the Audit Committee in the subsequent quarter for its review.

There were no contracts or arrangements necessitating reporting in Form AOC-2 as per Section 134(3)(h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014. Further, no such transactions were identified that could result in a potential conflict of interest with the interests of the Company at large, in accordance with the Company's Policy on the materiality of RPTs.

In accordance with applicable regulations and as approved by the Audit Committee / Board of Directors, members' approval is being sought for the following material related party transactions proposed for the FY 2026:

Unichem Laboratories Limited with Ipca Laboratories Limited;

Unichem Laboratories Limited with Unichem Pharmaceuticals USA Inc.;

Ipca Laboratories Limited with Unichem Pharmaceuticals USA Inc.

The Company's Policy on Related Party Transactions, as approved by the Board, is available on the website at:

https://www.unichemlabs.com/pdf/policies/related-party-transactions-policy.pdf.

Further, except for shareholding in the Company, receipt of remuneration, and sitting fees, there were no pecuniary transactions between any Director or KMP and the Company that could potentially result in a conflict of interest.

Related Party disclosures as per Ind AS 24 have been provided in Notes to accounts annexed to the financial statements.

Your Company has in place adequate internal financial controls with reference to the Financial Statements commensurate with the size, scale and complexity of its operations. Your Company has appointed an external firm, M/s. Ram Agarwal & Associates, Chartered Accountants as Internal Auditors who are responsible for independently evaluating the adequacy and effectiveness of all internal control designs and implementation, systems and processes. The internal control systems and risk management framework have been discussed in detail in the Management Discussion and Analysis section, which forms an integral part of this Report.

The Company maintains a zero-tolerance stance towards any form of unethical conduct, reflecting its steadfast commitment to integrity and ethical business practices. To reinforce this commitment, the Company has established a Whistle Blower Policy/Vigil Mechanism that enables employees, directors, and stakeholders to report genuine concerns relating to unethical behaviour, fraud, or violations of the Company's Code of Business Conduct and Ethics.

This mechanism provides adequate safeguards to protect whistleblowers from any form of retaliation or victimization, no individual was denied access to the Audit Committee during the year under review. The Company has not received any complaint during the year. The Whistle Blower Policy is accessible on the Company's intranet and website, and concerns can be reported via the designated email address: whistleblower@unichemlabs.com.

Disclosures relating to remuneration and other requisite details, as stipulated under Section 197(12) of the Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, are set out in Annexure E to this Report.

In accordance with the provisions of Section 136 of the Act, the statement containing particulars of employees as required under Section 197 read with Rules 5(2) and 5(3) of the said Rules is not being circulated to the Members along with this Annual Report. However, any Member interested in obtaining a copy of this information may do so by sending a written request to the Company Secretary, quoting their Folio No./DPID & Client ID at shares@unichemlabs.com.

Sustainability has been now a focus in all our operations, we are dedicated to resource conservation across our business. During the year, we achieved an impressive 54% reduction in our Scope 1 GHG emissions compared to our 2022 baseline and it is expected to reduce further in coming years. Power purchase agreement is in process for Roha and Kolhapur which will reduce our Scope 2 GHG emission. In the current year, Company aims to reduce Scope 2 GHG emission by 10%.

The disclosures required under Section 134(3)(m) of the Act, along with the applicable rules, are provided in Annexure F to this Report.

The Company remains committed to creating a positive impact across economic, social, and environmental dimensions. In line with Regulation 34(2)(f) of the Listing Regulations, the BRSR for the FY 2025 is annexed as Annexure G and forms an integral part of this Annual Report.

The Company is committed to providing a safe, inclusive, and respectful workplace where employees can perform their duties free from prejudice, gender bias, and any form of harassment. Management consistently strives to maintain a work environment that upholds dignity and equality, free from discrimination and sexual harassment.

In compliance with the provisions of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has implemented a comprehensive Policy on Prevention of Sexual Harassment at the Workplace. An Internal Complaints Committee (ICC) has been duly constituted to address complaints related to sexual harassment. The policy outlines the procedures for complaint redressal and the inquiry process to be followed by the ICC. It is applicable to all women employees, including those who are permanent, temporary, contractual, or trainees.

The policy also incorporates safeguards to prevent any form of retaliation or victimization against individuals who report incidents in good faith. During the year under review, the Company did not receive any complaints pertaining to sexual harassment.

In accordance with the provisions of Section 92(3) and Section 134 of the Act, read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company is available on the Company's website at https://www.unichemlabs.com/annual-report.php.

The particulars of loans, guarantees, and investments made under Section 186 of the Act, are disclosed in the note nos. 6, 7, 14, 36 and 52 to the standalone financial statements.

There were no transactions during the year under review that necessitate disclosure or reporting in respect of the following matters.

Acceptance of deposits as covered under Chapter V of the Act;

Transfer of any amount to reserves;

Any material changes or commitments affecting the financial position of the Company occurring between the end of the financial year and the date of this Report.

The Company remains dedicated to fostering an inclusive and empowering workplace that acknowledges employee contributions while promoting opportunities for continuous growth and development.

In addition, the Company places the utmost importance on protecting human health, ensuring workplace safety, and preserving the environment. It is committed to maintaining the highest standards of health and safety across all its plants and facilities, forming the foundation of its Environmental, Health, and Safety (EHS) management systems and governance framework.

To the best of their knowledge and belief, and based on the information and explanations received, your Directors hereby make the following statements pursuant to Section 134(3)(c) of the Act:

a. that in preparation of annual accounts for the year ended 31st March 2025, the applicable accounting standards have been followed and no material departures, have been made from the same;

b. that such accounting policies have been selected and applied consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year ending 31st March 2025 and Profit /Loss for that year;

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

d. that the annual accounts have been prepared on a going concern basis; e. that the internal financial controls were in place and that they were adequate and operating effectively; and f. that systems to ensure compliance with the provisions of all applicable laws were devised and such systems were adequate and operating effectively.

Your Directors appreciate and value the co-operation and support of the Company's parent company, customers, members, suppliers, bankers, associates, Central & State Governments and employees at all levels and look forward to continuance of the supportive relations and assistance in the future.