Zenotech Laboratories Ltd

Your Directors take pleasure in presenting the Thirty-Fifth (35th) Annual Report of the Company together with the Audited Financial Statements for the financial year ended March 31, 2024 (‘FY 2023-24').

The Company's financial performance for FY 2023-24: ( in Lakhs)

During the year under review, the Company recorded revenue of 3,676.15 Lakhs (Previous year 3,835.29 Lakhs) from its operations, 4% decrease over the corresponding previous year, due to decrease in volumes for General Injectables and Eye-care formulations, whereas marginal increase in volumes mainly in Oral Solid Dosage form and parenteral depot formulations supported in maintaining the estimated revenues. The Company reported profit after tax of 829.87 Lakhs as against previous year reported profit after tax of 1,158.53 Lakhs. Based on the projected business plans for the current and forthcoming years, the Company believes that it can maintain its positive performance by utilizing its resources to its maximum. Your Company is constantly striving to optimize its operational capacities, restricting costs to remain competitive which would help to improve the operational efficiency.

The Board of Directors do not propose any transfer to reserve.

The Board of Directors of your Company, after ascertaining the relevant circumstances, has decided that it would be prudent not to recommend any dividend for the year under review.

The Company does not have any joint venture or associate company. The Company's overseas subsidiaries viz., Zenotech Farmaceutica Do Brasil Ltda (Zenotech-Brazil) and Zenotech Inc. (Zenotech-USA) were defunct and reported as cancelled/ revoked respectivelybasedontheRegistrationCancellationCertificatedated 8 th June, 2022 and Long Form Standing Certificate th June, 2022 respectively, received from the concerned authorities. Accordingly, the Company is of the view that it does not have subsidiaries, joint ventures and associates within the definition of Ind AS 110 and hence no longer CFS is applicable. The Company received winding up order for Zenotech Laboratories Nigeria Limited during FY: 2019-20. However, related filings with RBI is pending.

For more information on subsidiaries, please refer to section "Consolidated financial statements" in this Report.

The Annual Return as required under sub-section (3) of Section 92 of the Companies Act, 2013 (‘the Act') in form MGT-7 is made available on the website of the Company and can be accessed at http://zenotechlab.com/annual-report/.

The management believes that internal controls are the prerequisite of governance and that action emanating from agreed business plans should be exercised within a framework of checks and balances. The management is committed to ensuring adequate internal controls environment commensurate with the size and complexity of the business, which assures compliance with internal policies, applicable laws and regulations, ensures reliability and accuracy of records, promotes operational efficiency, protects resources and assets, helps to prevent and detect fraud, errors and irregularities and overall minimizes the risks.

The Company has a well-established internal financial controls framework, which is designed to continuously assess the adequacy, effectiveness and efficiency of internal financial controls. The management is committed to ensuring an effective internal financial controls environment, commensurate with the size and complexity of the business, which provides an assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

The Company believes that Human Resource is its most valuable resource which has to be nurtured well and equipped to meet the challenges in the Industry the Company operates. The staff is highly motivated with good work culture, training, remuneration packages and the values. The top priority for the Human Resource function was providing a safe work environment to employees. Your Directors would like to take this opportunity to express their gratitude and appreciation for the passion, dedication and commitment of the employees and look forward to their continued contribution.

In terms of the provisions of Section 178(3) of the Act and Regulation 19 read with Schedule II Part D of Listing Regulations, the Nomination and Remuneration Committee is responsible for formulating the criteria for determining qualifications, positive attributes and independence of a Director.

The Nomination and Remuneration Committee is also responsible for recommending to the Board a policy relating to the remuneration of the Directors, Key Managerial Personnel and Senior Management. The purpose of the Remuneration Policy is to establish and govern the procedure applicable: a) To evaluate the performance of the members of the Board. b) To ensure remuneration payable to Directors, KMP & other senior Management, strike appropriate balance and commensurate, among others, with the functioning of the Company and its long term objectives. c) To retain, motivate and promote talent within the Company and to ensure long term sustainability of the managerial persons and create competitive advantage.

The Remuneration Policy is available on the website of the Company, http://zenotechlab.com/policies/

Disclosure pertaining to remuneration and other details as required under Section 197(12) of the Companies Act, 2013 read with Rules 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is annexed herewith as Annexure-1 to this Report.

Further, the information pertaining to Rule 5(2) and 5(3) of the aforesaid Rules, a statement showing the names and other particulars of the top ten employees in terms of remuneration drawn is available for inspection at the Registered Office of the Company and pursuant to the proviso to Section 136(1) of the Companies Act, 2013, the report and the accounts are being sent to the members of the Company excluding this information. Any shareholder interested in obtaining such information may write to the Company Secretary at the Registered Office address of the Company. During the year under review, none of the employees was in receipt of remuneration in excess of the limits as stipulated in the Rule 5(2) of the aforesaid Rules.

During the year, annual performance evaluation of the Board and Committees of the Board, individual Directors, was carried out as per the criteria and process approved by Nomination and Remuneration Committee, which is in line with the SEBI Guidance Note on Board Evaluation.

The Board discussed upon the outcome of performance evaluation and concluded that they were satisfied with the overall performance of the Board and Committees of the Board and Directors individually. The Board also assessed the fulfilment of the independence criteria by the Independent Directors of the Company and their independence from the management as specified in the Listing Regulations.

The performance evaluation of the Non-Independent Directors and the performance of the Board as a whole was discussed at the separate meeting of the Independent Directors as well.

In compliance with the requirements of Regulation 25(7) of the Listing Regulations, the Company has put in place a Familiarisation Programme for the Independent Directors to familiarise them with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model etc. The policy and programme details are available on the website of the Company, http://zenotechlab.com/policies/

During the year under review, there was no change in the Capital Structure of the Company. The Share Capital of the Company stood at 61,03,05,680/- (6,10,30,568 Equity Shares of 10/- each).

M/s. PKF Sridhar & Santhanam LLP (Firm registration number- 003990S/S 200018) Chartered Accountants, Hyderabad were re-appointed as the Statutory Auditors of the Company for a further period of 5 (five)years at the 31 st Annual General Meeting of the Company to hold office till the conclusion of the 36 th Annual General Meeting of the Company to be held in the year 2025.

The Auditor's Report for the financial year ended March 31, 2024, has been issued with an unmodified opinion, by the

Statutory Auditors.

The Board had appointed Mr. Mahadev Tirunagari, Company Secretary in Practice, Hyderabad, to undertake the Secretarial Audit of the Company for thefinancialyear 2023-24. The Secretarial Audit Report in the Form MR-3 for the year is provided as Annexure-2 to this Report. The Secretarial Audit Report for the year does not contain any qualification, reservation or adverse remark.

The Company is not required to maintain cost records as specified by the Central Government under Section 148(1) of the Act and accordingly the Cost Audit is not applicable.

The Company has complied with the applicable Secretarial Standards as amended from time to time.

Books of accounts and other related records/documents of the overseas subsidiaries of the Company were missing and due to non-availability of those records/information, the Company is unable to prepare consolidated accounts and attach the required statements and particulars in terms of the applicable provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The facts of the case had already been reported in earlier years. Overseas subsidiaries were apparently created; investments and loans were made during the period from 2006-07 to 2010-11 under the erstwhile management headed by Late Dr. Jayaram Chigurupati. Therefore, it was the responsibility of that management to handover those details to the Company during the transition. However, no details on those subsidiaries were made available to your Company. Despite several attempts by the Company to recover them, details concerning those subsidiaries including the documents and certificates related to the foreign exchange transactions which included loans and investments made to those foreign subsidiaries, could not be obtained. These subsidiaries viz., Zenotech Farmaceutica Do Brasil Ltda (Zenotech-Brazil) and Zenotech Inc. (Zenotech-USA) were defunct and reported as cancelled/revoked respectivelybasedontheRegistrationCancellationCertificatedated dated 15 8th June, 2022 and Long Form Standing Certificate th June, 2022 respectively, received from the concerned authorities. Accordingly, the Company is of the view that it does not have subsidiaries within the definition of Ind AS 110 and hence Consolidated Financial Statements are no longer applicable. The Company received winding up order for Zenotech Laboratories Nigeria Limited during FY: 2019-20. However, related filings with RBI is pending.

The Company had filed a complaint before the Hon'ble Economic Offences Court, Nampally, Hyderabad, under the provisions of Section 630 of erstwhile Companies Act, 1956 against the former Managing Director, Late Dr. Jayaram Chigurupati, who was in complete control over the Company affairs during the period of these events. However, due to demise of Dr. Jayaram Chigurupati on January 31, 2019 the case before Economic Offence Court was abated.

Other Disclosures w During the year under review, the Statutory Auditor and Secretarial Auditor have not reported any instances of fraud committed in the Company by its Officers or employees to the Audit Committee and/or Board under Section 143(12) of the Companies Act, 2013. w There are no proceedings initiated/ pending against your Company under the Insolvency and Bankruptcy Code, 2016 and there is no instance of one-time settlement with any Bank or Financial Institution.

Pursuant to the requirements under Section 134 (5) read with Section 134(3)(c) of the Companies Act, 2013 with respect to Directors' Responsibility Statement, it is hereby confirmed that: (a) in the preparation of the annual accounts for the financial year ended March 31, 2024, the applicable accounting standards have been followed and there are no material departures; (b) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the at March 31, 2024 and of the profit of the Company for the year ended on that date; (c) the Directors have taken proper and sufficientcare for the with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) the Directors have prepared the annual accounts on a going concern basis; (e) the Directors have laid down internal financial controls to be followed by the Company controls are adequate and were operating effectively; and (f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

The Management Discussion and Analysis as prescribed under Part B of Schedule V read with Regulation 34(3) of the Listing Regulations is provided in a separate section and forms part of this Report which includes the state of affairs Company.

Corporate Governance Report from Mr. Mahadev Tirunagari, TheCorporateGovernanceReportandtheCertificate Company Secretary in Practice,

Hyderabad, as stipulated in Schedule V of the Listing Regulations, are provided in a separate section and forms part of this Report.

The Company has not accepted any deposit from the Public during the year under review.

Pursuant to Section 152 of the Companies Act, 2013, Dr. Azadar Husain Asghar Mehdi Khan (DIN: 01219312), Director, is liable to retire by rotation at the ensuing 35th Annual General Meeting and being eligible, has offered himself for reappointment. The Board recommends his appointment.

Pursuant to Section 2(51) and Section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Mr. Poly K.V., Chief Financial Officer and Mr. Abdul Gafoor Mohammad, Company Secretary & Compliance Officer continued as the ‘Key Managerial Personnel' of the Company. Subsequent to the financial year end, Mr. Devendra Chandrakant Shenvi Kenkre has tendered Chief Executive Officer ("Key Managerial Personnel") of the Company vide his letter dated May 17, 2024 due to personal reasons. His last working day as the Chief Executive Officer ("Key Managerial Personnel") was on the closing of business hours on July 24, 2024.

The necessary disclosures required under the Companies Act, 2013 ("Act") and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") and Secretarial Standards-2 on General Meetings issued by the Institute of Company Secretaries of India, for the above-mentioned re-appointment is provided in the Notice of 35th Annual General Meeting of the Company.

The Company has received declarations from all the Independent Directors confirming that they meet with the criteria of independence as prescribed under Section 149(6) of the Act and the Regulation 16(1)(b) of the Listing Regulations. In the opinion of the Board, the Independent Directors fulfil the conditions specified under the Act and the Listing Regulations and are independent of the management.

The Board of Directors of the Company met 5 (five) times during the year under review. The dates of the Board meeting and the attendance of the Directors at the said meetings are provided in the Corporate Governance Report, which forms a part of this Report.

As on March 31, 2024, the Board has 4 (four) Committees. Audit Committee, Nomination and Remuneration Committee, Stakeholders' Relationship Committee and Corporate Social Responsibility Committee.

The details pertaining to the meetings and composition of the Committees of the Board are included in the Corporate Governance Report, which forms part of this Report.

During the year under review, your Company has not granted any loans or made any investments or provided any guarantees or securities to the parties covered under Section 185 and 186 of the Companies Act, 2013.

The policy on Related Party Transactions as approved by the Board is available on the website of the Company and can be accessed through the web link: http://zenotechlab.com/wp-content/uploads/2022/08/Zenotech-Policy-on-Related-Party-Transactions-2022.pdf. All contracts/arrangements/transactions entered by the Company during the year under review with the related parties were in the ordinary course of business and on an arm's length basis.

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

The Company's policy for Risk Management is to apply best practice in identifying, evaluating and cost-effectively controlling risks to ensure that any residual risks are at an acceptable level. Whilst it is not possible to eliminate the risk absolutely, effort is underway to actively promote and apply best practices at all levels and to all its activities, including its dealing with external partners.

In compliance with the requirements of Section 135 and other applicable provisions, if any, of the Companies Act, 2013 and read with Companies (Corporate Social Responsibility Policy) Rules, 2014, the Board of Directors has constituted a Corporate Social Responsibility (CSR) Committee. The details of membership of the Committee and the meetings held are detailed in the Corporate Governance Report, forming part of this Report. The CSR Policy of the Company is available on the website of the Company and can be assessed through the web link, http://zenotechlab.com/policies/ The annual report on CSR activities is appended as Annexure-4 to this Report.

Your 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 employees that is free from discrimination and harassment including sexual harassment. The Company has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The Company has arranged various interactive awareness workshops in this regard for the employees at the factory office during the year under .

During the financial year ended March 31, 2024, no complaint pertaining to sexual harassment was received by the Company. Your Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

The Company's Environment, Health & Safety (EHS) imperatives are part of its broader sustainability journey. These initiatives focus on reducing the environment footprint, help enhance well-being of employees and set high safety standards for employees, contractors and visitors. The Company undertakes periodic internal audits to assess the safety practices and procedures in alignment with the EHS management system. As part of the auditing procedure, the Company recognises the critical areas requiring immediate corrective action. Further, as part of the EHS management system, the Company provides safety trainings through modules and safety drill practices to all its employees and workers. The safety training programs enable the development of strong foundation among the workforce, in terms of their ability to identify, mitigate and prevent risks pertaining to Occupational Health and Safety. The Company continued to ensure that environmental norms were abided by its Formulation units. The operating formulation units have conformed to the regulations for disposal of waste water to Common Effluent Treatment Plants (CETPs), biological waste, e-waste, hazardous waste, used oil, etc., were send through Pollution Control Board approved vendors for recycling / disposal. The Company's EHS policy provides framework for compliance with applicable laws and regulations and commitment to the continuous improvement of Environment, personnel skills and conservation of natural resources.

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as stipulated under Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is provided as Annexure-5 to this Report.

The Company is committed to conducting its business by adopting the highest standards of professional integrity and ethical behaviour. The organisation has a detailed Code of Conduct (‘Code') that directs the Employees to uphold the Company values and urges them to conduct business with integrity and the highest ethical standards. Management intends to prevent the occurrence of any practice not in compliance with this Code through the Whistle Blower Policy. This mechanism aims to provide a secure environment to Employees for responsible reporting of Code violations by Employees. The Policy is available on the website, www.zenotechlab.com and may be accessed through the web link, http:// zenotechlab.com/policies/

There are no significant and material orders passed by the regulators or courts or tribunals which impact the status of the Company.

No Credit Rating was obtained during the financial year 2023-24.

There have been no material changes and commitments affecting the financial position of the Company, between the of the financial year and the date of this report.

Your Directors would like to place on record their sincere appreciation to customers, bankers, vendors, government agencies and shareholders for their continued support. Your Directors are also happy to place on record their sincere appreciation to the co-operation, commitment and contribution extended by all the employees of the Zenotech family and look forward to enjoying their continued support and cooperation.