SMS Pharmaceuticals Ltd

To

The Members of

SMS Pharmaceuticals Limited

Your Directors take pleasure in presenting the 36^th Annual Report of SMS Pharmaceuticals Limited ("The Company") along with the Audited Financial Statements for the Financial Year ended 31^st March, 2024. The Consolidated performance of the Company has been referred to wherever required.

FINANCIAL SUMMARY

The Audited Financial Statements of your Company as on 31^st March, 2024, are prepared in accordance with the relevant applicable Indian Accounting Standards ("Ind AS") and Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and the provisions of the Companies Act, 2013 ("Act").

The summarized financial highlight is depicted below:

(INR in Lakhs)

Financial & Production performance

During the year Company had achieved production of 2247.88 M.T. of APIs and their Intermediates in comparison with 1,147.53 M.T for the previous FY 2022-23.

During the FY 2023-24 the Company has recorded the net sales of H 69,232.52 Lakhs as against H 50,075.85 Lakhs for the previous FY 2022-23. The Company has recorded EPS of H 5.84 in the FY 2023-24 as against H 0.48 for the previous FY 2022-23.

Subsidiaries and Associates

Your Company is having one Associate Company i.e., "VKT Pharma Private Limited". Your Company is holding 36.55% equity shares in the said Associate Company during the Financial Year ended and the share of profit for your Company for the Financial Year 2023-24 was H 62.60 lakhs.

Your Company has incorporated a Joint Venture (JV) in Spain in the year 2021 with nomenclature of "CHEMO SMS ENTERPRISES SL' in the capital ratio of 55:45 with a share of 45% contributed by your Company.

There were no transactions during the reporting period, however, all the JV product sales were routed directly from your Company to the end customers during the reporting period as per JV manufacturing arrangement.

The consolidated financial statements had been prepared as per Indian Accounting Standard (Ind As) 28 investments in Associates & Joint Ventures specified under Section 133 of Companies Act, 2013 for considering the financials of Associate Company. The required form, as per the provisions of the Sec. 129(3) read with Rule 5 of Companies (Accounts) Rules, 2014 i.e., Form AOC-1 forms part of the Report as Annexure-1.

CHANGE IN NATURE OF BUSINESS

As per the requirements of Rule 8 (5) (ii) of Companies (Accounts) Rules, 2014, your Board of Directors specify that, there is no significant change in the nature of business of the Company during the financial year under review.

TRANSFER TO RESERVES

During the year, Your Company has transferred an amount of H1000.00 lakhs to General Reserve out of the amounts available for appropriations.

DIVIDEND

Your Directors have pleasure in recommending the dividend of Re.

0.40 (i.e. 40%) per equity share of Re. 1/- face value, aggregating to H3,38,60,812/- (Rupees Three Crores Thirty-eight Lakhs Sixty Thousand Eight Hundred and Twelve only) which shall be paid within 30 days after the conclusion of the Annual General Meeting, subject to the approval of the shareholders of the Company. Payment of dividend to members will be subject to tax deduction at source (TDS) as per statutory requirement.

Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors of the Company have adopted a Dividend Distribution Policy. The policy lays down a broad framework and factors which the Board considers for deciding the distribution of dividend to its shareholders. The said policy is available on the Company's website https://smspharma.com/wp-content/uploads/7077/08/ Dividend-Distribution-policy.pdf

DIRECTORS AND KEY MANAGERIAL PERSONNEL

During the year under review, there is no change in the Directors and Key Managerial Personnel of the Company. However, after the year under review the following changes have occurred which are mentioned as under:

(i) Appointment:

a. On the recommendation of Nomination and

Remuneration Committee, the Board of Directors at their meeting held on 05^th August, 2024 had appointed Dr. Suresh Kumar Gangavarapu (DIN: 00183128) as an Independent Director of the Company for a term of Five consecutive years from 12^th August, 2024 to 11^th August, 2029, subject to the approval of the members at the ensuing AGM.

b. On the recommendation of Nomination and

Remuneration Committee, the Board of Directors at their meeting held on 05^th August, 2024 had appointed Mrs. Shanti Sree Bolleni (DIN: 07092258) as an Independent Director (Women) of the Company for a term of Five consecutive years from 12^th August, 2024 to 11^th August, 2029, subject to the approval of the members at the ensuing AGM.

c. On the recommendation of Nomination and

Remuneration Committee, the Board of Directors at their meeting held on 05^th August, 2024 had appointed Mr. Trilok Potluri (DIN: 07634613) as a Non-Executive

Non Independent Director of the Company w.e.f. 12^th August, 2024, subject to the approval of the members at the ensuing AGM.

d. On the recommendation of Nomination and

Remuneration Committee, the Board of Directors at their meeting held on 05^th August, 2024 had appointed Dr. Sunkara Venkata Satya Shiva Prasad (DIN: 10404277) as a Non-Executive Non Independent Director of the Company w.e.f. 12^th August, 2024, subject to the approval of the members at the ensuing AGM.

(ii) Re-appointment:

On the recommendation of Nomination and Remuneration Committee, the Board of Directors at their meeting held on 05^th August, 2024 has re-appointed Mr. Sarvepalli Srinivas (DIN: 02292051) as an Independent Director of the Company for a second term of Five Years (5) with effect from 12^th August, 2024 to 11^th August, 2029, subject to the approval of the members at the ensuing AGM.

(iii) Term Completion/ Retirement:

a. Mr. Sarath Kumar Pakalapati (DIN: 01456746) has retired as an Independent Director of the Company with effect from the close of business hours on 11^th August, 2024 after completion of his second term of directorship which was from 12^th August, 2019 to 11^th August, 2024.

b. Mrs. Neelaveni Thummala (DIN: 00065571), has retired as an Independent Director of the Company with effect from the close of business hours on 11^th August, 2024 after completion of her second term of directorship which was from 12^th August, 2019 to 11^th August, 2024.

The Board placed on record its sense of deep appreciation for the services rendered by the above Independent Directors to the Company.

(iv) Retirement by rotation:

In accordance with the provisions of section 152(6) of the Act and in terms of the Articles of Association of the Company, Mr. Vamsi Krishna Potluri (DIN: 06956498), Whole Time Director, will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

(v) Declaration of Independence:

The Company has received declarations of independence from the Independent Directors as stipulated under section 149 (7) of the Companies Act, 2013, that each Independent Director meets the criteria of Independence laid down in the Section 149 (6) of the Companies Act, 2013 and Regulation 16(1 )(b) of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015. All the Independent Directors of the Company have enrolled in the Independent Director databank maintained by Indian Institute of Corporate Affairs (IICA) as per Companies (Creation and Maintenance of databank of Independent Directors) Rules, 2019.

MANAGEMENT DISCUSSION & ANALYSIS

Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ('Listing Regulations'), the Management Discussion and Analysis is presented in a separate section forming part of this Annual Report for the year ended 31^st March, 2024, as required under the provisions of the Listing Regulations.

SHARE CAPITAL Equity Share Capital:

During the year under review there were no changes in authorized and paid-up share capital of the Company. The authorised share capital of the Company is H 12,00,00,000 /- divided into

12.00. 00.000 Equity Shares of H1/- each and Paid-up share capital of the Company is H8,46,52,030/- divided into 8,46,52,030 Equity Shares of H1/- each. A report on the same i.e., 'Equity Buildup Report' forms part of this report as Annexure-2.

Listing of shares: Equity shares of the Company are listed in National Stock Exchange of India (NSE) and BSE Limited (BSE) with effect from 28^th February, 2007. [Listing fees has been paid for the year 2024-25 to both the Exchanges].

Issue of Warrants convertible into Equity Shares on a private placement basis

During the year under review, pursuant to the approval accorded by the members, at their Extra-Ordinary General Meeting held on 06^th March,2023 and in Principle approval received from both Stock Exchanges i.e. BSE Limited and National Stock Exchange of India Limited, the Company has issued the following securities on preferential basis:

90.00. 000 (Ninety Lakh) Convertible Warrants at an issue price of H127/- (Rupees One Hundred and Twenty-Seven only) each Warrant aggregating up to H114,30,00,000/- (One Hundred Fourteen Crores and Thirty Lakhs only) to promoters/promoters group of the Company.

The upfront money of 25% of issue price i.e., H31.75/- per warrant aggregating to H28,57,50,000/- (Rupees Twenty-Eight Crore Fifty- Seven Lakhs Fifty Thousand only) was received by the Company on allotment of warrants. The balance money of 75% of the issue price i.e., H95.25/- per warrant will be paid by the warrant holders on conversion of the warrants.

Further, the Securities Allotment Committee of Board of Directors passed resolution on 19^th March, 2024 for allotment of 90,00,000 Convertible warrants to the Promoters/Promoters Group of the Company on Preferential basis.

MATERIAL CHANGES AND COMMITMENTS, AFFECTING THE FINANCIAL POSITION OF THE COMPANY:

There are no material changes and commitments which affect the financial position of the Company that have occurred between the end of the financial year to which the financial statements relate and the date of this report.

EVALUATION OF PERFORMANCE OF BOARD OF DIRECTORS:

Pursuant to the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the formal annual evaluation of the performance of the Board as well as non-independent directors was undertaken by the Nomination and Remuneration Committee. The performance of Board Committees and of individual independent directors was undertaken by the Board members.

The manner of the evaluation of the Board and other Committees has been determined by the Nomination and Remuneration Committee as per the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India.

Your Company had conducted a separate Meeting of Independent Directors during the year on 08^th August, 2023 in which they had evaluated the performance of Executive directors and NonExecutive directors. Further, at the Board meeting that followed the meeting of Nomination and Remuneration Committee in its meeting held on 08^th February, 2024 the performance of the Board, its committees, and individual directors was also discussed. The evaluation had been made based on specified standards.

FAMILIARIZATION PROGRAMMES FOR INDEPENDENT DIRECTORS:

The Members of the Board of the Company have been provided opportunities to familiarize themselves with the Company, its Management, and its operations. The Directors are provided with all the documents to enable them to have a better understanding of the Company, its various operations, and the industry in which it operates.

The Company has put in place a system to familiarize its Independent Directors with the Company, their roles, rights & responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company, etc. further the Company has provided an opportunity to Directors to attend the programs conducted by various organizations

The Board members are periodically updated in its meetings about the industry overview, business operations, Company's performance, compliance procedures and practices in place, various statutory amendments, the operations of the Company, its plans, strategy, risks involved, new initiatives etc., and seek their views and suggestions on the same.

The details of these familiarization programs have been placed on the Company's website at https://smspharma.com/investor- relations/download/

COMMITTEES OF THE BOARD:

The Board of Directors has the following Committees:

1. Audit Committee

2. Nomination and Remuneration Committee

3. Stakeholders' Relationship Committee

4. Corporate Social Responsibility Committee

5. Risk Management Committee

6. Securities Allotment Committee

The details of all the above Committees along with their composition, number of meetings and attendance at the meetings are provided in detail in the Corporate Governance Report annexed to this Board's Report.

RISK MANAGEMENT POLICY:

The Risk Management Committee of the Company have the following Directors:

Mr. Ramesh Babu Potluri - Chairman Mr. Vamsi Krishna Potluri - Member Mr. Shravan Kudaravalli - Member.

The Committee had formulated a Risk Management Policy for dealing with different kinds of risks which it faces in day-to- day operations of the Company. Risk Management Policy of the Company outlines different kinds of risks and risk mitigating measures to be adopted by the Board. The Company has adequate internal control systems and procedures to combat risks. The Risk management procedures are reviewed by the Audit Committee and the Board of Directors on a quarterly basis at the time of review of the Quarterly Financial Results of the Company.

Brief description of terms of reference of the Committee, inter alia, includes the following:

• managing and monitoring the implementation of action plans developed to address material business risks within the Company and its business units, and regularly reviewing the progress of action plans;

• setting up internal processes and systems to control the implementation of action plans;

• regularly monitoring and evaluating the performance of management in managing risk;

• providing management and employees with the necessary tools and resources to identify and manage risks;

• regularly reviewing and updating the current list of material business risks;

• regularly reporting to the Board on the status of material business risks;

• review and monitor cyber security; and

• Ensuring compliance with regulatory requirements and best practices with respect to risk management.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Companies

Act, 2013 as amended, the Board of Directors confirm that:

1. In the preparation of the Financial Statements for the year ended 31^st March, 2024 the applicable accounting standards had been followed along with proper explanation relating to material departures, if any.

2. They had selected such accounting policies as notified & modified by ICAI 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;

3. They had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, as amended from time to time for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

4. The Annual Accounts had been prepared on going concern basis.

5. The Company has developed an effective mechanism for internal financial controls to be followed by the Company consistently and such internal financial controls are adequate and operating effectively;

6. They had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

THE CRITERIA FOR APPOINTMENT OF DIRECTORS, KMP AND SENIOR MANAGEMENT

A person for appointment as Director, KMP or in senior management should possess adequate qualifications, expertise and experience for the position considered for appointment. The Nomination and Remuneration Committee decides whether qualification, expertise and experience possessed by a person are sufficient for the concerned position. The Committee ascertains the credentials and integrity of the person for appointment as Director, KMP or senior management level and recommends to the Board his/ her appointment.

The Committee, while identifying suitable persons for appointment to the Board, will consider candidates on merit against objective criteria and with due regard for the benefits of diversity on the Board.

The Nomination and Remuneration Committee shall assess the independence of directors at the time of appointment, reappointment and the Board shall assess the same annually. The Board shall re-assess determination of independence when any new interests or relationships are disclosed by a Director.

The criteria of independence are as prescribed in the Act and the listing regulations and the Independent Directors shall abide by the Code specified for them in Schedule IV of the Act.

The Nomination and Remuneration Committee has the criteria for appointing any Key Managerial Personnel (KMP) and nominating directors on the Board. The appointment of any KMP is made by the Nomination and Remuneration Committee based on the requirement of the position and experience and skill sets of the candidate.

COMPOSITION & NUMBER OF MEETINGS OF THE BOARD AND AUDIT COMMITTEE

During the year under review, four (4) Board Meetings and five (5) Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report, which forms part of this report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and Listing Regulations.

ANNUAL RETURN

The Annual Return of the Company as on 31^st March, 2024, in terms of the provisions of Section 92(3) and 134(3)(a) of the Act, 2013 is available on the Company's website: https://smspharma. com/annual-report/

CORPORATE GOVERNANCE

A separate section on Corporate Governance standards followed by your Company, as stipulated under Schedule V of the SEBI (LODR) Regulations, 2015, which is forming part of this report. The requisite certificate from M/s. Suryanarayana & Suresh, Chartered Accountants, confirming the compliance with the conditions of Corporate Governance is annexed to the Report on Corporate Governance.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT (BRSR)

The 'Business Responsibility and Sustainability Report' (BRSR) of your Company for the year ended 31^st March, 2024, forms part of this Annual Report as required under Regulation 34 (2) (f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is available as a separate section in this Annual Report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY:

The Board of Directors of the Company had adopted a vigil mechanism and formulated a Whistle Blower Policy to provide mechanism for directors and employees of the Company to report their concerns about any unethical behavior, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. The Policy provides that the Company investigates such incidents, when reported, in an impartial manner and takes appropriate action to ensure that requisite standards of professional and ethical conduct are always upheld. This mechanism also provides for adequate safeguards against victimization of director(s)/ employee(s) who avail the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. There were no allegations / disclosures / concerns received during the year under review in terms of the vigil mechanism established by the Company. A copy of the Whistle Blower Policy is hosted on the Company's website at https://smspharma.com/ company-announcements/downloads/

DEPOSITS

The Company has not accepted any deposits from the public within the purview of Chapter V of the Companies Act, 2013. Hence, no amount on account of principal or interest on public deposits was outstanding as on the date of the balance sheet.

LOANS, GUARANTEES AND INVESTMENTS

Particulars of Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the Notes to the Financial Statements provided in this Annual Report.

RELATED PARTY TRANSACTIONS

All related party transactions that were entered by the Company during the financial year 2023-24 with related parties were in the ordinary course of business and on an arm's length basis and are in compliance with the provisions of the Companies Act, 2013 and the SEBI (Listing Obligation & Disclosure Requirement) Regulation, 2015. There are no materially significant related party transactions made by the Company with Promoters, Directors and Key Managerial Personnel, etc., which may have potential conflict with the interest of the Company. All related party transactions are presented to the Audit Committee on quarterly basis and were also placed before the Board.

A statement of all Related Party Transactions is being presented before the Audit Committee on Quarterly basis specifying the nature, value and terms and conditions of the transactions. A Policy on Related Party Transactions approved by the Board is uploaded on the Company's website at the web link https:// smspharma.com/wp-content/uploads/2022/08/Policy-on- Related-Party-Transactions.pdf

The particulars of contracts or arrangements entered into by the Company with related parties referred to in Section 188(1) are kept by the Company in Statutory Form AOC-2. Further details required to disclose as per Accounting Standard form part of the notes to the financial statements provided in the annual report. The Form AOC-2 is attached to the Report as Annexure-3.

CORPORATE SOCIAL RESPONSIBILITY

Pursuant to Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014, your Company has constituted the Corporate Social Responsibility (CSR) Committee.

The brief outline of the CSR policy of the Company, details regarding CSR Committee and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure-4, of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. CSR Policy is available on the Company's website on https://smspharma.com/wp-content/ uploads/Rs0RsRs/08/corporate-social-responsibility-policy.pdf

PARTICULARS OF EMPLOYEES

The information relating to remuneration and other details as required, pursuant to 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 mentioned under 'Employees Remuneration Report' which forms part of this report as Annexure-5

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Rules does not form part of this Report however the same shall be kept open for inspection in terms of Section 136 of the Act and any member can obtain a copy of the said statement by writing an email to the Company Secretary at cs@smspharma.com

PREVENTION OF INSIDER TRADING

The Company has adopted an Insider trading Policy to regulate, monitor and report trading by insiders under the SEBI (Prohibition of Insider Trading) Regulations, 2015. This policy includes practices and procedures for fair disclosure of unpublished price-sensitive information, initial and continual disclosure. The Board reviews the policy on a need basis. The policy is available on our website: https://smspharma.com/company-announcements/downloads/

The Company takes several measures to familiarise and sensitize its employees with the provisions and various aspects of the Insider Trading Code, including periodic circulation of informative emails on Prevention of Insider Trading, Do's and Don'ts, Trading Window closure notifications, and providing clarifications to the designated persons as and when required. These activities have created awareness amongst the Designated Persons.

ENVIRONMENT, HEALTH AND SAFETY ENVIRONMENT

The Company continuously monitors its energy usage, regulates the emissions released and waste generated, and makes sure it follows responsible water consumption practices. Our focus on environmental protection and occupational health and safety is enshrined in our policies.

The Company conducts training programmes mock drills for and safety of the employees. To help protect our employees from injuries, identifies high risk areas and invest in technological solutions and awareness-raising initiatives. The Company conducts free health checkup programmes.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION

The information required under Section 134(3)(m) of the Companies Act, 2013 read with the applicable Rules forms part of this report as Annexure-6.

FOREIGN EXCHANGE EARNINGS AND OUTGO

(Rs in Lakhs)

Statutory Auditors

M/s. Suranarayana & Suresh, Chartered Accountants, (Firm Registration No. 006631S), Hyderabad were appointed as Statutory Auditors of the Company at the Annual General Meeting held on 30^th September, 2022 for a second term of five (5) years i.e., from the conclusion 34^th AGM till the conclusion of 39^th Annual General Meeting to be held in the year 2027.

Further, the report of the Statutory Auditors along with notes to accounts forms part of the Annual Report. There has been no other qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.

Internal Auditor

The Board has appointed M/s. Adusumilli and Associates, Chartered Accountants, as an Internal Auditors of the Company for a period of two years from 01.04.2022 to 31.03.2024 under Section 138 of the Companies Act, 2013, in accordance with the scope as defined by the Audit Committee.

Secretarial Auditor

As per Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company has appointed M/s. SVVS & Associates Company Secretaries LLP to undertake Secretarial Audit of the Company for the Financial Year ended on 2023-2024. Secretarial Audit Report in Form MR-3 for the financial year 2023-2024 forms part of this report as Annexure - 7.

There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.

Annual Secretarial Compliance Report

As per Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has obtained the Annual Secretarial Compliance Report which forms part of this Report as Annexure - B from Mr. C. Sudhir Babu, Practicing Company Secretary (Proprietor, CSB Associates) and submitted the same to the Stock Exchanges where the shares of the Company are listed.

Cost Auditor

As per Section 148 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, and the Companies (Cost Records & Audit) Amendment Rules, 2014, the Company maintains Cost Records. Your Board has, upon the recommendations of the Audit Committee, appointed Mr. K.S.N. Sarma (Registration No.102145 and Membership No.6875) as Cost Auditor of the Company for the financial year 2023-2024.

The Board of Directors on the recommendations of the Audit Committee, appointed M/s. Harshitha Annapragada & Co., Cost

Accountants (Firm Registration No. 006031 and Membership No. 39895) as Cost Auditors of the Company for the financial year 2024-2025.As required under the Act and Rules made thereunder, the remuneration payable to the Cost Auditors is required to be placed before the Members at a general meeting for ratification. Accordingly, a resolution seeking ratification of the remuneration payable to M/s.Harshitha Annapragada & Co., Cost Accountants, by the members is included in the Notice convening 36^th Annual General Meeting.

FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY

Internal Financial Controls are an integral part of the risk management process, addressing financial and financial reporting risks. Internal financial control systems of the Company are in commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable accounting standards and relevant statutes, safeguarding assets from unauthorised use, executing transactions with proper authorisation and ensuring compliance of corporate policies. The Company uses an established Tally to record day-to-day transactions for accounting and financial reporting.

Assurance on the effectiveness of internal financial controls is obtained through management reviews, continuous monitoring by functional owners as well as testing of the internal financial control systems by the internal auditors during the course of their audits. We believe that these systems provide reasonable assurance that our internal financial controls are designed effectively and are operating as intended.

The Company has in place adequate internal financial controls with reference to financial statements. However, the Company recognizes that no matter how the internal control framework is, it has inherent limitations and accordingly, periodic audits and reviews ensure that such systems are updated on regular intervals.

POLICIES

Company has following policies in place pursuant to applicable provisions of the Act and SEBI Listing Regulations and the same are published on the official website of the Company (www.smspharma.com):

HUMAN RESOURCES / INDUSTRIAL RELATIONS

The Company believes that competent and committed human resources are vitally important to attain success in the organization. In line with this philosophy, utmost care is being exercised to attract quality resources and suitable training is imparted on various skill-sets and behavior. Employee knowledge enrichment is a core value of the organisation, and focus has been placed on training and development of the Company's human capital and also various initiatives were undertaken to enhance the competitive spirit and encourage bonding teamwork among the employees and could achieve the targeted growth in the performance of the Company.

SHARE TRANSFER SYSTEM

Pursuant to Regulation 40(1) of SEBI (LODR) Regulations, 2015, as amended from time to time, transfer, transmission and transposition of securities shall be effected only in dematerialised form.

Pursuant to SEBI Circular dated January 25, 2022, the listed companies shall issue the securities in dematerialised form only, for processing any service requests from shareholders vis., issue of duplicate share certificates, endorsement, transmission, transposition, etc. After processing the service request, a letter of confirmation will be issued to the shareholders and shall be valid for a period of 120 days, within which the shareholder shall make a request to the Depository Participant for dematerialising those shares. If the shareholders fail to submit the dematerialisation request within 120 days, then the Company shall credit those shares in the Suspense Escrow Demat account held by the Company. Shareholders can claim these shares transferred to Suspense Escrow Demat account on submission of necessary documentation.

The Stakeholders Relationship Committee meets as often as required to approve share transfers and to attend to any grievances or complaints received from the members.

GENERAL DISCLOSURE

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

a) No material changes and commitments affecting the financial position of the Company between the financial year ended 31^st March, 2024 and the date of this report.

b) No fraud has been reported by the Auditors to the Audit Committee or to the Board.

c) No material and significant orders passed by the regulators or courts or tribunals impacting the going concern status and the Company's operations in future

d) Company has complied with the requirements of the Secretarial Standards issued by Institute of Company Secretaries of India.

e) There are no instances where the Board has not accepted the recommendation of Audit Committee.

f) Cost records are maintained as per the requirements of Section 148 of the Act.

g) The extract of Annual Return is disclosed on the Company's website.

DISCLOSURE UNDER THE SEXUAL HARASSEMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:

The Company is committed to ensure that there is no scope for sexual harassment at workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules framed thereunder. Your Company has zero tolerance towards sexual harassment at the workplace.

During the Financial Year ended on March 31,2024, the Company has not received any complaint of sexual harassment.

COMPLIANCE WITH SECRETARIAL STANDARDS

During the year under review, the Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India.

INSURANCE:

The Company's plant, properties, equipment and stocks are adequately insured against all major risks. The Parent Company has taken Directors' and Officers' Liability Policy to provide coverage against the liabilities arising on them, which includes the Directors of the Company also.

RATING

CARE Rating Limited has assigned its rating of 'CARE A'; 'Negative' (Single A; Outlook Negative) on the Long Term Bank Facilities of the Company and 'CARE A2+' on the Short Term Bank Facilities of the Company

DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE

During the year under review, there were no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

DISCLOSURE OF CERTAIN TYPES OF AGREEMENTS BINDING ON THE COMPANY:

During the period under the review the Company does not enter into any agreement(s) which were falling under clause 5A of para A of part A of schedule III of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE:

As on the date of the Report no application is pending against the Company under the Insolvency and Bankruptcy Code, 2016 and the Company did not file any application under (IBC) during the Financial Year 2023-24.

ACKNOWLEDGEMENTS:

Your Directors place on record their sincere appreciation for the continued co-operation and support extended to the Company by

the Banks. Board takes this opportunity to thank all shareholders, analysts, business partners, government and regulatory authorities, distributors, suppliers, business associates, medical professionals and customers for their continued guidance, encouragement and splendid support.

The Board of Directors also wish to place on record its deep sense of appreciation for the dedicated and committed services by the Company's executives, staff and workers.

The Directors also wish to express their gratitude to the Investors for the confidence and faith that they continued to repose in the Company.