Alembic Pharmaceuticals Ltd

Dear Members,

Your Directors have pleasure in presenting their 14th Annual Report together with the Audited Statement of Accounts for the year ended 31st March, 2024.

1. Operations and State of Affairs of the Company: (C in Crores)

The break-up of consolidated sales including export incentives is as under:

The Company has prepared the Standalone and Consolidated Financial Statements in accordance with the Companies (Indian Accounting Standards) Rules, 2015 prescribed under Section 133 of the Companies Act, 2013 (the "Act").

2. Scheme of Arrangement:

As informed to Stock Exchanges earlier, the Company received a letter from BSE Limited and National Stock Exchange of India Limited dated 16th August, 2023 and 17th August, 2023, respectively returning the Draft Scheme of Arrangement between the Company and the Shareholders for re-organisation of General Reserve as approved by the Board of Directors at their meeting held on 2nd March, 2023. The Company decided not to pursue the matter any further.

3. Dividend:

The Board of Directors at their meeting held on 9th May, 2024 has recommended Dividend of C 11/- (550%) per equity share having face value of C 2/- each for the financial year 2023-24 as against the Dividend of C 8/- (400%) per equity share having face value of C 2/- each for the financial year 2022-23.

4. Management Discussion and Analysis Report:

The Management Discussion and Analysis Report as required under Regulation 34 read with Schedule V of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations, 2015") forms part of this Annual Report. Certain Statements in the said report may be forward-looking. Many factors may affect the actual results, which could be different from what the Directors envisage in terms of the future performance and outlook.

5. USFDA Audit:

Our Oncology (Injectable and Oral Solid) Formulation Facility (F-2) at Panelav was inspected by USFDA with 4 procedural observations. The Company had submitted its compliance response within stipulated period. Since then, the said facility has received the Establishment Inspection Report (EIR). With this, for all our USFDA facilities EIRs are in place.

6. Financing:

During the year under review, the financing requirement of the Company has been met through working capital loans from multiple banks as well as issuance of commercial papers (CPs).

7. Subsidiaries, Associates and Joint Venture:

A statement containing the salient features of the financial statements of subsidiary/associate/joint venture companies, as per Section 129(3) of the Act, is part of the consolidated financial statements.

In accordance with fourth proviso of Section 136(1) of the Act, the Annual Report of the Company, containing therein its standalone and the consolidated financial statements has been placed on the website of the Company, www.alembicpharmaceuticals.com. Further, as per fifth proviso of the said section, audited annual accounts of each of the subsidiary companies have also been placed on the website of the Company. Shareholders interested in obtaining a physical copy of the audited annual accounts of the subsidiary companies may write to the Company Secretary requesting for the same.

8. Directors:

During the year under review, Mr. Jai Diwanji (DIN: 00910410) was appointed as an Independent Director of the Company w.e.f. 5th May, 2023 for a period of five (5) years. The Board of Directors of the Company, on recommendation of Nomination and Remuneration Committee appointed Mr. Manish Kejriwal (DIN: 00040055) as an Additional Director designated as Independent Director of the Company w.e.f. 31st March, 2024.

Mr. K. G. Ramanthan, Mr. Pranav Parikh and Mr. Paresh Saraiya, Independent Directors of the Company retired effective from 31st March, 2024, end of day, on completion of their tenure of 10 years. The Board placed on record its appreciation for the valuable contributions made by them towards growth of the Company.

In accordance with the provisions of Section 152 and other applicable provisions, if any, of the Act and the Articles of Association of the Company, Mr. R. K. Baheti (DIN: 00332079), Director - Finance & Chief Financial Officer of the Company, will retire by rotation at the ensuing Annual General Meeting and being eligible offers himself for re-appointment.

9. Key Managerial Personnel:

Mr. Chirayu Amin, Chairman & Chief Executive Officer, Mr. Pranav Amin, Managing Director, Mr. Shaunak Amin, Managing Director, Mr. R. K. Baheti, Director

- Finance & Chief Financial Officer and Ms. Manisha Saraf, Company Secretary are Key Managerial Personnel of the Company. During the year under review, Ms. Manisha Saraf was appointed as Company

Secretary and Compliance Officer of the Company w.e.f 1st April, 2023.

10. Meetings of the Board:

Five (5) Board Meetings were held during the financial year ended 31st March, 2024. The details of the Board Meetings with regard to their dates and attendance of each of the Directors thereat have been provided in the Corporate Governance Report.

11. Independent Directors:

The Company has received declarations/confirmations from all the Independent Directors of the Company as required under Section 149(7) of the Act read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014 and Regulation 25(8) of the SEBI Listing Regulations, 2015.

12. Performance Evaluation:

Pursuant to the provisions of the Act, SEBI Listing Regulations, 2015 and Nomination and Remuneration Policy of the Company, the Nomination and Remuneration Committee ("NRC") and the Board has carried out the annual performance evaluation of the Board, its Committees and individual Directors by way of individual and collective feedback from Directors. The Independent Directors have also carried out annual performance evaluation of the Chairperson, the non-independent directors and the Board as a whole. Structured questionnaires covering the evaluation criteria laid down by the NRC, prepared after taking into consideration inputs received from Directors, were used for carrying out the evaluation process. The Directors expressed their satisfaction with the evaluation process.

13. Audit Committee:

In compliance with the requirements of Section 177 of the Act and Regulation 18 of the SEBI Listing Regulations, 2015, the Company has formed an Audit committee. The composition of the Committee is provided in the report on Corporate Governance forming part of this Report. The Committee inter alia reviews the Internal Control System, Reports of Internal Auditors, Key Audit Matters presented by the Statutory Auditors and compliance of various regulations. The Committee also reviews the financial statements before they are placed before the Board.

During FY 2023-24, the recommendations of Audit Committee were duly accepted by the Board.

14. Vigil Mechanism/Whistle Blower Policy:

Pursuant to the provisions of Section 177(9) & (10) of the Act and Regulation 22 of the SEBI Listing Regulations, 2015, a Vigil Mechanism/Whistle Blower Policy for directors, employees and other stakeholders to report genuine concerns has been established. The same is uploaded on the website of the Company and the web-link as required under SEBI Listing Regulations, 2015 is as under: https://alembicpharmaceuticals.com/webfiles/ pdf/Investor/governance-philosophy/Whistle%20 Blower%20Policy.pdf

15. Internal Control Systems:

The Company's internal control procedures which includes internal financial controls, ensures compliance with various policies, practices and statutes, keeping in view the organization's pace of growth and increasing complexity of operations. The internal auditors' team carries out extensive audits throughout the year across all locations and across all functional areas and submits its reports to the Audit Committee.

16. Corporate Social Responsibility:

Alembic Group has been proactively carrying out CSR activities since more than fifty years. Alembic Group has established, nurtured and promoted various NonProfit Organizations focusing on three major areas – Education, Healthcare and Rural Development. In compliance with requirements of Section 135 of the Act, the Company has laid down a CSR Policy. The composition of the Committee, contents of CSR Policy and report on CSR activities carried out during the financial year ended 31st March, 2024 in the format prescribed under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed herewith as Annexure A.

17. Policy on Nomination and Remuneration:

In compliance with the requirements of Section 178 of the Act and Regulation 19 of the SEBI Listing Regulations, 2015, the Company has laid down a Nomination and Remuneration Policy which has been uploaded on the Company's website. The web-link as required under the Act is as under: https://alembicpharmaceuticals.com/webfiles/pdf/ Investor/governance-philosophy/Nomination%20 and%20Remuneration%20Policy.pdf The salient features of the NRC Policy are as under:

1) Setting out the objectives of the Policy

2) Definitions for the purposes of the Policy

3) Policy for appointment and removal of Director, KMP and Senior Management

4) Policy relating to the Remuneration for the Managerial Personnel, KMP, Senior Management Personnel & other employees

5) Remuneration to Non-Executive/Independent Director Considering the evolving dynamics and in order to maintain alignment of the policy with our organization's goals and objectives, the Nomination and Remuneration policy of the Company was amended during the year.

18. Dividend Distribution Policy:

In compliance with the requirements of Regulation 43A of the SEBI Listing Regulations, 2015, the Company has laid down a Dividend Distribution Policy, which has been uploaded on the Company's website. The web-link as required under SEBI Listing Regulations, 2015 is as under: https://alembicpharmaceuticals.com/webfiles/pdf/ Investor/governance-philosophy/APL-Dividend%20 Distribution%20Policy.pdf

19. Related Party Transactions:

Related party transactions that were entered into during the financial year were on arm's length basis and were in ordinary course of business. There were no related party transactions which could be considered material. Hence, there is no information to be provided as required under Section 134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules, 2014.

There are no materially significant related party transactions made by the Company which may have potential conflict with the interest of the Company. The Board has approved a policy for related party transactions which has been uploaded on the Company's website. The web-link as required under SEBI Listing Regulations, 2015 is as under: https://alembicpharmaceuticals.com/webfiles/pdf/ Investor/governance-philosophy/10-RPT-Policy-1.pdf

20. Corporate Governance Report:

The Report on Corporate Governance as required under Regulation 34 read with Schedule V of the SEBI Listing Regulations, 2015, forms part of this Annual Report. The certificate from M/s. Samdani Shah & Kabra, Practicing Company Secretaries required as per the aforesaid Schedule V, confirming compliance with the conditions of Corporate Governance as stipulated under the SEBI Listing Regulations, 2015 is attached to the Report on Corporate Governance.

21. Business Responsibility & Sustainability Report:

The Business Responsibility & Sustainability Report as required under Regulation 34 of the SEBI Listing Regulations, 2015, forms part of this Annual Report.

22. Listing of securities:

The equity shares of the Company are listed on BSE and NSE with Stock Code 533573 and security ID/symbol of APLLTD. The ISIN for equity shares is INE901L01018. The Company confirms that the annual listing fees to both the stock exchanges for the financial year 2024-25 have been paid.

23. Loans, Guarantees or Investments:

During the year under review, the Company has not granted any Loans and given any Guarantees falling within the purview of the provisions of Section 186 of the Act read with the Companies (Meetings of Board and its Powers) Rules, 2014. The details of Investments made under the said provisions are provided in Note No. 4 of Notes to Standalone Financial Statements of the Company.

a) Statutory Auditors:

In compliance with the provisions of the Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014, M/s. K C Mehta & Co. LLP, Chartered Accountants having Firm Registration No. 106237W/ W100829 has been appointed as Statutory Auditors of the Company by the members at their 10th Annual General Meeting held on 22nd July, 2020 to hold office for a term of five (5) years i.e. till the conclusion of Annual General Meeting for the financial year 2024-25. The Statutory Auditor's in their Report to the members, have issued their Audit Report with Qualified opinion as mentioned under ‘Basis for Qualified Opinion' of their Report.

It may be clarified that the qualification in the report by Statutory Auditors is only with reference to information pertaining to previous financial year ended on 31st March, 2023. It has no impact on the current year numbers. The Company has provided the Statement on Impact of Audit Qualifications on Standalone Financial Statements and Consolidated Financial Statements as Annexure B to this Report which shall be treated as Board's response.

b) Secretarial Auditors:

The Board of Directors appointed M/s. Samdani Shah & Kabra, Practicing Company Secretaries, to conduct Secretarial Audit for the financial year 2024-25. The Secretarial Audit Report of M/s. Samdani Shah & Kabra, Practicing Company Secretaries for the financial year 2023-24, is annexed herewith as Annexure C. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

During the year under review, the Company has complied with the applicable provisions of the Secretarial Standards as prescribed by the Institute of Company Secretaries of India.

c) Cost Auditors:

The provisions of Section 148(1) of the Act with regard to maintenance of cost records are applicable to the Company and the Company has made and maintained the cost records as specified therein.

The Board of Directors appointed M/s. Diwanji & Co., Cost & Management Accountants as Cost Auditors for conducting audit of the cost records maintained by the Company relating to Bulk Drugs and Formulations for the financial year 2024-25.

d) Internal Auditors:

The Board of Directors appointed M/s. Sharp & Tannan Associates, Chartered Accountants as Internal Auditors of the Company for the financial year 2024-25.

25. Risk Management:

The Company has constituted a Risk Management Committee and formulated Enterprise Risk Management Policy which functions as a guiding tool in fulfilling the management's responsibility towards risk management. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed at the meetings of the Risk Management Committee, Audit Committee and the Board of Directors of the Company.

26. Material Changes:

There have been no material changes and commitments affecting the financial position of the Company since the close of financial year i.e. since 31st March, 2024. Further, it is hereby confirmed that there has been no change in the nature of business of the Company.

27. Annual Return:

A copy of the Annual Return as required under Section 92(3) of the Act has been placed on the Company's website. The web-link as required under Section 134(3)(a) of the Act is as under: https://alembicpharmaceuticals.com/notices-correspondences-disclosures/

28. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo:

The information required under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure D.

29. Particulars of employees and related disclosures:

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

A statement showing the names and particulars of the employees falling within the purview of Rule 5(2) of the aforesaid rules are provided in the Annual Report. The Annual Report is being sent to the members of the Company excluding the aforesaid information. The said information is available for inspection at the Registered Office of the Company during working hours and the same will be furnished, on request in writing, to the members.

30. Other Disclosures:

a) The Company has not accepted/renewed any deposits. Further, there has been no default in repayment of deposits or payment of interest thereon. No deposits remained unpaid or unclaimed as at the end of the year under review.

b) The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

c) In the opinion of the Board, the Independent Directors appointed during the year are persons of integrity and possess expertise, experience and proficiency.

d) Neither the Managing Director nor the Whole-time Directors of the Company have received any remuneration or commission from any of its subsidiaries.

e) No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future.

f) No fraud has been reported by the Auditors under Section 143(12) of the Act to the Audit Committee or the Board.

g) The Company has in place a Policy on prevention of Sexual Harassment in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013 and has constituted the Internal Complaints Committee to redress complaints received regarding sexual harassment. During the year, no complaint was received by the Company.

h) Neither application was made nor any proceeding is pending under the Insolvency and Bankruptcy Code, 2016.

i) No settlements have been done with banks or financial institutions.

31. Directors' Responsibility Statement:

Pursuant to Section 134(5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that:

a) in preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

b) they 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 Company at the end of the financial year and of the profit of the Company for that period;

c) they have taken proper and sufficient care for 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) they have prepared the annual accounts on a going concern basis;

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

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

On behalf of the Board of Directors,