Emcure Pharmaceuticals Ltd

To,

The Members,

Emcure Pharmaceuticals Limited

Your Directors hereby present the 40th Board's Report on the business, operations and state of affairs of the Company together with the audited financial statement for the year ended March 31, 2021.

FINANCIAL RESULTS

The standalone and consolidated financial statements for the financial year 2020-21 have been prepared and presented in accordance with Indian Accounting Standards (Ind AS).

Rs. in million

DIVIDEND

Your Directors have recommended a final dividend of Rs. 1/- per Equity Share on the face value of Rs. 10/- each for the Financial Year ended March 31, 2021. The payment of final dividend is subject to declaration by the members at the ensuing Annual General Meeting.

EMPLOYEE STOCK OPTION SCHEME

During the year under review, the Company had granted 2,20,000 stock options to the employees under the Employee Stock Option Scheme 2013 (Emcure ESOS 2013), and 22,65,000 stock options were cancelled. As on March 31, 2021, 15,95,000 Stock options were outstanding.

The disclosures in compliance with Section 62 of the Companies Act, 2013 read with Rule 12 of Companies (Share Capital and Debentures) Rules, 2014 in relation to Employee Stock Option Scheme are set out in "Annexure - A" to this Report.

SUBSIDIARIES AND ASSOCIATES

During the year under review, the following companies were incorporated as wholly owned subsidiaries of the Company:

• Avet Lifesciences Limited

• Emcure Pharma Chile SpA, Chile

• Lazor Pharmaceuticals Limited, Kenya

The salient features of the financial statements of each of the Subsidiaries and the Associate Companies as required under the Companies Act, 2013 is provided in "Annexure - B"

(Form AOC - 1).

During the year under review, the Company had filed a Composite Scheme of Arrangement between Emcure Pharmaceuticals Limited ("Demerged Company" / the "Company") and Avet Lifesciences Limited ("Resulting Company") and their respective shareholders ('Scheme') with National Company Law Tribunal ("NCLT"), Mumbai, on November 30, 2020, for demerger of the Company's US (United States of America) market business and vesting the same with the Resulting Company,

under Sections 230 to 232 read with Section 52, section 66 and other applicable provisions of the Companies Act, 2013. The Joint Petition was filed with NCLT on February 04, 2021 and the final hearing of NCLT is awaited.

LOANS, GUARANTEES AND INVESTMENTS

Particulars of loans given, guarantees given, investments made and securities provided, if any, are reported in the financial statements.

RELATED PARTY TRANSACTIONS

All the related party transactions that were entered during the financial year 202021 were on an arm's length basis and in the ordinary course of business. Particulars of contracts or arrangements with related parties as referred to in sub-section (1) of Section 188 of the Companies Act, 2013 is provided in "Annexure - C" (Form AOC-2).

i) Independent Directors

Mr. P. S. Jayakumar (DIN: 01173236) was appointed as an Independent Director of the Company at the Annual General Meeting (AGM) held on August 21, 2020, to hold the office for a period of 3 years.

The Board of Directors, on the recommendation of Nomination and Remuneration Committee and in accordance with provisions of the Companies Act, 2013 appointed Mr. Vijay Gokhale (DIN: 09134089) and Mrs. Vidya Yeravdekar (DIN: 02183179) as Additional Directors on the Board w.e.f. April 16, 2021. They shall hold office as Additional Directors upto the date of the ensuing AGM.

Further, Mr. Vijay Gokhale (DIN: 09134089) and Mrs. Vidya Yeravdekar (DIN: 02183179) were appointed as Independent Directors w.e.f. April 16, 2021 for a period of 5 years, subject to the approval by the Members at the ensuing AGM.

In accordance with the provisions of Section 149 of the Companies Act, 2013, the Independent Directors have given a declaration that they meet the criteria of independence as provided in the said Section.

Mr. Humayun Dhanrajgir (DIN: 00004006) resigned as an Independent Director and Chairman of the Company w.e.f. April 16, 2021 due to his other commitments. The Board placed on record its appreciation for the valuable contribution and the services rendered by him during his tenure on the Board as Chairman and NonExecutive Director.

ii) Other Directors

The Board of Directors, on the recommendation of Nomination and Remuneration Committee and in accordance with provisions of the Companies Act, 2013 appointed Mr. Shailesh Ayyangar (DIN: 00268076) as an Additional Director (Non-Executive, Non-Independent) on the Board w.e.f. April 16, 2021. He shall hold office as Additional Director upto the date of the ensuing AGM.

Dr. Mukund Gurjar (DIN: 00026843), retires by rotation at the ensuing AGM and being eligible, offers himself for re-appointment.

iii) Key Managerial Personnel

There was no change in the Key Managerial Personnel (KMPs) during the year under review.

Subsequent to the end of the financial year, Mrs. Namita Thapar resigned as Chief Financial Officer of the Company w.e.f. April 16, 2021. The Board placed on record its sincere appreciation for the valuable contribution made by Mrs. Namita Thapar to the Company during her tenure as Chief Financial Officer.

The Board of Directors, on the recommendation of Nomination and Remuneration Committee and in accordance with the provisions of the Companies Act, 2013 appointed Mr. Tajuddin Shaikh as the Chief Financial Officer of the Company w.e.f. April 16, 2021.

NUMBER OF BOARD MEETINGS HELD

During the year ended March 31, 2021, the Board met 5 times.

REMUNERATION POLICY

The Company has formulated a Remuneration Policy pursuant to Section 178 of the Companies Act, 2013. The policy is available on the website at link: www.emcure. com.

BOARD EVALUATION

During the year under review, a meeting of the Independent Directors was held on July 22, 2020. The Independent Directors evaluated the performance of the NonIndependent Directors, performance of the Board as a whole, the committees thereof and also that of the Chairman in terms of the provisions of the Companies Act, 2013. Performance evaluation of independent directors was carried out by the entire Board of Directors, excluding the director evaluated.

INTERNAL FINANCIAL CONTROLS AND RISK MANAGEMENT

The Company has in place adequate internal financial controls with reference to the financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation were observed. The Company has also formulated a risk management policy.

The Audit Committee presently comprises of:

Subsequent to the end of the financial year, Mr. Humayun Dhanrajgir resigned from the Board of the Company and consequently as a member of the Audit Committee, w.e.f. April 16, 2021.

VIGIL MECHANISAM

The Company has adopted a Vigil Mechanism Policy (the Policy) for the employees to report genuine concerns/grievances. The Policy is available on the website of the Company at the link: www.emcure.com.

The Policy provides for adequate safeguards against the victimisation of the employees who use the vigil mechanism. The vigil mechanism is overseen by the Audit Committee.

PREVENTION OF SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company has a Policy on Prevention of Sexual Harassment of Women at Workplace. No cases were reported during the year under review. There were no complaints pending as on March 31, 2021. The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Board of Directors has constituted a Corporate Social Responsibility (CSR) Committee in accordance with the provisions of the Companies Act, 2013. The CSR Committee presently comprises of:

As part of CSR initiatives, the Company has undertaken projects in the areas of Education, Healthcare, Environment Sustainability etc.

CSR REPORT

The CSR Report on the activities undertaken during the year is provided as "Annexure - D" to this Report. The CSR Policy is available on the website of the Company at the link: www.emcure.com.

DISCLOSURE UNDER SECTION 197 OF THE COMPANIES ACT, 2013

The information as required under Section 197 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, is provided as "Annexure - E" to this Report.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS/OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings/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 - F" to this Report.

AUDITORS

M/s. BSR & Co. LLP, Chartered Accountants (FRN 101248-W/W-100022) are the Auditors of the Company. Their term of appointment is up to the conclusion of 41st Annual General Meeting to be held in the year 2022. The Auditors' Report annexed to the financial statements for the year under review does not contain any qualification, reservation, adverse remark or disclaimer.

SECRETARIAL AUDIT REPORT

Pursuant to Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. SVD & Associates, Company Secretaries, were appointed as the Secretarial Auditors, to conduct the Secretarial Audit for the financial year ended March 31, 2021. The Report of the Secretarial Auditor is provided as "Annexure - G" to this Report. The Secretarial Auditors' Report for the year under review does not contain any qualification, reservation, adverse remark or disclaimer.

COST AUDIT

As per Section 148 of the Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules, 2014, the Company is required to maintain cost records and accordingly, such accounts and records are maintained. M/s. B. M. Sharma & Co. (Registration no. 000219), Cost Accountants were appointed as Cost Auditors for conducting the audit of Cost Records of the Company for financial year ended March 31, 2021.

OTHERS

No disclosure is required in respect of the details relating to the deposits covered under Chapter V of the Companies Act, 2013, as the Company has not accepted any deposit. There was no significant or material order passed by any regulator or court or tribunal which would impact the status of the Company as a going concern and the operations in future. The Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India.

ANNUAL RETURN

Pursuant to Section 92(3) read with section 134(3)(a) of the Companies Act, 2013, copy of the Annual Return of the Company is placed on the website of the Company and is accessible at the web-link: www.emcure.com.

Pursuant to Section 134 of the Companies Act, 2013, the Directors confirm that -

i. in the preparation of the annual accounts, the applicable accounting standards had been followed,

ii. appropriate accounting policies have been selected and applied them consistently and had made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs as at March 31, 2021 and of the profit of the Company for the financial year ended on that date;

iii. proper and sufficient care had been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the annual accounts have been prepared on a going concern basis;

v. internal financial controls have been laid down and the same are adequate and operating effectively; and

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

INDUSTRIAL RELATIONS

Industrial Relations for the period under review continued to be cordial. ACKNOWLEDGEMENTS

The Board of Directors acknowledge the valuable guidance and continued support extended by the Company's customers, business partners, distributors, suppliers, medical professionals, other government authorities, Banks and other stakeholders. Your Directors would also like to take this opportunity to express their appreciation for the dedicated efforts of the employees of the Company.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS EMCURE PHARMACEUTICALS LIMITED