Laurus Labs Ltd

To

The Members of

Laurus Labs Limited

Your Directors have pleasure in presenting the 19^th Annual Report of the Company together with the Audited Financial Statements for the Financial Year ended March 31, 2024.

Standalone and Consolidated Financial Highlights:

(Rs. in crores)

Company's Affairs: (i) Operations:

During the year under review, the Turnover of your Company stood at Rs.5,041 crores and registered growth of 9% excluding one large purchase order (PO). However, due to reduction in sale price for ARV prodcuts, non-generation of revenue from the additional manufacturing capacities for want of completing validation protocols, incurred cost on new areas of business, the turnover and profits have reduced significantly. The profit stood at Rs.168 crores which is less by 80% over the last year profit of Rs.797 crores. Notwithstanding this, your company is able to maintain gross marging at more than 50% which gives confidence and hope that your company will be able to achieve it's goals in forthcoming years.

During the year under review –

• Your Company was able to undertake increasing application of new and sustainable technologies such as Flow Chemistry, Bio Catalysis, precision fermentation etc. providing base for rapidly expanding CDMO offering.

• Your Company has invested Rs.700 crores during the year on ongoing expansion program so that the Company will be able to achieve its future goals;

• Your Company continue to advance on regulatory and ESG Agenda; signed Greenhouse Gases commitment with Science Based Targets Initiative (SBTi);

• More than 100 quality audits have been completed by various customers and regulatory agencies;

• The Company has implemented SANK ALP (in alliance with DSS+) to enhance organisational safety and excellence.

• During the year, our Investee company ImmunoACT, India's first CAR-T cell therapy, NexCAR 19 has been approved from CDSCO on October 12, 2023 to treat r/r Lymphoma/Leukamia indication and commercial launch and treatment started and CAR-T treatment capacity has been under expansion to service more patients.

• The Company has collaborated with IIT Kanpur to in-license and fund development of Gene Therapy assets and took all steps to set up a GMP manufacturing facility in IIT-Kanpur campus.

• The stake in ImmunoACT has been increased to 33.86% from the earlier 26.62% by investing around Rs.80 crores and the stake in Laurus Bio has gone up from the earlier 72.61% to 87.58% (both on fully diluted basis) by investing Rs.72 crores;

• Executed MOU with KRKA d.d., novo mesto, Slovenia to set up a JV Company which will have significant growth potential in India and overseas markets.

• Your Company was certified as Great Place to Work in fourth consecutive year.

(ii) Outlook:

Business prospects may remain positive because of the growing global demand for generics and opportunities provided by the expiry of patents in developed markets. Your Company also expects to sustain in overall ARV business due to stable demand.

Management Discussion & Analysis:

Various business aspects including market conditions, business opportunities, challenges etc. have been discussed at length in the Management Discussion and Analysis (MD&A), which forms part of this Annual Report.

Dividend:

Your directors are pleased to inform you that the Board has declared the interim dividend @ 20% (i.e. Rs.0.40 per share of the face value of Rs.2/- each) and paid to the Shareholders in November, 2023 and the 2^nd Interim dividend @ 20% (i.e.

Rs.0.40 per share of the face value of Rs.2/- each) and being paid to the shareholders in May, 2024 aggregating to 40% dividend i.e. Rs.0.80/- per share of the face value of Rs.2/- each relating to the FY 2023-24. The dividend payout ratio is 19% which is within the stipulated maximum of 20% under dividend policy.

Transfer to Reserves:

Your Company did not transfer any portion of profits to Reserves.

Share Capital:

During the year under review -

• Company has allotted 3,14,933 (Three lakh fourteen thousand nine hundred and thirty three only) equity shares of Rs.2/- to various eligible employees of the Company under Employee Stock Option Scheme 2018 upon exercise of their vesting rights in December, 2023.

• As a result, the paid up share capital as on December 8, 2023 stood at Rs.107,79,31,716/- divided into 53,89,65,858 shares of Rs.2/- each.

Change in the nature of the business, if any:

There is no change in the nature of the business of the Company or any of its subsidiaries or associates, during the year under review.

Material Changes and commitments, affecting the financial position of the Company:

There are no material changes and commitments affecting the financial position of the Company that have occurred between the end of the financial year of the Company to which the financial statements relate and the date of the Report i.e. between March 31, 2024 to April 25, 2024.

Disclosure on Large Corporate:

Your Company was qualified as "Large Corporate" in terms of the circular dated November 26, 2018 issued by Securities and Exchange Board of India (SEBI) for the Financial Years 2022 and 2023 due to which your Company was required to raise 25% of its incremental borrowings during the Financial Years 2023 and 2024 through debt securities. For these two years, the incremental borrowings made by the Company and the amount to be raised through debt securities are as follows:

This criteria is to be met over a period of three years. However, SEBI through its circular dated October 19, 2023 changed the criteria for "Large Corporate" according to which your Company is not qualified as "Large Corporate" and hence the requirement of raising 25% of its incremental borrowing through debt securities done away with for the FY 2025 onwards unless your Company is qualified as Large Corporate as per the revised criteria in future.

The said circular also stated that for the earlier years the Large Corporates like your Company (which are not Large Corporates as per the revised circular) may endeavour to comply with the requirements of raising 25% of the incremental borrowings through debt securities or alternatively such Large Corporates shall provide a one time explanation in their Annual Report for FY 2024.

The borrowing cost of funds through the route of debt securities is higher by around 1% to 1.50% per annum by way of higher interest rate and placement cost and therefore in order to keep the cost of funds under control your Company has decided not to proceed with raising of incremental borrowings through debt securities as per the rescinded circular of SEBI dated November 26, 2018 and the same may be noted by the members accordingly.

Fixed deposits:

The Company did not accept any fixed deposits.

Subsidiaries, Associates and Joint Ventures:

At the end of the year, the status of the subsidiaries/associates is as follows:

* WOS means Wholly Owned Subsidiary

@ Laurus Generics GmbH, Germany and Laurus Generics Inc., are step-down subsidiaries of Laurus Labs Limited # Balance 49.24% is held by your Company.

As per Sec.129(3) of the Companies Act, 2013 the consolidated financial statement of the Company and all its Subsidiaries and Associates prepared in accordance with the applicable accounting standards forms part of this Annual Report. Further, a statement containing salient features of the financial statements of our subsidiaries and associates in the prescribed form in AOC-1 is attached asAnnexure-1 to the Directors' Report.

Consolidated financial Statements:

Consolidated Financial Statements have been prepared by the Company in accordance with the requirements of applicable Accounting Standards and the provisions of Companies Act, 2013. As per the provisions of Section 136 of the Companies Act, 2013, the Company has placed separately the audited financial statements of its subsidiaries on its website www.lauruslabs.com and copies of audited financial statements of the subsidiaries will be provided to the Members at their request.

Particulars of Loans, Guarantees and Investments:

The Company has also issued a Corporate Guarantee to the Bankers for the loans sanctioned to Laurus Synthesis Private Limited and for Laurus Bio Private Limited and the guarantees provided are well within the limits prescribed under Sec.186 of the Companies Act, 2013.

Board of Directors and Key Management Personnel:

As per the provisions of the Companies Act, 2013, Mr. V.V. Ravi Kumar will retire at the ensuing annual general meeting and, being eligible, seek reappointment. The Board of Directors recommends his re-appointment.

During the year, Mr. Chandrakanth Chereddi has resigned as a non-executive Director from the Board w.e.f.

October 21, 2023.

Board Meetings:

The Board and Committee meetings are pre-scheduled and a tentative calendar of the meetings shall be finalised in consultation with the Directors to facilitate them to plan their schedule. However, in case of urgent business needs, approval is taken by passing resolutions through circulation. During the year under review, eight (8) board meetings were held. The details of the meetings including the composition of various committees are provided in the Report on Corporate Governance.

Performance Evaluation:

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 SEBI circular dated January 5, 2017.

Declaration from Independent Directors:

The independent directors have submitted the declaration of independence stating that they meet the criteria of independence as prescribed in sub-section (6) of Section 149 of the Companies Act, 2013 as well as under Regulation 16(1) (b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Policy on Directors' Appointment and Remuneration:

The policy of the Company on directors' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters are adopted as per the provisions of the Companies Act, 2013. The remuneration paid to the Directors is as per the terms laid out in the nomination and remuneration policy of the Company.

The nomination and remuneration policy is adopted by the Board and the salient features of the policy are as follows:

• Non-Executive and Independent Directors ("NEDs") will be paid remuneration by way of sitting fees and commission. The remuneration/ commission/ compensation to the NEDs will be determined by the Nomination and Remuneration Committee ("Compensation Committee") and recommended to the Board for its approval.

• As approved by the shareholders at the shareholders meeting held on July 20, 2016, commission will be paid at a rate not exceeding 1% per annum of the profits of the Company computed in accordance with section 198 of the Act.

• The payment of the Commission to the NEDs will be placed before the Board every year for its consideration and approval. The sitting fee payable to the NEDs for attending the Board and Compensation Committee meetings will be fixed, subject to the statutory ceiling. The fee will be reviewed periodically and aligned to comparable best in class companies.

• NEDs will not be eligible to receive stock options under the existing employee stock option scheme(s) ("ESOP") of the Company.

• The compensation paid to the executive directors (including the Managing Director) will be within the scale approved by the shareholders. The elements of the total compensation, approved by the Compensation Committee will be within the overall limits specified under the Act.

• The Company's total compensation for Directors and Key Managerial Personnel as defined under the Act / other employees will consist of: - fixed compensation - variable compensation in the form of annual incentive - benefits - work related facilities and, perquisites Changes made to the policy: Nil The Nomination and Remuneration Policy is placed on the Company's website and the following is web address of the said policy. https://www.lauruslabs.com/Investors/PDF/Policies/ Remuneration_Policy.pdf

Dividend Distribution Policy:

The web link of the Dividend Distribution Policy has been provided below for the perusal of the shareholders. https://www.lauruslabs.com/Investors/PDF/Policies/ Dividend_Policy.pdf

Risk Management:

Your Company had formulated a risk management policy for dealing with different kinds of risks that it faces in the 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 financial control systems and procedures to mitigate the risk. The risk management procedure is reviewed by the Risk Management Committee and Board of Directors on a regular basis at the time of review of quarterly financial results of the Company. Further, your Company had constituted a Risk Management Committee which lays down various risk mitigating practices that your Company is required to implement in the Company.

Adequacy of Internal Financial Controls:

The internal financial controls with reference to the Financial Statements, apart from statutory audit, internal audit and cost compliance, are adequate to the size and operations of the Company.

Directors' Responsibility Statement:

In terms of Section 134(3)(c) of the Companies Act, 2013, the Board of Directors of the Company states that: (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the directors had 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 and loss of the Company for that period; (c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of Companies Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) the directors had prepared the annual accounts on a going concern basis; (e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operative effectively; and

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operative effectively.

Related Party Transactions:

In accordance with Sec 134(h) of the Companies Act, 2013 and Rule 8(2) of Companies (Accounts) Rules, 2014, the particulars of contracts or arrangements entered into by the Company with the Related Parties referred to in Sec.188(1) of the Act, have been provided in Form AOC-2 and attached the same as Annexure-2.

The details of related party disclosures as stated in the notes to the financial statements forms part of this annual report.

Vigil Mechanism:

The Company established a whistleblower policy in order to assure that the business is conducted with integrity and that the Company's financial information is accurate.

(i) Statutory Auditors:

M/s. Deloitte, Haskins & Sells LLP, Firm Registration No.117366W/W-100018 have been appointed as Statutory Auditors of the Company for the second term of Five years from the conclusion of 17^th AGM till the conclusion of 22^nd AGM of the Company at a remuneration to be decided by the Board.

(ii) Cost records and Auditors:

The Company is required under Section 148(1) of the Companies Act, 2013 read with Companies (Audit

& Auditors') Rules, 2014 and the Companies (Cost Records and Audit) Amendments Rules, 2014, the Company is required to maintain the cost records in respect of its business and accordingly such accounts and records are made and maintained.

Your Board has re-appointed M/s. Sagar & Associates, Cost Accountants, as the Cost Auditors of the Company for the Financial Year 2024-25. As required by the Act, the remuneration of the Cost Auditors has to be ratified by the Members and accordingly the resolution relating to the Cost Auditors is being placed before the Members for their ratification.

(iii) Secretarial Auditors & Secretarial Audit Report:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has re-appointed Y. Ravi Prasada Reddy, Practising Company Secretary (CP No. 5360) proprietor of RPR & Associates, to undertake the Secretarial Audit of the Company for the financial year 2023-24. The Secretarial Audit Report issued in Form MR-3 is in Annexure-3 to this Report. There are no qualifications, reservations or adverse remarks in the Secretarial Audit Report.

Auditors' Qualifications/reservations/adverse remarks/ Frauds reported:

There are no Auditors' Qualifications or reservations or adverse remarks on the financial statements of the Company. The Auditors have not reported any frauds to the Audit Committee as prescribed under Sec. 143(12) of the Companies Act, 2013.

Significant and material orders passed by the Courts/ Regulators:

There are no significant and material orders passed by the Courts or Regulators against the Company.

Rating:

CARE has continued with its rating of "AA Stable" on the long term bank facilities of the Company and Reaffirmed A1+ on the short term bank facilities of the Company.

Insurance:

All properties and insurable interests of the Company including buildings, plant and machinery and stocks have been fully insured.

Corporate Social Responsibility initiatives:

Pursuant to the provisions of Section 135 and Schedule VII of the Companies Act, 2013, CSR Committee of the Board of Directors had framed the policy on Corporate Social Responsibility and the relevant details have been provided in Annexure-4 and forms part of this Report.

Annual Return:

As required pursuant to section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014 (as amended), a copy of the Annual Return of the Company shall be placed on the Website of the Company at www.lauruslabs.com.

Statement of Particulars of Appointment and Remuneration of Managerial Personnel/ employees:

In accordance with the provisions of Section 134 and Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the statement of particulars of appointment and remuneration of managerial personnel and employees is attached in Annexure-5 to this Report.

Human resources:

The management believes that competent and committed human resources are vitally important to attain success in the organisation. 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. 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.

Employee Stock Options:

During the year, the Company has allotted 3,14,933 (Three lakh fourteen thousand nine hundred and thirty three only) equity shares of Rs.2/- to various eligible employees of the Company under Employee Stock Option Scheme 2018 upon exercise of their vesting rights in December, 2023.

The details of stock options are as mentioned in Annexure-6 and forms part of this Report. Further, the details of the stock options stated in the notes to accounts of the financial statements also forms part of this Annual Report.

Conservation of energy, technology absorption and foreign exchange earnings/outgo:

The information required under Section 134 (3) (m) of the Companies Act, 2013, read with Rule 8(3) of Companies (Accounts) Rules, 2014, is appended hereto as Annexure-7 and forms part of this Report.

Policy on Prevention of Sexual Harassment:

The Company has formulated and implemented a policy for Prevention of Sexual Harassment of Women at workplace. During the year under review, the Company has not received any complaints under the policy.

The Company has many systems, processes and policies to ensure professional ethics and harmonious working environment. We follow Zero Tolerance towards Corruption and unethical conduct. These are ensured through Whistle Blower Policy, Anti-Corruption Policy, Gift Policy, Sexual Harassment Policy and Redressal Guidelines.

The 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.

Corporate Governance:

A separate section on Corporate Governance practices followed by your Company, as stipulated under Schedule V(C) of the SEBI (LODR) Regulations, 2015 is enclosed and forming part of this report.

The certificate of the Practising Company Secretary Mr.Y.Ravi Prasada Reddy with regard to compliance of conditions of corporate governance as stipulated under Schedule V (E) of the SEBI (LODR) Regulations, 2015 is annexed to the Report on Corporate Governance.

Business Responsibility and Sustainability Report (BRSR)

The Listing Regulations mandate the inclusion of the BRSR as part of the Annual Report for top 1000 listed entities based on market capitalisation. In accordance with the Listing Regulations, we have integrated BRSR disclosures into our Annual Report.

Awards:

• Dr. Satyanarayana Chava, Founder & CEO has been awarded by Business Today as the Best CEO 2024 in Pharma & Health Care sector.

• The following Laurus Labs Units won the Confederation of Indian Industry (CII), Andhra Pradesh – Industrial Safety Excellence Awards for the Performance Year 2023: -

- Laurus Labs Limited, Unit-2: Best Safety Performer Award

- Laurus Labs Limited, Unit-4: Best Safety performer Award - Laurus Labs Limited, Unit-5: Industrial Safety Leadership Award

Acknowledgements:

Your Directors would like to place on record their sincere appreciation to customers, business associates, 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 Laurus family and look forward to enjoying their continued support and cooperation.

For and on behalf of the Board