Neuland Laboratories Ltd
Directors Reports
The Board of Directors are pleased to present the Company?s Thirty
Ninth Annual Report and the Company?s audited financial statements (standalone and
consolidated) for the financial year ended March 31, 2023.
Financial Performance
The Company?s financial performance (standalone) for the year
ended March 31, 2023, is summarised below:
| Particulars |
2022-23 |
2021-22 |
| Total Income |
1,20,094.61 |
95,315.33 |
| Profit before Finance Costs, Depreciation, Amortisation and
Tax |
28,105.58 |
14,427.06 |
| Finance costs |
1,306.67 |
1,349.44 |
| Profit before Depreciation, Amortisation and Tax |
26,798.91 |
13,077.62 |
| Less: Depreciation & Amortisation |
5,277.62 |
4,903.64 |
| Profit before Tax |
21,521.29 |
8,173.98 |
| Less: Current tax |
5,039.00 |
2,042.19 |
| Deferred tax |
170.37 |
(221.55) |
| Profit after Tax |
16,311.92 |
6,353.34 |
| Add: Other comprehensive income |
(391.39) |
(599.17) |
| Total comprehensive income for the year |
15,920.53 |
5,754.17 |
For the financial year ended March 31, 2023, a Total Income of
`1,20,094.61 lakhs as against `95,315.33 lakhs in the previous year.
For the year ended on March 31, 2023, the Company has reported Earnings
Before Interest, Finance Cost, Depreciation and Amortization and Tax (EBIDTA) of
`28,105.58 lakhs as against the EBIDTA of `14,427.06 lakhs during the previous year.
The Net Profit of the Company for the year 2022-23 was `16,311.92 lakhs
compared to `6,353.34 lakhs during the previous year.
Business Review
During the year under review, your Company was able to navigate
uncertain macro-economic circumstances and take appropriate actions in line with the
long-term objectives of the organization. The Company continued its focus on business
development and portfolio management with the strategic priorities as the guiding
framework. The long-term focus on Specialty GDS products & CMS projects resulted in
the change in business mix which has had a significant positive impact on margins. We have
seen significant GDS revenues from products where customers are preparing for generic
launches. In terms of the CMS business, we are seeing increase in revenues as projects
progress in their lifecycle with customers preparing for launch or scaling their
commercial requirements. We are continuing to see good traction in new business as more
customers are aware of the Company?s capabilities.
During the year, the Company spent time on customer feedback based on
survey facilitated by an external agency which gave inputs for improvement. The
Company?s commitment to strong governance, sustainability and the environment was
further bolstered through the work on Enterprise Risk Management and Environmental, Social
and Governance overseen by the Risk and Sustainability Committee of the Board. The Company
received satisfactory scores as it was rated by external agencies on Sustainability.
During the year, the Company's management has spent significant time on talent planning to
ensure that the Company is able to deliver on its strategic objectives.
Dividend
Your directors are pleased to recommend a final dividend of `10/-
(100%) per equity share on face value of `10/- each of the Company, for the financial year
ended March 31, 2023. The final dividend, if approved at the 39th Annual General Meeting,
will be paid to members within the period stipulated by the Companies Act, 2013 ('the
Act'), as amended from time to time. The outflow on account of final dividend is estimated
to be `12,82,98,890/-.
In terms of Regulation 43A of the Securities and Exchange Board of
India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI Listing
Regulations), the dividend distribution policy, is available on the Company?s website
at - https://www.neulandlabs.com/wp-content /uploads/2021/06/
Dividend-Distribution-Policy.pdf
Share Capital
The equity shares of your Company continue to be listed and traded on
the BSE Limited and National Stock Exchange of India Limited. The paid-up equity share
capital of the Company as on March 31, 2023 is `1,290.05 lakhs. During the year under
review, the Company has not issued any shares with differential voting rights nor granted
stock options nor sweat equity.
Outlook
The Company is focussed on actions to secure the long-term growth and
sustainability of the Company as there is visibility on customer order flow for the short
term, and processes are in place to ensure short-term execution. Project management will
be critical to ensure delivery of projects and new products, as it will also be key to
ensuring cost improvement programs and other strategic initiatives are on track. The
Company will continue to keep quality at the top of the agenda, though it focuses on
deepening current relationships and attracting new customers. The Company is continuously
taking actions across the complete spectrum of the value chain to ensure it delivers value
to all stakeholders and is one of the leading API partners of choice.
Consolidated Financial Statements
The Audited Consolidated Financial Statements of your Company as on
March 31, 2023, which forms part of the Annual Report, have been prepared pursuant to the
provisions of SEBI Listing Regulations as amended from time to time, and also as per the
applicable Indian Accounting Standard (IndAS) on Consolidated Financial Statements
(IndAS-110) as notified by the Ministry of Corporate Affairs.
The annual accounts of the subsidiary companies are kept for inspection
by any member at the Registered Office of the Company as well as at the Registered Office
of the respective subsidiary companies and also available on the website of the Company,
www.neulandlabs.com. Any member interested in a copy of the accounts of the subsidiaries
may write to the Company Secretary at the Registered Office of the Company.
Subsidiaries
Your Company has two subsidiaries, Neuland Laboratories K.K., Japan and
Neuland Laboratories Inc. USA, working on market development. Your Company does not have
any joint venture or associate companies. Further there has been no material change in the
nature of business of the subsidiaries.
A report on the performance and financial position of the subsidiaries,
set out in the prescribed form AOC-1 in terms of proviso to sub-section (3) of Section 129
of the Act as amended from time to time, is provided as Annexure to the consolidated
financial statements and hence not repeated here.
Corporate Governance Report, Management Discussion & Analysis and
Other Information Required under the Companies Act, 2013 and SEBI Listing Regulations
As per SEBI Listing Regulations, as amended from time to time Corporate
Governance Report with Certificate from a Practicing Company Secretary thereon and
Management Discussion and Analysis report are attached and form part of this report.
Directors and Key Managerial Personnel
During the year, Members of the Company approved the appointment of Mr.
Prasad Raghava Menon as Independent Director through postal ballot, with effect from
October 31, 2022. The Board is of the opinion that Mr. Menon possess requisite integrity,
experience and expertise (including the pro_ciency).
The Board of Directors on the recommendation of the Nomination and
Remuneration Committee, have approved the following, subject to approval of the members
sought in the Notice of the Thirty Ninth Annual General Meeting:
• Re-appointment of Mr. Davuluri Sucheth Rao as Whole Time
Director designated as Vice-Chairman & Chief Executive Officer of the Company and
remuneration thereof, effective August 1, 2023.
• Continuation of Mrs. Bharati Rao as Non-Executive Independent
Director on attaining the age of 75 years.
• Re-appointment of Dr. D.R. Rao as Whole Time Director designated
as Executive Chairman of the Company and remuneration thereof, effective April 1, 2024.
Dr. Christopher M. Cimarusti, who is liable to retire by rotation, has
offered himself for re-appointment as the Director at the ensuing AGM of the Company. The
Board recommends his re-appointment in the ensuing AGM of the Company.
During the year under review, Mr. Deepak Gupta, Chief Financial Officer
and Key Managerial Personnel (KMP) of the Company tendered his resignation w.e.f. close of
business hours on October 13, 2022. The Board places on record its appreciation for the
contribution and guidance of Mr. Gupta during his tenure as Chief Financial Officer. Mr.
Abhijit Majumdar has been appointed as the Chief Financial Officer and designated as KMP
of the Company w.e.f. November 23, 2022.
Dr.Davuluri Rama Mohan Rao, Executive Chairman, Mr. Davuluri Sucheth
Rao, Vice Chairman & Chief Executive Officer, Mr. Davuluri Saharsh Rao, Vice Chairman
& Managing Director, Mr. Abhijit Majumdar, Chief Financial Officer, and Ms. Sarada
Bhamidipati, Company Secretary & Compliance Officer, are the Key Managerial Personnel
of the Company as on the date of this Report.
Listing at Stock Exchanges
The equity shares of your Company continue to be listed and traded on
the BSE Limited and National Stock Exchange of India Limited. The Annual Listing fee for
the year 2023-24 has been paid to both the stock exchanges.
Directors? Responsibility Statement
Pursuant to Section 134(3)(c) of the Companies Act, 2013, as amended
from time to time, your directors confirm that to the best of their knowledge and belief
and according to the information and explanation obtained by them:
a. in the preparation of the annual financial statements for the year
ended March 31, 2023, the applicable accounting standards have been followed along with
proper explanation relating to material departures, if any;
b. such accounting policies as mentioned in the Notes to the Financial
Statements have been selected and applied consistently and judgement and estimates have
been made that are reasonable and prudent so as to give a true and fair view of the state
of affairs of the Company as at March 31, 2023 and of the profit of the Company for the
year ended on that date;
c. proper and sufficient care has been taken 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;
d. the annual financial statements have been prepared on a going
concern basis;
e. proper internal financial controls were in place and that the
financial controls were adequate and were operating effectively; and
f. systems to ensure compliance with the provisions of all applicable
laws were in place and were adequate and operating effectively.
Board Meetings
During the year under review, six Board 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 Act, and SEBI Listing Regulations, as amended from time to time.
Composition of various Committees
Details of various committees constituted by the Board as per the
provisions of the Act and SEBI Listing Regulations as amended from time to time, and their
meetings are given in the Corporate Governance Report which forms part of this report
Board Evaluation
Pursuant to the provisions of the Act and SEBI Listing Regulations the
annual evaluation of the performance of the Board, its Committees and of individual
directors has been carried out by the Board. The process was carried out by circulating
questionnaires on the Board and Committees functioning on certain parameters. The
performance evaluation of the Independent Directors was carried out by the entire Board,
except the director being evaluated. The performance evaluation of the non-Independent
Directors including Executive Directors was carried out by the Independent Directors.
Independent Directors
The Independent Directors met on February 14, 2023, without the
presence of non-Independent Directors and members of the management. The Independent
Directors, inter alia, discussed matters pertaining to the Company?s affairs and
reviewed the performance of non-Independent Directors, the Chairman and the Board as a
whole, and assessed the quality, quantity and timeliness of flow of information between
the Company management and the Board that is necessary for the Board to effectively and
reasonably perform their duties.
The Company has received declarations from all the Independent
Directors of the Company confirming that they meet the criteria of independence prescribed
under the Act and SEBI Listing Regulations, as amended. Further, they have afirmed
compliance to the code of conduct for Independent Directors as prescribed in Schedule IV
of the Act. The terms and conditions of appointment of Independent Directors is available
on the website of the Company.
Disclosures by Directors
None of the directors of your Company is disqualified as per provisions
of Section 164(2) of the Act. Your directors have made necessary disclosures to this
effect as required under Act.
Audit Committee
During the year under review, five Audit Committee Meetings were
convened and held. The details of the committee meeting and composition of the Audit
Committee and its terms of reference are included in the Report on Corporate Governance
annexed. All the recommendations made by the Audit Committee were accepted by the Board of
Directors.
Nomination and Remuneration Policy
The Nomination and Remuneration Policy of the Company includes Board
Diversity as part of the policy and is available on the website of the Company at
https://www.neulandlabs.com/ investors/board-of-directors/policies/. Your Company's policy
covers selection and appointment of Directors, Key Managerial Personnel, Senior Management
and their remuneration, including criteria for determining qualifications, positive
attributes, independence of a director and other matters provided under section 178(3) of
the Act and SEBI Listing Regulations.
Corporate Social Responsibility
The Company has in place a Corporate Social Responsibility Policy which
is available on the website of the Company at https://
www.neulandlabs.com/investors/board-of-directors/policies/. Further, your Company has met
its CSR obligations for the financial year ended March 31, 2023 under the provisions of
the Act and rules made thereunder.
Annual report on CSR activities as required under Rule 8 of the
Companies (Corporate Social Responsibility Policy) Rules, 2014 read with Section 134(3)
and 135(2) of the Act, has been appended as Annexure-1 and forms an integral part of this
Board?s Report.
Business Responsibility and Sustainability Report
In accordance with Regulation 34(2)(f) of the SEBI Listing Regulations,
the Business Responsibility and Sustainability Report (BRSR), is forming part of this
report as Annexure-2.
Code of Conduct for Board of Directors and Senior Management Personnel
The directors and members of senior management have afirmed compliance
with the Code of Conduct for Board of Directors and Senior Management Personnel of the
Company. A declaration to this effect by the Vice Chairman & Chief Executive Officer,
forms part of the Annual Report.
Vigil Mechanism/ Whistle Blower Policy
Your Company has a Vigil Mechanism/Whistle Blower Policy which serves
as a mechanism for its directors, employees and stakeholders to report genuine concerns
about unethical behaviour, actual or suspected fraud or violation of the Code of Conduct
without fear of reprisal. Audit Committee of the Company oversees implementation of the
Whistle Blower Policy. During the year, Company has not received any protected disclosure.
The Whistle Blower Policy is available on the website of the Company, at https://www.
neulandlabs.com/investors/board-of-directors/ policies/. A brief note on the Whistle
Blower Policy is also provided in the Report on Corporate Governance, which forms part of
this Annual Report.
Prevention of Insider Trading
Pursuant to Securities and Exchange Board of India (Prohibition of
Insider Trading) Regulations, 2015, the Company has adopted the Code of Internal
Procedures and Conduct for Regulating, Monitoring and Reporting of Trading by Designated
Persons and their Immediate Relatives along with Code of Fair Disclosures. Periodically,
insider trading awareness sessions are conducted for the benefit of designated persons.
Trading window closures, when the designated persons are not permitted to trade in the
securities of the Company, are intimated in advance to all concerned.
Disclosure as per Sexual Harassment 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. The Company has not received any complaints on sexual harassment during the
year under review and as on the date of this report.
Employee Stock Option Scheme
As on March 31, 2023, there are no employee stock options available in
the Company and hence no disclosures are required to be made under Regulation 14 of the
Securities and Exchange Board of India (Share Based Employee Benefits and Sweat Equity)
Regulations, 2021.
Statutory Auditors
The financial statements have been audited by M/s. M S K A &
Associates (Firm Registration No: 105047W), Chartered Accountants, Statutory Auditors of
the Company.
The Statutory Auditors were appointed in the AGM held on July 5, 2019
to hold office from the conclusion of the thirty fifth Annual General Meeting until the
conclusion of the fortieth Annual General Meeting.
Auditors? Report
There are no qualifications, reservations or adverse remarks made by
M/s. M S K A & Associates, Statutory Auditors, in their report for the financial year
ended March 31, 2023.
Pursuant to provisions of Section 143(12) of the Act, the Statutory
Auditors have not reported any incident of fraud to the Audit Committee during the year
under review.
Secretarial Audit
Pursuant to the provisions of Section 204 of the Act and the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended from time
to time, the Company has appointed M/s. P.S. Rao & Associates, a firm of Company
Secretaries in Practice, to conduct the Secretarial Audit of the Company. The report of
the Secretarial Audit for the financial year ended March 31, 2023 is annexed to the
Corporate Governance Report and forms part of this report. There are no qualifications,
reservations or adverse remarks made by the Secretarial Auditor in their report.
Cost Auditors
Pursuant to Section 148 of the Act read with the Companies (Cost
Records and Audit) Amendment Rules, 2014, as amended from time to time, subject to the
approval of the Central Government, if any required, the Audit Committee has recommended
and the Board of Directors had appointed M/s. Nageswara Rao & Co. (Registration No.
000332), Cost Accountants, Hyderabad, being eligible and having sought re-appointment, as
Cost Auditors of the Company, to carry out the cost audit of the products manufactured by
the Company during the financial year 2023-24.
Reporting of Fraud
During the year, the Statutory Auditors, Cost Auditors and Secretarial
Auditors have not reported any instances of frauds committed in the Company by its
officers and employees under Section 143(12) of the Act details of which needs to be
mentioned in this Report.
Insurance
Your Company has taken necessary steps to mitigate risks and obtained
appropriate insurances and the Board is kept appraised of the risk assessment and
minimization procedures. The assets of the Company have been adequately covered under
insurance. The policy values have been determined taking into consideration the value of
the assets of the Company.
Material Changes
There have been no material changes and commitments affecting the
financial position of the Company between the end of the financial year of the Company to
which the financial statements relate and the date of the report. Further, it is hereby
confirmed that there has been no change in the nature of business of the Company.
Energy Conservation, Technology Absorption and Foreign Exchange
Earnings and Outgo
The information on conservation of energy, technology absorption and
foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read
with Rule, 8 of the Companies (Accounts) Rules, 2014, as amended from time to time, is
annexed herewith as Annexure-3.
Annual Return
Pursuant to Section 92 and Section 134 of the Act, the Annual Return as
on March 31, 2023 in form MGT-7 is available on the website of the Company at
www.neulandlabs.com.
Particulars of Employees and related disclosures
The information relating to remuneration and other details as required
pursuant to Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and
Remuneration of Managerial
Personnel) Rules, 2014, as amended, is provided as Annexure-4 to this
report.
In terms of the provisions of Section 197 of the Act read with Rules
5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014, as amended, a statement showing the names and other particulars of the
employees drawing remuneration in excess of the limits set out in the said rules are
provided in the Annual Report, which forms part of this Report.
Pursuant to the provisions of the first proviso to Section 136(1) of
the Act, the Annual Report is being sent to the members and other persons entitled
thereto, excluding the information in respect of employees of the Company containing the
particulars as specified in Rule 5 (2) of the said Rules. The said information is
available for inspection on all working days, during business hours, at the Registered
Office of the Company up to the date of the ensuing Annual General Meeting. Any member
interested in obtaining such information, may write to the Company Secretary and the same
will be furnished on request.
Related Party Transactions
All contracts/arrangements/transactions with the related parties during
the financial year were in the ordinary course of business and at an arm?s length
basis.
During the year, the Company has not entered into any contract or
arrangement with related parties which could be considered material in accordance with the
policy of the Company on materiality of related party transactions. Further, there were no
materially significant related party transactions which could have potential conflict with
interest of the Company at large.
The Policy on Materiality of Related Party Transactions and on dealing
with Related Party Transactions as approved by the Board may be accessed on the
Company?s website at https://www.neulandlabs.
com/investors/board-of-directors/policies/.
The particulars of transactions with related parties in the prescribed
format is annexed to this report, as Annexure-5. Members may refer to Note No. 38 to the
standalone financial statement which sets out related party disclosures pursuant to Ind
AS.
Particulars of Loans, Guarantees and Investments
The Company has not given any loans and guarantees or made any
investments under Section 186 of the Act during the year under review.
Deposits from Public
The Company has not accepted any deposits from the public and as such
no amount of principal or interest on deposits from the public was outstanding as on the
date of the Balance Sheet.
Significant and Material Orders passed by the Regulators or Courts
There are no significant and material orders passed by the Regulators/
Courts which would impact the going concern status of the Company and its future
operations.
Transfer to Reserves
No amount was proposed to be transferred to the general reserve during
the financial year 2022-23.
Risk Management
The Board oversees Company?s processes for determining risk
tolerance and review management?s action and comparison of overall risk tolerance to
established levels. The framework is designed to enable risks to be identified, assessed
and mitigated appropriately. Major risks identified by the businesses and functions are
systematically addressed through appropriate actions on a continuous basis. For details,
please refer to the Management Discussion and Analysis report which forms part of this
Report.
Internal Financial Controls
Internal Financial Controls are an integral part of the risk management
process, addressing financial and financial reporting risks. The internal financial
controls have been embedded and documented in the business processes. The controls in
place include essential components of internal financial controls required under the
Companies Act, 2013, as amended from time to time, and also the internal financial
controls over financial reporting as per the Guidance Note on Audit of Internal Controls
over Financial Reporting as issued by Institute of Chartered Accountants of India.
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. During the year under review such controls were tested
and no reportable material weakness in the design or operation were observed.
Human Resources & Industrial Relations
Your Company?s relations with its employees continue to be
cordial. Dedicated work by the workmen, supervisors and executives of your Company made it
possible to achieve success under trying and difficult circumstances.
Acknowledgement
Your Board of Directors take this opportunity to thank all its
stakeholders, including banks, financial institutions, business partners, government and
other statutory bodies, regulatory authorities, analysts and members for their continued
support and valuable cooperation. The Board of Directors also wish to place on record its
deep sense of appreciation for the committed services by the Company?s employees at
all levels.
|
For and on behalf of the Board |
|
Dr. Davuluri Rama Mohan Rao |
| Place: Hyderabad |
Executive Chairman |
| Date: May 11, 2023 |
(DIN: 00107737)) |