<dhhead>Directors Report</dhhead>
The Board of Directors are pleased to present the Companys Forty
First Annual Report (second Integrated Annual Report) and the Companys audited
financial statements (standalone and consolidated) for the financial year ended March 31,
2025.
FINANCIAL PERFORMANCE
The Companys financial performance (standalone) for the year
ended March 31, 2025, is summarised below:
(Rs.in lakhs)
Particulars |
2024-25 |
2023-24 |
Total Income |
1,49,734.59 |
1,57,112.48 |
Profit before Finance Costs, Depreciation,
Amortisation and Tax |
34,280.75 |
47,446.55 |
Finance costs |
829.59 |
1,399.72 |
Profit before Depreciation, Amortisation and
Tax |
33,451.16 |
46,046.83 |
Less: Depreciation & Amortisation |
6,554.19 |
5,969.91 |
Profit before exceptional items and tax |
26,896.97 |
40,076.92 |
Exceptional items |
7,640.36 |
- |
Profit before tax |
34,537.33 |
40,076.92 |
Less: Current tax |
7365.30 |
9,958.57 |
Deferred tax |
1229.49 |
158.73 |
Profit after Tax |
25,942.54 |
29,959.62 |
Add: Other comprehensive income |
(21.19) |
140.79 |
Total comprehensive income for the year |
25,921.35 |
30,100.41 |
For the financial year ended March 31, 2025, a Total Income of
Rs.1,49,734.59 lakhs as against Rs.1,57,112.48 lakhs in the previous year.
For the year ended on March 31, 2025, the Company has reported Earnings
Before Interest, Finance Cost, Depreciation and Amortisation and Tax (EBIDTA) of
Rs.34,280.75 lakhs as against the EBIDTA of Rs.47,446.55 lakhs during the previous year.
The Net Profit of the Company for the year 2024-25 was Rs.25,942.54
lakhs compared to Rs.29,959.62 lakhs during the previous year.
BUSINESS REVIEW
During the year under review, your Company consolidated its position as
a leading CDMO for innovators even as the generic business continues to grow. While we saw
a decline in revenues based on the lifecycle of the products, the Company has good
visibility of growth over the short to medium term. The Company continues to attract
customers on the basis of its strong quality track-record, customer-centricity and
agility. The focus for the GDS business continues to be in products where the Company's
presence makes a significant difference to customers. The filing of the first Peptide DMF
is a significant milestone and in line with the Company's plans in this growing area. The
Company is continuing to improvise both its business development approach even as it
strengthens in line with the growing opportunities. The Company continued to focus on
developing deeper connections with customers and listening through formal customer
feedback surveys.
The Companys commitment to strong governance, sustainability and
the environment continues to be reinforced through the work on Enterprise Risk Management
and Environmental, Social and Governance overseen by the Risk and Sustainability Committee
of the Board. The Company improved its scores as it was rated by external agencies on
Sustainability. As in previous years, the Company is building capabilities in line with
the strategic priorities and anticipated business needs. Along with technical &
infrastructural needs, the capability building is increasingly focussed on people and
building a pipeline of talent for the long-term. The Company is also getting better
focussed in terms of its internal communication so as to build a strong organisation
aligned on the vision and values.
DIVIDEND
Your directors are pleased to recommend a final dividend of Rs.12/-
(120%) per equity share on face value of Rs.10/- each of the Company, for the financial
year ended March
31, 2025. The final dividend, if approved at the 41st 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 Rs.1,539.59 lakhs.
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 Companys website
at - https://www.neulandlabs.com/
sites/neulandlabs/files/neuland-labs/Investors/corporate-governance/policies-and-documents/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, 2025 is Rs.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 committed to securing long-term growth and
sustainability by ensuring visibility on customer order flow for the short term and
implementing processes for short-term execution. Effective project management will be
crucial for delivering projects and new products, as well as for keeping cost improvement
programs and other strategic initiatives on track. While maintaining a strong focus on
quality, the Company aims to deepen existing relationships and attract new customers. By
taking actions across the entire value chain, the Company strives to deliver value to all
stakeholders and establish itself as a leading API partner enabling a healthier world.
CONSOLIDATED FINANCIAL STATEMENTS
The Audited Consolidated Financial Statements of your Company as on
March 31, 2025, which forms part of the Integrated 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,
https://www.neulandlabs.com/ en. 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&ANALYSISANDOTHERINFORMATION
REQUIRED UNDER THE COMPANIES ACT, 2013 AND
SEBI LISTING REGULATIONS
As per the Act and SEBI Listing Regulations, as amended from time to
time, Corporate Governance Report and
Management Discussion and Analysis report are attached and forms part
of this report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL Appointments
During the year, the members of the Company at the Annual General
Meeting (AGM) held on July 31, 2024, approved the re-appointments of Dr. Davuluri Rama
Mohan Rao and Mr. Davuluri Sucheth Rao, as a Director liable to retire by rotation
respectively.
Retirement and Resignations
Dr. Nirmala Murthy (DIN: 00734866) has retired as an Independent
Director of the Company with effect from close of business hours on May 7, 2025, after
completion of her second term of directorship.
The Board placed on record its sense of deep appreciation for the
services rendered by Dr. Murthy to the Company.
Re-appointment of Directors
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 41st AGM:
Re-appointment of Mr. Davuluri Saharsh Rao as Whole Time Director
designated as Vice-Chairman &Managing Director of the Company and remuneration
thereof, effective June 1, 2025.
Retirement by Rotation
Pursuant to the provisions of Section 152(6) (d) of the Act read with
Companies (Appointment and Qualification of Directors) Rules, 2014 and Articles of
Association of the Company, Mr. Davuluri Saharsh Rao (DIN: 02753145) and Dr. Christopher
M. Cimarusti (DIN: 02872948) will retire by rotation at the ensuing AGM and being eligible
has offered themselves for re-appointment. The Board recommends their re-appointment in
the ensuing AGM of the Company.
Changes in Key Managerial Personnel (KMP)
During the year under review, there were no changes in the KMP of the
Company. As on the date of this report, the Company has the following KMP as per Sections
2(51) and 203 of the Act:
Sl. No. Name of KMP |
Designation |
1 Dr.Davuluri Rama Mohan Rao |
Executive Chairman |
2 Mr. Davuluri Sucheth Rao |
Vice Chairman & Chief |
|
Executive Officer |
3 Mr. Davuluri Saharsh Rao |
Vice Chairman & |
|
Managing Director |
4 Mr. Abhijit Majumdar |
Chief Financial Officer |
5 Ms. Sarada Bhamidipati |
Company Secretary & |
|
Compliance Officer |
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 2025-26 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, 2025, 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, 2025 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 11, 2025, without the
presence of non-Independent Directors and members of the management. The Independent
Directors, inter alia, discussed matters pertaining to the Companys 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 affirmed 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 the
provisions of Section 164(2) of the Act. Your directors have made necessary disclosures to
this effect as required under the Act.
AUDIT COMMITTEE
During the year under review, four 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 COMMITTEE
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/sites/neulandlabs/files/neuland-labs/
Investors/corporate-governance/policies-and-documents/
NominationandRemuerationPolicy22042025.pdf. The 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/sites/neulandlabs/files/
neuland-labs/Investors/corporate-governance/policies-and-documents/corporate-social-responsibility-csr-policy.
pdf. The CSR expenditure of the Company for FY 2024-25 as per Section 135 of the Act and
the Companies (Corporate Social Responsibility Policy) Rules 2014, as amended from time to
time, was Rs.491.52 lakhs. After setting-off Rs.11.68 lakhs from the excess CSR
expenditure spend for FY 2023-24 the Company's total CSR obligation for FY 2024-25 was
Rs.479.84 lakhs.
The Company has spent an amount of Rs.426.85 lakhs towards CSR projects
and administrative overheads for FY 2024-25. In addition, an amount of Rs.98.19 lakhs was
transferred to Unspent account, in April 2025 towards identified and ongoing CSR projects
for FY 2024 - 25 due for completion in FY 2025 - 26.
The total CSR expenditure for FY 2024 - 25 was Rs.525.04 lakhs which
includes CSR projects spend, administrative expenditure and amount transferred to Unspent
CSR account, which is in excess of Rs 33.52 lakhs over the total CSR obligation for FY
2024-25.
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
Report.
INTEGRATED REPORT
The Company continues with its integrated reporting journey in the
current financial year. This is the second year of publication of the Integrated Annual
Report of the Company in line with the Integrated Reporting Framework, now part of the
IFRS Foundation.
The Global Reporting Initiative reported in this Integrated Annual
Report have been subject to Reasonable Assurance. The Assurance Report issued by TUV India
Private Ltd has been annexed to this Integrated Annual Report.
The Integrated Annual Report consists of both financial and
non-financial information to demonstrate how various capitals are utilised to
create value, thereby enabling stakeholders to make informed decisions and gain a
comprehensive understanding of the Companys long-term perspective and value creation
for all stakeholders.
This years Integrated Annual Report is structured around
Environmental, Social, and Governance ("ESG") commitments and
their integration into the Companys business strategy. The Companys commitment
to sustainable operations, supported by empowered people and governance, underpins the
seamless growth and development of the Companys business.
The Board acknowledges its responsibility for the integrity of the
report and the information contained therein.
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 affirmed 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 this 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 the 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/en/investors/corporate-governance/policies-and-documents. A
brief note on the Whistle Blower Policy is also provided in the Report on Corporate
Governance, which forms part of this Report.
PROHIBITION 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. During the year under review and as on the date of this report, the Company
had received 3 sexual harassment complaints. The Complaints were taken through the due
process with necessary actions executed for a satisfactory closure.
EMPLOYEE STOCK OPTION SCHEME
As on March 31, 2025, 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
M/s. M S K A & Associates (Firm Registration No: 105047W),
Chartered Accountants, were re-appointed as the Statutory Auditor of the Company at the
40th AGM of the Company held on July 31, 2024, to hold the office till the conclusion of
the 45th AGM to be held in the year 2029.
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, 2025.
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, 2025, 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.
Further, in terms of the SEBI (Listing Obligations & Disclosure
Requirements) (Third Amendment) Regulation, 2024, the Board has recommended appointment of
M/s. P.S. Rao & Associates as the Secretarial Auditors of the Company for a term of
five consecutive financial years commencing from April 1, 2025 till March 31, 2030. The
appointment will be subject to shareholders approval at the ensuing AGM. M/s. P.S.
Rao & Associates have consented to the said appointment and confirmed that they are
not disqualified to be appointed as Secretarial Auditors of the Company in terms of
Regulation 24(A) of SEBI Listing Regulations.
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 2025-26.
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
minimisation 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, 2025 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 arms 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
Companys website at
https://www.neulandlabs.com/en/investors/corporate-governance/policies-and-documents.
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
During the year the Company has not given any loans and guarantees
under Section 186 of the Act and the investments made by the Company are in compliance
with the provisions of Section 186 of the Act.
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 2024-25.
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