Ajanta Pharma Ltd Management Discussions

Economic Overview and Outlook

The global economy is set for another year of slow but steady growth, the International Monetary Fund said in April. The strength in the U.S. economy is pushing world output through headwinds from lingering high inflation, weak demand in China and Europe, and spillovers from two regional wars. The IMF forecasts global real

GDP growth of 3.2% for 2024 and 2025 - the same rate as in 2023.

The IMF forecast that global median headline inflation will fall to 2.8% by the end of 2024 from 4% last year, to 2.4% in 2025.

A potential escalation of the

Middle East conflict would raise oil prices and inflation, triggering tighter monetary policy from central banks. The IMF said that in an "adverse scenario" in which a Middle East escalation would lead to a 15% increase in oil prices and higher shipping costs would hike global inflation by about 0.7 percentage points.

Pharmaceutical Sector Overview

Global health systems have demonstrated remarkable resilience in the face of the pandemic, global inflation, and regional conflicts and have moved forward to adopt novel therapies and increase usage. Overall, the global use and spending on medicines is exceeding pre-pandemic growth rates and is expected to continue significantly above those trends through 2028.

The pharmaceutical industry has and will continue to have a significant impact on the global economy in terms of contribution to GDP.

Invoice Spending and Growth

The volume use of medicines globally plateaued in 2023 but is expected to grow at an average

2.3% rate through 2028, as per the IQVIA report, "Global use of Medicines 2024". It will be driven by China, India, and other Asian markets all growing faster than 3%.

Countries in Latin America have grown more rapidly than other regions in the last five years and are expected to grow further at

1.9% annually through the forecast.

North America, Western Europe, and Japan are expected to grow medicine usage more slowly, partly due to their already higher per capita use. In 2024, Eastern Europes volume growth is expected to return to trends prevailing prior to the start of the Ukraine conflict.

Exhibit 1: Global Invoice Spending and Growth

Invoice Spending and Growth	2023 Spending USD Bn	2019-2023 CAGR	2028 Spending USD Bn	2024-2028 CAGR
Developed	1,276	7.2%	1,775-1,805	5-8%
Pharmerging	304	7.8%	400-430	10-13%
Lower-income countries	28	5.6%	33-37	3-6%
Global	1,607	7.3%	2,225-2,255	6-9%

Source: Global use of Medicines 2024 by IQVIA

Spending globally is expected to grow by more than USD 600 billion, reaching USD 2.3 trillion driven by existing branded medicines in the leading ten developed markets, which will grow by USD 385 billion. New products will add USD 193 billion but will be offset by the impact of patent expiries, removing USD 192 billion. Other developed markets and fast-growing Pharmerging markets will together add another USD 184 billion.

In each of these cases, growth drivers are an acceleration over the past five years, reflecting a rebound from the disrupted 2019-2023 period.

The types of medicines driving spending and growth vary considerably across countries broadly correlated with a degree of economic development. Generally, wealthier countries have higher levels of spending on original branded products, especially earlier in the patented periods of these products. Lower-income countries have a greater reliance on generic drugs and sometimes prefer non-original branded versions, called branded generics.

The relative amount of medicine spending has been shifting over time, with some fast-growing countries becoming more important to the total level of global spending. Volume growth, often of older generic medicines, has been the primary driver of growth in many Pharmerging markets, although the more recent rising rankings ahead of leading developed markets are also driven by shifts in the mix of spending.

Company Overview

Ajanta Pharma is a specialty pharmaceuticals formulation company with a well-diversified

Branded Generics business spread across India, Asia, and Africa as also US Generics and Institutional business in Africa. In Branded Generics business, the Company has a strong chronic-focused product portfolio led by a first-to-market strategy and front-end presence which helps it outgrow the market. The Company is committed to investing in R&D for product innovations to fill identified gaps.

Performance Highlights

The following analysis and discussion are based on the consolidated financials of the Company for the financial year 2024. It covers different business verticals as well as the consolidated financial position as a whole.

Branded Generics

During the year, Branded Generics business in India, Asia, and Africa contributed 71% to the total sale of H 4,162 cr.

In India, Ajantas sales grew by 9.4% surpassing IPM growth rate of 7.6% as per IQVIA MAT March 2024. The 180 basis points outperformance of the IPM came on the back of 15 new product launches, including 4 first-to-market, and consistent growth in the existing products. This also helped the Company jump to

26th rank in IPM from 27^th in the last financial year.

The Branded Generics business in Asia and Africa consists of eight major therapeutic segments and we hold the leading position in all our sub-therapeutic segments.

Basket of More than 200

Products

Our Asia business is spread across the Middle East, South East Asia, and Central Asia regions with a presence in 10 countries. This business saw a growth of 10% in the year and contributed 26% to total sales.

We launched 18 new products in these markets in the financial year. The growth was well-diversified in terms of new product launches, besides volume growth of existing products.

Our Africa business grew by 5% in the year. Here also our product basket is spread across various therapeutic segments and enjoys leadership position in some of them.

We launched 9 new products in these markets in the financial year. Due to rationalisation of the inventory by our distributor, our primary sales growth for the year has been lower. As the rationalisation is completed now, we are confident of accelerating growth in Africa.

The US Generics

The US Generics recorded 16% growth for the year and contributed

23% to total sales. This growth was on the back of softening of price erosions, shortages and ease in

API price. We have 44 products on the shelf and 22 ANDAs are awaiting approvals. During the year, we filed

7 ANDAs, received 6 final approvals and launched 4 products.

Africa Institutional

This business consists of antimalarial products being distributed through multilateral aid agencies, which saw growth of 31% and contributed 6% to total sales. As this business is dependent on the availability of funds with agencies, there is a high level of uncertainty and we remain neutral on this vertical.

Operational and Financial Performance

During FY 2024, we significantly enhanced capital allocation to the Branded Generics business with accelerated product filing and enhanced ground presence.

We have scaled up our margins on the back of the enhanced contribution of Branded Generics business and normalisation of freight costs. This has added surety, scalability, and sustainability to the business.

(?cr.)
Particulars	FY 2024	% to RO	FY 2023	% to RO	% Growth
Revenue from Operations	4,209	-	3,743	-	12%
EBITDA	1,172	28%	783	21%	50%
Profit Before Tax	1,114	26%	745	20%	49%
Net Profit	816	19%	588	16%	39%
Total Comprehensive Income	817	19%	603	16%	36%

Revenue from Operations

Revenue from operations stood at H 4,209 cr. in FY 2024 against H 3,743 cr. in FY 2023, registering a growth of 12%.

Material Costs

Material cost moved to 25% in FY 2024 from 28% in FY 2023, an improvement of 300 basis points on the back of ease in API prices.

Employee Expenses

Personnel expenses accounted for

21% of the revenue from operations in FY 2024 and previous year. Total cost stood at H 900 cr. in FY 2024 against H 785 cr. in FY 2023.

Other Expenses

Other expenses stood at H 1,070 cr. in FY 2024 (25% of revenue from operations) against H 1,124 cr. in FY 2023 (31% of revenue from operations), a 600 basis point decrease over the previous year. We have been able to build excellent operational efficiencies across functions during the year, with clear focus on getting more from the existing base. Our efforts in this direction bore good fruits with international logistics cost going down by about H 103 cr., in spite of improving on deliveries.

Similarly, R&D cost came down to H 208 cr. in FY 2024 against H 237 cr. in FY 2023, though the output from R&D saw a good increase in terms of product filings.

With our continued focus on Branded Generics business, we have allocated higher resources on product registrations, promotions, and the launch of new products, resulting in higher marketing expenses.

Operating Profit Margin

EBITDA in FY 2024 stood at H 1,172 cr. against H 783 cr. in FY 2023, a growth of 50% over the previous year. This positive performance was attributed to the combined benefits of reduction in API prices, reduced logistics cost and stabilisation in

US price erosion. EBITDA as % to revenue stood at 28%, which is among the best in the industry. We expect this to now remain at this level or see small improvement in coming years.

Other Income

Other Income stood at H 85 cr. in FY 2024 against H 99 cr. in FY 2023.

Major component in both the years was the forex gain.

Net Profit Margin

Profit After Tax was at H 816 cr. in FY 2024 against H 588 cr. in FY 2023. PAT margins stood at 19% in FY 2024 against 16% in FY 2023.

Return on Net Worth

Return on Net Worth improved to 23% in FY 2024 against 18% in the previous year.

Return on Capital Employed

Return on Capital Employed stood at 31% in FY 2024 compared to 22% in FY 2023.

Balance Sheet

Non-current Assets

The non-current assets have gone up to H 1,907 cr. in FY 2024 from H 1,845 cr. in FY 2023. Our CAPEX was H 160 cr. for the year which was mostly the maintenance CAPEX. The CAPEX including maintenance CAPEX for FY 2025 is estimated to be about H 250 cr.

Current Assets

Current Assets stood at H 2,731 cr. in FY 2024 against H 2,834 cr. in FY 2023. Receivables days slightly increased to 109 days from 104 in FY 2023 due to increase in businesses across verticals. The absolute amount stood at H 1,247 cr. against H 1,057 cr. in FY 2023.

Inventory in terms of the number of days to sales has improved to

73 days in FY 2024 from 80 days in FY 2023 due to the easing of the supply chain. In absolute amounts, it has marginally increased to H 828 cr. in FY 2024 from H 816 cr. in FY 2023. Current Ratio for FY 2024 stood at 3.05 against 2.49 in FY 2023.

Shareholders Funds

Shareholders funds increased to

H 3,567 cr. in FY 2024 from H 3,388 cr. in FY 2023. Earnings per share stood at H 65 in FY 2024 against H 46 in FY 2023. During the year, the Company paid H 642 cr. as dividend against H 479 cr. in FY 2023 through a combination of dividend and share buyback (including tax).

Non-current Liabilities

Non-current liabilities in FY 2024

Consolidated Cash Flow stood at H 175 cr. against H 152 cr. in FY 2023, mainly consisting of deferred tax and lease liabilities.

Current Liabilities

Current liability stood at H 896 cr. in FY 2024 against H 1,139 cr. in FY 2023. Trade payable days increased from 79 in FY 2023 to 85 in FY 2024. Our strong balance sheet combined with a focus on cash conservation provides us the confidence that we will continue with our consistent performance.

Empowered Team

We are proud to mention that your Companys Human Resource Development efforts to make Ajanta a preferred place to work got the prestigious ‘Great Place to Work recognition for the second year in a row. Our people practices which are now benchmarked globally, including skill development, personality enhancement, and employee engagement through internal communications foster happiness at work.

Ajantaites are truly empowered. The Companys culture is centred on the four core values of Excellence, Transparency, Integrity, and Discipline. These values drive over

7,900 Ajantaites on the mission to provide life-saving drugs to needy patients.

Your Company is committed to providing a safe, secure, and healthy work environment to employees. We continuously strive to exceed our own internal and industry benchmarks in workforce productivity and performance.

The Company had a healthy cash flow during FY 2024; the snapshot of this in Exhibit 6.

Particulars	FY 2024	FY 2023
Opening Cash and Cash Equivalents	330	206
Cash flows from:
a) Operating Activities	785	792
b) Investing Activities	65	(560)
a) Financing Activities	(1,051)	(108)
Closing Cash and Cash Equivalents	129	330

The Occupational Health and Safety

(OHS) system at our manufacturing facilities has enabled workers and employees to operate in a safe and healthy working environment.

The professional objectives for employees and teams across levels are directly linked with the organisations objectives and philosophy. This conveys and provides a sense of purpose and direction to all employees. The key areas for driving HR initiatives include a strong emphasis on building a culture of inclusion and respect, ensuring a safe work environment, focusing on building capabilities and careers and protecting human rights.

The Company continues to support the capabilities of differently-abled employees. We ensure strict adherence to our internal codes and have a clearly defined zero-tolerance policy towards discrimination of any kind.

Risk Management

We operate in over 30 highly regulated countries with their own specific complex operating environments. In addition, this business landscape is dynamic and constantly evolving. This brings to the fore a multitude of risks which are closely monitored, mapped, and mitigated through our robust

Enterprise Risk Management (ERM) framework. By effectively identifying, assessing, and mitigating risks we strive to enhance our resilience, drive sustainable growth, and maximise value creation.

The ERM involves engaging with all functional heads to identify internal and external events that may have an adverse impact on the achievement of the Companys objectives. It also entails periodic monitoring of changes in both the internal and external environment leading to the emergence of a new threat/risk. The major risks identified are regulatory, competition, supply chain disruption, cyber & data security, economic & political, and Environmental, Social, and

Governance (ESG). A review of the risk management policy is carried out annually by the Risk Management Committee. Our ERM framework plays a significant role in safeguarding the interests of our Company, our shareholders, and our stakeholders.

Internal Controls and Adequacy

Your Company has a robust and reliable system of internal controls as we believe that it is the prerequisite of good governance.

The control framework is designed to continuously assess the adequacy, effectiveness, and efficiency of internal controls. The management is committed and ensures an effective internal controls environment, commensurate with the size and complexity of the business. This assures compliance with internal policies, applicable laws, regulations, the accuracy of records, operational efficiency, protection of resources assets, and overall risk minimisation.

These controls have been designed to provide reasonable assurance over time.

The current system of Internal

Financial Controls (IFC) is aligned with the requirement of the

Companies Act, 2013 and is in line with the globally accepted risk-based framework. The Internal Audit (IA) function of the Company reports to the Chairperson of the Audit Committee, thereby maintaining its objectivity. Our dedicated internal audit team supported by external audit firms help to enhance and protect organisational value by providing risk-based objective assurance, advice and insight. The annual internal audit plan is carved out from a comprehensively defined

Audit Universe that encompasses all businesses, functions, risks, compliance requirements, and maturity of controls. The internal audit plan is approved by the Audit Committee at the beginning of every year. Each quarter, the Audit Committee is presented with

& key control issues and the actions taken on issues highlighted in the previous reports.

The Audit Committee deliberates with the management, considers the systems as laid down, and meets the internal auditors and statutory auditors to ascertain their views on the internal control framework.

The Company recognises the fact that any internal control framework would have some inherent limitations and hence has inculcated a process of periodic audits and reviews to ensure that such systems and controls are updated at regular intervals.

Cautionary Statement

Statements in the Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations may be forward-looking statements. Actual results may differ materially from those expressed or implied due to various risks and uncertainties. Important factors that could make a difference to the Companys operations include global and Indian demand-supply conditions, finished goods prices, changes in government regulations and policies, tax regimes, economic conditions within India and the countries within which the Company conducts business and other such factors. The Company does not undertake to update these statements.

Directors Report

Dear Shareholders,

Your directors have pleasure in presenting Forty-Fifth Annual Report and Audited Financial Statements of the Company for the Year ended 31 March 2024.

Summarised Position of the Financials Statements is Given Below:

( H cr.)

Particulars	Consolidated		Standalone
Year ended 31 March	2024	2023	2024	2023
Revenue from operations	4,209	3,743	3,971	3411
Other Income	85	99	116	133
Profit before Depreciation, Finance Costs and Tax expense	1,257	882	1236	832
Profit after Tax	816	588	807	559
Total Comprehensive Income	817	603	805	556
Earnings Per Share (EPS) (H) (Basic)	64.82	45.89	64.11	43.61

The Company discloses consolidated and standalone financial results on a quarterly basis, which are subjected to limited review and publishes consolidated & standalone audited financial results annually.

Performance Review

Company continues to be engaged in the development, manufacturing and sale of specialty pharmaceutical formulations with specific emphasis on branded generics in various therapeutic segments in India and more than 30 countries across Asia & Africa.

During the year under review, Consolidated Revenue from operations augmented at H4,208.71 cr., an increase of 12% over the previous year.

Consolidated Profit After Tax stood at H816.17 cr. higher by 39% compared to previous year. Exports contributed 68% of the revenue.

Dividend

Two Interim Dividends of K 25 and K 26

During the year under review, the Board declared following interim dividend(s):

	Interim Dividend FY 2024
Particulars
	1st	2nd
Date of Declaration	27 July 2023	31 January 2024
Record Date	04 August 2023	08 February 2024
Date of Payment	17 August 2023	20 February 2024
Rate of Dividend per share (Face Value of H 2 per share)	25	26
%	1250	1300
Total Pay-out (H in crore)	315 cr.	327 cr.

Dividend pay-out is in accordance with the Companys Dividend Distribution Policy which is available on the website of the Company and can be accessed at https://ajantapharma.com//images/DividendPolicy.pdf

Subsidiaries, Associates and Joint Ventures

The Company continues to have four overseas subsidiaries and it does not have any Associate company or Joint Venture. There is no change in Subsidiaries.

Salient features of the Financial Statements of subsidiaries are provided in the AOC-1 statement annexed herewith as "Annexure A".

Audited Financial Statements of subsidiaries are available on Companys website at www.ajantapharma.com and the same are also available for inspection at the Registered Office of the Company during business hours as stipulated under Section 136 of The Companies Act, 2013 (the "Act"). The same will be made available to interested members upon getting request.

Ajanta Pharma USA Inc. is a material subsidiary in accordance with the provisions of The SEBI

(Listing Obligations and Disclosure Requirements) Regulations, 2015 (The "Listing Regulations") read with the Companys "Policy on Material Subsidiaries". The policy can be accessed at https://ajantapharma.com//images/ PolicyonMaterialSubsidiaries.pdf

Share Capital There was no change in authorised share capital of the Company during the year under review.

Buyback of 22,10,500 equity shares representing 2.59% of the subscribed and paid-up share capital of the Company, through "Tender Offer" route, at a price of H 1,425/- (Rupees One Thousand Four Hundred and Twenty-Five only) per equity share for an aggregate amount of H 315.00 cr., was started in March 2023, and successfully completed in April 2023.

[ Employee Stock Option Scheme

The Company has formulated and implemented Employee Stock Option Scheme, 2011 ("ESOS 2011") and Ajanta Pharma Share-Based Incentive Plan 2019 ("SBIP 2019"). The Schemes are administered by the Nomination and Remuneration Committee ("NRC").

During the year under review, the Committee conducted a comprehensive evaluation of the Companys compensation and benefits structure to optimise operational efficiency and sustained long-term growth.

After careful consideration, the Board on the recommendation of NRC decided to suspend/withdraw ESOS 2011 as the scheme had become dormant.

During FY 2024, 1,000 shares were issued against the options exercised and 87,600 new options were granted under the SBIP 2019.

Disclosures with regard to Employees Stock Options Scheme are put up on the Companys website and can be accessed at http://www.ajantapharma. com/ AnnualReports.aspx

Credit Rating

Companys bank facilities are rated by Credit Analysis and Research Limited ("CARE"). They have assigned rating CARE AA/CARE A1+ for long-term/short-term bank facilities, which connotes stability. This reaffirms the reputation and trust the Company has earned for its sound financial management and its ability to meet its financial obligations.

Listing at Stock Exchanges

The Equity shares of the Company continue to be listed on BSE Limited and The National Stock Exchange of India Limited.

Directors and Key Managerial Personnel

Board of the Company comprise of eminent professionals having diverse skillset, domain expertise and business acumen. The Executive Directors possess the required expertise & acumen to manage and grow the business and the Non-Executive & Independent Directors bring in the expertise in the fields of finance, accounting, corporate governance, forex management, risk management, people management etc. Independent Directors also contribute in bringing independent judgement on Boards decisions. This Board mix facilitates sustained growth of the Company.

During the year under review, none of the Non-Executive Directors had any pecuniary relationship or transactions with the Company, other than sitting fees, commission and reimbursement of expenses, if any.

[ Retirement by Rotation

Mr. Mannalal B. Agrawal retires by rotation at the ensuing AGM and being eligible, has offered himself for re-appointment. The Board recommends his re-appointment.

[ Independent Directors

Mr. Chandrakant Khetan, Mr. K.H. Viswanathan, Mr. Prabhakar Dalal and Dr. Anjana Grewal, have been Independent Directors for 2 terms of 5 years each and hold office up to 17 July 2024. The Board places on record its deepest appreciation for the invaluable services, inspirational guidance, thoughtful contribution & expertise rendered by them.

Appointment of new Independent Directors

At the Board meeting held on 02 May 2024, the Board, based on recommendations of the Nomination and Remuneration Committee, has appointed Mr. Rajesh Dalal, Mr. David Rasquinha, Ms. Medha Joshi and Ms. Simi Thapar as additional Independent Directors. They have been appointed in accordance with the guidelines set out under the "Policy for Determining Qualifications of Directors". Their appointment is subject to approval of members at the ensuing Annual General Meeting and proposal to that effect are included in the Notice convening the Annual General Meeting.

All the Independent Directors meet the independence criteria prescribed under Section 149(6) of the Act as also under the Listing Regulations and are also in compliance with the other statutory requirements. They have also affirmed compliance to the Code of Conduct for

Independent Directors.

Based on disclosures provided by them, none of them are disqualified/debarred from being appointed as Director under Section 164 of the Act/Listing Regulations order or any other authority and are independent from the management.

The Board is of the opinion that the Independent Directors possess the required skillset, competences and expertise in the fields of strategic thinking, general management & administration, corporate governance, finance, forex management, people management, global business & economics, CSR, Stakeholder management, sales & marketing, risk management etc. and they hold highest standards of integrity

& probity, Skill set, expertise & competencies matrix of all the Directors is provided in the

Report on Corporate Governance forming part of this Annual Report.

[ Policies on Appointment and Remuneration of Directors

Companys "Policy for Determining Qualifications of Directors" sets out guiding principles for selection of persons who are qualified to become Directors/ Independent Directors.

The "Policy for Remuneration of Directors and Employees" sets out guidelines to ensure that level and composition of remuneration is reasonable and sufficient to attract, retain and motivate the Directors,

Key Managerial Personnel ("KMP") and Senior Management employees.

The policies are available at: https://ajantapharma.com//images/ Policyfordeterminingqualificationsof Director.pdf https://ajantapharma.com//images/

PolicyforRemunerationofDirectorsand

Employees.pdf

The same are briefly mentioned in the Report on Corporate Governance.

[ Key Managerial Personnel

Mr. Yogesh M. Agrawal, Managing Director; Mr. Rajesh M. Agrawal, Joint Managing Director; Mr. Arvind K. Agrawal, Chief Financial Officer and Mr. Gaurang C. Shah, Company Secretary, are the KMPs of the Company as on the date of this report.

[ Board and Directors Evaluation

Performance evaluation of the Board, Board committees and individual Directors was carried out by the Board, in accordance with the criteria laid down in the "Policy on Board Evaluation", which are in alignment with the best corporate governance practices.

Further, at a separate meeting, the

Independent Directors evaluated performance of Non-Independent Directors, Board as a whole and of the Chairman of the Board.

A consolidated report on performance evaluation was shared with the Chairman of the Board for his review and discussion with Board and each Director.

The manner of evaluation of Board of

Directors performance and matters incidental thereto, are detailed in the Report on Corporate Governance.

Board Meetings

Board of Directors of the Company met 5 times during the year under review. Details of meetings are given in the Report on Corporate Governance.

Board Committees

The Board has constituted Audit Committee, Nomination and Remuneration Committee, Corporate Social Responsibility Committee, Stakeholders Relationship Committee, Risk Management Committee, Executive Committee and ESG Committee. All the recommendations made by these Committees to the Board were accepted by the Board. At the Board meeting held on 02 May 2024 the CSR Committee has been renamed as the "CSR

& Sustainability Committee".

Details of committees, its composition, committee meetings held etc. are provided in the Report on Corporate Governance.

Related Party Transactions (RPTS) and Policy

All RPTs for the year under review were on arms length basis and in the ordinary course of business. Further, all RPTs entered into by the Company during the financial year were in accordance with the Companys Policy on RPTs and in pursuance of approval granted by the Audit Committee. Pursuant to Regulation 23(3) of the Listing Regulations and Rule 6A of the Companies (Meetings of Board and its Powers) Rules, 2014, the Audit Committee granted omnibus approval to the transactions likely to be entered into by the Company with related parties during the year which are of repetitive nature. Members may refer to Note No. 54 to the Financial Statement which sets out RPT disclosures pursuant to IND AS-24.

All the RPTs effected in accordance with the approval are placed before the Audit Committee on a quarterly basis for review and noting.

Apart from remuneration and sitting fees, there is no pecuniary transaction with any director, which had potential conflict of interest with the Company.

During the year, the Company had not entered into any transactions with related parties (save and except transactions with companys subsidiaries), which could be considered as material in accordance with the Companys "Policy on materiality of RPT" or which are required to be reported in Form AOC-2 in terms of Section 134(3)(h) read with Section 188 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.

Corporate Social Responsibility ("CSR")

The Companys CSR initiatives go beyond charity. Company believes before that as a responsible corporate citizen, it should consider its impact on society as much as creating business impact.

The Board had at its meeting held on 05 May 2023, approved the Annual Action Plan of CSR activities to be undertaken during the year in accordance with the CSR policy. The CSR activities were carried out through the eligible charitable trusts and NGOs. CSR Committee reviewed and monitored the CSR projects and expenditure undertaken by the Company as per the plan and apprised the Board of the same.

Company has spent more than 2% of the average net profits during three preceding financial years. Thrust areas for CSR continued to be healthcare, education, rural development, community welfare, upliftment of socio-economic backward society, women empowerment & promoting sports.

CSR spend more than obligation

Chief Financial Officer has certified that the funds disbursed for CSR during the financial year 2024, have been used for the purpose and in the manner approved by the Board.

CSR policy and CSR activities undertaken during the year are annexed as "Annexure B" to this report, in accordance with Sections 134 & 135 of the Act read with Rule 8 of the Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 and Rule 9 of the Companies (Accounts) Rules, 2014.

Management Discussion and Analysis

Pursuant to Regulation 34 read with Part B of Schedule V of the Listing Regulations, a detailed review of the business operations, performance, future outlook, major events occurred during the year as well as state of companys affairs is given in the Management Discussion and Analysis, which forms part of this report.

Report on Corporate Governance

The Board of Directors reaffirm their continued commitment to good Corporate Governance & ethical practices. The Company is committed to maintain highest standard of Corporate

Governance and elevating the same to the best global practices.

Report on Corporate Governance for the year under review, forms part of this report. A certificate from M/s. Alwyn DSouza & Co.,

Practicing Company Secretaries confirming compliance with Corporate Governance norms as stipulated under the Listing Regulations, is also annexed and forms part of this report.

Business Responsibility and Sustainability Report

Company has been conducting business in a sustainable manner so as to create maximum value for all its stakeholders. It is also committed to ensure that its actions positively impact the economic, societal and environmental dimensions.

Sustainable business practices to maximise stakeholders value

Business Responsibility and Sustainability Report ("BRSR") for FY 2024 in accordance with Regulation 34(2) (f) of the Listing Regulations, forms part of this report. It enumerated various initiatives taken by the Company in environment, social and governance fields.

Annual Return

Pursuant to Section 92(3) read with Section 134(3) (a) of the Act, the Annual Return as on 31 March 2024 in Form MGT-7 is placed on the Companys website at https://ajantapharma.com//images/ DraftAnnualReturn-FY2023-24.pdf.

Unclaimed Dividend/Shares

In pursuance of Regulation 39 read with Schedule VI of the Listing Regulations, the details of shares lying in unclaimed suspense account and unclaimed shares/dividend transferred to

Investor Education and Protection Fund, are provided in the Report on Corporate Governance.

Auditors and Audit Reports [ Statutory Auditors

M/s. B S R and Co. LLP, Chartered Accountants (ICAI Registration No.: 101248W/W-100022) ("BSR") are the Statutory Auditors of the Company. At the 43rd AGM held on 04 August 2022, Members re-appointed BSR for a further period of five years, i.e. from the conclusion of the 43^rd AGM till the conclusion of the 48th AGM of the Company to be held in the year 2027.

Auditors Report on the financial statements of the Company for the financial year ended 31 March 2024 is enclosed with the financial statements, which forms part of this Annual Report. The report is unmodified i.e. it does not contain any qualification, reservation, adverse remark or disclaimer. Notes on financial statement referred to in the Auditors Report are self-explanatory and do not call for any further comments.

[ Internal Auditors

M/s. Aneja Assurance Private Limited conducted internal audit of important centralised functions. For other locations, viz. factories, C&F agents and warehouses, other Chartered Accountant Firms having requisite expertise and resources are appointed as Internal Auditors. Important audit observations and corrective actions, improvements are presented to the Audit

Committee in each meeting. No instances of fraud, suspected fraud, irregularity or failure of internal control systems of material nature were reported by the internal auditors during the year.

[ Secretarial Auditors, Audit Report,

Secretarial Compliance Certificate

Pursuant to Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 & Regulation 24A of the Listing Regulations, Board has appointed M/s. Alwyn DSouza & Co., Practicing Company Secretaries to undertake the Secretarial Audit of the Company for year ended 31 March 2024.

Secretarial Audit Report is annexed to this report as "Annexure C". There are no qualifications or reservations or adverse remarks in the Secretarial Audit Report. The report is self-explanatory and does not call for any further comments.

M/s. Alwyn DSouza & Co., Practicing Company

Secretaries, have also issued Secretarial

Compliance Report for the year ended 31 March 2024 confirming that the Company maintained proper records as stipulated under various Rules and Regulations applicable to the Company and that no action has been taken against the Company or its material subsidiaries or promoters/directors by SEBI/ Stock Exchanges. The Company disseminates the Report on the websites of BSE and NSE within the prescribed time.

On the recommendations of the Audit Committee, Board of Directors have re-appointed M/s. Alwyn DSouza & Co., Practicing Company Secretaries, to conduct the secretarial audit of the

Company for FY 2025. They have consented and confirmed their eligibility for the said re-appointment.

[ Cost Auditors

The Company maintains cost accounts and records as per the provisions of Section

148(1) of the Act and the same are audited by the Cost Auditors. In accordance with Section 148(6) of the Act read with Rule 6(6) of the Companies (Cost Records and Audit) Rules, 2014, cost audit report, in Form No. CRA-4 (in XBRL mode), for the year ended 31 March 2023, was filed with the Ministry of Corporate Affairs, within the prescribed time

M/s. Sevekari Khare & Associates, practicing Cost Accountants have expressed their inability to continue as cost auditors due to personal reasons. Based on the recommendation of the Audit Committee,

Board has appointed M/s. RA & Co., practicing Cost Accountants, to audit the cost records of the Company for

FY 2025 They have confirmed that their appointment is in accordance with the applicable provisions of the Act and rules framed thereunder and that they are not disqualified to be appointed as the Cost

Auditors of the Company for the year ending

31 March 2025.

In accordance with the provisions of Section 148 of the Act read with the Companies (Audit and Auditors) Rules, 2014, the remuneration to be paid to the Cost Auditor for FY 2024 is required to be ratified by the members. Accordingly, the Board of Directors recommends the same for approval by members at the ensuing AGM.

The proposal forms a part of the notice of the AGM.

During the year under review, the Statutory, Internal, Secretarial and Cost Auditors have not reported to the Audit Committee, any instances of fraud committed against the

Company by its officers or employees, the details of which need to be mentioned in the Directors report.

Secretarial Standards

During FY 2024, the Company has complied with all the applicable Secretarial Standards issued by the Institute of Company Secretaries of India as amended.

Internal Control System, Risk

Management and Compliance Framework

The Company has a well-established internal controls framework comprising a set of policies, procedures and systems, instrumental in enhancing the efficiency and effectiveness of business operations, reducing risks and costs, and improving decision-making and accountability.

The Internal control framework ensures the following: .

[ Establishment of policies and procedures, assignment of responsibility, delegation of authority, segregation of duties to provide a basis for accountability and controls;

[ Physical existence and ownership of assets at a specified date;

[ Proactive anti-fraud controls and a risk management framework to mitigate fraud risks to the Company;

[ Recording of all transactions occurred during a specific period;

Accounting of assets, liability, and revenue and expense components at appropriate amounts;

[ Preparation of financial information as per the timelines defined by the relevant authorities.

The internal financial controls are adequate and operating effectively. Effectiveness of internal financial controls is ensured through management reviews, controlled self-assessment and independent testing by the internal audit team Risk Management.

The Company also has Risk Management Policy and framework in place which defines roles and responsibilities at various levels of the risk management process. Risk Management Committee ("RMC") oversees the implementation of Risk Management Policy as well as risk management and mitigation framework. The Company has also laid down procedures to inform Board members about the risk assessment and its minimisation, which is periodically reviewed to ensure that risk control is exercised by the management effectively.

Risks are categorised into Regulatory, Competition, Supply Chain Disruption, Cyber Security including Data Security, Economic & Political Environment, Environmental, Social & Governance Risks and other critical risks. The in-house Internal audit team acts as Risk co-ordinator and engages with all functional heads to identify internal and external events that may have an adverse impact on the achievement of Companys objectives and periodically monitors changes in both internal and external environment leading to emergence of a new threat/risk.

Risk Management system followed by the Company is detailed in the Management Discussion and Analysis report and in the Notes to Accounts.

[ Statutory Compliances

The Company has a comprehensive framework for monitoring statutory compliances and internal policies. Business and corporate functions ensure implementation of laws at the primary level through checks and controls in their operational processes. Compliances are further mapped into the compliance monitoring tool and affirmed at regular frequency by the compliance owners and compliance reports are submitted to the Board on a quarterly basis.

Supply Chain

A sustainable and seamless supply chain is critical for the timely availability of our medicines to our patients across the globe. Your Company also works with our suppliers to promote Responsible sourcing practices, uphold ethical standards and drive sustainability in supply chain. Company continuously supports supply chain and distribution partners to maintain an uninterrupted supply and distribution of medicines.

Company has requisite processes in place for sustainable sourcing and sustainability parameters are integrated into overall supply chain.

Thrust on responsible sourcing, ethical practices and sustainability in supply chain

Vigil Mechanism/Whistle-Blower Policy

The Board of Directors adopted the Whistle-Blower Policy in accordance with Section 177(9) of the Act, and Regulation 22 of the Listing Regulations. The Whistle-Blower Policy aims to conduct the affairs of the Company in a fair and transparent manner by adopting the highest standards of professionalism, honesty, integrity, and ethical behaviour. All permanent employees and Whole-time Directors of the Company are covered under the Whistle-Blower Policy.

A mechanism has been established for employees and other stakeholders to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Code of Conduct and

Ethics, and leak of price-sensitive information. It also provides for adequate safeguards against the victimisation of whistle blowers and allows direct access to the Chairperson of the Audit

Committee and also Managing Director of the Company in exceptional cases.

It is posted on the intranet and website of the Company and the same is available at https:// ajantapharma.com//images/Whistle-Blower-Policy-Feb-2023.pdf.

The same is reviewed by the Audit Committee from time to time. It is affirmed that no person has been denied access to the Audit Committee.

Policy on Sexual Harassment of Women at Work Place

Company is dedicated in providing a safe, conducive and healthy working environment that enables its employees to work without fear of prejudice and gender bias. It is the continuous endeavour of the management to create and provide an environment that is free from discrimination and sexual harassment.

The Company has laid down policy on prevention and prohibition of sexual harassment at the workplace. The policy provides for protection against sexual harassment of women at the workplace and for the prevention and redressal of such complaints. Company conducts awareness sessions to sensitise employees about the policy.

It has a vigorous mechanism in place to redress complaints reported under it and has constituted an Internal Complaints Committee ("ICC") at all the locations where there are more than 10 women employees, to address the complaints for sexual harassment.

During the year under review, no complaint of sexual harassment has been received.

Code of Conduct

The Board of Directors has laid down a ‘Code of Conduct (the "Code") for all the Board members and the senior management of the Company and this Code is posted on the website of the Company. An annual declaration is obtained from every person covered by the Code.

Pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015 in order to regulate, monitor and report trading by insiders as also for ensuring fair disclosure of un-published price sensitive information, the Company has put in place a comprehensive "Code of Conduct for prevention of insider trading" and "Ajantas Code of Practices & Procedures for Fair Disclosure of Unpublished Price Sensitive Information".

The data management and monitoring of insider trading is done through ESSCOM portal. The

Company has also put in place a Structured

Digital Database for monitoring the sharing of unpublished price sensitive information.

Details of these Codes are given in the Corporate

Governance Report.

Human Resource, Health & Safety

Human Resources are invaluable assets and the topmost priority for the Human Resource function is to provide a work environment which is safe, diverse, inclusive and full of growth opportunities. It invests in their training and professional development to equip them with the necessary skills, domain expertise and latest technology in line with the business strategy.

Your Directors would like to take this opportunity to express their gratitude and appreciation for the passion, dedication and commitment of the Ajantaites and look forward to their continued contribution.

Company once again recognised as a "Great Place to Work"

Managerial Remuneration and Particulars of Employees

There were 7,844 permanent employees of the Company as of 31 March 2024. The information pursuant to Rule (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this report as "Annexure D".

Information pursuant to Rule 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 also forms part of this report pursuant to Section 136(1) of the Act. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary at the registered office address of the Company.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings & Outgo

Pursuant to Section 134 of the Act read with Companies (Accounts) Rules, 2014, particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, are disclosed in "Annexure E".

Loans, Guarantees & Investments

Pursuant to Section 134(3)(g) of the Act, details of loans, guarantees and investments are disclosed in Notes to Financial Statements.

Other Disclosures

During the year under review:

[ There was no amount proposed to be transferred to the Reserves;

[ There were no changes in the nature of business of the Company;

[ There were no agreements entered into during the year which comes within the purview of Regulation 30A of the Listing Regulations;

[ Company issued and allotted equity shares as per its Stock Option Scheme and there was no instance wherein it failed to implement any corporate action within the statutory time limit;

[ The Company did not accept any deposit within the meaning of Sections 73 and 74 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014 and accordingly no amount on account of principal or interest on public deposits was outstanding as on 31 March 2024;

[ No provision of money has been made for the purchase of its own shares by employees or by trustee for the benefit of employees;

[ There were no Suspension of Companys securities;

[ There were no remuneration or commission received by Managing Director/Whole-Time Director from subsidiaries;

[ The Company has not issued shares with differential voting rights and sweat equity shares;

[ The Company does not have any defaults in loan payments and as such question of one time settlement does not arise;

[ There were no significant or material orders passed by the regulators or courts or tribunals which could impact the going concern status of the Company and its future operations;

[ There were no material changes and commitments which occurred after the close of the year till the date of this report, which may affect the financial position of the Company;

[ There was no application or proceedings made under the Indian Bankruptcy Code, 2016.

Directors Responsibility Statement

The financial statements are prepared in accordance with the Indian Accounting Standards (Ind AS) under the historical cost convention on accrual basis except for certain financial instruments, which are measured at fair values, the provisions of the Companies

Act, 2013 (to the extent notified) and guidelines issued by SEBI.

To the best of their knowledge and belief and according to the information and explanations obtained by them and pursuant to Section 134 of the Act (including any statutory modification(s) and/or re-enactment(s) thereof for the time being in force), your Directors confirm:

a) that in the preparation of the annual accounts for the year ended 31 March 2024, the applicable Accounting Standards have been followed along with proper explanation relating to material departures, if any;

b) that they had selected accounting policies and applied them consistently and made judgements and estimates that were 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 ended 31 March 2024 and of the profit of the Company for the period;

c) that proper and sufficient care has been taken for the 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) that the annual accounts/financial statements have been prepared on a going concern basis;

e) that proper internal financial controls were in place and that the financial controls adequate and were operating effectively;

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

Green Initiative

The MCA had undertaken the Green Initiative in Corporate Governance by allowing paperless compliances by companies through electronic mode. We request all the shareholders to support the ‘Green Initiative of the Ministry of Corporate Affairs and the Companys continuance towards greener environment by enabling the service of the Annual Report, AGM Notice and other documents electronically to your e-mail address registered with your Depository Participant/ Registrar and Share Transfer Agent. The Company appeals to you, its Shareholders, who are yet to register the e-mail addresses that they take necessary steps for registering the same so that you can also become a part of the initiative and contribute towards a greener environment.

Gratitude & Acknowledgements

Your Directors place on record earnest appreciation for the contribution made by each and every Ajantaite during the year under review. Companys consistent growth was made possible by their hard work, solidarity, cooperation and dedication. The Directors also wish to express their gratitude to the Investors for the confidence and faith that they continued to repose in the Company. Board takes this opportunity to thank all shareholders, analysts, business partners, government and regulatory authorities, financial institutions, banks, distributors, suppliers, business associates, medical professionals and customers for their continued guidance, encouragement and splendid support.

For and on Behalf of the Board of Directors

	Mannalal B. Agrawal
	Chairman
Mumbai, 02 May 2024	DIN: 00073828