Auro Laboratories Ltd Directors Report

Financial Highlights

Notes:

The above figures are extracted from the audited standalone financial statements of the Company as per the Indian Accounting Standards (Ind AS). Equity shares are at par value of Rs.10 per share.

Overview of companys financial performance and state of affairs:

During the year under review, the Company registered strong growth in terms of operational goals.

Revenue from Operations

Revenue from Operations for FY 2023-24 Rs. 5363 Lakhs as against Rs. 5289 Lakhs in FY 2022-23 registering a growth of 1.40%.

Employee benefit expense

The employee benefit expense during the year was Rs. 514 Lakhs as (Rs. 472 Lakhs in Previous year).

Finance Cost

Finance Cost for the year was Rs. 73.57 Lakhs as against Rs. 81.42 Lakhs in previous year.

Depreciation and amortisation expense

Depreciation and amortisation expense during the year was Rs. 109.24 lakhs as against 107.42 Lakhs in previous year.

Other expenses

Other expenses during the year were Rs. 1126 Lakhs as against Rs.808 Lakhs in previous year, as percentage to net sales is 21% for FY24.

Profit before tax & exceptional item

Profit before tax & exceptional item for the year was Rs. 1035 Lakhs as against Rs. 345 Lakhs in previous year. The increase is in line with industry standards and attributable to lower input and shipping costs that had increased considerably in the previous year due to Covid pandemic effects.

Projects and expansion plans

A capacity expansion project was initiated in this financial year to primarily increase the capacity of all APIs being produced by the company. Metformin HCl capacity will be increased from 1800 MTA to 3600 MTA and this should be completed before the end of this financial year.

In addition, the company plans to introduce new API molecules and the enhanced manufacturing capacity would enable us to produce additional products simultaneously.

Regulatory approvals in various countries will be applied for on completion of the facility.

Dividend

To consolidate the financial position of the Company, the Board does not propose any dividend for the year ended March 31, 2024.

Transfer to reserves

As permitted under the provisions of the Companies Act, 2013, the Board does not propose to transfer any amount to general reserve.

Insurance

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

Particulars of loans, guarantees or investments

Loans, guarantees and investments covered under Section 186 of the Companies Act, 2013 form part of the Notes to the financial statements provided in this Annual Report.

Particulars of contracts or arrangements made with related parties

Prior omnibus approval is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and on an arms length basis. All related party transactions are placed before the Audit Committee for review and approval.

No material related party transactions were entered during the Financial Year by your Company. Accordingly, no disclosure is made in respect of related party transactions, as required under Section 134(3)(h) of the Act in Form AOC-2. Members may refer to note no. 23(vii) of the financial statements which sets out related party disclosures pursuant to INDAS-24.

Material changes and commitments affecting financial position between the end of the financial year and date of the report

There have been no material changes and commitments which affect the financial position of the Company that have occurred between the end of the financial year to which the financial statements relate and the date of this report.

Deposits

Your Company has not accepted any deposits from the public within the meaning of Chapter V of the Act and as such, no amount of principal or interest was outstanding as on the balance sheet date.

Insolvency and Bankruptcy Code, 2016

During the year under review, no application was made or any proceeding was pending under the Insolvency and Bankruptcy Code, 2016 (31 of 2016).

One time Settlement with Banks/Financial Institutions

During the year under review, no one time settlement was done with any of the Banks or Financial Institutions.

Subsidiaries, joint ventures & associate

The Company does not have any subsidiaries, joint ventures & associate companies. The Company is also not a subsidiary of any other company.

Change in nature of business

There were no changes in the nature of business of the Company during the financial year.

Authorized Share Capital

The Authorized Share Capital of the Company as at March 31, 2024 was Rs.7,00,00,000/- (Rupees Seven Crores only) divided into 70,00,000 (Seventy Lakhs) Equity shares of 10/- each.

Issued, Subscribed & Paid-up share Capital

The Paid-up Equity share Capital, as at March 31, 2024 was Rs.6,23,25,000/- (Rupees Six Crores Twenty-Three Lakhs Twenty-Five Thousand only) divided into 62,32,500 (Sixty-Two Lakhs Thirty-Two Thousand Five Hundred) Equity shares, having face value of Rs.10/- each fully paid up. There was no change in the paid-up share capital of the Company during the FY 2023-2024.

During the year under review, the Company has not issued any shares with differential voting rights nor granted any stock neither options nor sweat equity.

Composition of Board of Directors

As on March 31, 2024 the Board of Directors consists of Six (6) members. Besides the Chairman & Managing Director, who is an Executive Director, the Board comprises of Two (2) Executive Directors, Three (3) Independent Directors (including one Woman Director) as on March 31, 2024. The composition of the Board is in conformity with the Companies Act, 2013 and Listing Regulations enjoining specified combination of Executive and Non-Executive Directors with at least one Women Independent Director and not less than fifty per cent of the Board comprising of Independent Directors.

In the opinion of the Board, all our Independent Directors possess requisite qualifications, experience, expertise and hold high standards of integrity for the purpose of Rule 8(5)(iii)(a) of the Companies (Accounts) Rules, 2014. List of key skills, expertise and core competencies of the Board, including the Independent Directors, forms part of the corporate governance report annexed to this report.

Changes during the year:

Changes in Board post closure of financial year

Post the closure of financial year, the following changes occurred in the Board of Directors of the Company: The Board of Directors, on recommendation of the Nomination and Remuneration Committee, in their meeting dated March 30, 2024 considered and approved appointment of Mr. Mahendra Kumar Daga (DIN: 10570354) as an additional Non-Executive Independent Director of the Company for a term of 5(five) years with effect from April 1, 2024. Matter for his appointment shall be placed as agenda item in the notice of ensuing Annual General Meeting for approval of shareholders.

Retirement by Rotation

In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Kiran Suresh Kulkarni, Whole Time Director of the Company is liable to retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, has offered himself for re-appointment. The Board recommends his re-appointment.

More details about the Directors are either given in the Corporate Governance Report and in the Notice of the ensuing Annual General Meeting being sent to the shareholders along with the Annual Report.

Key Managerial Personnel

During the year, Mr. Amit Mahipat Shah ceased to be the Chief Financial Officer w.e.f October 1, 2023 on account of his resignation and Ms. Shaan Jain was appointed as the Chief Financial Officer w.e.f December 22, 2023.

Declaration of Independence by Independent Directors & adherence to the Companys Code of Conduct for Independent Directors

All Independent Directors of the Company have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16(1) (b) of the SEBI (LODR) Regulations, 2015 (“Listing Regulations”). In the opinion of the Board, the Independent Directors, fulfill the conditions of independence specified in Section 149(6) of the Act and Regulation 16(1) (b) of the Listing Regulations.

All Independent Directors have affirmed compliance to the code of conduct for independent directors as prescribed in Schedule IV to the Companies Act, 2013.

Directors responsibility statement

Pursuant to Section 134 (3) (c) of the Companies Act, 2013 the Directors confirm that:

(a) In the preparation of the Annual Accounts, the applicable accounting standards had been followed along with proper explanation relating to material departure, if any; (b) The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period;

(c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) The Directors had prepared the annual accounts on a going concern basis; (e) The Directors, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; (f) The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

Committees of the board

The Board has the following Committees: a) Audit Committee b) Nomination & Remuneration Committee c) Stakeholders Relationship Committee and

Further details of the Committees along with their composition, number of meetings and attendance at the meetings are provided in the Corporate Governance Report.

Audit Committee Recommendations

All recommendations of Audit Committee were approved by the Board of Directors during the year.

Independent directors meeting:

Independent Directors met 1 (one) time during the year on February 6, 2024 and the meeting was attended by all Independent Directors. The disclosure under this heading forms part of the Corporate Governance report.

Performance evaluation of the board, its committees and directors

Pursuant to the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015 the company has implemented a system of evaluating performance of the Board of Directors and of its committees and individual directors on the basis of evaluation criteria suggested by the Nomination and Remuneration Committee and the SEBI (LODR) Regulations, 2015. Accordingly, the Board has carried out an evaluation of its performance after taking into consideration various performance related aspects of the Boards functioning, composition of the Board and its Committees, culture, execution and performance of specific duties, remuneration, obligations and governance. The performance evaluation of the Board as a whole, Chairperson and Non-Independent Directors was also carried out by the Independent Directors in their meeting held on February 6, 2024.

Similarly, the performance of various committees, individual Independent and Non-Independent Directors was evaluated by the entire Board of Directors (excluding the Director being evaluated) on various parameters like engagement, analysis, decision making, communication and interest of stakeholders.

The Board of Directors expressed its satisfaction with the performance of the Board, its committees and individual directors.

Familiarization program for independent directors

All new independent directors inducted into the Board attend an orientation program. The details of the training and familiarization program are provided in the corporate governance report. Further, at the time of the appointment of an independent director, the Company issues a formal letter of appointment outlining his / her role, function, duties and responsibilities.

In compliance with the requirements of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Company has formulated a policy to familiarize the Independent Directors with the Company and the details of Familiarization Program are provided in the Corporate Governance Report and also available at http://www.aurolabs.com/contact/Familiarization_Programme/financial-year-2023-2024.pdf

Corporate Policies

Annual Return

Pursuant to Section 92(3) and Section 134(3) (a) of the Companies Act, 2013, the Company has placed a copy of the Annual Return as at March 31, 2024 on its website at www.aurolabs.com at http://www.aurolabs.com/contact/Corporate%20Announcements/Corporate%20Announcement_20 23-2024/Draft%20MGT_7%20for%20FY%202023-2024.pdf

Corporate Governance and Management Discussion & Analysis Reports

The Company adheres to the requirements set out by the Securities and Exchange Board of Indias Corporate Governance practices and has implemented all the stipulations prescribed. The Company has implemented several best corporate governance practices.

The Corporate Governance and Management Discussion & Analysis Report, which form an integral part of this Report, are set out as “Annexure C” and “Annexure B”, respectively together with the Certificate from the Secretarial Auditors of the Company regarding compliance with the requirements of Corporate Governance as stipulated in Listing Regulations.

Secretarial Standards

The Company complies with all applicable secretarial standards issued by the Institute of Company Secretaries of India.

Listing

The Companys Shares are listed on BSE Limited, Mumbai. The Company has paid Listing Fees for the year 2024-2025.

Depository services

The Companys Equity Shares have been admitted to the depository mechanism of the National Securities Depository Limited (NSDL) and also the Central Depository Services (India) Limited (CDSL). As a result, the investors have an option to hold the shares of the Company in dematerialized form in either of the two Depositories. The Company has been allotted ISIN No. INE292C01011.

Shareholders therefore are requested to take full benefit of the same and lodge their holdings with Depository Participants [DPs] with whom they have their Demat Accounts for getting their holdings in electronic form.

Internal control systems and their adequacy

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. The scope and authority of the Internal Audit function is defined by the Audit Committee. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee of the Board & to the Managing Director.

The Internal Audit monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies of the Company.

Based on the report of internal auditor, the Company undertakes corrective action in their respective areas and thereby strengthens the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board.

Significant and material orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Companys operations in future.

Statutory Auditor

Kothari Jain & Associates, Chartered Accountants, (FRN 113041W), were appointed as Statutory Auditors of the Company at the 34th Annual General Meeting (AGM) held on September 23, 2023 for a period of 5 years, to hold office from conclusion of 34th Annual General Meeting till the conclusion of 39th Annual General Meeting.

The Company has received the consent from the Auditors and confirmation to the effect that they are not disqualified to be appointed as the Auditors of the Company in the terms of the provisions of the Companies Act,2013 and the Rules made thereunder. The remuneration payable to the Statutory Auditor for the financial year 2024-2025 shall be determined by the Board of Directors based on the recommendation of the Audit Committee.

Report of the Statutory Auditor for the Financial Year 2023-2024:

M/s. Kothari Jain & Associates, Chartered Accountants, (FRN 113041W), Chartered Accountants, have submitted their Report on the Financial Statements of the Company for the FY 2023-2024, which forms part of the Annual Report.

Auditors remark in their report under Section 143(3) of the Companies Act, 2013 i. Proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 for maintaining books of account using accounting software which has a feature of recording audit trail (edit log) facility is applicable to the Company with effect from April 1, 2023. However, the Company has not implemented the same.

Company Reply:

The Company had purchased the requisite software during the year however, due to some technical issue in implementation, the process could only be implemented in the books of accounts from April 2024.

Other than the above, there were no observations (including any qualification, reservation, adverse remark or disclaimer) of the Auditors in the Audit Reports issued by them which call for any explanation from the Board of Directors.

Internal Auditor

Pursuant to the provisions of Section 138 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014, the Board, on recommendation of the Audit Committee has appointed M/s. Pokharna and Associates, as internal auditors of the Company for the financial year 2024-2025.

Secretarial Auditor

M/s GMJ & Associates, Company Secretaries, were appointed as Secretarial Auditors of the Company for the financial year 2023-2024 pursuant to section 204 of the Act. The Secretarial Audit Report submitted by them in the prescribed form MR- 3 is attached as ‘Annexure A to this report.

In addition to Secretarial Audit Report, M/s GMJ & Associates, Company Secretaries has issued the Secretarial Compliance Report under Regulation 24A of SEBI LODR Regulations, 2015 for the financial year 2023-2024.

There were no qualifications or observations or adverse remarks or disclaimer of the Secretarial Auditors in the Report issued by them for the financial year 2023-2024 which call for any explanation from the Board of Directors.

In terms of Section 204 of the Act, read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors, on the recommendation of the Audit Committee, have re-appointed M/s. GMJ & Associates, Company Secretaries as the Secretarial Auditors of the Company in relation to the financial year 2024-2025. The Company has received their written consent that the appointment is in accordance with the applicable provisions of the Act and rules framed there under.

Cost auditor:

The Board of Directors, on the recommendation of the Audit Committee, has appointed M/s. Poddar & Co., Cost Accountants as the Cost Auditors of the Company for the Financial Year 2024-2025 at a remuneration of Rs.60,000/- (Rupees Sixty Thousand Only) plus applicable taxes and out of pocket expenses.

Pursuant to Section 148 of the Companies Act, 2013 read with Rule 14 of the Companies (Accounts) Rules, 2014, the remuneration payable for the year 2024-2025 to the Cost Auditors of the Company is subject to ratification by the shareholders at the ensuing Annual General Meeting. The remuneration to the Cost Auditors is commensurate with the size of the Company, work involved and scope of audit. Your directors recommend the same for approval by the Members at the ensuing Annual General meeting.

Cost records and audit

The Company has duly prepared and maintained the cost records of the business activities carried out by the Company during the financial year 2023-2024 as required pursuant to the provisions of section 148(1) of the Companies Act 2013 read with Companies (Cost Records and Audit) Rules 2014.

The Cost audit report for the financial year 2023-2024 will be filed with Central Government in the due course.

Reporting of frauds by auditor and other matters under Section 143(12) of the Act

During the year under review, the Statutory Auditors, Cost Auditors or Secretarial Auditors of the Company have not reported any frauds to the Audit Committee or to the Board of Directors under section 143(12) of the Act, including rules made there under.

Particulars of employees

The information required under Section 197(12) of the Act read with Rule 5(1), 5(2) & 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, including amendment thereto, is provided in the Annexure forming part of the Report. In terms of the second proviso to Section 136(1) of the Act, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. The said information is available for inspection by the members at the registered office of the Company during working hours on working days up to the date of the Annual General Meeting and if any member is interested in obtaining as copy thereof, such member may write to the Company Secretary and Compliance Officer at auro@aurolabs.com.

Prevention and prohibition of sexual harassment

The Company has in place a Policy on prohibition, prevention and redressal of sexual harassment of women at workplace and matters connected therewith or incidental thereto covering all the aspects as contained under “The Sexual Harassment of Women at Work Place (Prevention, Prohibition and Redressal) Act, 2013”. A copy of the same is available on the website of your Company at http://www.aurolabs.com/contact/Corporate_Policies/Sexual%20harassment%20Policy.pdf

During the year, there were no complaints received relating to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

An Internal Complaint Committee has been set up with majority women. Committee has a full access to the Board of Directors and during the year under review, there were no reported instances pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Health, Safety & Environment

The Company is committed to:

Maintain an organizational culture of Health, Safety & Environmental excellence by conducting its business in a manner that will promote consistent development. Safe work, resource conservation, waste management and emergency response measures for continual improvement in performance. Design, construct, operate & maintain its facilities while assuring the best material and service quality and operate in a way that mitigates and minimizes risks and hazards. Prevention of ill-health, injuries and pollution by adopting best practices, carrying out periodic risk assessments, audits, reviews, inspections and providing awareness to employees and concerned stakeholders.

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo pursuant to Section 134(3) (m) of the Companies Act, 2013, read with the Rule 8(3) of the Companies (Accounts) Rules, 2014 is given as under:

Conservation of energy:

1. the steps taken or impact on conservation of energy:

During the year, Company continued to focus on minimizing the energy consumption and the measures taken are summarised below:

a] Due consideration has been given to energy consumption while procuring equipments. As a responsible Corporate Citizen and in adherence to our climate change strategy, the Company is continuously taking effective steps to conserve energy and to reduce methane and other Green Houses Gases (GHG) emissions, wherever feasible. Except the emergency lights, all lights and electrical gadgets are turned off after working hours and on holidays at office premises of the Company to help in minimising the energy consumption.

c) The steps taken by the Company for utilising alternate sources of energy: Not Applicable d) The capital investment on energy conservation equipments: Not Applicable

Technology absorption

Technology absorption, adaptation and innovation: Not Applicable i. the efforts made towards technology absorption during the year under review are: ii. the benefits derived like product improvement, cost reduction, product development or import substitution: iii. in case of imported technology (imported during the last three years reckoned from the beginning of the financial year): a. the details of technology imported, b. the Year of import c. whether the technology been fully absorbed; iv. During the year Company has incurred R&D Expenditure

Foreign exchange earnings and outgo:

Business Responsibility Reporting

The Business Responsibility Reporting as required by Regulation 34(2) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, is not applicable to the Company for the financial year ending March 31, 2024.

Your Company recognizes that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner; your Company periodically assesses risks in the internal and external environment, along with the cost of treating risks and incorporates risk treatment plans in the strategy, business and operational plans.

The Company has in place a Risk Management Policy (a) to ensure that all the current and future material risk exposures of the Company are identified, assessed, quantified, appropriately mitigated, minimized and managed i.e. to ensure adequate systems for risk management. (b) to establish a framework for the companys risk management process and to ensure its implementation. (c) to enable compliance with appropriate regulations, wherever applicable, through the adoption of best practices (d) to assure business growth with financial stability. A copy of the same is available on the website of your Company at http://www.aurolabs.com/contact/Corporate_Policies/Risk%20Management%20Policy.pdf. There are no risks which threaten the existence of the Company.

The Company has also obtained various GMP Certifications.

APPRECIATION