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Morepen Laboratories Ltd			Industry : Pharmaceuticals - Indian - Bulk Drugs & Formln


BSE Code:	500288	NSE Symbol:	MOREPENLAB	P/E(TTM):	31.47

ISIN Demat:	INE083A01026	Div & Yield %:	0	EPS(TTM):	1.59

Book Value(Rs):	15.9655673	Market Cap ( Cr.):	2557.38	Face Value(Rs):	2

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Dear Shareholders,

Your directors have pleasure in presenting the 38th Annual Report on business, operations, and achievements of the company together with the audited financial statements for the financial year ended 31st March 2023.

FINANCIAL HIGHLIGHTS

( in Lakhs)

Particulars	Consolidated		Standalone
	2022-23	2021-22	2022-23	2021-22
Sales	141395.48	154156.51	133547.91	144604.93
Other Operating Income	357.52	526.18	340.42	321.73
Other Income	613.34	1030.72	575.88	1023.53
Total Income	142366.34	155713.41	134464.21	145950.19
Operating Surplus	8566.65	14697.96	8302.86	13937.32
Finance cost	198.08	(736.55)	198.08	(736.55)
Cash Surplus	8368.57	15434.51	8104.78	14673.87
Non-Cash Items:
Depreciation & Amortisation	2793.04	2764.25	1800.57	2119.49
Profit before Tax	5575.53	12670.26	6304.21	12554.38
Tax - Current Year	1681.78	2528.49	1659.99	2462.35
Tax - Earlier Years	5.86	(274.62)	(0.41)	(262.52)
Deferred Tax	20.34	248.26	20.34	248.26
Profit after Tax before non-controlling interest	3867.55	10168.13	4624.29	10106.29
Less: Non - controlling interest	0.03	(0.14)	-	-
Profit after Tax and non-controlling interest	3867.52	10168.27	4624.29	10106.29
Other Comprehensive Income (Net of Tax)	(148.03)	(37.10)	(144.78)	(36.85)
Total Comprehensive Income	3719.49	10131.17	4479.51	10069.44
EPS (Basic)	0.77	2.26	0.92	2.25
EPS (Diluted)	0.77	1.96	0.92	1.94

REVIEW OF PERFORMANCE

The current year consolidated revenues of 142366.34 Lakhs reflect a decrease compared to the previous year's revenues of 155713.41 Lakhs. The decline in revenue amounts to 8.57 percent on a year-on-year basis.

In the year under review, the share of export revenue in total sales revenues has increased to 40 percent at 57249.13 Lakhs. Although there has been a marginal increase in annual export revenues of around 3 percent, the rise in the share of export revenue indicates a positive trend for the company's international sales. During the period, the company experienced significant growth in its exports to Europe, with a notable increase of 31 percent. Exports to Africa also witnessed a healthy growth rate of 24 percent. On the other hand, the growth rate for exports to the USA was relatively lower at 4 percent. In terms of domestic business, the company experienced a decline of 15 percent. There was also a decline in exports to Asia, with a decrease of 13 percent.

The lower levels of current year revenues are attributed to multiple factors, including market conditions and large base effect of preceding year, on strength of staggering 30 percent revenue growth recorded during the financial year ending 31^st March 2022.

During the year, the home diagnostics business experienced a significant drop in its annual revenues, with a decline of 22 percent. Similarly, the Over the Counter (OTC) business also faced a decline in revenues, with a drop of 11 percent. The API (Active Pharmaceutical Ingredient) business witnessed a relatively smaller decline of 4 percent in its annual revenues. On the positive side, the domestic formulation business continued its growth journey with a revenue growth of 10 percent during the year. The growth rate for formulation business, in the current year has been at lower levels against previous year revenue growth of 28 percent.

The API business, with annual revenues of '82303.76 Lakhs has managed to increase its revenue share in the overall business, despite experiencing 4 percent drop in the current year revenues. API business has remained relatively strong and has contributed significantly to the company's overall revenue. However, within the API business, the anti-allergic drug 'Montelukast' faced challenges during the year. It registered a substantial revenue drop of 24 percent due to lower demand and price realization. On the export front, the API business experienced marginal growth of 2 percent. However the domestic revenue for the API business declined by 15 percent.

The current year's revenues for home diagnostics business have experienced a decline, though there has been consistent growth in the annual revenues with a staggering compound annual growth rate (CAGR) of 44 percent in preceding four years period ending 31^st March 2022. The revenues for the current year are at '32706.91 Lakhs, against previous year revenues of '41891.99 Lakhs. Within the Home diagnostics business, joint revenue drop for blood glucose and blood pressure monitors was at 14 percent. The share of the blood glucose monitor business in the total Home diagnostics business increased to 78 percent, compared to 67 percent in the previous year.

In the current year, all revenue streams, except the Formulation business, have experienced a decline in their annual revenues. However, the Formulation business with its annual revenues of '18537.25 Lakhs has shown growth with a 10 percent increase, although it is lower growth compared to the incredible growth of 28 percent for immediately preceding year. The branded Rx (prescription) business and brand sharing generics business continues to generate higher revenues, registering strong performance in the market. This suggests that the company's branded products and generic medications promoted under its own brand name have maintained their acceptance and demand among consumers. On the other hand, the third- party manufacturing business has remained at previous year's level.

The Over the Counter (OTC) business of the company has recorded a decline of 11 percent in its annual revenues, at '9349.37 Lakhs. This decrease can be attributed primarily to lower OTC trade and online revenue. However, a portion of the decline was offset by growth in the brand sharing OTC business.

The drop in annual revenues, coupled with tight price margins and increased spend on sales, marketing, and administrative activities, has resulted in lower profits for the company compared to the previous year. It is worth noting that the company has managed to reduce manpower costs through lower incentive pay outs. Despite challenges, all business segments continue to generate profits, except the formulation business, which is working on improving its operational efficiency.

On a standalone basis, the company recorded annual sales revenues of '133547.91 Lakhs during the current financial year, representing a decline of 8 percent against previous year revenues of '144604.93 Lakhs.

Financial Performance Sales

Since financial year 2004-05, the revenues of the company are on growth trajectory with successive year of revenue growth till 31^st March 2022. However, revenue growth has taken a pause during the current year. The consolidated sales revenues for the year under review are at lower levels, at '141395.48 Lakhs, down by 8 percent against previous year revenues of '154156.51 Lakhs. Total income for the current year is at '142366.34 Lakhs against '155713.41 Lakhs in the preceding year. The export revenues at '57249.13 Lakhs are up by 3 percent whereas domestic sales revenues are down by 15 percent for the year under review.

On standalone basis, the company registered sales revenues of '133547.91 Lakhs against '144604.93 Lakhs of revenues recorded during previous financial year, a degrowth of 8 percent.

Material Cost

The material cost, as a percentage of sales at 67.59 percent, is 48 basis points lower against the previous year material cost of 68.07 percent. The company is improving its sourcing channels to save on input cost which can be shared with its customers, bringing better value for money for company's products.

Employee Cost

The current year employee cost at '15468.05 Lakhs is lower against previous year cost of '16424.65 Lakhs. However, on account of lower current year sales revenues, the percentage employee cost to annual sales revenues has jumped up to 10.94 percent against 10.65 percent in the last financial year. The company continues to pay merit- based employee compensation so as to retain best talent.

Other Expenses

The consolidated expenditure on manufacturing, sales & marketing and the administrative activities at 16.09 percent of sales revenues, is at higher levels, against 12.75 percent recorded in the preceding financial year. Increased spend on manufacturing, selling & distribution followed by administrative activities has adversely impacted the bottom line for the current year.

Finance Cost & Depreciation

Finance cost comprises of interest on working capital facilities backed by fixed deposit made by the company, on car loan interest pay outs and interest on delay payment of advance income tax. Annual consolidated depreciation & amortisation charge are marginally up at '2793.04 Lakhs against '2764.25 Lakhs in the previous year.

Other Operating Income & Other Income

The consolidated other operating income represents export incentives and others. The export incentives for the current year at '314.15 Lakhs are marginally up against last year amounting to '289.15 Lakhs. Other income for the current year at '43.36 Lakhs is lower against '237.03 Lakhs in the preceding year.

Consolidated other income representing currency fluctuations, interest income and others is lower at '613.34 Lakhs, against previous year of '1030.72 Lakhs.

Profit after Tax

The consolidated profit before interest, depreciation and tax is lower at '8566.65 Lakhs against '14697.96 Lakhs generated in the previous year. Net profit after tax but before share of profit from non-controlling interest is down at '3867.55 Lakhs against '10168.13 Lakhs in last financial year. The consolidated net profit, net of minority share, at '3867.52 Lakhs is down by 61.97 percent over previous years' profit of '10168.27 Lakhs. Total Comprehensive Income for the current year is at '3719.49 Lakhs against '10131.17 Lakhs earned in the previous financial year.

On standalone basis, the net profit after tax for the year is at '4624.29 Lakhs as against '10106.29 Lakhs during previous financial year, a drop of 54.24 percent. Total Comprehensive Income for the year is down by 55.51 percent, at '4479.51 Lakhs vis-a-vis '10069.44 Lakhs of the preceding year.

Business wise Performance:

Active Pharmaceutical Ingredients (API)

API business of the company has been a consistent growth driver and the largest revenue generator over the years. It has maintained its top position within the company, even in the current year, despite experiencing lower revenue levels compared to the previous year. The fact that the API business has consistently generated significant revenue highlights its importance and strong performance within the company.

A 15 percent drop in domestic revenues, during current year has contributed to degrowth in API revenues at '82303.76 Lakhs against '85846.08 Lakhs in the immediately preceding year. Despite dip in current year revenue, API share in standalone sales revenue is higher at 61.63 percent against 59.37 percent in last financial year. The customer base was expanded with addition of 260 new customers. The company's share in total exports from India for Loratadine and Montelukast has remained healthy at 64 percent and 39 percent respectively, whereas the company is working hard to improve its share in Atorvastatin export from current 10 percent levels. From financial year ending 31^st March 2020 to 31^st March 2023, share of US business has gone up to 12.80 percent from 10.60 percent, followed by increase in domestic business share to 30.60 percent during the year against 27.80 percent in the financial year ending 31^st March 2020.

Loratadine and Montelukast, constituting 61 percent of total API revenues with a combined revenue of '50417.53 Lakhs, having registered a revenue drop of 13 percent during the year. Montelukast with annual revenues of '23584.19 Lakhs has recorded a revenue drop of 24 percent, whereas Loratadine, with annual revenues '26833.34 Lakhs is up only marginally. Atorvastatin, third major revenue generating product, has recorded a revenue of '13664.79 Lakhs during the year, a growth of 11 percent over preceding year revenues of '12261.55 Lakhs.

New molecules have generated a revenue of '4033.66 Lakhs during the year, a growth of 21 percent against last year revenues of '3338.00 Lakhs.

US Food and Drug Administration (USFDA) inspection was carried out during the year for its manufacturing facility at Baddi, Himachal Pradesh and no adverse findings (NIL 483) were registered during facility inspection. It was 3^rd in row USFDA inspection, wherein NIL 483 was granted to the company. Four new international patents were filed during the year by the company.

Home Diagnostics - Point of care Device Business

Current year revenues at '32706.91 Lakhs, have recorded a degrowth of 22 percent against previous year revenues of '41891.99 Lakhs. Last year, highest ever annual revenues for the point of care business were recorded on account of extraordinary demand generated by Covid pandemic. In the last financial year ending 31^st March 2022 a revenue growth of 46 percent was recorded against previous year revenues of '28736.77 Lakhs.

Blood Gluco business with annual revenues of '25410.83 Lakhs, recorded a dip of 9 percent in its annual followed by 31 percent drop in BP monitor revenue at '5828.23 Lakhs. The fall in current year revenues has been aggravated by meagre demand in the current year, for items like Thermometers, Nebulisers, Oxygen Concentrator & others, which were extensively consumed during covid period. The revenue from aforesaid point of care products, on account of reasons explained above, have dipped by 74 percent at '1467.85 Lakhs.

Despite blip in current year revenues, the Blood Glucose Monitor and Blood Pressure monitor business has recorded tremendous during past many years, recording a compounded annual growth rate (CAGR) of 44 percent and 47 percent respectively, during preceding 4 years. With a view to expand the visibility of its product range across all the geographies, the company is spending on marketing activities by engaging prominent sports and film personalities for advertisement of its products.

Finished Formulations

The finished dosages business is now expanding its reach and has recorded a sales revenue of '18537.25 Lakhs during the current year against last year revenue of '16866.90 Lakhs, a growth of 10 percent. The formulation business has sustained its growth trajectory and has built up the revenue, despite recording tremendous growth of 28 percent in the immediately preceding year.

At '6209.72 Lakhs, a growth of 25 percent was recorded in the annual revenue for the branded formulation business for the current year. Brand sharing generics business at '6245.02 Lakhs have recorded a growth of 8 percent, whereas contract manufacturing business at '6082.51 Lakhs has remained at previous year levels. Under the Branded Prescription (Rx) product category, the top three therapeutic categories namely Antibiotics, Gastroenteritis and Vitamins collectively registered a growth of 18 percent. In the current year, their annual revenues amounted to '3587.95 Lakhs, whereas in the previous financial year, sales revenue for these categories was '3050.29 Lakhs.

DIVIDEND

Given the growing resource needs for expanding the business of the company, the directors do not recommend any dividend for the year under review.

RESERVES

Standalone net profit after tax of '4624.29 Lakhs, has been carried forward to the 'Retained Earnings' during the year. No amount has been transferred to the general reserve during the current year. A sum of '13798.35 Lakhs was added to securities premium account during the year, on account of issuance of 2,13,42,505 Equity Shares, to banks, financial institutions and other at a premium of '51.72/- per share and preferential issuance of 1.20.00. 000 Equity Shares at a premium of '23/- per share to the entities belonging to promoter group (towards conversion of fully convertible warrants).

A sum of '1875.00 Lakhs has been transferred to Capital Reserve Account, being amount forfeited towards 3.00. 00.000 share warrants, which could not be subscribed by the entities belonging to promoter group within stipulated period and were therefore lapsed during the year.

DEPOSITS

Your company has not accepted any deposits from the public, during the year under review, within the meaning of Section 73 of the Companies Act, 2013 ('the Act') read with the Companies (Acceptance of Deposits) Rules, 2014.

FINANCES

The company continues to fund its growth through its internal accruals without relying on any outside funding support. A sum of '2250.00 Lakhs, brought in towards balance 75 percent payment of 1,20,00,000 warrants, issued to the entities belonging to promoter group, has been used to fund working capital needs and others.

SHARE CAPITAL

During the year, the Equity Share Capital of the company has gone up by '666.85 Lakhs to '10222.71 Lakhs against '9555.86 Lakhs as of 31^st March 2022.

The company, during the current year, has issued 3.33.42.505 Equity Shares of '2/- each to banks, financial institutions, promoter entities and other. Out of these 2.13.42.505 Equity Shares, were issued to banks, financial institutions and other, at a premium of '51.72/- per share, whereas 1,20,00,000 Equity Shares has been issued at a premium of '23/- per share to the entities belonging to the promoter group.

In respect of 50,38,983 Equity Shares surrendered with the company for the cancellation, in compliance with Hon'ble NCLT order dated 12.03.2018, the company has filed an application with Stock Exchanges for the cancellation of these equity shares from its total listed capital. The said application is yet to be approved.

The Equity Shares issued by the company are listed at following Stock Exchanges as on 31^st March 2023:

1. National Stock Exchange of India Limited (NSE)

2. BSE Limited (BSE)

Annual listing fee for the financial year 2023-24 has been paid to both the Stock Exchanges. The Equity Shares continue to be listed on NSE and BSE.

SUBSIDIARIES / JOINT VENTURES / ASSOCIATES

The company has incorporated a new wholly owned subsidiary namely, Morepen Rx Limited, to carry out and focus more, on the 'Formulation business', post receipt of requisite approvals, if any.

As on 31^st March 2023, the company has five (5) subsidiaries, namely:

1. Dr. Morepen Limited

2. Morepen Devices Limited

3. Morepen Rx Limited

4. Total Care Limited (subsidiary of Dr. Morepen Ltd.)

5. Morepen Bio Inc., USA (Formerly Morepen Inc.)

Dr. Morepen Limited

The current year revenues for the over the counter (OTC) business at '9349.37 Lakhs, has recorded revenue a dip of around 11 percent, against last year revenues of '10563.99 Lakhs. The drop in current sales have been brought about by lower sales in top selling products like Burnol, Lemolate, Isabgol and also fall in revenue for grooming and covid products.

The current year combined sales revenues for primary brands comprising of Burnol (Burn Cream), Lemolate (Cough & Cold) and Fiber-X (Sat Isabgol) is at '1703.84 Lakhs against revenues of '1901.77 Lakhs posted in last year.

OTC range, which refers to a range of other over-the - counter products, has experienced a decline in annual revenues. The revenue for OTC range is '2372.88 Lakhs , a dip of 24 percent compared to previous year.

The brand sharing revenues have increased to '3006.50 Lakhs, representing a growth of 18 percent compared to previous year revenues.

The grooming business, with its annual revenues of '2275.09 Lakhs, have recorded a decline of 18 percent in its annual revenues.

Online OTC revenues, at '2030.74 Lakhs has gone up by 23 percent during the year. During the current year, the share of online business, has reached 22 percent from 16 percent in the last year.

On account of cleaning up of the trade channels filled with excessive inventory, the company has called back its surplus stocks from such channels, which have affected the sales revenues for the year under review. However, it has helped the company to use the inventory so released to cater to the fresh demands generated and save on new investments to be made on fresh buying.

The company has expanded its reach on the online channels and intends to put more resources for the same as it positively affects OTC trade channels as well.

Morepen Devices Limited & Morepen Rx Limited

No operating activities have been carried out during the year.

Total Care Limited

The company is dealing in OTC & Health Care products. The revenue during the year has been meagre at '3.04 Lakhs.

Morepen Bio Inc. (Formerly Morepen Inc.)

Morepen Bio Inc. has been the marketing and distribution interface of the company in USA for its API business, various OTC & other products. However the company intends to use it presence in US markets for Bio similar and other pharmaceuticals activities as and when any opportunity arises. During the year, it has also bought Bulk Drugs ( i.e. API) from its parents and sell in US and neighbouring markets either directly or through local trade channels.

During the current year, the company has recorded revenue of Rs. 2698.08 Lakhs ($3,281,931) as against '204.46 Lakhs ($270,205) of previous year. The company has recorded 73 percent growth in post-tax profit at '112.38 Lakhs against profit of '65.09 Lakhs logged in the previous year.

CONSOLIDATED FINANCIAL STATEMENTS

The consolidated financial statements for the year ended 31^st March 2023 have been prepared in accordance with Indian Accounting Standards (Ind AS) notified under the Companies (Indian Accounting Standards) Rules, 2015 as amended together with the comparative period data as at and for the previous year ended 31^st March 2022.

In accordance with the Companies Act, 2013 and Indian Accounting Standards (Ind AS) 110 on 'Consolidated Financial Statements' read with Ind AS 112 on 'Disclosure of interests in other entities', the Audited Consolidated Financial Statements is provided in the Annual Report.

In accordance with the provisions of Section 129(3) of the Act, read with the Companies (Accounts) Rules, 2014, a report on the performance and financial position of each of the subsidiaries is attached as ANNEXURE 'A' to this Report in the prescribed form, AOC-1.

DIRECTORS & KEY MANAGERIAL PERSONNEL Changes in Directors & Key Managerial Personnel

I. Mrs. Anju Suri (DIN:00042033), a Non-Executive Director, Non-Independent Director, has resigned from the directorship of the company on 22^nd June 2022.

II. The members in their 37 ^th Annual General Meeting (AGM) held on 27^th September 2022, approved the appointment of Mr. Sanjay Suri (DIN: 00041590), who retired by rotation at said annual general meeting and being eligible, offered himself for re-appointment.

III. Pursuant to approval of members at 37 ^th AGM, the term of Mr. Sanjay Suri (DIN: 00041590) as a whole-time director has been extended for a period of 3 years commencing from 13^th August 2022 till 12^th August 2025.

The existing term of Mr. Sushil Suri (DIN: 00012028) as Chairman & Managing Director of the company, is going to be completed on 19 ^th October 2023. In view of aforesaid, based on the recommendation of nomination and remuneration committee, subject to approval of members of the company at ensuing AGM, the Board of Directors has appointed Mr. Sushil Suri as the Chairman & Managing Director for further period of 3 years, i.e. from 20 ^th October 2023 to 19^th October 2026. The Board of Directors is seeking consent of members for re-appointment of Mr. Sushil Suri at 38 ^th AGM.

Mr. Sanjay Suri (DIN: 00041590), is liable to retire by rotation and being eligible, offered himself for reappointment, at ensuing AGM. The Board of Directors of the company, based on the recommendation of nomination and remuneration committee and subject to approval of members of the company at ensuing AGM, recommend reappointment of Mr. Sanjay Suri at ensuing AGM. The Board of Directors is seeking consent of members for reappointment of Mr. Sanjay Suri at 38 ^th AGM.

Declaration by Independent Director(s)

Pursuant to the provisions of Section 149 of the Act, the independent directors have submitted declarations that each of them meets the criteria of independence as provided in Section 149(6) of the Act along with Rules framed thereunder and Regulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"). There has been no change in the circumstances affecting their status as independent directors of the company.

Evaluation of Board, Committees and Directors

Pursuant to the provisions of the Act and Regulation 17 of Listing Regulations, the Board has carried out its own performance evaluation, that of the Committees and the individual performance of its directors. The way the evaluation has been carried out has been provided in the 'Corporate Governance Report'.

Familiarization Programme for Independent Directors

The details pertaining to Familiarization Programme for Independent Directors has been incorporated in 'Corporate Governance Report'.

Meetings of Board of Directors

The Board of Directors met Eight (8) times during the year under review, to transact the business of the company, the details of which are given in 'Corporate Governance Report'.

Independent Directors Meeting

During the year under review, a separate meeting of the Independent Directors of the company was held on 13^th February 2023, without the presence of NonIndependent Directors and members of the Management. The Independent Directors reviewed the performance of Non-Independent Directors and the Board as a whole, performance of chairperson of the company and assessed the quality, quantity, and timelines of flow of information between the company management and the Board. All the Independent Directors of the company were present in the meeting.

DIRECTORS' RESPONSIBILITY STATEMENT

As required under Section 134(3)(c) of the Act, your Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them, confirm that:

a) in the preparation of annual accounts, the applicable accounting standards have been followed, along with proper explanation relating to material departures, wherever applicable, within statutory prescribed timeline.

b) your directors have selected such accounting policies and applied them consistently and made judgements 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) your directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for prevention and detecting of fraud and other irregularities;

d) the annual accounts have been prepared on a going concern basis;

e) internal financial controls to be followed by the company have been laid down and such internal financial controls are adequate and were operating effectively;

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

MANAGERIAL REMUNERATION AND OTHER DISCLOSURES

Disclosure pursuant to Section 197 of the Act read with Rule

5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

a) Ratio of the remuneration of each Director to the median remuneration of the employee's (MRE) and other details pursuant to Section 197 (12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed and forms part of this report as ANNEXURE 'B'.

b) The Statement containing the particulars of employees as required under section 197(12) of the Act read with Rule 5(2) and other applicable Rules (if any) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the members excluding the aforesaid annexure. In terms of Section 136 of the Act the said annexure is open for inspection at the Registered and Corporate office of the company during the working hours. Any member interested in obtaining a copy of the same may write to the company and obtain the copy within statutory prescribed timeline.

c) No Director of the company, including its Managing Director or Whole-Time Director, is in receipt of any commission from the company or its subsidiary company.

AUDIT COMMITTEE

Your company has an Audit Committee in compliance of the provisions of Section 177 of the Act and Regulation 18 of Listing Regulations. The complete details with respect to Audit Committee, as required to be given under the aforesaid provisions, is given in the 'Corporate Governance Report'.

WHISTLE BLOWER POLICY / VIGIL MECHANISM

The company has established a Whistle Blower Policy/Vigil Mechanism through which its Directors, Employees and Stakeholders can report their genuine concern about unethical behaviours, actual or suspected fraud or violation of the company's Code of Conduct or Ethics Policy. The said policy provides for adequate safeguard against victimization and direct access to the higher level of superiors including Chairman of the Audit Committee in exceptional cases. The same is reviewed by the Audit Committee from time to time.

RISK MANAGEMENT

The company has in place a mechanism to inform the Board about the risk assessment and minimisation procedures and periodical review to ensure that management controls the risk through means of a properly defined framework.

The company has formulated and adopted Risk Management Policy to prescribe risk assessment, management, reporting and disclosure requirements of the Company.

The company being one of the top 1000 listed entities, have a Risk Management Committee of the Board of Directors for monitoring and reviewing of the risk and its management thereof.

NOMINATION AND REMUNERATION COMMITTEE

Your company has a Nomination and Remuneration Committee in compliance with the provisions of Section 178 the Act and Regulation 18 of Listing Regulations. The complete details with respect to the salient features of Nomination and Remuneration Committee, as required to be given under the aforesaid provisions, is given in the 'Corporate Governance Report'.

The company has adopted a Nomination and Remuneration Policy for Directors, Key Managerial Personnel (KMP) and other employees of the company as formulated by Nomination and Remuneration Committee, pursuant to provisions of Section 178 of the Act and Para A of Part D of Schedule II of Listing Regulations, which acts as a guideline for determining, inter-alia, qualifications, positive attributes and independence of a Director, matters relating to the remuneration, appointment, removal and evaluation of performance of the Directors, Key Managerial Personnel, Senior Management and other employees.

The detailed policy formulated by Nomination and Remuneration Committee can be accessed at http://www.morepen.com/pdf/Nomination-and- Remuneration-Policy.pdf

STATUTORY AUDITORS

M/s. S. P Babuta & Associates, Chartered Accountants, (FRN: 007657N), were appointed by the members, as the Statutory Auditors of the company, for a term of five (5) consecutive years, to hold office from the conclusion of the 37 ^th AGM of the company held on 27 ^th September 2022 until the conclusion of 42^nd AGM of the company, to be held in the year 2027.

EXPLANATION TO AUDITORS REPORT

The Notes on financial statement referred to in the Auditors' Report are self-explanatory and do not call for any further comments. The Statutory Auditor's report does not contain any qualifications, reservations, adverse remarks, or disclaimers, which would be required to be dealt with in the Boards' Report.

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Act read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, Mr. Praveen Dua, Company Secretary, Proprietor of M/s. PD and Associates, Company Secretaries, was appointed by Board of Directors of the company as Secretarial Auditors of the company for the financial year 2022-23. The Secretarial Audit Report is annexed and forms part of this report as ANNEXURE 'C'.

Pursuant to the compliance of the Listing Regulations Secretarial Audit Report of Dr. Morepen Ltd., is annexed herewith as ANNEXURE 'C - 1'. Dr. Morepen Ltd. was a material unlisted subsidiary company in the financial year 2020-2021 but has not qualified the criteria of material unlisted subsidiary from the financial year 2021-2022 onwards. The company is mandated by law to obtain Secretarial Audit Report up-to three financial years from the financial year from which the Dr. Morepen Ltd. ceased to be a material subsidiary, in accordance with second proviso of Regulation 15 (2) (a) of the Listing Regulations.

The annexed Secretarial Audit Report of Dr. Morepen Limited is of the second financial year, out of total three succeeding financial years from the financial year in which the status of Dr. Morepen Limited has been changed from the material subsidiary company to subsidiary company.

EXPLANATION TO SECRETARIAL AUDIT REPORT

The notes referred to in the secretarial auditor's report of the company are self-explanatory and do not call for any further comments. The secretarial auditor' report does not contain any qualification, reservation, adverse remark or disclaimer.

The observations made in point no. (g) i.e., cancellation of equity shares surrendered by FD holders, the company has filed application with the Stock Exchanges to take effect of such cancellation of equity shares from total listed capital of the company and awaiting their response, although said shares were cancelled by the Board of Directors. Further, in point no. (h) i.e., appointment of Central Government Nominee Directors, the requisite explanations are already given in point (i) of 'Legal and Corporate Matters', in this report.

The notes referred to in the secretarial auditor's report of Dr. Morepen Ltd., are self-explanatory and do not call for any further comments. The secretarial auditor' report does not contain any qualification, reservation, adverse remark or disclaimer.

BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT

The company being the part of top 1000 listed entity based on the market capitalisation as on 31^st March 2022, is required to annex Business Responsibility & Sustainability Report in compliance with Regulation 34(2)(f) of the Listing Regulations, with Annual Report, in enclosed as ANNEXURE 'D'.

SECRETARIAL STANDARDS

The company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively.

COST AUDIT

Pursuant to Section 148 of the Act, read with the Companies (Cost Records and Audit) Rules, 2014, the Cost Accounting Records maintained by the company are required to be audited by the Cost Auditors. The Board of Directors of the company on the recommendation of the Audit Committee, has appointed M/s. Vijender Sharma & Co., Cost Accountants, as the Cost Auditor of the company for the financial year ended 31^st March 2024, at a remuneration of '2.50 Lakhs, subject to the ratification of their remuneration by the members at the ensuing AGM.

INTERNAL FINANCIAL CONTROLS

The company has an Internal Control System, commensurate with the size, scale, and complexity of its operations. The internal financial controls are adequate and are operating effectively to ensure orderly and efficient conduct of business operations. The company's internal financial control procedures ensure that company's financial statements are reliable and prepared in accordance with the applicable laws.

Based on the internal audit report, process owners undertake corrective action in their respective areas and thereby strengthening the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee of the Board. The internal auditor carries out extensive audits throughout the year across all functional areas and submits its reports from time to time to the Audit Committee of the Board of Directors.

CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility ('CSR') Committee of the company was constituted by the Board to monitor implementation of CSR activities by the company in accordance with Section 135 read with Schedule VII of the Act read with (Corporate Social Responsibility Policy) Rules, 2014, as amended. The composition of the CSR Committee, CSR Policy and Projects approved have been placed on the website of the company. Based on the recommendation of the CSR Committee, your Board has adopted a CSR Policy indicating the activities to be undertaken by the Company as specified in Schedule VII.

The Report on CSR Activities with details of the composition of CSR Committee, CSR Policy, CSR initiatives and activities during the year is annexed and forms part of this report as ANNEXURE 'E'.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The company has in place a policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at Workplace pursuant to the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. The policy has set guidelines on the redressal and enquiry process that is to be followed by complainants and the ICC, while dealing with issues related to sexual harassment at the workplace. All women employees whether permanent, temporary, contractual and trainees are covered under this policy. The company has received one complaint, which is disposed of within prescribed time, during the year.

LEGAL & CORPORATE MATTERS

(i) In the matter of appointment of government directors on the board of the company under section 408 of erstwhile Companies Act, 1956, the company's appeal, against Hon'ble National Company Law Tribunal (NCLT) order dated 06^th October 2021, confirming appointment of two government directors on the board of the company for a period of 3 years, filed before Hon'ble National Company Law Appellate Tribunal ('NCLAT'), was dismissed vide its order dated 25^th April 2023.

However, the company filed an appeal before Hon'ble Supreme Court of India, against the aforesaid order passed by Hon'ble NCLAT. The Hon'ble Supreme Court has issued notice to the central government and has also granted a stay on the contempt proceedings. The matter is under adjudication.

(ii) In the matter of prosecutions launched by the Registrar of Companies/Central Government against the company and its director's u/s 235 of the erstwhile Companies Act, 1956, the company is defending against the said prosecutions before the Court and the matter is under adjudication.

ANNUAL RETURN

The Annual Return is available at the website of the company at http://www.morepen.com/pdf/Annual- Return.pdf

MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There are no material changes and commitments affecting the financial position of the company post-date of signing of Balance Sheet of the company.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS ANT OUTGO

The information relating to Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo, as required under Section 134(3)(m) of the Act read with the Companies (Accounts) Rules, 2014 is annexed and forms part of this report as ANNEXURE 'F'.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Act are given in the notes to the Financial Statements.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All the related party transactions that were entered into during the financial year were on arm's length basis and in the ordinary course of business. During the year under review there were no materially significant related party transactions, including arm's length transactions; hence, disclosure in Form AOC - 2 is not required.

The complete details with respect to contracts or arrangements with related parties as required to be given under the Act and Part C of Schedule V of Listing Regulations is given in the 'Corporate Governance Report'.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A detailed review of the operations and performance of the Company is set out in the Management Discussion and Analysis Report pursuant to Part B of Schedule V of Listing Regulations which forms part of the Annual Report for the year under review as ANNEXURE 'G'.

HUMAN RESOURCES

A detailed review of Human Resources of the company is set out in the Management Discussion and Analysis Report.

CORPORATE GOVERNANCE

A Report on Corporate Governance along with a certificate from the Practicing Company Secretary regarding compliance with conditions of Corporate Governance as stipulated in Part E of Schedule V of Listing Regulations forms part of this report and is annexed as ANNEXURE 'H'.

ACKNOWLEDGMENTS

The Directors would like to express their gratitude to various stakeholders for their cooperation, continuous support, and confidence in the management of the company. They extend their thanks to the shareholders, customers, dealers, suppliers, bankers, governments, and all other business associates for their valuable contributions to the company's success. Their support has been instrumental in the company's growth and achievements.

For and on behalf of Board of Directors

	Sushil Suri
Place: Gurugram, Haryana	(Chairman & Managing Director)
Date: 05^th August 2023	DIN:00012028