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Directors Report of Zydus Lifesciences Ltd.

Mar 31, 2023

Your Directors are pleased to present the Twenty Eighth Annual Report and the Audited Financial Statements of Zydus Lifesciences Limited ("the Company") for the Financial Year ended on March 31, 2023.

FINANCIAL HIGHLIGHTS:

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards ("Ind ASâ) notified under section 133 of The Companies Act, 2013 ("the Act"), read with rule 7 of The Companies (Accounts) Rules, 2014 ("the Accounts Rules").

The standalone and consolidated financial performance of the Company for the Financial Year ended on March 31, 2023 is summarized below:

Particulars	Standalone		H in mio. Consolidated
Particulars	2022-23	2021-22	2022-23	2021-22
Revenue from Operations and Other Income	92,800	80,156	174,240	153,346
Profit before Interest, Depreciation, Amortisation and Impairment	30,028	20,968	40,465	35,654
Expenses & Tax (âPBIDTâ)
Less: Finance Cost	2,782	1,349	1,299	1,270
Less: Depreciation, Amortisation and Impairment Expenses	4,886	4,787	7,227	7,130
Less/(Add) : Exceptional Items	2,038	3,193	6,042	(1,127)
Profit Before Tax (âPBTâ)	20,322	11,639	25,897	28,381
Less: Tax Expenses	5,030	3,060	5,878	5,117
Profit After Tax (âPATâ)	15,292	8,579	20,019	23,264
Add: Share of Profit of Joint Ventures (Net of Tax)	-	-	946	462
Profit for the year from continuing operations	15,292	8,579	20,965	23,726
Add: (Loss) / Profit after tax from discontinued operations	-	-	(46)	22,457
Profit for the year	15,292	8,579	20,919	46,183
Attributable to:
Owners of the Parent	15,292	8,579	19,603	44,873
Non-Controlling Interests	-	-	1,316	1,310
Other Comprehensive Income / (Loss) (Net of Tax)	(141)	42	(3,144)	(1,045)
Total comprehensive income	15,151	8,621	17,775	45,138
Attributable to:
Owners of the Parent	15,151	8,621	16,459	43,832
Non-Controlling Interests	-	-	1,316	1,306
Opening balance in Retained Earnings	92,894	87,969	154,958	113,842
Amount available for appropriation	108,204	96,479	174,563	158,678
Dividend	2,530	3,585	2,665	3,720
Closing Balance in Retained Earnings	105,674	92,894	171,898	154,958
Earnings Per Share (âEPSâ) from continuing operations (Face Value of	15.06	8.38	19.35	21.90
shares of Re. 1/- each)
EPS from continuing and discontinued operations (Face Value of	15.06	8.38	19.30	43.83
shares of Re. 1/- each)
Note: Previous year figures have been regrouped / re-arranged wherever necessary.

The Company proposes to retain an amount of H 105,674 mio. (Rupees One Lakh Five Thousand Six Hundred Seventy Four Million only) in the Statement of Profit and Loss. The Company proposes not to transfer any amount to general reserve on declaration of dividend.

RESULTS OF OPERATIONS:

During the year under review, the consolidated revenue from operations and other income was H 174,240 mio. (Rupees One Lakh Seventy Four Thousand Two Hundred Forty Million only). The Company has achieved consolidated PBT from continuing operations of H 25,897 mio. (Rupees Twenty Five Thousand Eight Hundred Ninety Seven Million only) and consolidated PAT (from continuing and discontinued operations) of H 20,919 mio. (Rupees Twenty Thousand Nine Hundred Nineteen Million only). The Company achieved a consolidated total Comprehensive Income of H 17,775 mio. (Rupees Seventeen Thousand Seven Hundred Seventy Five Million only). The consolidated EPS for the Financial Year ended on March 31, 2023 was H 19.30 (Rupees Nineteen and Paisa Thirty).

During the year under review, the standalone revenue from operations and other income was H 92,800 mio. (Rupees Ninety Two Thousand Eight Hundred only). The Company has achieved standalone PBT of H 20,322 mio. (Rupees Twenty Thousand Three Hundred Twenty Two Million only) and standalone PAT of H 15,292 mio. (Rupees Fifteen Thousand Two Hundred Ninety Two Million only). The Company achieved a standalone total Comprehensive Income of H 15,151 mio. (Rupees Fifteen Thousand One Hundred Fifty One Million only). The standalone EPS for the Financial Year ended on March 31, 2023 was H 15.06 (Rupees Fifteen and Paisa Six).

DIVIDEND:

Your Directors have recommended a final dividend of H 6.00/-(Rupees Six only) (i.e. 600%) per equity share of Re. 1/- (Rupee One only) each fully paid-up for the Financial Year ended on March 31, 2023. The final dividend, if declared by the members at the ensuing Annual General Meeting ("AGMâ), will result into cash outflow of H 6,073.22 mio. (Rupees Six Thousand Seventy Three Million Two Hundred Twenty Thousand only) and will be paid to those members, whose names stand registered in the Register of Members on Friday, July 28, 2023 i.e. the record date. In respect of shares held in demateriaLized mode, it will be paid to the members whose names are furnished by the National Securities Depository Limited and the Central Depository Services (India) Limited, as beneficiaL owners. The Dividend Payout Ratio for the Financial Year ended on March 31, 2023 is 31.01% of profits from continuing operations.

Pursuant to and in compliance with regulation 43A of The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("the Listing Regulations"), the Company has formulated Dividend Distribution Policy, which is approved by the Board of Directors ("the Boardâ) and is uploaded on Company''s website and the webLink of the

same is provided in a separate section of Corporate Governance Report, which forms a part of this Annual Report.

BUYBACK OF EQUITY SHARES:

The Board at its meeting held on May 20, 2022 passed a resolution to buyback 1,15,38,461 (one crore fifteen Lakh thirty eight thousand four hundred sixty one) equity shares of H 1/- (Rupee One only) each fully paid-up, representing 1.13% of the total number of pre-buyback equity shares at a price of H 650/- (Rupees Six Hundred Fifty only) aggregating to H 7,500 mio. (Rupees Seven Thousand Five Hundred Million only), being 6.85% and 4.36% of the aggregate of the fuLLy paid-up equity share capital and free reserves of the Company as per the audited standalone and consolidated financial statements of the Company as at March 31, 2022, respectively (which is within the statutory Limits of 10% of the aggregate of the fully paid-up equity share capital and free reserves of the Company, based on both standalone and consolidated financial statements of the Company, under the Board approval route as per the provisions of the Act and The SEBI (Buyback of Securities) Regulations, 2018 ("the Buyback Regulationsâ)), excluding the transaction cost reLating to the buyback, from the members of the Company, including the promoters of the Company, on a proportionate basis under the tender offer route in accordance with the provisions of the Buyback ReguLations and the Act and RuLes made thereunder.

Pursuant to and in compliance with the provisions of section 68 of the Act read with rule 17 of The Companies (Share Capital and Debentures) RuLes, 2014 and the Buyback ReguLations, the amount of buyback was distributed to the members on July 15, 2022 and the corresponding equity shares were extinguished on July 19, 2022. Pre and post buyback shareholding structure is as under:

Pre buyback shareholding	No. of shares bought back	Post buyback shareholding
102,37,42,600 equity shares of H 1/- each fully paid-up	1,15,38,461 equity shares of H 1/-each fully paid-up	101,22,04,139 equity shares of H 1/- each fully paid-up

SECRETARIAL STANDARDS:

The Company is in compliance with Secretarial Standards on Meetings of Board of Directors and General Meetings issued by The Institute of Company Secretaries of India.

MANAGEMENT DISCUSSION AND ANALYSIS (âMDAâ):

Pursuant to and in compliance with the provisions of regulation 34(2)(e) of the Listing Regulations, MDA for the Financial Year ended on March 31, 2023 is presented in a separate section which forms a part of the Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS:

Pursuant to and in compLiance with the provisions of Ind AS-110 on Consolidation of Financial Statements read with Ind

AS-28 on Accounting for Investments in Associates and Joint Ventures and as prescribed under the provisions of the Act read with Schedule III of the Act and Rules made thereunder and the Listing Regulations, the Audited Consolidated Financial Statements are provided in the Annual Report, which show the financial resources, assets, liabilities, income, profits and other details of the Company, its associate companies and its subsidiary companies after elimination of minority interest, as a single entity.

SUBSIDIARY COMPANIES:

i. The Company has 15 (fifteen) Indian subsidiary companies (including 6 (six) step down subsidiaries), 29 (twenty nine) foreign subsidiary companies (including 19 (nineteen) step down subsidiaries) and 3 (three) joint venture companies as at March 31, 2023. There has been no material change in the nature of business of the Company, subsidiary companies and joint venture companies. There is 1 (one) partnership firm in the group, in which 2 (two) subsidiary companies of the Company are the partners. More details are provided in the Audited Financial Statements. During the year under review, the Board has reviewed the performance / affairs of the subsidiary companies.

ii. The Company has incorporated Zydus Pharmaceuticals UK Limited in United Kingdom as a wholly owned subsidiary company on February 8, 2023.

iii. The Company has incorporated Zynext Ventures Pte. Ltd. ("ZVPLâ) in Singapore as a wholly owned subsidiary on February 21, 2023.

iv. ZVPL has incorporated Zynext Ventures USA LLC as its wholly owned subsidiary in the United States of America on March 3, 2023.

v. Pursuant to the provisions of section 136 of the Act, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. The Company will make available free of cost the Audited Financial Statements of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The Financial Statements of the subsidiary companies will also be kept open for inspection. Pursuant to and in compliance with the provisions of sections 129, 134 and 136 of the Act and Rules made thereunder and regulation 33 of the Listing Regulations, the Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.

vi. Pursuant to and in compliance with the provisions of section 129(3) of the Act and Rules made thereunder, a statement containing the salient features of the financial statements of its subsidiaries and joint venture companies in the format prescribed under the rules is attached to the audited financial statements. The policy relating to material subsidiaries, pursuant to the provisions of regulation

16(1)(c) of the Listing Regulations is uploaded on Company''s website and the weblink of the same is provided in a separate section of Corporate Governance Report, which forms a part of this Annual Report.

vii. Pursuant to and in compliance with the provisions of section 134 and rule 8(1) of the Accounts Rules, the details of performance of subsidiaries and joint ventures of the Company are covered in the MDA and Audited Financial Statements.

viii. Your Company funds its subsidiaries, from time to time, in the ordinary course of business and as per their funding requirements, through equity, loan, guarantee and/or other means for their business purposes.

ix. Pursuant to the Company''s policy to determine material subsidiary companies, read with the provisions of the Act and the Listing Regulations, Zydus Healthcare Limited, Zydus Wellness Limited, Zydus Wellness Products Limited, Zydus Animal Health and Investments Limited and Zydus Pharmaceuticals USA Inc., USA are the material subsidiary companies of the Company, the details of which are provided in the Corporate Governance Report, which forms a part of this Annual Report.

WIND SOLAR HYBRID POWER PROJECT:

In line with the philosophy to enhance the share of renewable power source in its operations and to comply with regulatory requirement for being a âcaptive user'' under Electricity Laws, 2003, the Company has entered into Share Purchase, Subscription and Shareholders'' Agreement to acquire stake in AMP Energy Green Nine Private Limited ("AMPâ), for setting up captive Wind Solar Hybrid Power Project in Gujarat. The Company has invested in the equity shares and Compulsorily Convertible Debentures ("CCDsâ) equivalent to 12.17% of the equity share capital and CCDs of AMP, on a fully diluted basis, as at March 31, 2023 and the details of investment are provided in the Note No. 4-Investments of the Audited Standalone Financial Statements.

ACQUISITION OF BUSINESS UNDERTAKING:

The Company has entered into a Business Transfer Agreement ("BTAâ) for purchase of one of the business undertakings ("Business Undertakingâ) of Watson Pharma Private Limited ("Watsonâ) on a going concern basis by way of slump sale, without values being assigned to individual assets and liabilities, on cash-free and debt-free basis at a lump-sum consideration of H 467.70 mio. (Rupees Four Hundred Sixty Seven Million Seven Hundred Thousand only), subject to certain closing date adjustments as provided in the BTA, with effect from such date and in such manner and on the terms and conditions as mentioned in the BTA.

Business Undertaking of Watson is engaged in the business of developing, manufacturing, marketing and sale of Active Pharmaceutical Ingredients ("APIsâ). The said transaction will help the Company to expand its presence in the APIs space through increase in product pipeline and manufacturing capacity.

EXTRA ORDINARY GENERAL MEETING:

During the Financial Year ended on March 31, 2023, 1 (one) extra ordinary general meeting of the members of the Company was held on December 30, 2022 to appoint Mr. Akhil Monappa (DIN-09784366) and Ms. Upasana Konidela (DIN-02781278) as the Independent Directors ("IDsâ) of the Company for the first term of 5 (five) consecutive years.

INSURANCE:

The Company''s plants, properties, equipments and stocks / inventory are adequately insured against all major risks. The Company has insurance cover for product liability and clinical trials. The Company has also taken Directors'' and Officers'' Liability Policy to provide coverage against the liabilities arising on them.

PUBLIC DEPOSITS:

The Company has not accepted any deposits from public as per the provisions of sections 73 and 74 of the Act read with Rules made thereunder and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

COST ACCOUNTS AND RECORDS:

The Company has made and maintained the cost accounts and records as specified under section 148(1) of the Act and Rules made thereunder.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:

In terms of provisions of section 134(3)(g) of the Act, details of loans, guarantees and investments covered under section 186(4) of the Act are given in the notes to the Audited Standalone Financial Statements.

FRAUDS:

In terms of section 134(3)(ca) of the Act, during the Financial Year ended on March 31, 2023, the statutory auditors, cost auditors and the secretarial auditor have not reported to the Audit Committee, under section 143(12) of the Act, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board''s Report.

RELATED PARTY TRANSACTIONS:

All contracts / arrangements / transactions entered into by the Company during the Financial Year ended on March 31, 2023 with related parties were in the ordinary course of business and on an arm''s length basis and had no conflict with the interest of the Company. All related party transactions are placed before the Audit Committee on quarterly basis for review and approval. As provided under section 134(3)(h) of the Act and Rules made and the Listing Regulations, disclosure of particulars of material transactions (i.e. transactions exceeding H 10,000 mio. (Rupees Ten Thousand Million only) or 10% of the annual consolidated

turnover as per the last Audited Financial Statements) with related parties entered into by the Company in the prescribed Form No. AOC-2 is annexed to this report as Annexure-A. Disclosures on related party transactions are set out in Note No. 41 of the Audited Standalone Financial Statements.

The weblink to view the policy on materiality of related party transactions and dealing with related party transactions is provided in a separate section of Corporate Governance Report, which forms a part of this Annual Report.

Pursuant to and in compliance with provisions of regulation 23(9) of the Listing Regulations, the Company has filed the related party transactions with the stock exchanges.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

As at March 31, 2023, your Company''s Board comprised of 10 (ten) Directors, of which 2 (two) are Executive Directors, 2 (two) are Non-Executive Directors and 6 (six) are IDs (including 2 (two) woman IDs). Other statutory details are provided in the Corporate Governance Report, which forms a part of this Annual Report.

i. Appointment and re-appointment of IDs:

Based on the recommendation of Nomination and Remuneration Committee ("NRCâ) and the Board, the members at their extra ordinary general meeting held on December 30, 2022 passed special resolutions to appoint Mr. Akhil Monappa (DIN-09784366) and Ms. Upasana Konidela (DIN-02781278) as the IDs of the Company for the first term of 5 (five) consecutive years.

Mr. Bhadresh K. Shah (DIN-00058177) was appointed as an ID of the Company at the AGM held on August 19, 2019, to hold office for the first term of 5 (five) consecutive years with effect from December 6, 2018 till to December 5, 2023. The NRC has considered his diverse skills, leadership capabilities, knowledge and expertise in manufacturing, marketing, business and management. In view of the above and based on his performance evaluation by the NRC, the NRC and the Board have recommended the re-appointment of Mr. Bhadresh K. Shah as an ID of the Company for the second term of 5 (five) consecutive years with effect from December 6, 2023 to December 5, 2028, notwithstanding that he shall attain the age of 75 (seventy five) years during the said second term, in accordance with the provisions of sections 149, 150 and 152 of the Act and regulations 16(1)(b), 17(1A) and 25(2A) of the Listing Regulations.

ii. Retirement by rotation:

Pursuant to and in compliance with the provisions of section 152(6) of the Act and in terms of the Articles of Association of the Company, Dr. Sharvil P. Patel, Managing Director (DIN-00131995) and Mr. Ganesh N. Nayak, Executive Director (DIN-0 0017481), will retire by rotation at the ensuing AGM and being eligible, offer themselves for re-appointment. The Board recommends their re-appointment.

iii. Declaration of independence:

Pursuant to and in compliance with the provisions of section 134(3)(d) of the Act, the Company has received declaration of independence as stipulated under sections 149(6) and 149(7) of the Act and regulations 16(1)(b) and 25 of the Listing Regulations from IDs confirming that they are not disqualified for continuing as an ID. There has been no change in the circumstances affecting their status as an ID of the Company.

All the Directors of the Company, who are required to get registered, have registered themselves with The Indian Institute of Corporate Affairs. Further, as per the declarations received, none of the Directors of the Company are required to give online proficiency test, except 1 (one) ID (who shall comply with the provisions within the prescribed time frame), as per the first proviso to rule 6(4) of The Companies (Appointment and Qualification of Directors) Rules, 2014, as amended from time to time.

iv. Profile of Directors seeking re-appointment:

Pursuant to and in compliance with the provisions of regulation 36(3) of the Listing Regulations and standard 1.2.5 of Secretarial Standard on General Meetings, particulars of Directors (Dr. Sharvil P. Patel, Mr. Ganesh N. Nayak and Mr. Bhadresh K. Shah) seeking re-appointment at the ensuing AGM are annexed to the notice convening Twenty Eighth AGM.

v. Key Managerial Personnel:

The following persons are the Key Managerial Personnel ("KMPâ) as on March 31, 2023:

1. Dr. Sharvil P. Patel, Managing Director,

2. Mr. Ganesh N. Nayak, Executive Director,

3. Mr. Nitin D. Parekh, Chief Financial Officer and

4. Mr. Dhaval N. Soni, Company Secretary.

vi. Board Evaluation:

Pursuant to and in compliance with the provisions of the Act and Rules made thereunder and as provided in Schedule IV of the Act and the Listing Regulations, the NRC and the Board have carried out an annual evaluation of its own performance, the Directors individually as well as its committees. In terms of section 134(3)(p) of the Act read with rule 8(4) of the Account Rules, the manner in which the evaluation was carried out is provided in the Corporate Governance Report, which forms a part of this Annual Report.

In a separate meeting of IDs, the performance of the non-independent directors, the Board as a whole and the Chairman of the Company was evaluated, taking into account the views of executive directors and non-executive directors.

The Board and the NRC reviewed the performance of individual directors on the basis of criteria fixed by the Board / NRC.

The functioning of the Board, the Committees and performance of individual Directors was found satisfactory.

vii. Nomination and Remuneration Policy:

The Board has, on the recommendation of the NRC, framed a policy on selection and appointment of Directors, Senior Management and their remuneration. The Nomination and Remuneration Policy and weblink of the same is provided in a separate section of Corporate Governance Report, which forms a part of this Annual Report.

viii. Pecuniary relationship:

During the year under review, except those disclosed in the Audited Financial Statements, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company.

DIRECTORS'' RESPONSIBILITY STATEMENT:

In terms of sections 134(3)(c) and 134(5) of the Act and to the best of their knowledge and belief, and according to the information and explanations provided to them, your Directors hereby make the following statements:

i. that in preparation of the Financial Statements, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any,

ii. that such accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2023 and of the profit of the Company for the year ended on that date,

iii. that proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities,

iv. that the annual financial statements have been prepared on a going concern basis,

v. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively, and

vi. that the systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

TRANSFER OF SHARES AND DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND (âIEPFâ):

During the year under review, pursuant to and in compliance with the provisions of sections 124 and 125 of the Act and Rules made thereunder, the Company has transferred-

i. 86,432 (eighty six thousand three hundred forty two) equity shares held by 69 (sixty nine) members whose dividend has remained unclaimed / unpaid for a consecutive period of 7 (seven) years to IEPF and

ii. '' 5.99 mio. (Rupees Five Million Nine Hundred Ninety Thousand only) held by 2,634 (two thousand six hundred thirty four) members, being the unclaimed dividend, pertaining to the interim dividend for the Financial Year ended on March 31, 2015 to IEPF after giving notice to the members to claim their unclaimed / unpaid dividend.

As at March 31, 2023, 14,78,733 (one million four hundred seventy eight thousand seven hundred thirty three) equity shares are lying with IEPF.

Further, during April / May 2023, the Company has transferred-

i. 42,464 (forty two thousand four hundred sixty four) equity shares held by 66 (sixty six) members whose dividend has remained unclaimed / unpaid for a consecutive period of 7 (seven) years to IEPF and

ii. '' 7.43 mio. (Rupees Seven Million Four Hundred Thirty Thousand only) held by 3,443 (three thousand four hundred forty three) members, being the unclaimed dividend, pertaining to the interim dividend for the Financial Year ended on March 31, 2016 to IEPF after giving notice to the members to claim their unclaimed / unpaid dividend.

BOARD MEETINGS:

5 (five) Board meetings were held during the Financial Year ended on March 31, 2023 and in compliance with provisions of section 173(1) of the Act, time gap between any 2 (two) Board meetings was not more than 120 (one hundred twenty) days. The Board approved 2 (two) resolutions by circulation, vide circulars dated April 1, 2022 and March 30, 2023. Other information with regard to the Board meetings is given in the Corporate Governance Report, which forms a part of this Annual Report.

AUDIT COMMITTEE:

Pursuant to and in compliance with the provisions of section 177(8) of the Act and regulation 18 of the Listing Regulations, the information about composition of Audit Committee and other details are given in the Corporate Governance Report, which forms a part of this Annual Report.

RECOMMENDATION OF COMMITTEES:

The Board has accepted the recommendations of all the committees constituted by the Board.

CORPORATE GOVERNANCE:

The Company has complied with the Corporate Governance requirements under the Act and as stipulated under the Listing Regulations. A separate section on detailed report on the Corporate Governance practices followed by the Company under the Listing Regulations, along with a certificate from Manoj Hurkat & Associates, Practicing Company Secretaries, confirming the compliance, forms a part of this Annual Report.

AUDITORS:

i. Statutory Auditors and Audit Report:

Deloitte Haskins & Sells LLP, Chartered Accountants ("Deloitteâ), were appointed as the Statutory Auditors of the Company for a period of 5 (five) consecutive years from the conclusion of Twenty Second AGM till the conclusion of Twenty Seventh AGM.

Based on the recommendation of the Audit Committee and the Board, members at their Twenty Seventh AGM passed the resolution to re-appoint Deloitte as the Statutory Auditors of the Company for a further period of 5 (five) consecutive years from the conclusion of Twenty Seventh AGM till the conclusion of Thirty Second AGM in the calendar year 2027, with an authority to the Audit Committee and the Board to decide the remuneration payable to them.

Deloitte have furnished a declaration confirming their independence as well as their arm''s length relationship

with the Company and that they have not taken up any prohibited non-audit assignments for the Company.

The Board has duty reviewed the Statutory Auditor''s Report and the observations and comments, appearing in the report, are self-explanatory and do not call for any further explanation / clarification by the Board as provided under section 134(3)(f) of the Act.

ii. Cost Auditors:

Pursuant to the provisions of section 148(3) of the Act and rules 3 and 4 of The Companies (Cost Records and Audit) Rules, 2014, ("the Cost Rules") the cost audit records maintained by the Company in respect of Drugs and Pharmaceuticals are required to be audited. The Board had, on the recommendation of the Audit Committee, appointed Dalwadi & Associates, Cost Accountants to audit the cost records of the Company for the Financial Year ending on March 31, 2024 on a remuneration of '' 1.41 mio. (Rupees One Million Four Hundred Ten Thousand only) plus applicable Goods and Services Tax and out of pocket expenses at actuals. Pursuant to the provisions of section 148 of the Act and rule 14(a)(ii) of The Companies (Audit and Auditors) Rules, 2014, the remuneration payable to the Cost Auditors is required to be placed before the members in a general meeting for ratification. Accordingly, a resolution seeking ratification by members for the remuneration payable to Dalwadi & Associates is included at Item No. 7 of the Notice convening Twenty Eighth AGM.

iii. Secretarial Auditors and Secretarial Audit Report:

Pursuant to and in compliance with the provisions of section 204 of the Act , rule 9 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 ("Managerial Personnel Rules") and regulation 24A(1) of the Listing Regulations, the Board has appointed Manoj Hurkat & Associates, Practicing Company Secretaries to undertake the Secretarial Audit of the Company for the Financial Year ended on March 31, 2023. The Secretarial Audit Report is annexed herewith as Annexure-B. The Board has duly reviewed the Secretarial Audit Report and the observations and comments, appearing in the report are self-explanatory and do not call for any further explanation / clarification by the Board as provided under section 134(3)(f) of the Act.

Further, pursuant to and in compliance with the provisions of regulation 24A(1) of the Listing Regulations, the secretarial audit reports of Zydus Healthcare Limited and Zydus Animal Health and Investments Limited, unlisted material subsidiary companies incorporated in India are annexed herewith as Annexure-B1 and Annexure-B2 respectively.

Zydus Wellness Products Limited ("ZWPL") is a wholly owned subsidiary of Zydus Wellness Limited ("ZWL"), a listed entity and a subsidiary of the Company. ZWL and ZWPL are also material subsidiaries of the Company. In view of the same, secretarial audit reports of ZWL and

ZWPL are not required to be annexed with the Boards'' Report of the Company.

iv) Annual Secretarial Compliance Report:

Pursuant to and in compliance with the provisions of regulation 24A(2) of the Listing Regulations, Manoj Hurkat & Associates, Practicing Company Secretaries have issued Annual Secretarial Compliance Report for the Financial Year ended March 31, 2023. Said report was presented at the Board meeting held on May 18, 2023.

AWARDS AND RECOGNITIONS:

Details of awards and recognitions are provided in separately in this Annual Report.

BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT (âBRSRâ):

Pursuant to and in compliance with the provisions of regulation 34(2)(f) of the Listing Regulations, a separate section on BRSR forms a part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (âCSRâ) AND ENVIRONMENT SOCIAL AND GOVERNANCE (âESGâ) COMMITTEE:

Pursuant to and in compliance with section 135 of the Act read with section 134(3)(o) and rule 5 of The Companies (Corporate Social Responsibility Policy) Rules, 2014 ("the CSR Rules"), the Board has constituted a CSR and ESG Committee. CSR Policy is placed on the Company''s website. The details of the CSR and ESG Committee constitution, CSR activities and other details, as required under section 135 of the Act and the CSR Rules, are given in the CSR Report at Annexure-C.

The Board at its meeting held on August 10, 2022 adopted the charter for ESG part of the CSR and ESG Committee.

BUSINESS RISK MANAGEMENT:

Pursuant to and in compliance with the provisions of section 134(3)(n) of the Act and regulation 21 of the Listing Regulations, the Company has constituted a Risk Management Committee ("RMC"). The details of the RMC and its terms of reference are set out in the Corporate Governance Report, which forms a part of this Annual Report.

A well-defined risk management mechanism covering the risk mapping and trend analysis, risk exposure, potential impact and risk mitigation process is in place. The objective of the mechanism is to minimize the impact of risks identified and taking advance actions to mitigate them. The mechanism works on the principles of probability of occurrence and impact, if triggered. A detailed exercise is being carried out to identify, evaluate, monitor and manage both business and non-business risks. The Company has framed a Risk Management Policy to identify and assess the key risk areas, monitor and report compliance and effectiveness of the policy and procedure.

Discussion on risks and concerns are covered in the MDA, which forms a part of this Annual Report.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY:

Pursuant to and in compliance with the provisions of section 134(5)(e) of the Act read with rule 8(5) of the Account Rules, the Company has designed and implemented a process driven framework for Internal Financial Controls ("IFCâ). For the Financial Year ended on March 31, 2023, the Board is of the opinion that the Company has sound IFC commensurate with the size, scale and complexity of its business operations. The IFC operates effectively and no material weakness exists. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and / or improved internal controls whenever the effect of such gaps would have a material effect on the Company''s operations.

The Company has a well-placed, proper and adequate IFC system, which ensures:

â¢ The orderly and efficient conduct of its business,

â¢ Safeguarding of its assets,

â¢ The prevention and detection of frauds and errors,

â¢ The accuracy and completeness of the accounting records and

â¢ The timely preparation of reliable financial information.

The Board reviews the effectiveness of controls documented as a part of IFC framework and take necessary corrective and preventive actions wherever weaknesses are identified as a result of such reviews. This review covers entity level controls, process level controls, fraud risk controls and Information Technology environment.

Based on this evaluation, no significant events had come to notice during the Financial Year ended on March 31, 2023 that have materially affected, or are reasonably likely to materially affect, our IFC. The management has also come to a conclusion that the IFC and other financial reporting was effective during the Financial Year ended on March 31, 2023 and is adequate considering the business operations of the Company. The Statutory Auditors of the Company have audited the IFC with reference to Financial Reporting and their Audit Report is annexed as an Annexure to the Independent Auditors'' Report under Standalone Financial Statements and Consolidated Financial Statements.

MANAGING THE RISKS OF FRAUD, CORRUPTION AND UNETHICAL BUSINESS PRACTICES:

i. Vigil Mechanism / Whistle Blower Policy:

The Company has built a reputation for doing business with honesty and integrity and it has zero tolerance for any type of unethical behavior or wrongdoing. The Company has in place a stringent vigil system to report unethical behavior in order to promote professionalism, fairness, dignity and ethical behavior in its employees.

Pursuant to and in compliance with the provisions of section 177(9) of the Act, rule 7 of The Companies (Meetings of Board and its Powers) Rules, 2014 and regulation 22 of the Listing Regulations, the Company has established vigil mechanism and framed Whistle Blower Policy for Directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Company''s Code of Conduct or Ethics Policy and Insider Trading Regulations. Whistle Blower Policy is uploaded on Company''s website and the weblink of the same is provided in a separate section of Corporate Governance Report, which forms a part of this Annual Report.

ii. Zydus Business Conduct Policy:

The Company has framed "Zydus Business Conduct Policyâ ("Business Conduct Policyâ) and is monitored by the President-Group Human Resources. Every employee is required to review and sign the policy at the time of joining and an undertaking shall be given for adherence to the Business Conduct Policy. The objective of the Business Conduct Policy is to conduct the business in an honest, transparent and ethical manner. The Business Conduct Policy provides for anti-bribery and avoidance of other corruption practices by the employees of the Company.

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

The Company has zero tolerance towards sexual harassment at the workplace and has adopted a policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. The Company has constituted an Internal Complaints Committee as required under the said Act. The Company always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment. The Company has in place a robust policy on prevention of sexual harassment at workplace. The policy aims at prevention of harassment of employees and lays down the guidelines for identification, reporting and prevention of sexual harassment.

During the Financial Year ended on March 31, 2023, 1 (one) complaint was received and the same was resolved. No complaint was pending to be resolved as at March 31, 2023.

ANNUAL RETURN:

Pursuant to and in compliance with the provisions of section 92(3) read with section 134(3)(a) of the Act, Annual Return for the Financial Year ended on March 31, 2023, in prescribed Form No. MGT-7 is available on the website of the Company at https://www.zvduslife.com/investor/#FinancialInformation1785.

PARTICULARS OF EMPLOYEES:

The information required under section 197(12) of the Act read with rule 5(1) of Managerial Personnel Rules is provided in Annexure-D.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under section 134(3)(m) of the Act read with rule 8(3) of the Accounts Rules, is provided in Annexure-E.

GENERAL DISCLOSURES:

Your Directors state that the Company has made disclosures in this report for the items prescribed in section 134(3) of the Act and rule 8 of the Accounts Rules to the extent the transactions took place on those items during the year under review.

During the Financial Year ended on March 31, 2023, the Company has not issued any shares with differential voting rights and sweat equity shares.

There are no proceedings initiated/pending against your Company under the Insolvency and Bankruptcy Code, 2016 which materially impact the business of the Company.

There were no instances where your Company required the valuation for one time settlement or while taking the Loan from the Banks or Financial institutions.

In terms of section 134(3)(L) of the Act, apart from what is mentioned in this report, there are no materiaL changes and commitments affecting the financial position of the Company between the end of the financial year to which the financial statements relate and the date of this report.

ACKNOWLEDGMENT:

Your Directors pLace on record their sincere appreciation for the continued co-operation and support extended to the Company by various Banks. Your Directors also thank the MedicaL Profession, the Trade and Consumers for their patronage to the Company''s products. Your Directors aLso pLace on record sincere appreciation of the continued hard work put in by the employees at all levels. The Directors aLso thank the Company''s customers, vendors, investors, business associates, Stock Exchanges, Government of India, State Governments and various departments and agencies for their support and co-operation.

Your Directors appreciate and value the contribution made by every member of the Zydus group.

Mar 31, 2022

Your Directors are pleased to present the Twenty Seventh Annual Report and the Audited Financial Statements of Zydus Lifesciences Limited ("the Companyâ) for the Financial Year ended on March 31, 2022.

NAME CHANGE:

Pursuant to the resolutions passed by the Board of Directors ("the Boardâ) and the members and upon receipt of fresh certificate of incorporation from Registrar of Companies, Ahmedabad, Gujarat, name of Cadila Healthcare Limited is changed to Zydus Lifesciences Limited w.e.f. February 24, 2022. The change of name has not affected any of the rights of the Company or of the members / stakeholders of the Company. Further, with the name change, the objects and the line of business remains unaltered.

Memorandum of Association and Articles of Association of the Company were altered consequent upon change in name of the Company.

FINANCIAL HIGHLIGHTS:

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards ("Ind ASâ) notified under section 133 of the Companies Act, 2013 ("the Actâ), read with rule 7 of The Companies (Accounts) Rules, 2014 ("Accounts Rulesâ).

The standalone and consolidated financial performance of the Company, for the Financial Year ended on March 31, 2022 is summarized below:

'' in mio.
	Standalone		Consolidated
Particulars	For the year ended on March 31, 2022	For the year ended on March 31, 2021	For the year ended on March 31, 2022	For the year ended on March 31, 2021
Revenue from Operations and Other Income	81,606	78,693	154,899	144,491
Profit before Interest, Depreciation, Amortisation and Impairment Expenses & Tax (PBIDT)	17,775	22,105	36,781	32,276
Less: Finance Cost	1,349	709	1,270	1,588
Less: Depreciation, Amortisation and Impairment Expenses	4,787	4,511	7,130	6,696
Less/(Add) : Exceptional Items	3,193	1,875	(1,127)	2,051
Profit Before Tax (PBT)	11,639	16,885	28,381	23,992
Less: Tax Expenses	3,060	2,123	5,117	1,936
Profit After Tax (PAT)	8,579	14,762	23,264	22,056
Add: Share of Profit of Joint Ventures (Net of Tax)	-	-	462	474
Profit for the year from continuing operations	8,579	14,762	23,726	22,530

	Standalone		Consolidated
Particulars	For the year ended on March 31, 2022	For the year ended on March 31, 2021	For the year ended on March 31, 2022	For the year ended on March 31, 2021
Add: Profit after tax from discontinued operations	-	-	22,457	(680)
Profit for the year	8,579	14,762	46,183	21,850
Attributable to:
Owners of the Parent	8,579	14,762	44,873	21,336
Non-Controlling Interests	-	-	1,310	514
Other Comprehensive Income / (Loss) (Net of Tax)	42	81	(1,045)	731
Total Comprehensive Income	8,621	14,843	45,138	22,581
Attributable to:
Owners of the Parent	8,621	14,843	43,832	22,059
Non-Controlling Interests	-	-	1,306	522
Opening balance in Retained Earnings	87,969	73,360	113,842	86,124
Amount available for appropriation	96,479	87,969	158,678	111,682
Transferred from Debenture Redemption Reserve	-	-	-	2,160
Dividend	3,585	-	3,720	-
Closing Balance in Retained Earnings	92,894	87,969	154,958	113,842
Earnings Per Share (EPS) from continuing operations (Face Value of shares of '' 1/- each)	8.38	14.42	21.90	21.51
Earnings Per Share (EPS) from continuing and discontinued operations (Face Value of shares of '' 1/- each)	8.38	14.42	43.83	20.84

The Company proposes to retain an amount of '' 92,894 mio. (Rupees Ninety Two Thousand Eight Hundred Ninety Four Million only) in the Statement of Profit and Loss. The Company proposes not to transfer any amount to general reserve on declaration of dividend.

RESULTS OF OPERATIONS:

During the year under review, the consolidated revenue from operations and other income was '' 1,54,899 mio. (Rupees One Lakh Fifty Four Thousand Eight Hundred Ninety Nine Million only). The Company has achieved consolidated Profit Before Tax from continuing operations of '' 28,381 mio. (Rupees Twenty Eight Thousand Three Hundred Eighty One Million only) and consolidated Profit After Tax (from continuing and discontinued operations) of '' 46,183 mio. (Rupees Forty Six Thousand One Hundred Eighty Three Million only). The Company achieved a consolidated total Comprehensive Income of '' 45,138 mio. (Rupees Forty Five Thousand One Hundred Thirty Eight Million only). The consolidated EPS for the Financial Year ended on March 31, 2022 was '' 43.83 (Rupees Forty Three and paisa Eighty Three).

During the year under review, the standalone revenue from operations and other income was '' 81,606 mio. (Rupees Eighty One Thousand Six Hundred Six Million only). The Company has achieved standalone Profit Before Tax of

'' 11,639 mio. (Rupees Eleven Thousand Six Hundred Thirty Nine Million only) and standalone Profit After Tax of '' 8,579 mio. (Rupees Eight Thousand Five Hundred Seventy Nine Million only). The Company achieved a standalone total Comprehensive Income of '' 8,621 mio. (Rupees Eight Thousand Six Hundred Twenty One Million only). The standalone EPS for the Financial Year ended on March 31, 2022 was '' 8.38 (Rupees Eight and paisa Thirty Eight).

DIVIDEND:

Your Directors have recommended a final dividend of '' 2.50/- (i.e. 250%) per equity share of '' 1/- each fully paid-up for the Financial Year ended on March 31, 2022. The final dividend, if declared by the members at the ensuing Annual General Meeting (âAGMâ), will be paid to those members, whose names stand registered in the Register of Members on Friday, July 29, 2022 i.e. the record date. In respect of shares held in dematerialized mode, it will be paid to the members whose names are furnished by the National Securities Depository Limited and the Central Depository Services (India) Limited, as beneficial owners. The Dividend Payout Ratio for the Financial Year ended on March 31, 2022 is 11.42% of profits from continuing operations.

In terms of regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015

("the Listing Regulationsâ) the Company has formulated Dividend Distribution Policy, which is approved by the Board and is uploaded on Company''s website and the link of the same is provided in a separate section of Corporate Governance Report.

BUYBACK OF EQUITY SHARES:

The Board at its meeting held on May 20, 2022 passed a resolution to buyback 1,15,38,461 (One Crore Fifteen Lakh Thirty Eight Thousand Four Hundred Sixty One) equity shares of '' 1/- (Rupee One only) each fully paid-up at a price of '' 650 (Rupees Six Hundred Fifty only) aggregating to '' 7500,000,000 (Rupees Seven Thousand Five Hundred Million only), excluding the transaction cost relating to the buyback, from the members of the Company on proportionate basis under the tender offer route in accordance with the provisions of SEBI (Buyback of Securities) Regulations, 2018 and the Act and Rules framed thereunder. Said buyback is within the powers of the Board.

The buyback exercise is proposed to be undertaken by the Company to return a part of the onetime funds received on sale of India centric animal health business undertaking in July 2021, to the members and thereby enhancing overall return to the members.

Buyback exercise will be undertaken as per the statutory provisions.

COMMERCIAL PAPERS:

During the year under review, the Company had redeemed whole of the Commercial Papers of '' 6,250 mio. (Rupees Six Thousand Two Hundred Fifty Million only) on its maturity. The corresponding ISIN was extinguished.

SECRETARIAL STANDARDS:

The Company is in compliance with Secretarial Standards on Meetings of Board of Directors and General Meetings issued by the Institute of Company Secretaries of India.

MANAGEMENT DISCUSSION AND ANALYSIS (âMDA"):

MDA for the year under review, as stipulated under the Listing Regulations, is presented in a separate section which forms a part of the Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS:

In accordance with Ind AS-110 on Consolidation of Financial Statements read with Ind AS-28 on Accounting for Investments in Associates and Joint Ventures and as provided under the provisions of the Act read with Schedule III of the Act and Rules made thereunder and the Listing Regulations, the Audited Consolidated Financial Statements are provided in the Annual Report, which show the financial resources, assets, liabilities, income, profits and other details

of the Company, its associate companies and its subsidiary

companies after elimination of minority interest, as a single

entity.

SUBSIDIARY COMPANIES:

i. The Company has 15 (fifteen) Indian subsidiary companies, 26 (twenty six) foreign subsidiary companies and 3 (three) joint venture companies as at March 31, 2022. There has been no material change in the nature of business of the Company, subsidiary companies and joint venture companies. There is 1 (one) partnership firm in the group, in which 2 (two) subsidiary companies of the Company are the partners. More details are provided in the Audited Financial Statements. During the year under review, the Board has reviewed the performance / affairs of the subsidiary companies.

ii. Zydus Wellness Products Limited, a wholly owned subsidiary of Zydus Wellness Limited, which in turn is a subsidiary of the Company, has incorporated a wholly owned subsidiary in Bangladesh in the name of Zydus Wellness (BD) Pvt Limited, to carry on the business of distribution and marketing of consumer products.

iii. I n line with the philosophy to enhance the share of renewable power source in its operation and to comply with regulatory requirement for being a âcaptive user'' under Electricity Laws, 2003, the Company has entered into Share Purchase, Subscription and Shareholders'' Agreement to acquire up to 11.86% stake on a fully diluted basis in AMP Energy Green Nine Private Limited, for setting up captive Wind Solar Hybrid power project in Gujarat.

iv. Zydus Discovery DMCC, Dubai, a wholly owned subsidiary of Zydus Worldwide DMCC, Dubai, which in turn is a wholly owned subsidiary of the Company, got merged with Zydus Therapeutics Inc., USA w.e.f. July 1, 2021.

v. Zydus Healthcare Limited and Zydus Animal Health and Investments Limited, both wholly owned material subsidiary companies redeemed their preference shares amounting to '' 10,065 mio. (Rupees Ten Thousand Sixty Five Million only) and '' 5,000 mio. (Rupees Five Thousand Million only) respectively.

vi. As provided in section 136 of the Act, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. The Company will make available free of cost the Audited Financial Statements of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The Financial Statements of the subsidiary companies will also be kept open for electronic inspection. The

Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.

vii. As provided under section 129(3) of the Act and Rules made thereunder, a statement containing the salient features of the financial statements of its subsidiaries in the format prescribed under the rules is attached to the financial statements. The policy relating to material subsidiaries, pursuant to the provisions of the Listing Regulations may be accessed on the Company''s website at the link provided in a separate section of Corporate Governance Report.

DISPOSAL OF AN UNDERTAKING OF A WHOLLY OWNED SUBSIDIARY:

Pursuant to the special resolution passed by the members at the extra ordinary general meeting held on June 11, 2021 in accordance with the provisions of regulation 24(6) of the Listing Regulations, Zydus Animal Health and Investments Limited (âZAHLâ), a wholly owned subsidiary of the Company disposed of its Animal Healthcare Established Markets Undertaking (âUndertakingâ) (having animal healthcare business in India and certain other countries) to Zenex Animal Health India Private Limited (âPurchaserâ), by way of a slump sale, without values being assigned to the individual assets and liabilities at a lump sum consideration of '' 29,210 mio. (Rupees Twenty Nine Thousand Two Hundred Ten Million only) on debt free and cash free basis, subject to certain closing date adjustments specified in the Business Transfer Agreement.

The transaction of sale and disposal of the Undertaking was completed / closed on July 14, 2021.

EXTENSION OF JOINT VENTURE AGREEMENT:

The tenure of joint venture agreement with Bayer (South East Asia) PTE Limited, was extended for a further period of 3 (three) years till May 1, 2024. The Company believes that the said extension would be beneficial considering the prospects of the growth of Bayer Zydus Pharma Private Limited, the joint venture company, over next 3 (three) years.

EXTRA ORDINARY GENERAL MEETINGS:

During the Financial Year ended on March 31, 2022, 2 (two) extra ordinary general meetings of the members of the Company were held as per the below details:

1. June 11, 2021: to approve disposal of the Undertaking of ZAHLand

2. February 18, 2022: to (i) approve change in name of the Company, (ii) approve necessary amendments in the Memorandum of Association and the Articles of Association and (iii) re-appoint Dr. Sharvil P. Patel as the

Managing Director for a further period of 5 (five) years with effect from April 1, 2022.

INSURANCE:

The Company''s plants, properties, equipments and stocks are adequately insured against all major risks. The Company has insurance cover for product liability and clinical trials. The Company has also taken Directors'' and Officers'' Liability Policy to provide coverage against the liabilities arising on them.

PUBLIC DEPOSITS:

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

COST ACCOUNTS AND RECORDS:

The Company has made and maintained the cost accounts and records as specified by the Central Government under section 148(1) of the Act and Rules made thereunder.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:

Details of loans, guarantees and investments covered under section 186 of the Act are given in the notes to the financial statements.

FRAUDS:

During the year under review, neither the statutory auditors nor the secretarial auditor have reported to the Audit Committee, under section 143(12) of the Act, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board''s Report.

RELATED PARTY TRANSACTIONS:

All contracts / arrangements / transactions entered into by the Company during the Financial Year ended on March 31, 2022 with related parties were in the ordinary course of business and on an arm''s length basis and had no conflict with the interest of the Company. All related party transactions are placed before the Audit Committee for review and approval. As provided under section 134(3)(h) of the Act and Rules made thereunder disclosure of particulars of material transactions (i.e. transactions exceeding '' 10,000,000,000/- (Rupees Ten Thousand Million only) or 10% (ten percent) of the annual consolidated turnover as per the last Audited Financial Statements) with related parties entered into by the Company in the prescribed format (Form No. AOC-2) is annexed to this report as Annexure-A.

Disclosures on related party transactions are set out in Note No. 41 of the financial statements.

The link to view the policy on materiality of related party transactions and dealing with related party transactions is provided in a separate section of Corporate Governance Report.

DIRECTORS AND KEY MANAGERIAL PERSONNEL:

i. Re-appointment of Directors:

Based on the recommendation of Nomination and Remuneration Committee (âNRCâ) and the Board, the members passed the following 3 (three) resolutions during the Financial Year ended on March 31, 2022-

â¢ August 11, 2021-to re-appoint Mr. Ganesh N. Nayak (DIN-00017481) as the Executive Director of the Company for a further period of 3 (three) years w.e.f. July 12, 2021. His appointment is liable to retire by rotation.

â¢ August 11,2021-to re-appoint Mr. Apurva S. Diwanji (DIN-00032072) as the Independent Director ("IDâ) of the Company for the second term of 5 (five) consecutive years w.e.f. May 13, 2021. His appointment is not liable to retire by rotation.

â¢ February 18, 2022-to re-appoint Dr. Sharvil P. Patel (DIN-00131995) as the Managing Director of the Company for a further period of 5 (five) years w.e.f. April 1, 2022. His appointment is liable to retire by rotation.

ii. Retirement by rotation:

I n accordance with the provisions of section 152(6) of the Act and in terms of the Articles of Association of the Company, Mr. Pankaj R. Patel (DIN-00131852) and Mr. Mukesh M. Patel (DIN-00053892), Non-Executive Directors will retire by rotation at the ensuing AGM and being eligible, offer themselves for re-appointment. The Board recommends their re-appointment.

iii. Declaration of independence:

The Company has received declaration of independence as stipulated under sections 149(6) and 149(7) of the Act and regulations 16(1 )(b) and 25 of the Listing Regulations from IDs confirming that they are not disqualified for continuing as an ID. There has been no change in the circumstances affecting their status as an ID of the Company.

as per the first proviso to rule 6(4) of The Companies (Appointment and Qualification of Directors) Rules, 2014, as amended from time to time.

iv. Profile of Directors seeking re-appointment:

As required under regulation 36(3) of the Listing Regulations, particulars of Directors seeking reappointment at the ensuing AGM are annexed to the notice convening Twenty Seventh AGM.

v. Key Managerial Personnel:

The following persons are the Key Managerial Personnel (âKMPâ) as on March 31, 2022:

1. Dr. Sharvil P. Patel, Managing Director,

2. Mr. Ganesh N. Nayak, Executive Director,

3. Mr. Nitin D. Parekh, Chief Financial Officer and

4. Mr. Dhaval N. Soni, Company Secretary.

vi. Board Evaluation:

Pursuant to provisions of the Act and Rules made thereunder and as provided in Schedule IV of the Act and the Listing Regulations, the NRC / Board have carried out an annual evaluation of its own performance, the Directors individually as well as its committees. The manner in which the evaluation was carried out has been provided in the Corporate Governance Report, which forms a part of this Annual Report.

I n a separate meeting of IDs, the performance of the non-independent directors, the Board as a whole and the Chairman of the Company was evaluated, taking into account the views of executive directors and nonexecutive directors.

The Board and the NRC reviewed the performance of individual directors on the basis of criteria fixed by the Board / NRC.

The functioning of the Board, the Committees and performance of individual Directors was found satisfactory.

vii. Nomination and Remuneration Policy:

The Board has, on the recommendation of the NRC, framed a policy on selection and appointment of Directors, Senior Management and their remuneration. The Nomination and Remuneration Policy and link of the same is provided in a separate section of Corporate Governance Report.

viii. Pecuniary relationship:

During the year under review, except those disclosed in the Audited Financial Statements, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company.

CREDIT RATING:

The Company has not obtained any credit rating during the year under review for any debt instruments or fixed deposit programme. During the year under review, CRISIL Limited gave CRISIL AA / Stable and CRISIL A1 (Reaffirmed) rating for Long term and short term bank Loan facilities respectively.

INSIDER TRADING REGULATIONS:

The Company has adopted the Code for Insider Trading as per the SEBI (Prohibition of Insider Trading) Regulations, 2015. Other details on insider trading regulations are provided in the Corporate Governance Report, which forms a part of this Annual Report.

DIRECTORS'' RESPONSIBILITY STATEMENT:

i. that in preparation of the Financial Statements, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any,

ii. that such accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2022 and of the profit of the Company for the year ended on that date,

iv. that the annual financial statements have been prepared on a going concern basis,

v. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively, and

vi. that the systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

TRANSFER OF SHARES AND DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND (âIEPF"):

During the year under review, in compliance with the provisions of sections 124 and 125 of the Act and Rules made thereunder, the Company has transferred-

i. 1,49,321 (One Lakh Forty Nine Thousand Three Hundred Twenty One) equity shares of 163 (One Hundred

Sixty Three) members whose dividend has remained unclaimed / unpaid for a consecutive period of 7 (seven) years to IEPF.

ii. '' 4.98 mio. (Rupees Four Million Nine Hundred Eighty Thousand only) held by 2,715 (Two Thousand Seven Hundred Fifteen) members, being the unclaimed dividend, pertaining to the dividend for the Financial Year ended on March 31, 2014 to IEPF, after giving notice to the members to claim their unpaid / unclaimed dividend.

BOARD MEETINGS:

8 (eight) Board meetings were held during the Financial Year ended on March 31, 2022. The Board approved 5 (five) resolutions by circulation, vide circulars dated July 29, 2021, August 2, 2021, December 13, 2021, January 17, 2022 and March 31, 2022. Other information with regard to the Board meetings is given in the Corporate Governance Report, which forms a part of this Annual Report.

AUDIT COMMITTEE:

As provided in section 177(8) of the Act, the information about composition of Audit Committee and other details are given in the Corporate Governance Report, which forms a part of this Annual Report.

RECOMMENDATION OF COMMITTEES:

The Board has accepted the recommendations of all the committees constituted by the Board.

CORPORATE GOVERNANCE:

AUDITORS:

i. Statutory Auditors and Audit Report:

Deloitte Haskins & Sells LLP, Chartered Accountants (âDeloitteâ), were appointed as the Statutory Auditors of the Company for a period of 5 (five) consecutive years from the conclusion of Twenty Second AGM till the conclusion of Twenty Seventh AGM. Their term shall expire after the ensuing AGM.

The Audit Committee and the Board at their respective meetings, both held on May 20, 2022 recommended the re-appointment of Deloitte as the Statutory Auditors of the Company for a further period of 5 (five) consecutive years from the conclusion of Twenty Seventh AGM till the conclusion of Thirty Second AGM in year 2027,

Healthcare Limited and Zydus Animal Health and Investments Limited, unlisted material subsidiary companies are annexed herewith as Annexure-B1 and Annexure-B2 respectively.

iv. Annual Secretarial Compliance Report

In compliance with regulation 24A(2) of the Listing Regulations, Manoj Hurkat & Associates, Practicing Company Secretaries issued Annual Secretarial Compliance Report for the Financial Year ended on March 31, 2022. The Report, presented at the Board meeting held on May 20, 2022, confirmed that the Company has maintained proper records as stipulated under various Rules and Regulations and that, no action has been taken against the Company or its material subsidiaries or promoters / directors by SEBI / BSE / NSE. The Company has submitted the Report to the Stock Exchanges within the prescribed time.

BUSINESS RESPONSIBILITY REPORT (âBRR"):

As per regulation 34(2)(f) of the Listing Regulations, a separate section on BRR forms a part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (âCSR"):

Pursuant to section 135 of the Act and Rules made thereunder, the Board has constituted a CSR Committee under the Chairmanship of Mr. Pankaj R. Patel. Other members of the Committee are Ms. Dharmishtaben N. Raval and Dr. Sharvil P. Patel. CSR Policy is placed on the Company''s website. Other details of the CSR activities, as required under section 135 of the Act read with CSR Rules, are given in the CSR Report at Annexure-C.

The Board at its meeting held on May 20, 2022, changed the nomenclature of CSR Committee to CSR & ESG Committee.

BUSINESS RISK MANAGEMENT:

Pursuant to the provisions of section 134(3)(n) of the Act and regulation 21 of the Listing Regulations, the Company has constituted a Risk Management Committee. The details of the Committee and its terms of reference are set out in the Corporate Governance Report, which forms a part of this Annual Report.

with an authority to the Audit Committee and the Board to decide the remuneration payable to them. Re-appointment of Deloitte is subject to approval of members at the ensuing AGM. Necessary agenda item, resolution and statutory details are provided in the Notice of AGM.

Deloitte have furnished a declaration confirming their independence as well as their arm''s length relationship with the Company and that they have not taken up any prohibited non-audit assignments for the Company.

The Board has duly reviewed the Statutory Auditor''s Report and the observations and comments, appearing in the report, are self-explanatory and do not call for any further explanation / clarification by the Board as provided under section 134(3)(f) of the Act.

ii. Cost Auditors:

Pursuant to the provisions of section 148(3) of the Act read with The Companies (Cost Records and Audit) Amendment Rules, 2014 and rule 8 of the Accounts Rules, the cost audit records maintained by the Company in respect of Drugs and Pharmaceuticals are required to be audited. The Board had, on the recommendation of the Audit Committee, appointed Dalwadi & Associates, Cost Accountants to audit the cost records of the Company for the Financial Year ending on March 31,2023 on a remuneration of '' 1.32 mio. (Rupees One Million Three Hundred Twenty Thousand only) plus applicable Goods and Services Tax and out of pocket expenses on actuals. As required under the Act and Rules made thereunder, the remuneration payable to the Cost Auditors is required to be placed before the members in a general meeting for ratification. Accordingly, a resolution seeking ratification by members for the remuneration payable to Dalwadi & Associates is included at Item No. 7 of the Notice convening Twenty Seventh AGM.

iii. Secretarial Auditors and Secretarial Audit Report:

Pursuant to the provisions of section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Manoj Hurkat & Associates, Practicing Company Secretaries to undertake the Secretarial Audit of the Company for the Financial Year ended on March 31, 2022. The Secretarial Audit Report is annexed herewith as Annexure-B. The Board has duly reviewed the Secretarial Auditors'' Report and the observations and comments, appearing in the report are selfexplanatory and do not call for any further explanation / clarification by the Board as provided under section 134(3)(f) of the Act.

Further, as per regulation 24A(1) of the Listing Regulations, the secretarial audit reports of Zydus

The Company has in place a stringent vigil system to report unethical behaviour in order to promote professionalism, fairness, dignity and ethical behaviour in its employees.

I n compliance with provisions of section 177(9) of the Act and Rules made thereunder and regulation 22 of the Listing Regulations, the Company has established vigil mechanism and framed Whistle Blower Policy for Directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Company''s Code of Conduct or Ethics Policy and SEBI (Prohibition of Insider Trading) Regulations, 2015. Whistle Blower Policy is uploaded on Company''s website and the link of the same is provided in a separate section of Corporate Governance Report.

ii. Zydus Business Conduct Policy:

The Company has framed âZydus Business Conduct Policyâ and is monitored by the President-Group Human Resources. Every employee is required to review and sign the policy at the time of joining and an undertaking shall be given for adherence to the Policy. The objective of the Policy is to conduct the business in an honest, transparent and ethical manner. The policy provides for anti-bribery and avoidance of other corruption practices by the employees of the Company.

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

The Company always endeavors to create and provide an environment that is free from discrimination and harassment including sexual harassment. The Company has in place a robust policy on prevention of sexual harassment at workplace. The policy aims at prevention of harassment of employees as well as contractors and lays down the guidelines for identification, reporting and prevention of sexual harassment.

During the Financial Year ended on March 31, 2022, 2 (two) complaints were received and both of them were resolved. No complaint was pending to be resolved as at March 31, 2022.

Discussion on risks and concerns are covered in the MDA, which forms a part of this Annual Report.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY:

The Company has designed and implemented a process driven framework for Internal Financial Controls (âIFCâ) within the meaning of the explanation to section 134(5)(e) of the Act. For the Financial Year ended on March 31, 2022, the Board is of the opinion that the Company has sound IFC commensurate with the size, scale and complexity of its business operations. The IFC operates effectively and no material weakness exists. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and / or improved internal controls whenever the effect of such gaps would have a material effect on the Company''s operations.

The Company has a well-placed, proper and adequate IFC system, which ensures:

â¢ The orderly and efficient conduct of its business,

â¢ Safeguarding of its assets,

â¢ The prevention and detection of frauds and errors,

â¢ The accuracy and completeness of the accounting records and

â¢ The timely preparation of reliable financial information.

The Board reviews the effectiveness of controls documented as part of IFC framework, and take necessary corrective and preventive actions wherever weaknesses are identified as a result of such reviews. This review covers entity level controls, process level controls, fraud risk controls and Information Technology environment.

Based on this evaluation, no significant events had come to notice during the Financial Year ended on March 31, 2022 that have materially affected, or are reasonably likely to materially affect, our IFC. The management has also come to a conclusion that the IFC and other financial reporting was effective during the Financial Year ended on March 31, 2022 and is adequate considering the business operations of the Company. The Statutory Auditors of the Company has audited the IFC with reference to Financial Reporting and their Audit Report is annexed as an Annexure to the Independent Auditors'' Report under Standalone Financial Statements and Consolidated Financial Statements.

MANAGING THE RISKS OF FRAUD, CORRUPTION AND UNETHICAL BUSINESS PRACTICES: i. Vigil Mechanism / Whistle Blower Policy:

The Company has built a reputation for doing business with honesty and integrity and it has zero tolerance for any type of unethical behaviour or wrongdoing.

ANNUAL RETURN:

As per the provisions of section 92(3) read with section 134(3)(a) of the Act, Annual Return for the Financial Year ended on March 31, 2022, in prescribed Form No. MGT-7 is available on the website of the Company at https://www.zyduslife. com/public/pdf/financial/annualreturn2021-2022/Zydus-Lifesciences-Limited.pdf.

PARTICULARS OF EMPLOYEES:

The information required under section 197(12) of the Act read with rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure-D.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

GENERAL DISCLOSURES:

Apart from what is mentioned in this report, there are no material changes and commitments affecting the financial

position of the Company between the end of the financial year to which the financial statements relate and the date of this report.

ACKNOWLEDGMENT:

Your Directors place on record their sincere appreciation for the continued co-operation and support extended to the Company by various Banks. Your Directors also thank the Medical Profession, the Trade and Consumers for their patronage to the Company''s products. Your Directors also place on record sincere appreciation of the continued hard work put in by the employees at all levels, amidst the challenges due to pandemic. The Directors also thank the Company''s customers, vendors, investors, business associates, Stock Exchanges, Government of India, State Government and various departments and agencies for their support and co-operation.

Your Directors mourn the loss of lives due to COVID-19 pandemic and are deeply grateful and have immense respect for every person who risked his life and safety to fight this pandemic.

Your Directors appreciate and value the contribution made by every member of the Zydus group.

On behalf of the Board of Directors Pankaj R. Patel

Place : Ahmedabad Chairman

Date : May 20, 2022 DIN: 00131852

Mar 31, 2021

Your Directors are pleased to present the Twenty Sixth Annual Report and the Audited Financial Statements of Cadila Healthcare Limited (âthe Companyâ) for the Financial Year ended on March 31, 2021.

FINANCIAL HIGHLIGHTS:

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (âInd ASâ) notified under section 133 of the Companies Act, 2013 (âthe Actâ), read with rule 7 of the Companies (Accounts) Rules, 2014 (âAccounts Rulesâ).

The standalone and consolidated financial performance of the Company, for the Financial Year ended on March 31, 2021 is summarized below:

'' in mio.
Particulars	Standalone		Consolidated
	For the year ended on March 31, 2021	For the year ended on March 31, 2020	For the year ended on March 31, 2021	For the year ended on March 31, 2020
Revenue from Operations and other Income	78,693	71,968	151,394	143,670
Profit before Interest, Depreciation, Amortisation and Impairment Expenses & Tax (PBIDT)	22,105	22,205	31,731	25,337
Less: Finance Cost	709	2,339	1,635	3,418
Less: Depreciation, Amortisation and Impairment Expenses	4,511	4,289	7,248	6,965
Profit Before Tax (PBT)	16,885	15,577	22,848	14,954
Less: Tax Expenses	2,123	2,041	1,472	3,198
Profit After Tax (PAT)	14,762	13,536	21,376	11,756
Add: Share of Profit of Joint Ventures (Net of Tax)	-	-	474	288
Profit for the year from continuing operations	14,762	13,536	21,850	12,044
Add: Profit after tax from discontinued operations	-	593	-	-
Profit for the year	14,762	14,129	21,850	12,044
Attributable to:
Owners of the Parent	14,762	14,129	21,336	11,766
Non-Controlling Interests	-	-	514	278
Other Comprehensive Income / (Loss) (Net of Tax)	81	(220)	731	(3,005)
Total Comprehensive Income	14,843	13,909	22,581	9,039
Attributable to:
Owners of the Parent	14,843	13,909	22,059	8,754
Non-Controlling Interests	-	-	522	285
Opening balance in Retained Earnings	73,360	66,457	86,124	83,334
Amount available for appropriation	87,969	80,533	111,682	94,693
Transferred from Debenture Redemption Reserve	-	-	2,160	-
Dividend:
Dividend	-	7,166	-	7,166
Corporate Dividend Tax on Dividend (Net of CDT Credit)	-	7	-	1,403
Closing Balance in Retained Earnings	87,969	73,360	113,842	86,124
Earnings Per Share (EPS) from continuing operations (Face Value of shares of '' 1/- each)	14.42	13.22	20.84	11.49
Earnings Per Share (EPS) from continuing and discontinued operations (Face Value of shares of '' 1/- each)	14.42	13.80	20.84	11.49

The Company proposes to retain an amount of '' 87,969 mio. (Rupees Eighty Seven Thousands Nine Hundred and Sixty Nine Million only) in the Statement of Profit and Loss. The Company proposes not to transfer any amount to general reserve on declaration of dividend.

RESULTS OF OPERATIONS:

During the year under review, the consolidated revenue from operations and other income was '' 1,51,394 mio. The Company has achieved consolidated Profit Before Tax of '' 22,848 mio. and Profit After Tax of '' 21,850 mio. The Company achieved a consolidated total Comprehensive Income of '' 22,581 mio. The EPS on consolidated financials for the year ended on March 31, 2021 was '' 20.84.

During the year under review, the standalone revenue from operations and other income was '' 78,693 mio. The Company has achieved standalone Profit Before Tax of '' 16,885 mio. and Profit After Tax of '' 14,762 mio. The Company achieved a standalone total Comprehensive Income of '' 14,843 mio. The EPS on standalone financials for the year ended on March 31, 2021 was '' 14.42.

COVID-19

A. Battling COVID-19 on a war footing:

In order to support people battle the challenges posed by the pandemic, the Company launched several initiatives on multiple fronts for prevention and treatment of COVID-19 by leveraging its capabilities across therapeutics, wellness products and in the research space. These initiatives are discussed at length in the section on âManagement Discussion and Analysisâ.

B. Healthcare hubs for COVID-19 Care:

Zydus Medical College and Hospital, Dahod (which is operated and financially helped by Zydus Foundation-a section 8 company and a wholly owned subsidiary of the Company), has been at the forefront in providing treatment to COVID-19 patients since the onset of the pandemic and has catered to around 8,000 COVID patients till April 2021. With over 350 beds for COVID-19 patients the hospital bridges the need for an advanced healthcare hub for patients from Dahod, and adjoining districts within the state like Mahisagar, Panchmahal, Chota Udepur, and also serves people from adjoining states of Madhya Pradesh and Rajasthan. A team of highly specialized doctors provide treatment round-the-clock and the hospital has all critical infrastructure such as oxygen, ventilators and also ICU beds for COVID patients. When the country was reeling under a severe shortage of oxygen and ventilators, Zydus Hospitals Dahod was self-sufficient with its oxygen supplies, ventilators, labs to process RT-PCR in quick time and also provide medicines without any shortages. The Hospital is also handling the recent spurt of cases of Mucormycosis and saving lives with treatment meted out on time. The treatment at the hospital is free of cost including OPD, Indoor, all investigations, surgeries, anesthesia, oral medicines, injectables and food for the patients. With one of the best recovery rate of 92% amongst all COVID care hospitals in Gujarat, Zydus Medical College and Hospital, Dahod was felicitated by Honorable Chief Minister of Gujarat, Shri Vijay Rupani and Governor of Gujarat, Shri Acharya Devvrat for offering humanitarian services to the patients suffering from COVID-19.

C. Ensuring employee care during COVID:

C.1 COVID Compensation Benefit:

The pandemic has been one of the most challenging times for all. Unfortunately, the Company lost some of the Zydan

members due to COVID. To support the Zydans during these times, the Company put in place these initiatives for India based employees on its rolls with immediate effect.

In the unfortunate circumstances of an untimely demise of a Zydan on the rolls of the company, due to COVID-19, the family will receive an amount equivalent to 2 (two) years annual CTC for DGM and below level employees-with a minimum amount of '' 2 mio. (Rupees Two Million only) for GM and above level, the family will receive 1.5 years of the annual CTC upto '' 15 mio. (Rupees Fifteen Million only) Compensation will also be paid for employees working on a fixed term basis; HR team will announce the policy for the same soon.

Besides this, Zydus will also support the children of deceased Zydans for their education upto graduation within India. The dependent family members will continue to get hospitalization benefits for 3 (three) years under current Mediclaim policy. The family will also be eligible for gratuity till the age of retirement and will also get Employee Deposited Linked Insurance (âEDLIâ) benefit for disbursement upto '' 0.70 mio. (Rupees Seven Lacs only).

C.2 COVID Care Clinic:

The Company set up a COVID Care Clinic for Zydans and their families at the Zydus Hospitals at Ahmedabad. A one stop healthcare point, Employees can get all services from RT-PCR tests, and other diagnostic reports, consultation and medicines which enables them to start treatment early on without any lag of time. This was a boon to several employees who did not have to wait for 48 hours for an RT-PCR report or move around the city for HR CT Scans. At a time when healthcare services were stretched and difficult to access, this COVID care clinic provided quick, timely and most importantly all end-to-end services.

For employees based out of Ahmedabad, COVID Teleservices (Teleconsultation with a team of doctors) has been set up where employees can register themselves for an appointment and get timely medical advice. This has been very useful for employees in the remote areas and those who are working in the field.

C.3 Employee Support in these testing times:

I n these testing times, the Company took several steps to extend its support to the employees which include isolating the employees who were infected with COVID-19 and providing ample time for recuperation without any deductions in pay, providing the support to carry out diagnostic tests of employees and family members as per requirements during quarantine period, providing logistics and other necessary support to employees and their family during the quarantine period and also post recovery and helping employees and their families to avail treatment at home / hospitals without any financial burden on them. The Company conducted several vaccination camps for the employees within the campus. It also provided logistics support to employees to get them vaccinated at the nearest vaccine centres approved by the Government and also provided logistics and other necessary support to employees and their family members during COVID quarantine period and also post recovery.

C.4 Extensive workplace safety measures:

Stringent measures have been put in to safeguard employees. Arrangements for social distancing in the buses, ensure sanitisation of the buses after every trip have been made, sanitisation of the cafeteria, change rooms, happens at regular intervals. Thermal scanning is done to check body temperature at all entry points. Hand sanitizers are placed at vantage points all across the campus. Disposable masks and aprons have been made available. As a part of the SOPs and protocols in most of the areas inside the plant and research area and all across the offices, employees need to wear masks, gloves and fully covered aprons wherever required. Apart from this, face shields also included as a part of the work gear.

At the cafeteria partitions have been put up on every table to ensure that there is sufficient adequate distancing.

Occupational health centres have been set up where a doctor is on call to address any emergencies or health concerns and also counsel employees. The specially set up Helpline at the Occupational Health Centre provides medical consultation and medication is dispensed by the Doctor and trained medical staff. Healthy, immunity boosting food with a nutritional drink and Vitamin C is served at the cafeteria.

D. Business Sustainability:

Buffer / floater recruitment to meet the medicinal need of people and also business requirements in lieu of absenteeism arising due to COVID-19. This was a massive large scale of recruitment of 700 people in Ahmedabad within a span of one month. A fast track training programme is already designed to train these floaters.

The same floater recruitment is also initiated at other locations-Baddi, Goa, Daman and Sikkim assuming that we might encounter spikes going ahead. These floaters will be trained on fast track basis and replace people who are absenting or could not come due to COVID-19.

Revised COVID-19 guidelines as and when Government directives had come and executed it in the best interest of the Organisation.

Counseling support to employees who are in problem and have developed fear for reporting on job due to COVID-19 situation.

E. Measures implemented on a war footing:

A COVID Task-force has been set up to help employees and family members for Hospitalization, Medication and other Treatment needs.

An Internal COVID response team has also been formed which helped employees to get safe and timely treatment including hospitalization on short notices.

DIVIDEND:

Your Directors have recommended final dividend of '' 3.50/- (350%) per equity share on 102,37,42,600 Equity Shares of '' 1/- each fully paid-up for the Financial Year ended on March 31, 2021, amounting to '' 3,583.10 mio. (Rupees Three Thousands Five Hundred and Eighty Three Million and Ten Lacs only). The final dividend, if declared by the members at the

ensuing Annual General Meeting (âAGMâ), will be paid to those members, whose names stand registered in the Register of Members on Thursday, July 29, 2021 i.e. the date prior to the commencement of the book closure. In respect of shares held in dematerialized mode, it will be paid to the members whose names are furnished by the National Securities Depository Limited and the Central Depository Services (India) Limited, as beneficial owners. The Dividend Payout Ratio for the year ended on March 31, 2021 is 16.79% of profits.

In terms of regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âthe Listing Regulationsâ) the Company has formulated Dividend Distribution Policy, which is approved by the Board of Directors (âthe Boardâ) and is uploaded on Companyâs website and the link for the same is https://www.zyduscadila.com/public/ pdf/Dividend Distribution Policy.pdf

COMMERCIAL PAPERS:

During the year under review, the Company has issued Commercial Papers aggregating to '' 6,250 mio. (Rupees Six Thousands Two Hundred and Fifty Million only) on private placement basis.

SECRETARIAL STANDARDS:

The Company is in compliance with Secretarial Standards on Meetings of Board of Directors and General Meetings issued by the Institute of Company Secretaries of India.

MANAGEMENT DISCUSSION AND ANALYSIS (âMDAâ):

MDA for the year under review, as stipulated under the Listing Regulations, is presented in a separate section which forms a part of the Annual Report.

CONSOLIDATED FINANCIAL STATEMENTS:

In accordance with the Ind AS-110 on Consolidation of Financial Statements read with Ind AS-28 on Accounting for Investments in Associates and Joint Ventures and as provided under the provisions of the Act read with Schedule III of the Act and Rules made thereunder and the Listing Regulations, the Audited Consolidated Financial Statements are provided in the Annual Report, which show the financial resources, assets, liabilities, income, profits and other details of the Company, its associate companies and its subsidiary companies after elimination of minority interest, as a single entity.

SUBSIDIARY COMPANIES:

i. The Company has 15 (fifteen) Indian subsidiary companies, 26 (twenty six) foreign subsidiary companies and 3 (three) joint venture companies as at March 31, 2021. There has been no material change in the nature of business of the Company as well as of subsidiary companies. There is 1 (one) partnership firm in the group, in which 2 (two) subsidiary companies of the Company are the partners. More details are provided in the Audited Financial Statements. During the year under review, the Board has reviewed the performance / affairs of the subsidiary companies.

ii. The Company has incorporated a new company in the name of Zydus Strategic Investments Limited, as a wholly owned subsidiary company, as an investment company for the group.

iii. The Company has incorporated a new company in the name of Zydus VTEC Limited, as a wholly owned subsidiary company, to carry on the business of vaccines.

iv. Zydus Worldwide DMCC, Dubai, a wholly owned subsidiary of the Company has incorporated a new company in the name of Zydus Therapeutics Inc., USA, as its wholly owned subsidiary company.

v. Zydus International Private Limited, Ireland, a wholly owned subsidiary of the Company has reduced the face value of its equity share capital from Euro 1.462843 per equity share to Euro 1.1251 per share i.e. reduction of Euro 0.337743 per equity share. By doing so, the amount of investment made by the Company stands reduced from '' 6,518 mio. (Rupees Six Thousands Five Hundred and Eighteen Million only) to '' 4,643 mio. (Rupees Four Thousands Six Hundred and Forty Three Million only) i.e. reduction of '' 1,875 mio. (Rupees One Thousand Eight Hundred and Seventy Five Million only).

vii. As provided under section 129(3) of the Act and Rules made thereunder, a statement containing the salient features of the financial statements of its subsidiaries in the format prescribed under the rules is attached to the financial statements. The policy relating to material subsidiaries, pursuant to the provisions of the Listing Regulations may be accessed on the Companyâs website at the link: https://www.zyduscadila.com/public/pdf/CHL-Policy-on-Material-Subsidiary-Revised-February-7-2019.pdf

DIVESTMENT:

During the year under review, pursuant to two Definitive Agreements, one executed on April 16, 2020 and another executed on April 30, 2020, the Company sold 9,44,233 and 2,31,33,717 equity shares of '' 10/- (Rupees Ten only) each fully paid-up, respectively, representing in aggregate to 51% (Fifty One per cent) of the total paid-up equity share capital of Windlas Healthcare Private Limited (âWHPLâ) to Windlas Biotech Private Limited (âWBPLâ) for aggregate consideration of '' 1,035 mio. (Rupees One Thousand and Thirty Five Million only).

Pursuant to the said divestment, the Company ceases to hold any equity shares in WHPL and consequently, ceases to hold interest in the subsidiary company of WHPL in USA-Windlas Inc. and in the joint venture company of WHPL in USA-US Pharma Windlas LLC.

DISPOSAL OF AN UNDERTAKING OF A WHOLLY OWNED SUBSIDIARY:

Zydus Animal Health and Investments Limited (âZAHLâ), a wholly owned subsidiary of the Company has entered into a Business Transfer Agreement (âBTAâ) and other ancillary agreements (BTA and other ancillary agreements are collectively referred to as âDefinitive Agreementsâ) for disposal of its Animal Healthcare Established Markets Undertaking (âUndertakingâ) (having animal healthcare business in India and certain other countries) to Zenex Animal Health India Private Limited (formerly known as Nutrizvit Animal Health India Private Limited) (âPurchaserâ), by way of a slump sale, without values being assigned to the individual

assets and liabilities at a lump sum consideration of '' 29,210 mio. (Rupees Twenty Nine Thousands Two Hundred and Ten Million only) on debt free and cash free basis, subject to certain closing date adjustments specified in the BTA, with effect from such date, in such manner and on such terms and conditions, as specified in the Definitive Agreements.

The said transaction of sale and disposal of the Undertaking is subject to approval of members of the Company by way of a special resolution as per regulation 24(6) of the Listing Regulations. For the said approval, the Company has convened an extra ordinary general meeting of the members of the Company on Friday, June 11, 2021 and sent the notice convening the extra ordinary general meeting to the members of the Company.

INSURANCE:

The Companyâs plants, properties, equipments and stocks are adequately insured against all major risks. The Company has insurance cover for product liability and clinical trials. The Company has also taken Directorsâ and Officersâ Liability Policy to provide coverage against the liabilities arising on them.

PUBLIC DEPOSITS:

The Company has not accepted any deposits from public and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

COST ACCOUNTS AND RECORDS:

The Company has made and maintained the cost accounts and records as specified by the Central Government under section 148(1) of the Act and Rules made thereunder.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS:

Details of loans, guarantees and investments covered under section 186 of the Act are given in the notes to the financial statements.

FRAUDS:

During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the audit committee, under section 143(12) of the Act, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Directorsâ Report.

RELATED PARTY TRANSACTIONS:

All contracts / arrangements / transactions entered into by the Company during the financial year with related parties were in the ordinary course of business and on an armâs length basis. All related party transactions are placed before the Audit Committee for review and approval. As provided under section 134(3)(h) of the Act and Rules made thereunder disclosure of particulars of material transactions [i.e. transactions exceeding 10% (ten percent) of the annual consolidated turnover as per the last Audited Financial Statements] with related parties entered into by the Company in the prescribed format (Form No. AOC-2) is annexed to this report as Annexure-A. Disclosures on related party transactions are set out in Note No. 40 of the financial statements.

The Policy on materiality of related party transactions and dealing with related party transactions may be accessed on the Companyâs

website at the link https://www.zvduscadila.com/public/pdf/Policv-on-Related-Party-Transactions-and-dealing-with-Material-Related-Party-Transactions-February-7-2019.pdf

DIRECTORS AND KEY MANAGERIAL PERSONNEL:i. Re-appointment of Directors:

Based on the recommendation of Nomination and Remuneration Committee (âNRCâ), the Board at their meeting on February 5, 2021 re-appointed Mr. Apurva S. Diwanji (DIN-00032072) as an Independent Director (âIDâ) for the second consecutive term of 5 (five) vears. The re-appointment is subject to approval of the members by way of special resolution at the ensuing AGM of the Company scheduled to be held on August 11, 2021.

While re-appointing Mr. Apurva S. Diwanji as an ID, the Board took into account his integrity, expertise and experience. He is not required to give online proficiency test as per the MCA Circulars dated October 22, 2019 and December 18, 2020.

ii. Retirement by rotation:

In accordance with the provisions of section 152(6) of the Act and in terms of the Articles of Association of the Company, Mr. Mukesh M. Patel (DIN-00053892), Non-Executive Director will retire by rotation at the ensuing AGM and being eligible, offers himself for reappointment. The Board recommends his re-appointment.

iii. Declaration of independence:

The Company has received declarations of independence as stipulated under section 149(6) and 149(7) of the Act and regulation 16(1)(b) and 25 of the Listing Regulations from IDs confirming that they are not disqualified for continuing as an ID. There has been no change in the circumstances affecting their status as an ID of the Company.

All the Directors of the Company, who are required to get registered, have registered themselves with the Indian Institute of Corporate Affairs. Further, as per the declarations received, none of the Directors of the Company are required to give online proficiency test as per the first proviso to rule 6(4) of the Companies (Appointment and Qualification of Directors) Rules, 2014, as amended from time to time.

iv. Profile of Directors seeking re-appointment:

As required under regulation 36(3) of the Listing Regulations, particulars of Directors seeking re-appointment at the ensuing AGM are annexed to the notice convening Twenty Sixth AGM.

v. Key Managerial Personnel:

The following persons are the Key Managerial Personnel (âKMPâ) as on March 31, 2021:

1. Dr. Sharvil P. Patel, Managing Director,

2. Mr. Ganesh N. Nayak, Executive Director,

3. Mr. Nitin D. Parekh, Chief Financial Officer and

4. Mr. Dhaval N. Soni, Company Secretary.

Mr. Ganesh N. Nayak, Executive Director was re-appointed for a further period of 1 (one) year w.e.f. July 12, 2020, by the members of the Company at the last AGM held on August 27, 2020.

vi. Board Evaluation:

Pursuant to provisions of the Act and Rules made thereunder and as provided in Schedule IV of the Act and the Listing Regulations, the NRC / Board has carried out an annual evaluation of its own performance, the Directors individually as well as its committees. The manner in which the evaluation was carried out has been provided in the Corporate Governance Report, which is a part of this Annual Report.

In a separate meeting of IDs, the performance of the nonindependent directors, the Board as a whole and Chairman of the Company was evaluated, taking into account the views of executive directors and non-executive directors.

The Board and the NRC reviewed the performance of individual directors on the basis of criteria fixed by the Board / NRC.

vii. Nomination and Remuneration Policy:

The Board has, on the recommendation of the NRC, framed a policy on selection and appointment of Directors, Senior Management and their remuneration. The said Nomination and Remuneration Policy was revised by the NRC and the Board at their respective meetings held on May 27, 2021 and the revised Nomination and Remuneration Policy is stated in the Corporate Governance Report, which is a part of this Annual Report. The link to view the Nomination and Remuneration Policy is https://zyduscadila.com/public/pdf/NRC Policy revised 27 05 2021.pdf

viii. Pecuniary relationship:

During the year under review, except those disclosed in the Audited Financial Statements, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company.

DIRECTORSâ RESPONSIBILITY STATEMENT:

In terms of sections 134(3)(c) and 134(5) of the Act and to the best of their

knowledge and belief, and according to the information and explanations

provided to them, your Directors hereby make the following statements:

i. that in preparation of the Financial Statements, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any,

ii. that such accounting policies have been selected and applied consistently andjudgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2021 and of the profit of the Company for the year ended on that date,

iv. that the annual financial statements have been prepared on a going concern basis,

v. that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively, and

vi. that the systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

TRANSFER OF SHARES AND DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND (âIEPFâ):

During the year under review, in compliance with the provisions of sections 124 and 125 of the Act and Rules made thereunder the Company has transferred-

i. 60,579 (Sixty Thousands Five Hundred and Seventy Nine) equity shares of 45 (forty five) members whose dividend has remained unclaimed / unpaid for a consecutive period of 7 (seven) years to IEPF.

ii. '' 4.09 mio. (Rupees Four Million and Ninety Thousands only) held by 2,662 (Two Thousands Six Hundred and Sixty Two) members, being the unclaimed dividend, pertaining to the dividend for the Financial Year ended on March 31, 2013 was transferred to IEPF after giving notice to the members to claim their unpaid / unclaimed dividend.

BOARD MEETINGS:

6 (six) Board meetings were held during the Financial Year ended on March 31, 2021. Other information with regard to the Board meetings is given in the Corporate Governance Report, forming a part of this Annual Report.

AUDIT COMMITTEE:

As provided in section 177(8) of the Act, the information about composition of Audit Committee and other details are given in the Corporate Governance Report, forming a part of this Annual Report. The Board has accepted the recommendations of the Audit Committee.

CORPORATE GOVERNANCE:

AUDITORS:

i. Statutory Auditors and Audit Report:

Deloitte Haskins & Sells LLP, Chartered Accountants (âDeloitteâ), are appointed as the Statutory Auditors of the Company for a period of 5 (five) years from the conclusion of Twenty Second AGM till the conclusion of Twenty Seventh AGM.

Deloitte have furnished a declaration confirming their independence as well as their armâs length relationship with the Company and that they have not taken up any prohibited non-audit assignments for the Company.

The Board has duly reviewed the Statutory Auditorâs Report and the observations and comments, appearing in the report, are selfexplanatory and do not call for any further explanation / clarification by the Board as provided under section 134(3)(f) of the Act.

ii. Cost Auditors:

Pursuant to the provisions of section 148(3) of the Act read with the Companies (Cost Records and Audit) Amendment Rules, 2014 and rule 8 of the Accounts Rules, the cost audit records maintained by the Company in respect of the Drugs and Pharmaceuticals are required to be audited. The Board had, on the recommendation of the Audit

Committee, appointed Dalwadi & Associates, Cost Accountants to audit the cost records of the Company for the Financial Year 20212022 on a remuneration of '' 1.23 mio. (Rupees One Million Two Hundred and Thirty Thousands only) plus applicable Goods and Services Tax and out of pocket expenses on actuals. As required under the Act and Rules made thereunder, the remuneration payable to the Cost Auditors is required to be placed before the members in a general meeting for ratification. Accordingly, a resolution seeking ratification by members for the remuneration payable to Dalwadi & Associates is included at Item No. 4 of the Notice convening Twenty Sixth AGM.

iii. Secretarial Auditors and Secretarial Audit Report:

Pursuant to the provisions of section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Manoj Hurkat & Associates, Practicing Company Secretaries to undertake the Secretarial Audit of the Company for the Financial Year 2020-2021. The Secretarial Audit Report is annexed herewith as Annexure-B. The Board has duly reviewed the Secretarial Auditorsâ Report and the observations and comments, appearing in the report are self-explanatory and do not call for any further explanation / clarification by the Board as provided under section 134(3)(f) of the Act.

Further, as per regulation 24A(1) of the Listing Regulations, the secretarial audit reports of Zydus Healthcare Limited and Zydus Animal Health and Investments Limited, unlisted material subsidiary companies are annexed herewith as Annexure-B1 and Annexure-B2 respectively.

BUSINESS RESPONSIBILITY REPORT:

As per regulation 34(2)(f) of the Listing Regulations, a separate section on Business Responsibility Report forms a part of this Annual Report.

CORPORATE SOCIAL RESPONSIBILITY (âCSRâ):

Pursuant to section 135 of the Act and Rules made thereunder, the Board has constituted a CSR Committee under the Chairmanship of Mr. Pankaj R. Patel. Other members of the Committee are Ms. Dharmishtaben N. Raval and Dr. Sharvil P. Patel. CSR Policy has been revised as per the amended CSR Rules which are applicable from January 22, 2021 and is placed on the Companyâs website. Other details of the CSR activities, as required under section 135 of the Act read with amended CSR Rules, are given in the CSR Report at Annexure-C.

BUSINESS RISK MANAGEMENT:

Company has framed a Risk Management Policy to identify and assess the key risk areas, monitor and report compliance and effectiveness of the policy and procedure.

Discussion on risks and concerns are covered in the MDA, which forms a part of this Annual Report.

INTERNAL CONTROL SYSTEM AND ITS ADEQUACY:

The Company has designed and implemented a process driven framework for Internal Financial Controls (âIFCâ) within the meaning of the explanation to section 134(5)(e) of the Act. For the year ended on March 31, 2021, the Board is of the opinion that the Company has sound IFC commensurate with the size, scale and complexity of its business operations. The IFC operates effectively and no material weakness exists. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and / or improved internal controls whenever the effect of such gaps would have a material effect on the Companyâs operations.

MANAGING THE RISKS OF FRAUD, CORRUPTION AND UNETHICAL BUSINESS PRACTICES:i. Vigil Mechanism / Whistle Blower Policy:

In compliance with provisions of section 177(9) of the Act and Rules made thereunder and regulation 22 of the Listing Regulations, the Company has established vigil mechanism and framed Whistle Blower Policy for Directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Companyâs Code of Conduct or Ethics Policy and SEBI (Prohibition of Insider Trading) Regulations, 2015. Whistle Blower Policy is disclosed on the website of the Company, the link of which is https://www. zvduscadila.com/public/pdf/Whistle-Blower-Policv-Mav-29-2019. pdf

ii. Zydus Business Conduct Policy:

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

harassment at workplace. The policy aims at prevention of harassment of employees as well as contractors and lays down the guidelines for identification, reporting and prevention of sexual harassment.

No complaint is received during the Financial Year 2020-2021.

ANNUAL RETURN:

As per the provisions of section 92(3) read with section 134(3)(a) of the Act, Annual Return for the Financial Year ended on March 31, 2021, in prescribed Form No. MGT-7 is available on the website of the Company on https://www.zyduscadila.com/public/pdf/financial/annualreturn/ Form%20No.%20MGT-7%2031.03.2021.pdf.

PARTICULARS OF EMPLOYEES:

The information required under section 197(12) of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure-D.

ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:

GENERAL DISCLOSURES:

Apart from what are mentioned in this report, there are no material changes and commitments affecting the financial position of the Company between the end of the financial year to which the financial statements relate and the date of this report.

ACKNOWLEDGMENT:

Your Directors place on record their sincere appreciation for the continued co-operation and support extended to the Company by various Banks. Your Directors also thank the Medical Profession, the Trade and Consumers for their patronage to the Companyâs products. Your Directors also place on record sincere appreciation of the continued hard work put in by the employees at all levels, amidst the challenges due to pandemic. The Directors also thank the Companyâs vendors, investors, business associates, Stock Exchanges, Government of India, State Government and various departments and agencies for their support and co-operation.

Your Directors mourn the loss of lives due to COVID-19 pandemic and are deeply grateful and have immense respect for every person who risked their life and safety to fight this pandemic.

Your Directors appreciate and value the contribution made by every member of the Zydus family.

On behalf of the Board of Directors Pankaj R. Patel

Place : Ahmedabad Chairman

Date : May 27, 2021 DIN: 00131852

Mar 31, 2018

The Directors are pleased to present the Twenty Third Annual Report and the Financial Statements for the financial year ended on March 31, 2018.

Financial Highlights:

The standalone and consolidated financial performance of the Company, for the Financial Year ended on March 31, 2018 is summarised below:

Rs. in million

	Standalone		Consolidated
Particulars	For the year ended on March 31, 2018	For the year ended on March 31, 2017	For the year ended on March 31, 2018	For the year ended on March 31, 2017
Revenue from Operations and other Income	60,305	38,576	120,496	97,007
Profit before Interest, Depreciation, Amortisation and Impairment Expenses & Tax [PBIDT]	18,542	9,042	29,607	20,325
Less: Finance Cost	639	111	911	446
Less: Depreciation, Amortisation and Impairment Expenses	2,931	2,509	5,388	3,733
Profit Before Tax [PBT]	14,972	6,422	23,308	16,146
Less: Tax Expenses	4,064	(197)	5,644	1,289
Profit After Tax [PAT]	10,908	6,619	17,664	14,857
Share of Profit of Joint venture (net of tax)	-	-	628	338
Profit for the year from Continuing Operations	10,908	6,619	18,292	15,195
Less: Loss after tax from Discontinued operations	-	-	188	27
Profit for the year	10,908	6,619	18,104	15,168
Attributable to:
Owners of the Parent	10,908	6,619	17,758	14,877
Non-Controlling Interests	-	-	346	291
Other Comprehensive Income/(Loss) (net of tax)	362	57	195	51
Total Comprehensive Income	11,270	6,676	18,299	15,219
Attributable to:
Owners of the Parent	11,270	6,676	17,953	14,928
Non-Controlling Interests	-	-	346	291
Opening balance in Retained Earnings	47,315	44,072	50,073	37,742
Amount available for appropriation	58,127	50,610	67,717	54,016
Dividend:
Interim - FY 2016-17	-	3,276	-	3,276
Corporate Dividend Tax on Interim Dividend (net of CDT Credit)	-	19	10	667
Closing Balance in Retained Earnings	58,127	47,315	67,707	50,073
Earnings Per Share [EPS] from Continuing Operations [Face Value of shares of Rs.1/- each]	10.66	6.47	17.53	14.56
Earnings Per Share [EPS] from Continuing and Discontinued Operations [Face Value of shares of Rs.1/- each]	10.66	6.47	17.35	14.53

The Company proposes to retain an amount of Rs.58,127 million in the Statement of Profit and Loss.

Results of Operations:

During the year under review, the consolidated revenue from operations and other income was Rs.1,20,496 million. The Company has achieved consolidated Profit Before Tax of Rs.23,308 million and Profit After Tax of Rs.18,104 million. The Company achieved a consolidated total Comprehensive Income of Rs.18,299 million. The EPS from continuing operations on consolidated financials for the year ended on March 31, 2018 was Rs.17.53.

Dividend:

Your Directors have recommended a dividend of Rs.3.50 (350%) per equity share on 102,37,42,600 Equity Shares of Rs.1/- each fully paid-up for the financial year ended on March 31, 2018, amounting to Rs.3,592 million. (inclusive of Corporate Dividend tax (net of CDT) of Rs.9 million.) The dividend, if declared by the members at the ensuing Annual General Meeting (AGM), will be paid to those shareholders, whose names stand registered in the Register of Members on August 13, 2018. In respect of shares held in dematerialised form, it will be paid to the members whose names are furnished by the National Securities Depository Limited and the Central Depository Services (India) Limited, as beneficial owners. The Dividend Payout Ratio for the current year (inclusive of Corporate Dividend Tax) is 19.8% of profits.

During the year, the unclaimed dividend pertaining to the dividend for the year ended March 31, 2010 was transferred to Investors Education and Protection Fund.

As per SEBI Notification, the Company has formulated Dividend Distribution Policy, which is approved by the Board of Directors and is uploaded on Companyâs website www.zyduscadila.com. The link for the same is https://zyduscadila.com/wp-content/ uploads/2017/05/Dividend-Distribution-Policy-CHL.pdf.

Management Discussion and Analysis (MDA):

MDA, for the year under review, as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulationsâ) is presented in a separate section, which forms a part of the Annual Report.

Consolidated Financial Statements:

In accordance with the Ind AS-110 on Consolidation of Financial Statements read with Ind AS-28 on Accounting for Investments in Associates and Joint Ventures and as provided under the provisions of the Companies Act, 2013 (hereinafter referred to as âActâ) read with Schedule III to the Act and Rules made thereunder and the Listing Regulations, the Audited Consolidated Financial Statements are provided in the Annual Report, which show the financial resources, assets, liabilities, income, profits and other details of the Company, its associate companies and its subsidiaries after elimination of minority interest, as a single entity.

Subsidiary Companies and Joint Ventures:

The Company has divested the entire holding in Bremer Pharma GmbH, Germany (Bremer) on April 17, 2018 and therefore, though on the year end Bremer was a wholly owned subsidiary Company, it ceased to be a subsidiary of the Company with effect from April 17, 2018.

The Company has incorporated a new company in the name of Violio Pharmaceuticals Limited as a wholly owned subsidiary of the Company on May 10, 2018. Violio Pharmaceuticals Limited in turn has incorporated a new Company in the name of Violio Pharmaceuticals Inc., USA on May 11, 2018.

The Company had entered into Joint Venture Agreement (âJVAâ) with Bayer (South East Asia) Pte. Limited (âBayerâ) on January 28, 2011. Both Bayer and the Company held 2,50,00,000 Equity Shares of Rs.10/- each fully paid-up of Bayer Zydus Pharma Private Limited (âJoint Venture Companyâ). As per the terms of the JVA, the Company has sold 1,25,00,001 Equity Shares, on May 2, 2018, at a value determined in terms of JVA, to Bayer by executing a Share Purchase Agreement amongst the Company, Bayer and the Joint Venture Company. The Company has received the Exit Price for such sale of shares in terms of the JVA.

Further, as provided in section 136 of the Act, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. The Company will make available free of cost the Audited Financial Statements of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The Financial Statements of the subsidiary companies will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.

As provided under section 129(3) of the Act and Rules made thereunder a statement containing the salient features of the financial statements of its subsidiaries in the format prescribed under the rules is attached to the financial statements. The policy relating to material subsidiaries as approved by the Board may be accessed on the Companyâs website at the link: http://zyduscadila.com/wp/content/uploads/2015/05/Policy-on-Material-Subsidiary.pdf.

Particulars of Loans, Guarantees and Investments:

Details of loans, guarantees and investments covered under section 186 of the Act are given in the notes to the financial statements.

Related Party Transactions:

All contracts / arrangements / transactions entered into by the Company during the financial year with related parties were in the ordinary course of business and on an armâs length basis. As provided under section 134(3)(h) of the Act and Rules made thereunder disclosure of particulars of material transactions with related parties entered into by the Company in the prescribed format is annexed to this report as Annexure-A. Disclosures on related party transactions are set out in Note No. 41 to the financial statements.

The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Companyâs website at the link: http://zyduscadila. com/wp-content/uploads/2015/05/Policy-on-Related-Party-Transactions.pdf

Directors:

i) Appointment of Directors:

During the year upon recommendation of Nomination and Remuneration Committee, Dr. Sharvil P. Patel (DIN-00131995) was appointed as a Managing Director of the Company for a period of five years w.e.f. April 1, 2017. Further, Mr. Ganesh N. Nayak (DIN-00017481) was appointed as an Additional Director and a Whole Time Director, designated as Chief Operating Officer and Executive Director for a period of three years w.e.f. July 12, 2017. Appointment of Mr. Ganesh N. Nayak was regularised by the shareholders at the Annual General Meeting held on August 11, 2017. Further, Mr. Pankaj R. Patel (DIN-00131852) stepped down as the Managing Director of the Company w.e.f. July 12, 2017. However he continues as a Non-Executive Chairman.

ii) Retirement by rotation:

In accordance with the provisions of section 152(6) of the Act and in terms of the Articles of Association of the Company, Mr. Pankaj R. Patel, Non-Executive Director (DIN-00131852) will retire by rotation at the ensuing AGM and being eligible, offers himself for re-appointment. The Board recommends his re-appointment.

iii) Declaration of independence:

The Company has received declarations of independence as stipulated under section 149(7) of the Act and regulation 16(b) of the Listing Regulations from Independent Directors confirming that they are not disqualified for continuing as an Independent Director.

iv) Profile of Director seeking re-appointment:

As required under regulation 36(3) of the Listing Regulations, particulars of Director seeking re-appointment at the ensuing AGM are annexed to the notice convening Twenty Third AGM.

v) Key Managerial Personnel:

The following persons are/were the Key Managerial Personnel (KMP):

1. Mr. Pankaj R. Patel, Chairman (ceased to be the Managing Director and KMP w.e.f. July 12, 2017),

2. Dr. Sharvil P. Patel, Managing Director (appointed as a Managing Director w.e.f. April 1, 2017),

3. Mr. Ganesh N. Nayak, Executive Director (appointed as an Executive Director w.e.f. July 12, 2017),

4. Mr. Nitin D. Parekh, Chief Financial officer and

5. Mr. Upen H. Shah, Company Secretary.

vi) Board Evaluation:

Pursuant to provisions of the Act and Rules made thereunder and as provided in Schedule IV to the Act and the Listing Regulations, the Nomination and Remuneration Committee / Board has carried out the annual performance evaluation of itself, the Directors individually as well as the evaluation of its committees. The manner in which the evaluation was carried out has been provided in the Corporate Governance Report, which is a part of this Annual Report.

vii) Nomination and Remuneration Policy:

The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy on selection and appointment of Directors, Senior Management Personnel and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report, which is a part of this Annual Report.

Directorsâ Responsibility Statement:

In terms of section 134(3)(c) of the Act and to the best of their knowledge and belief, and according to the information and explanations provided to them, your Directors hereby make the following statements:

(a) that in preparation of the Financial Statements, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any,

(b) that such accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2018 and of the profit of the Company for the year ended on that date,

(c) that proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities,

(d) that the annual financial statements have been prepared on going concern basis,

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

(f) that the systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Transfer of Shares to Investor Education and Protection Fund (IEPF) Account:

In compliance with the provisions of section 124 of the Companies Act, 2013 and rules made thereunder, the Company has transferred the shares of the shareholders whose dividend has remained unclaimed / unpaid for a consecutive period of seven years to the Investor Education and Protection Fund (IEPF).

Board Meetings:

Information of meetings of the Board of Directors is given in Corporate Governance Report, forming a part of this report.

Audit Committee:

As provided in section 177(8) of the Act, the information about composition of Audit Committee and other details are given in Corporate Governance Report, forming a part of this report. The Board has accepted the recommendations of the Audit Committee. The Audit Committee comprises of Mr. Nitin R. Desai, Chairman, Mr. Humayun R. Dhanrajgir, Mr. Mukesh M. Patel, Mr. Apurva S. Diwanji and Ms. Dharmishta N. Raval as members.

Corporate Governance:

The Company has complied with the Corporate Governance requirements under the Act and as stipulated under Listing Regulations. A separate section on detailed report on the Corporate Governance practices followed by the Company under the Listing Regulations, along with a certificate from Manoj Hurkat & Associates, Practicing Company Secretaries, confirming the compliance forms a part of this Annual Report.

Auditors:

i) Statutory Auditors and Audit Report:

Deloitte Haskins & Sells LLP, Chartered Accountants, are appointed as the Statutory Auditors of the Company for a period of five years from the conclusion of Twenty Second AGM till the conclusion of Twenty Seventh AGM.

Deloitte Haskins & Sells LLP, Chartered Accountants have furnished a declaration confirming their independence as well as their armâs length relationship with the Company and that they have not taken up any prohibited non-audit assignments for the Company.

The Board has duly reviewed the Statutory Auditorâs Report of Deloitte Haskins & Sells LLP, Chartered Accountants and the observations and comments, appearing in the report are self-explanatory and do not call for any further explanation / clarification by the Board of Directors as provided under section 134 of the Act.

ii) Cost Auditors:

Pursuant to the provisions of section 148(3) of the Act read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of the Drugs and Pharmaceuticals are required to be audited. The Board had, on the recommendation of the Audit Committee, appointed Dalwadi & Associates, Cost Accountants to audit the cost records of the Company for the Financial Year 2018-2019 on a remuneration of Rs.1.08 million plus applicable taxes and out of pocket expenses on actuals. As required under the Act and Rules made thereunder, the remuneration payable to the Cost Auditors is required to be placed before the Members in a general meeting for ratification. Accordingly, a resolution seeking ratification by members for the remuneration payable to Dalwadi & Associates is included at Item No. 4 of the Notice convening Twenty Third AGM.

iii) Secretarial Auditors and Secretarial Audit Report:

Pursuant to the provisions of section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board has appointed Manoj Hurkat and Associates, a firm of Company Secretaries in Whole-time Practice to undertake the Secretarial Audit of the Company for the Financial Year 2017-2018. The Secretarial Audit Report is annexed herewith as Annexure-B. The Board has duly reviewed the Secretarial Auditorsâ Report and the observations and comments, appearing in the report are self-explanatory and do not call for any further explanation / clarification by the Board of Directors as provided under section 134 of the Act.

Business Responsibility Reporting:

As per Regulation 34(2)(f) of the Listing Regulations, a separate section on Business Responsibility Reporting forms a part of this Annual Report.

Corporate Social Responsibility (CSR):

Your Company, being a Pharmaceutical Company, having objective as âDedicated to Lifeâ has contributed for healthcare, education and research in cancer as a part of initiatives under âCorporate Social Responsibilityâ for the year under review. Pursuant to section 135 of the Act and the relevant rules, the Board has constituted a Corporate Social Responsibility (CSR) Committee under the Chairmanship of Mr. Pankaj R. Patel. The other members of the Committee are Dr. Sharvil P. Patel and Ms. Dharmishta N. Raval. CSR Policy has been framed and placed on the Companyâs website. Other details of the CSR activities, as required under section 135 of the Act, are given in the CSR Report at Annexure-C.

Business Risk Management:

Pursuant to the provisions of section 134(3)(n) of the Act and requirements under the Listing Regulations, the Company has constituted a Risk Management Committee. The details of the Committee and its terms of reference are set out in the Corporate Governance Report, which forms a part of this Annual Report.

A well-defined risk management mechanism covering the risk mapping and trend analysis, risk exposure, potential impact and risk mitigation process is in place. The objective of the mechanism is to minimise the impact of risks identified and taking advance actions to mitigate them. The mechanism works on the principles of probability of occurrence and impact, if triggered. A detailed exercise is being carried out to identify, evaluate, monitor and manage both business and non-business risks. The Company has formally framed a Risk Management Policy to identify and assess the key risk areas, monitor and report compliance and effectiveness of the policy and procedure.

Discussion on risks and concerns are covered in the Management Discussion and Analysis Report, which forms a part of this Annual Report.

Internal control system and its adequacy:

The Company has designed and implemented a process driven framework for Internal Financial Controls (IFC) within the meaning of the explanation to section 134(5)(e) of the Act. For the year ended on March 31, 2018, the Board is of the opinion that the Company has sound IFC commensurate with the size, scale and complexity of its business operations. The IFC operates effectively and no material weakness exists. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and / or improved internal controls whenever the effect of such gaps would have a material effect on the Companyâs operations.

Managing the Risks of fraud, corruption and unethical business practices:

i) Vigil Mechanism / Whistle Blower Policy:

The Company has established vigil mechanism and framed whistle blower policy for Directors and employees to report concerns about unethical behavior, actual or suspected fraud or violation of the Companyâs Code of Conduct or Ethics Policy. Whistle Blower Policy is disclosed on the website of the Company.

ii) Zydus Business Conduct Policy:

The Company has framed âZydus Business Conduct Policyâ and is monitored by the Senior Vice President (Human Resources). Every employee is required to review and sign the policy at the time of joining and an undertaking shall be given for adherence to the Policy. The objective of the Policy is to conduct the business in an honest, transparent and ethical manner. The policy provides for anti-bribery and avoidance of other corruption practices by the employees of the Company.

Disclosure as per the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013:

The Company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment. The Company has in place a robust policy on prevention of sexual harassment at workplace. The policy aims at prevention of harassment of employees as well as contractors and lays down the guidelines for identification, reporting and prevention of sexual harassment.

During the Financial Year 2017-2018, the Company has not received any complaint of sexual harassment.

Extract of annual return:

As per the provisions of section 92(3) of the Act, an extract of the Annual Return in the prescribed form MGT-9 is attached to this Report as Annexure-D.

Particulars of Employees:

The information required under section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure-E.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo:

General Disclosures:

Your Directors state that the Company has made disclosures in this report for the items prescribed in section 134(3) of the Act and rule 8 of the Companies (Accounts) Rules, 2014 to the extent the transactions took place on those items during the year.

Apart from what are mentioned in this report, there are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.

Acknowledgment:

Your Directors place on record their sincere appreciation for the continued co-operation and support extended to the Company by various Banks. Your Directors also thank the Medical Profession, the Trade and Consumers for their patronage to the Companyâs products. Your Directors also place on record sincere appreciation of the continued hard work put in by the employees at all levels. The Directors also thank the Companyâs vendors, investors, business associates, Stock Exchanges, Government of India, State Government and various departments and agencies for their support and co-operation.

On behalf of the Board of Directors

PANKAJ R. PATEL

Chairman

Place : Ahmedabad

Date : May 25, 2018

Mar 31, 2017

The Directors are pleased to present the Twenty Second Annual Report and the Financial Statements for the financial year ended on March 31, 2017.

Financial Results:

The financial statements of the Company have been prepared in accordance with the Indian Accounting Standards (Ind AS) notified under section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. The financial statements for the Financial Year ended on March 31, 2017 are the Companyâs first Ind AS compliant annual financial statements with comparative figures for the year ended March 31 2016 also under Ind AS. The transition date of Ind AS is April 1, 2015.

The disclosure and effects of first time adoption of Ind AS are provided in Note 46 and Note 47 of the standalone financial statements and Note 52 and Note 53 of the consolidated financial statements.

The standalone and consolidated financial performance of the Company, for the Financial Year ended on March 31, 2017 is summarized below:

(INR-Millions)

Particulars	Standalone		Consolidated
	For the year ended on March 31, 2017	For the year ended on March 31, 2016	For the year ended on March 31, 2017	For the year ended on March 31, 2016
Revenue from Operations and other Income	38,576	73,033	97,539	97,326
Profit before Interest, Depreciation, Amortisation and Impairment Expenses & Tax [PBIDT]	9,042	27,515	20,319	24,436
Less: Finance Cost	111	265	450	528
Less: Depreciation, Amortisation and Impairment Expenses	2,509	2,212	3,750	2,921
Profit Before Tax [PBT]	6,422	25,038	16,119	20,987
Less: Tax Expenses	(197)	4,663	1,289	1,774
Profit After Tax [PAT]	6,619	20,375	14,830	19,213
Share of Profit of Joint Venture (Net of Tax)	--	--	338	430
Profit After Tax including share of Joint Venture	6,619	20,375	15,168	19,643
Attributable to:
Owners of the Parent	6,619	20,375	14,877	19,339
Non-Controlling Interests	--	--	291	304
Other Comprehensive Income/(Loss) (Net of Tax)	57	(392)	51	(522)
Total Comprehensive Income	6,676	19,983	15,219	19,121
Attributable to:
Owners of the Parent	6,676	19,983	14,928	18,817
Non-Controlling Interests	--	--	291	304
Opening balance in Retained Earnings	44,072	30,658	38,132	25,878
Amount available for appropriation	50,610	50,863	54,406	45,032
Dividend:
Interim - FY 2016-17	3,276	--	3,276	--
Interim - FY 2015-16	--	3,276	--	3,276
Final - FY 2014-15	--	2,457	--	2,457
Corporate Dividend Tax on Interim Dividend (Net of CDT Credit)	19	1,058	667	1,167
Closing Balance in Retained Earnings	47,315	44,072	50,463	38,132
Earnings Per Share [EPS] [Face Value of shares of Re. 1/- each]	6.47	19.90	14.82	19.19

The Company proposes to retain an amount of Rs. 47,315 mio in the Statement of Profit and Loss.

Results of Operations

During the year under review, the consolidated revenue from operations and other income was Rs. 97,539 mio. The company has achieved consolidated Profit Before Tax of Rs. 16,119 mio and Profit After Tax of Rs. 14,830 mio. The Company achieved a consolidated Total Comprehensive Income of Rs. 15,219 mio. The EPS on consolidated financials for the year ended on March 31, 2017 was Rs. 14.82.

Interim Dividend

During the year under review, your Directors had declared and paid an interim dividend of Rs. 3.20 per equity share of face value Re. 1 each to the shareholders holding shares in physical form and whose names were listed on the Register of Members of the Company as on March 17, 2017, being the Record Date fixed for the purpose. Those shareholders holding shares in electronic form were paid dividend as per the beneficiary data provided by the Depositories. Your Directors did not recommend final dividend. The dividend payout ratio for the current year [inclusive of corporate dividend tax on dividend distribution] is 16.08%.

During the year, the unclaimed dividend pertaining to the dividend for the year ended March 31, 2009 was transferred to Investors Education and Protection Fund after giving notice to the members to claim their unpaid / unclaimed dividend.

Scheme of Arrangement between Company and Zydus Healthcare Limited

In order to bring more focused and concentrated efforts, the management has decided to consolidate India Human Formulation Business of Zydus Group in one entity. To achieve this objective, during the year Biochem Pharmaceutical Industries Limited, a wholly owned subsidiary Company was amalgamated with Zydus Healthcare Limited, another wholly owned subsidiary Company. As a part of the consolidation, pursuant to order dated May 18, 2017 passed by the Honâble National Company Law Tribunal, Bench at Ahmedabad [NCLT], the India Human Formulations Undertaking [as defined in the Scheme of Arrangement] was transferred and merged into Zydus Healthcare Limited, on a cash consideration, pursuant to approval of the Scheme of Arrangement between the Company and Zydus Healthcare Limited and their respective shareholders and creditors sanctioned by the NCLT.

Management Discussion and Analysis (MDA)

MDA, for the year under review, as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 [Listing Regulations] is presented in a separate section, which forms a part of the Annual Report.

Consolidated Financial Statements

In accordance with the Ind AS-110 on Consolidation of Financial Statements read with Ind AS-28 on Accounting for Investments in Associates and Joint Ventures and as provided under the provisions of the Companies Act, 2013 [hereinafter referred to as âActâ] read with Schedule III to the Act and Rules made thereunder and the Listing Regulations, the Audited Consolidated Financial Statements are provided in the Annual Report, which show the financial resources, assets, liabilities, income, profits and other details of the Company, its associate companies and its subsidiaries after elimination of minority interest, as a single entity.

Subsidiary Companies

As provided in section 136 of the Act, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. The Company will make available free of cost the Audited Financial Statements of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The Financial Statements of the subsidiary companies will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.

During the year, Biochem Pharmaceutical Industries Limited merged with Zydus Healthcare Limited [formerly known as German Remedies Limited], both wholly owned subsidiary Companies pursuant to Scheme of Amalgamation approved by the Honâble National Company Law Tribunal, Bench at Ahmedabad vide its final order dated March 15, 2017.

During the year, the Company has incorporated Zydus Holdings Inc., USA, which has acquired 100% shareholding of US specialty Company-Sentynl Therapeutics Inc., USA (âSentynlâ). After acquisition, Zydus Holdings Inc., USA was merged with Sentynl. Sentynl is now a wholly owned subsidiary Company.

During the year, the Company has acquired all shares held by its subsidiary companies in (1) Zydus Pharmaceuticals USA Inc., USA, (ZPUI), (2) Zydus Healthcare USA LLC, USA, (ZHUL), (3) Zydus Noveltech Inc., USA (ZNI) and (4) Bremer Pharma GmbH, Germany (Bremer) and therefore these four entities have become direct overseas subsidiary companies.

As provided under section 129[3] of the Act and Rules made thereunder a statement containing the salient features of the financial statements of its subsidiaries in the format prescribed under the rules is attached to the financial statements. The policy relating to material subsidiaries as approved by the Board may be accessed on the Companyâs website at the link: http://zyduscadila. com/wp/content/uploads/2015/05/Policy-on-Material-Subsidiary. pdf.

Particulars of Loans, Guarantees and Investments

Details of loans, guarantees and investments covered under section 186 of the Act are given in the notes to the financial statements.

Related Party Transactions

All contracts / arrangements / transactions entered into by the Company during the financial year with related parties were in the ordinary course of business and on an armâs length basis. As provided under section 134[3][h] of the Act and Rules made thereunder disclosure of particulars of material transactions with related parties entered into by the Company in the prescribed format is annexed to this report as Annexure-A. Disclosures on related party transactions are set out in Note No. 41 to the financial statements.

Directors

i) Retirement by rotation:

In accordance with the provisions of section 152[6] of the Act and in terms of the Articles of Association of the Company, Mr. Mukesh M. Patel, Non-Executive Director [DIN-00053892] will retire by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment. The Board recommends his reappointment.

The Board of Directors of the Company has, subject to the approval of the shareholders at the ensuing Annual General Meeting reappointed Dr. Sharvil P. Patel, as a Joint Managing Director of the Company for a period of five years with effect from April 1, 2017.

ii) Declaration of independence:

The Company has received declarations of independence as stipulated under section 149[7] of the Act and regulation 16[b] of the Listing Regulations from Independent Directors confirming that they are not disqualified for continuing as an Independent Director.

iii) Profile of Director seeking appointment / re-appointment:

As required under regulation 36 [3] of the Listing Regulations, particulars of Directors seeking appointment / re-appointment at the ensuing Annual General Meeting are annexed to the notice convening Twenty Second Annual General Meeting.

iv) Key Managerial Personnel:

The following persons are the Key Managerial Personnel:

1. Mr. Pankaj R. Patel, Chairman and Managing Director,

2. Dr. Sharvil P. Patel, Joint Managing Director,

3. Mr. Nitin D. Parekh, Chief Financial officer and

4. Mr. Upen H. Shah, Company Secretary.

There is no change in the Key Managerial Personnel during the year.

v) Board Evaluation:

vi) Nomination and Remuneration Policy:

Directorsâ Responsibility Statement

In terms of section 134[3][c] of the Act and to the best of their knowledge and belief, and according to the information and explanations provided to them, your Directors hereby make the following statements:

(a) that in preparation of the Financial Statements, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any,

(b) that such accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2017 and of the profit of the Company for the year ended on that date,

(d) that the annual financial statements have been prepared on going concern basis,

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

(f) that the systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Board Meetings

Information of meetings of the Board of Directors is given in Corporate Governance Report, forming a part of this report.

Audit Committee

As provided in section 177[8] of the Act, the information about composition of Audit Committee and other details are given in Corporate Governance Report, forming a part of this report. The Board has accepted the recommendations of the Audit Committee. The Audit Committee comprises of Mr. Nitin R. Desai, Chairman, Mr. Humayun R. Dhanrajgir, Mr. Mukesh M. Patel, Mr. Apurva S. Diwanji and Ms. Dharmishta N. Rawal as members.

Corporate Governance

The Company has complied with the Corporate Governance requirements under the Act and as stipulated under Listing Regulations. A separate section on detailed report on the Corporate Governance practices followed by the Company under the Listing Regulations along with a certificate from the Statutory Auditors, confirming the compliance forms a part of this Annual Report.

Auditors

i) Statutory Auditors and Audit Report:

Mukesh M. Shah & Co., Chartered Accountants, the existing Statutory Auditors, have been in the office for a period of more than 10 years at the commencement of the Companies Act, 2013, which provides a transition period of 3 years for appointing new Statutory Auditors.

Further, as per the Companies (Removal of Difficulties) Third Order, 2016 dated June 30, 2016 of Ministry of Corporate Affairs, the Company is required to appoint new Statutory Auditors at the ensuing Annual General Meeting (AGM).

Based on the recommendation of the Audit Committee, the Board of Directors have approved the appointment of Deloitte Haskins & Sells LLP, Chartered Accountants, as Statutory Auditors of the Company for a period of five years from the conclusion of ensuing Twenty Second AGM till the conclusion of Twenty Seventh AGM, subject to approval of the members at the ensuing AGM. Further, the appointment shall be ratified by the members at each AGM.

Deloitte Haskins & Sells LLP, Chartered Accountants have informed to the Company that their appointment, if made, would be within the limits prescribed under section 141 of the Act. They have also furnished a declaration confirming that their independence as well as their armâs length relationship with the Company and that they have not taken up any prohibited non-audit assignments for the Company.

The Board has duly reviewed the Statutory Auditorâs Report of Mukesh M. Shah & Co., Chartered Accountants and the observations and comments, appearing in the report are self-explanatory and do not call for any further explanation / clarification by the Board of Directors as provided under section 134 of the Act.

ii) Cost Auditors:

Pursuant to provisions of section 148[3] of the Act read with the Companies [Cost Records and Audit] Amendment Rules, 2014, the cost audit records maintained by the Company in respect of the Drugs and Pharmaceuticals are required to be audited. The Board had, on the recommendation of the Audit Committee, appointed Dalwadi & Associates, Cost Accountants to audit the cost records of the Company for the Financial Year 2016-2017 on a remuneration of Rs. 1.00 mio. As required under the Act and Rules made thereunder, the remuneration payable to the Cost Auditors is required to be placed before the Members in a general meeting for ratification. Accordingly, a resolution seeking ratification by members for the remuneration payable to Dalwadi & Associates is included at Item No. 6 of the Notice convening Twenty Second AGM.

iii) Secretarial Auditors and Secretarial Audit Report:

Pursuant to provisions of section 204 of the Act and the Companies [Appointment and Remuneration of Managerial Personnel] Rules, 2014, the Board has appointed Manoj Hurkat and Associates, a firm of Company Secretaries in Whole-time Practice to undertake the Secretarial Audit of the Company for the Financial Year 2016-2017. The Secretarial Audit Report is annexed herewith as Annexure-B. The Board has duly reviewed the Secretarial Auditorsâ Report and the observations and comments, appearing in the report are self-explanatory and do not call for any further explanation / clarification by the Board of Directors as provided under section 134 of the Act.

Business Responsibility Reporting

As per Regulation 34[2][f] of the Listing Regulations, a separate section on Business Responsibility Reporting forms a part of this Annual Report.

Corporate Social Responsibility [CSR]

Your Company, being a Pharmaceutical Company, having objective as âDedicated to Lifeâ has contributed for healthcare, education and research in cancer as a part of initiatives under âCorporate Social Responsibilityâ for the year under review. Pursuant to section 135 of the Act and the relevant rules, the Board has constituted a Corporate Social Responsibility [CSR] Committee under the Chairmanship of Mr. Pankaj R. Patel. The other members of the Committee are Dr. Sharvil P. Patel and Ms. Dharmishta N. Rawal. CSR Policy has been framed and placed on the Companyâs website. Other details of the CSR activities, as required under section 135 of the Act, are given in the CSR Report at Annexure-C.

Business Risk Management

Pursuant to provisions of section 134[3][n] of the Act and requirements under the Listing Regulations, the Company has constituted a Risk Management Committee. The details of the Committee and its terms of reference are set out in the Corporate Governance Report, which forms a part of this Annual Report.

A well-defined risk management mechanism covering the risk mapping and trend analysis, risk exposure, potential impact and risk mitigation process is in place. The objective of the mechanism is to minimize the impact of risks identified and taking advance actions to mitigate them. The mechanism works on the principles of probability of occurrence and impact, if triggered. A detailed exercise is being carried out to identify, evaluate, monitor and manage both business and non-business risks. The Company has formally framed a Risk Management Policy to identify and assess the key risk areas, monitor and report compliance and effectiveness of the policy and procedure.

Discussion on risks and concerns are covered in the Management Discussion and Analysis Report, which forms a part of this Annual Report.

Internal control system and its adequacy

The Company has designed and implemented a process driven framework for Internal Financial Controls [IFC] within the meaning of the explanation to section 134[5][e] of the Act. For the year ended on March 31, 2017, the Board is of the opinion that the Company has sound IFC commensurate with the size, scale and complexity of its business operations. The IFC operates effectively and no material weakness exists. The Company has a process in place to continuously monitor the same and identify gaps, if any, and implement new and / or improved internal controls whenever the effect of such gaps would have a material effect on the Companyâs operations.

Managing the Risks of fraud, corruption and unethical business practices

i) Vigil Mechanism / Whistle Blower Policy:

ii) Zydus Business Conduct Policy:

The Company has framed âZydus Business Conduct Policyâ and is monitored by the Group President [Human Resources and Corporate Communication]. Every employee is required to review and sign the policy at the time of joining and an undertaking shall be given for adherence to the Policy. The objective of the Policy is to conduct the business in an honest, transparent and ethical manner. The policy provides for anti-bribery and avoidance of other corruption practices by the employees of the Company.

Disclosure as per the Sexual Harassment of Women at Workplace [Prevention, Prohibition and Redressal] Act, 2013

During the Financial Year 2016-2017, the Company has not received any complaint of sexual harassment.

Extract of annual return

As per the provisions of section 92[3] of the Act, an extract of the Annual Return in the proscribed form MGT 9 is attached to this report as Annexure-D.

Particulars of Employees

The information required under section 197 of the Act read with rule 5[1] of the Companies [Appointment and Remuneration of Managerial Personnel] Rules, 2014 is given in Annexure-E.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo

Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under section 134[3][m] of the Act read with rule 8[3] of the Companies [Accounts] Rules, 2014, is provided in Annexure-F and forms a part of this Report.

General Disclosures

Your Directors state that the Company has made disclosures in this report for the items prescribed in section 134[3] of the Act and rule 8 of the Companies [Accounts] Rules, 2014 to the extent the transactions took place on those items during the year.

There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report.

Acknowledgment

Your Directors place on record their sincere appreciation for the continued co-operation and support extended to the Company by various Banks. Your Directors also thank the Medical Profession, the Trade and Consumers for their patronage to the Companyâs products. Your Directors also place on record sincere appreciation of the continued hard work put in by the employees at all levels. The Directors also thank the Companyâs vendors, investors, business associates, Stock Exchanges, Government of India, State Government and various departments and agencies for their support and co-operation.

On behalf of the Board of Directors

Pankaj R. Patel

Chairman

Place : Ahmedabad

Date : May 27, 2017

Mar 31, 2014

Dear Members,

The Directors are pleased to present the 19th Annual Report and the audited accounts for the financial year ended on March 31, 2014.

Financial Results:

The financial performance of the Company, for the year ended on March 31, 2014 is summarised below:

(INR-Millions)

For the year For the year Particulars ended on ended on March 31, 2014 March 31, 2013

Sales and Other Income 43,507 35,803

Profit before Interest, Finance Charges, Depreciation, 11,156 7,592 Amortisation and Impairment and Tax (PBIDT)

Less: Depreciation, Amortisation and Impairment 1,274 1,168

Profit before Interest and Finance Charges and Tax (PBIT) 9,882 6,424

Less: Interest and Finance Charges 425 1,110

Profit before Tax [PBT] 9,457 5,314

Less: Provision for Tax 421 328

Profit after Tax [PAT] 9,036 4,986

Add: Profit brought forward from the previous year 11,896 10,094

Profit available for appropriation, which is appropriated as follows: 20,932 15,080

Interim Dividend - 1,536

Proposed Final Dividend 1,843 -

Corporate Dividend Tax on Proposed Final Dividend / Interim 273 198 Dividend [Net of CDT Credit]

Transferred to Debenture Redemption Reserve 450 450

Transferred to General Reserve 1,000 1,000

Balance carried to Balance Sheet 17,366 11,896

Total 20,932 15,080

Earnings Per Share [EPS] [Face Value of shares of Rs.5/- each] [in Rupees] 44.13 24.35

Results of operations:

During the year under review, the consolidated gross sales grew by 14.69%. On standalone basis, the Company has achieved gross sales of Rs. 35,873 millions, showing a growth of 20.46% as compared to the previous year. The PBIDT was increased by 46.94% to Rs. 11,156 millions and the Profit before Tax increased by 77.96% to Rs. 9,457 millions. The Profit after Tax has increased to Rs. 9,036 millions as compared to Rs. 4,986 millions in the previous year and the EPS has increased from Rs. 24.35 in the previous year to Rs. 44.13. A detailed analysis of performance for the year has been included in the Management Discussion and Analysis, which forms part of the Annual Report.

Dividend:

Your Directors have recommended a dividend of Rs. 9/- [180%] per equity share [last year interim dividend of Rs. 7.50 per equity share] on 204,748,520 equity shares of Rs. 5/- each fully paid-up for the financial year ended on March 31, 2014, amounting to Rs. 2,116 millions [inclusive of corporate dividend tax [net of CDT credit] of Rs. 273 millions]. The dividend, if declared by the shareholders at the ensuing Annual General Meeting will be paid to those shareholders, whose names stand registered in the Register of Members on July 30, 2014. In respect of shares held in dematerialised form, it will be paid to the members whose names are furnished by the National Securities Depository Limited and the Central Depository Services [India] Limited, as beneficial owners. The Dividend Payout ratio for the current year (inclusive of Corporate Dividend Tax) is 23.42% on Profits after Tax.

Management Discussion and Analysis (MDA):

MDA, for the year under review, as stipulated under clause 49 of the Listing Agreement with the Stock Exchanges is presented in a separate section, which forms part of the Annual Report.

Consolidated Financial Statements:

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates and Accounting Standard AS-27 on Financial Reporting of Interest in Joint Ventures and as provided under the Listing Agreement with the Stock Exchanges, the audited Consolidated Financial Statements are provided in the Annual Report, which show the financial resources, assets, liabilities, income, profits and other details of the Company, its associate companies and its subsidiaries after elimination of minority interest, as a single entity.

Subsidiary Companies:

In accordance with the General Circular No. 51/12/2007-CL-III dated February 8, 2011 issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. As required under the Circular, the Board of Directors at its meeting held on May 16, 2014 passed a resolution giving consent for not attaching these documents with the Balance Sheet of the Company.

The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company, who may be interested in obtaining the same. The Annual Accounts of the subsidiary companies will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary Company. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.

During the year as a part of long term strategic planning, the Company has decided to discontinue operations of its wholly owned subsidiary Company in Japan market. The Company''s subsidiary Company in Japan namely Zydus Pharma Japan Company Limited may be wound up after necessary formalities as per the regulations applicable to the subsidiary Company. The accounts of this subsidiary Company are therefore not prepared on a going concern basis.

The statement containing the list of subsidiaries along with brief financial details of the subsidiaries is given in this Annual Report separately.

Directors:

The Board of Directors at their meeting held on May 16, 2014 appointed Ms. Dharmishtaben N. Rawal as an Additional Director and she shall hold office till the ensuing Annual General Meeting of the Company and she has expressed her willingness to be appointed as an Independent Director.

As per the provisions of section 149 and other applicable provisions of the Companies Act, 2013 and rules made thereunder, your Directors are seeking appointment of Mr. H. Dhanrajgir, Mr. Nitin Raojibhai Desai and Ms. Dharmishtaben N. Rawal as independent Directors on the Board for a period of consecutive five years and they shall not be liable to retire by rotation.

Mr. Apurva S. Diwanji, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for reappointment. The Board recommends the reappointment of Mr. Apurva S. Diwanji as Director liable to retire by rotation.

Brief profile of all Independent Directors proposed to be appointed at the ensuing Annual General Meeting for a period of five consecutive years and Mr. Apurva S. Diwanji, Director retiring by rotation and seeking reappointment, as required under clause 49 of the Listing Agreement, is annexed to the notice convening the 19th Annual General Meeting, which forms part of this Annual Report.

Disclosures:

There have been no material changes and commitments, which may affect the financial position of the Company between the end of the financial year and the date of this report.

Directors'' Responsibility Statement:

Pursuant to the requirements under section 217 (2AA) of the Companies Act, 1956 and to the best of their knowledge and belief, and according to the information and explanations provided to them, your Directors hereby state that:

(a) The Annual Accounts for the year ended March 31, 2014 are prepared on going concern basis;

(b) In preparation of the Annual Accounts, all the applicable accounting standards have been followed. Necessary explanations are given for material departures, if any;

(c) Sound accounting policies have been selected and applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2014 and of the profit of the Company for the year ended on that date and

(d) Proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities.

Corporate Governance:

A detailed report on the Corporate Governance together with a certificate from the statutory auditors, confirming the compliance of conditions of Corporate Governance stipulated under clause 49 of the Listing Agreement with the Stock Exchanges forms part of the Annual Report.

Corporate Social Responsibility [CSR]:

In compliance of the provisions of section 135 of the Companies Act, 2013, the Board of Directors has formed a CSR Committee comprising three Directors. Ms. Dharmishtaben N. Rawal, an Independent Director is one of the members of the Committee.

Auditors:

M/s. Mukesh M. Shah & Co., Chartered Accountants, (Firm Registration No. 106625W) Statutory Auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. As per the provisions of section 139 of the Companies Act, 2013 [the Act] and rules made thereunder, as M/s Mukesh M. Shah & Co., Chartered Accountants have provided their services for more than 10 years; the Company shall comply with the said provisions within a period of three years. Accordingly, M/s Mukesh M. Shah & Co., Chartered Accountants shall hold office from the conclusion of the 19th Annual General Meeting till the conclusion of the 20th Annual General Meeting.

The Company has received a letter from M/s Mukesh M. Shah & Co., Chartered Accountants to the effect that their reappointment, if made, would be within the prescribed limits under section 139 of the Act and rules made thereunder and that the firm is eligible for appointment and is not disqualified for appointment under the Act, the Chartered Accountants Act, 1949 and the rules and regulations made thereunder.

The Audit Committee and the Board of Directors recommend the reappointment of M/s Mukesh M. Shah & Co., Chartered Accountants, as the Statutory Auditors of the Company.

Auditors'' Report and Notes on Accounts:

The Board has duly reviewed the Statutory Auditor''s Report on the Accounts. The observations and comments, appearing in the Auditor''s Report are self-explanatory and do not call for any further explanation / clarification by the Board of Directors under section 217[3] of the Companies Act, 1956.

Cost Auditors:

The Ministry of Corporate Affairs vide General Circular No. 15/2011 dated April 11, 2011 mandated the cost audit for the Pharmaceutical Products. For conducting the cost audit for the financial year ended March 31, 2014, based on the recommendation of Audit Committee, the Board has appointed M/s Dalwadi & Associates, Cost Accountants and made an application to the Central Government in accordance with MCA Circular dated April 11, 2011. The Cost Auditor has filed the cost audit reports for the financial year ended on March 31, 2013 for Pharmaceutical Products within the due date on August 1, 2013. The due date of filing the cost audit report in XBRL was September 30, 2013.

Particulars of Employees:

The names and other particulars of the employees as set out under section 217(2A) of the Companies Act, 1956 and rules made thereunder are provided in Annexure forming part of the Report. In terms of section 219(1) (b) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary. None of the employees listed in the said Annexure is related to any Director of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo:

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of Particulars in the Report of Directors) Rules, 1988, are provided in the Annexure - A to this Report.

Acknowledgment:

Your Directors place on record their sincere appreciation for the continued co-operation extended to the Company by the Consortium Banks and Financial Institutions. Your Directors also thank the Medical Profession, the Trade and Consumers for their patronage of the Company''s products. Your Directors also place on record sincere appreciation of the continued hard work put in by the employees at all levels. The Directors also thank the Company''s vendors, investors, business associates, Government of India, State Government and various departments and agencies for their support and co-operation.

By Order of the Board of Directors

Place : Ahmedabad Pankaj R. Patel

Date : May 16, 2014 Chairman

Mar 31, 2013

The Directors are pleased to present 18th Annual Report and the audited accounts for the financial year ended on March 31, 2013.

Financial Results:

The financial performance of the Company, for the year ended on March 31, 2013 is summarized below:

(INR-Millions)

For the year For the year Particulars Growth ended on ended on March 31,2013 March 31,2012

Sales and Other Income 37,286 33,877 10.06

Profit before Interest, Finance Charges, Depreciation, 7,592 9,047 -16.08 Amortisation and Impairment and Tax (PBIDT)

Less: Depreciation, Amortisation and Impairment 1,168 1,082 7.95

Profit Before Interest and Finance charges and Tax (PBIT) 6,424 7,965 19.35

Less: Interest and Finance charges 1,110 1,261 11.97

Profit Before Tax 5,314 6,704 20.73

Less: Provision for Tax 328 129 154.26

Profit After Tax 4,986 6,575 24.17

Add: Profit brought forward from the previous year 10,094 6,675

Profit available for appropriation, which is appropriated as follows: 15,080 13,250

Interim Dividend 1,536 -

Proposed Final Dividend - 1,536

Corporate Dividend Tax on Interim Dividend / Proposed Final Dividend 198 170 [Net of CDT Credit]

Transferred to Debenture Redemption Reserve 450 450

Transferred to General Reserve 1000 1000

Balance carried to Balance Sheet 11,896 10,094

Total 15,080 13,250

Earnings per share [EPS] [Face Value of shares of Rs. 5/-] [in Rupees] 24.35 32.11

Results of operations:

During the year under review, the consolidated gross sales grew by 21.31%. On standalone basis, the Company has achieved gross sales of Rs. 29,781 millions, showing a growth of 21.23% compared to the previous year. However, the PBIDT was decreased by 16.08% to Rs. 7,592 millions and the Profit Before Tax was also decreased by 20.73% to Rs. 5,314 millions. As a result, the Profit After Tax has decreased to Rs. 4,986 millions as compared to Rs. 6,575 millions in previous year and the EPS decreased from Rs. 32.11 in the previous year to Rs. 24.35. The standalone figures are not comparable with the previous year as they include the financials of the merged entities. A detailed analysis of performance for the year has been included in the Management Discussion and Analysis, which forms part of the Annual Report.

Dividend:

Your Directors have declared an Interim Dividend of Rs. 7.50 per Equity Share [last year final dividend recommended of Rs. 7.50 per Equity Share] on 204,748,520 equity shares of Rs.5/- each fully paid-up, out of the profits for the financial year ended March 31, 2013, amounting to Rs. 1,734 millions [inclusive of Corporate Dividend Tax of Rs. 198 millions]. The Interim Dividend was paid to the shareholders of the Company, whose names stand registered in the Register of Members as on June 12, 2013, being the Record Date fixed for the purpose. In respect of shares held in dematerialized form, it was paid to the members whose names were furnished by the depositories, as beneficial owners as on the Record Date. The Dividend payout ratio for the current year (inclusive of Corporate Dividend tax) is 34.78 percent on profits of the merged entity.

Scheme of Amalgamation:

Board of Directors of your Company, subject to requisite approvals, approved a Scheme of Amalgamation [the Scheme] under sections 391 - 394 of the Companies Act, 1956 for amalgamation of Liva Healthcare Limited, Zydus Animal Health Limited and Zydus Pharmaceuticals Limited, the wholly owned subsidiary companies with the Company.

After requisite approvals / NOC from the Stock Exchanges, Regional Director and Official Liquidator, the Hon''ble High Court of Gujarat at Ahmedabad on its hearing on August 8, 2013 approved the Scheme.

The appointed day for the merger was April 1, 2012. However, the Scheme became effective from August 26, 2013, being the date of filing of High Court Orders with the Registrar of Companies, Gujarat at Ahmedabad.

The Company has prepared and presented the merged accounts, which include the financials of three subsidiary Companies.

Management Discussion and Analysis (MDA):

MDA, for the year under review, as stipulated under clause 49 of the Listing Agreement with the Stock Exchanges is presented in a separate section, which forms part of the Annual Report.

Consolidated Financial Statements:

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates and Accounting Standard AS-27 on Financial Reporting of Interest in Joint Ventures and as provided under the Listing Agreement with the Stock Exchanges, the audited Consolidated Financial Statements are provided in the Annual Report, which show the financial resources, assets, liabilities, income, profits and other details of the Company, its associates companies and its subsidiaries after elimination of minority interest, as a single entity.

Subsidiary Companies:

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. As required under the circular, the Board of Directors at its meeting held on August 30, 2013 passed a resolution giving consent for not attaching these documents with the Balance Sheet of the Company.

In view of the long term business prospects, your Company incorporated Zydus Healthcare Philippines, Inc.

The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The Annual Accounts of the subsidiary companies will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.

The statement containing the list of subsidiaries along with brief financial details of the subsidiaries is given in this Annual Report separately.

Directors:

Mr. Mukesh M. Patel, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for reappointment. The Board of Directors recommends the reappointment of Mr. Mukesh M. Patel. Brief profile of Mr. Mukesh M. Patel, Director proposed to be reappointed as required under clause 49 of the Listing Agreement is annexed to the notice convening 18th Annual General Meeting forming part of this Annual Report.

Directors'' Responsibility Statement:

Pursuant to the requirements under section 217 (2AA) of the Companies Act, 1956 and to the best of their knowledge and belief, and according to the information and explanations provided to them, your Directors hereby state that:

(a) the Annual Accounts for the year ended March 31, 2013 are prepared on going concern basis;

(b) in preparation of the Annual Accounts, all the applicable accounting standards have been followed. Necessary explanations are given for material departures, if any;

(c) sound accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2013 and of the profit of the Company for the year ended on that date, and

(d) proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities.

Corporate Governance:

A detailed report on the Corporate Governance together with a certificate from the statutory auditors, confirming the compliance of conditions of Corporate Governance stipulated under clause 49 of the Listing Agreement with the Stock Exchanges forms part of the Annual Report.

Auditors:

M/s. Mukesh M. Shah & Co., Chartered Accountants, (Firm Registration No. 106625W) Statutory Auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Company has received a letter from them to the effect that their reappointment, if made, would be within the prescribed limits under section 224 (1B) of the Companies Act, 1956 and that they are not disqualified for reappointment within the meaning of section 226 of the said Act.

Auditors'' Report and Notes on Accounts:

The Board has duly reviewed the Statutory Auditor''s Report on the Accounts. The observations and comments, appearing in the Auditor''s Report are self-explanatory and do not call for any further explanation / clarification by the Board of Directors under section 217[3] of the Companies Act, 1956.

Cost Auditors:

The Ministry of Corporate Affairs vide general circular No. 15/2011 dated April 11, 2011 mandated the cost audit for the Pharmaceutical Products. For conducting the cost audit for the financial year ended March 31, 2013, based on the recommendation of Audit Committee, the Board has appointed M/s Dalwadi & Associates, Cost Accountants and made an application to the Central Government in accordance with MCA circular dated April 11, 2011. The Cost Auditor has filed the cost audit reports for the financial year ended on March 31, 2012 for Pharmaceutical Products within the due date on January 31, 2013. The due date of filing the cost audit report in XBRL was February 28, 2013.

Particulars of Employees:

The names and other particulars of the employees as set out under section 217(2A) of the Companies Act, 1956 and rules made thereunder is provided in Annexure forming part of the Report. In terms of section 219(1) (b) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary. None of the employees listed in the said Annexure is related to any Director of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earning and Outgo:

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under section 217(1 )(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of Directors) Rules, 1988, are provided in the Annexure - A to this Report.

Acknowledgment:

Your Directors place on record their sincere appreciation for the continued co-operation extended to the Company by the Consortium Banks and Financial Institutions. Your Directors also thank the Medical Profession, the Trade and Consumers for their patronage of the Company''s products. Your Directors also place on record sincere appreciation of the continued hard work put in by the employees at all levels. The Directors also thank the Company''s vendors, investors, business associates, Government of India, State Government and various departments and agencies for their support and co-operation.

By Order of the Board of Directors

Place : Ahmedabad Pankaj R. Patel

Date : August 30, 2013 Chairman

Mar 31, 2012

The Directors are pleased to present 17th Annual Report and the audited accounts for the financial year ended on March 31, 2012.

Financial Results:

The financial performance of the Company, for the year ended on March 31, 2012 is summarized below:

(INR-Millions) For the year For the year Particulars Growth ended on ended on (%) March 31, 2012 March 31, 2011

Sales and Other Income 33,899 29,784 13.82

Profit before Interest, Finance Charges, Depreciation, 9,069 7,659 18.41

Amortisation and Impairment and Tax (PBIDT)

Less: Depreciation, Amortisation and Impairment 1,082 969 11.66

Profit Before Interest and Finance charges and Tax (PBIT) 7,987 6,690 19.39

Less: Interest and Finance charges 1,283 318 303.46

Profit Before Tax 6,704 6,372 5.21

Less: Provision for Tax 129 268 (51.87)

Profit After Tax 6,575 6,104 7.72

Add: Profit brought forward from the previous year 6,675 3,323

Profit available for appropriation, which is appropriated as follows: 13,250 9,427

Proposed Dividend 1,536 1,280

Corporate Dividend Tax on Proposed Dividend [Net of CDT Credit] 170 146

Transferred to Debenture Redemption Reserve 450 100

Transferred to General Reserve 1,000 1,226

Balance carried to Balance Sheet 10,094 6,675

Total 13,250 9,427

Earnings per share [EPS] [Face Value of shares Rs.5/-] [in Rupees] 32.11 29.81

Results of operations:

During the year under review, the consolidated sales grew by 14.59 %. On standalone basis, the Company has achieved sales of Rs. 24,565 millions, showing a growth of 11.09 % compared to the previous year. The PBIDT increased by 18.41 % to Rs. 9,069 millions. The Profit before Tax was higher by 5.21 % to Rs. 6,704 millions. The Profit after Tax increased to Rs. 6,575 millions up by 7.72% compared to Rs. 6,104 millions in 2010-11. The Company achieved EPS of Rs. 32.11 compared to Rs. 29.81 in 2010-11. A detailed analysis of performance for the year has been included in the Management Discussion and Analysis, which forms part of the Annual Report.

Dividend:

Your Directors have recommended a dividend of Rs. 7.50 per Equity Share [last year Rs. 6.25 per Equity Share] on 204,748,520 equity shares of Rs.5/- each fully paid-up for the financial year ended March 31, 2012, amounting to Rs. 1,706 millions [inclusive of tax of Rs. 170 millions]. The dividend, if declared by the shareholders at the ensuing Annual General Meeting, will be paid to those shareholders, whose names stand registered in the Register of Members as on August 6, 2012. In respect of shares held in dematerialized form, it will be paid to the members whose names are furnished by National Securities Depository Limited and Central Depository Services [India] Limited, as beneficial owners. The Dividend Payout ratio for the current year (inclusive of corporate tax on dividend distribution) is 25.95 percent.

Management Discussion and Analysis [MDA]:

MDA, for the year under review, as stipulated under clause 49 of the Listing Agreements with the Stock Exchanges is presented in a separate section, which forms part of the Annual Report.

Consolidated Financial Statements:

In accordance with the Accounting Standard AS-21 on Consolidated Financial Statements read with Accounting Standard AS-23 on Accounting for Investments in Associates and AS-27 on Financial Reporting of Interest in Joint Ventures and as provided under the Listing Agreement with the Stock Exchanges, the audited Consolidated Financial Statements are provided in the Annual Report, which show the financial resources, assets, liabilities, income, profits and other details of the Company, its associates companies and its subsidiaries after elimination of minority interest, as a single entity.

Subsidiary Companies:

During the year, Quimica E Pharmaceutica Nikkho Do Brazil Ltda., Brazil was merged with Zydus Healthcare Brazil Ltda, Brazil with effect from April 1, 2011. After the merger, the name of the Company was changed to Zydus Nikkho Pharmaceutica Ltda, Brazil.

In accordance with the general circular issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary companies are not being attached with the Balance Sheet of the Company. As required under the circular, the Board of Directors at its meeting held on May 10, 2012 passed a resolution giving consent for not attaching these documents with the Balance Sheet of the Company.

The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.

The statement containing the list of subsidiaries along with brief financial details of the subsidiaries is given in this Annual Report separately.

Directors:

Mr. Apurva S. Diwanji, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for reappointment. The Board of Directors recommends the reappointment of Mr. Apurva S. Diwanji.

The Board of Directors of the Company has, subject to approval of the shareholders at the ensuing Annual General Meeting reappointed Dr. Sharvil P. Patel as Deputy Managing Director of the Company. An abstract of the terms and conditions of his appointment and memorandum of interest under section 302 of the Act have been sent to the members of the Company.

Brief profiles of the Directors proposed to be reappointed as required under clause 49 of the Listing Agreement are annexed to the notice convening 17th Annual General Meeting forming part of this Annual Report.

Directors' Responsibility Statement:

Pursuant to the requirements under section 217 (2AA) of the Companies Act, 1956 and to the best of their knowledge and belief, and according to the information and explanations provided to them, your Directors hereby state that:

(a) the Annual Accounts for the year ended March 31, 2012 are prepared on going concern basis;

(b) in preparation of the Annual Accounts, all the applicable accounting standards have been followed. Necessary explanations are given for material departures, if any;

(c) sound accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2012 and of the profit of the Company for the year ended on that date and

(d) proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for prevention and detection of fraud and other irregularities

Corporate Governance:

A detailed report on the Corporate Governance together with a certificate from the statutory auditors, confirming the compliance of conditions of Corporate Governance stipulated under clause 49 of the Listing Agreements with the Stock Exchanges forms part of the Annual Report.

Auditors:

M/s. Mukesh M. Shah & Co., Chartered Accountants, (Firm Registration No. 106625W) Statutory Auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Company has received a letter from them to the effect that their reappointment, if made, would be within the prescribed limits under section 224 (1B) of the Companies Act, 1956 and that they are not disqualified for reappointment within the meaning of section 226 of the said Act.

Auditors' Report and Notes on Accounts:

The Board has duly reviewed the Statutory Auditor's Report on the Accounts. The observations and comments, appearing in the Auditor's Report are self-explanatory and do not call for any further explanation / clarification by the Board of Directors under section 217[3] of the Companies Act, 1956.

Cost Auditors:

The Central Government has directed an audit of the cost accounts maintained by the Company in respect of formulations and bulk drugs businesses. For conducting the cost audit for these activities for the financial year ended March 31, 2012, based on the recommendation of Audit Committee, the Board has appointed M/s A. G. Dalwadi & Co., Cost Accountants and made an application to the Central Government in accordance with MCA Circular dated April 11, 2011. The Cost Auditor has filed the cost audit reports for the financial year ended on March 31, 2011 for formulations and bulk drugs businesses within the due date on September 17, 2011. The due date of filing the cost audit report was September 30, 2011.

Particulars of Employees:

The names and other particulars of the employees as set out under section 217(2A) of the Companies Act, 1956 and rules made thereunder is provided in Annexure forming part of the Report. In terms of section 219(1) (b) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary. None of the employees listed in the said Annexure is related to any Director of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earning and Outgo:

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of Directors) Rules, 1988, are provided in the Annexure - A to this Report.

Acknowledgment:

Your Directors place on record their sincere appreciation for the continued co-operation extended to the Company by the Consortium Banks and Financial Institutions. Your Directors also thank the Medical Profession, the Trade and Consumers for their patronage of the Company's products. Your Directors also place on record sincere appreciation of the continued hard work put in by the employees at all levels. The Directors also thank the Company's vendors, investors, business associates, Government of India, State Government and various departments and agencies for their support and co-operation.

By Order of the Board of Directors

Place : Ahmedabad Pankaj R. Patel

Date : May 10, 2012 Chairman

Mar 31, 2011

The Directors are pleased to present 16 th Annual Report and the audited accounts for the financial year ended on 31 st March 2011.

Financial Results:

The financial performance of the Company, for the year ended on 31 st March, 2011 is summarised below :

For the For the Particulars Year Year Growth ended ended (%) 31st March 31st March 2011 2010

Sales and Other Income 29780 24684 20.6

Profit before Interest, Finance Charges, Depreciation, 7659 6534 17.2

Amortisation and Impairment and Tax (PBIDT) 6690 5634 18.7

Less: Depreciation, Amortisation and Impairment 969 900 7.7

Profit Before Interest and Finance charges and Tax (PBIT) 6690 5634 18.7

Less: Interest and Finance charges 318 431 (26.2)

Profit Before Tax 6372 5203 22.5

Less: Provision for Tax 268 170 57.6

Profit After Tax 6104 5033 21.3

Add: Profit brought forward from the previous year 3323 2030

Profit available for appropriation, which is appropriated as follows: 9427 7063

Proposed Dividend 1280 1024

Corporate Dividend Tax on Proposed Dividend [Net of CDT Credit] 146 116

Transferred to Debenture Redemption Reserve 100 100

Transferred to General Reserve 1226 2500

Balance carried to Balance Sheet 6675 3323

Total 9427 7063

Earnings per share [EPS] [Face Value of shares Rs.5/-] [in Rupees] 29.81 24.58*

* After considering bonus equity shares issued after 31st March, 2010.

Results of operations:

During the year under review, the Company has scaled new heights and achieved milestone total revenues of one billion dollar mark on consolidated basis. The consolidated sales grew by 25 % during the year. On standalone basis, the Company has achieved sales of Rs. 22,113 mn, showing a growth of 19.2 % compared to the previous year. The PBIDT increased by 17.2 % to Rs. 7,659 mn. The Profit before Tax was higher by 22.5 % to Rs. 6,372 mn. The Profit after Tax increased to Rs. 6,104 mn up by 21.3 % compared to Rs. 5,033 mn in 2009-10. The Company achieved EPS of Rs. 29.81 compared to Rs.24.58 in 2009-10, calculated on the enhanced capital after the issue of Bonus Equity Shares. A detailed analysis of performance for the year has been included in the Management Discussion and Analysis, which forms part of the Annual Report.

Bonus Equity Shares and Listing:

On 9 th April, 2010, the Company has allotted 68,249,507 bonus equity shares in the ratio of 1:2 [one bonus equity share for every two equity shares] to the members, whose names appeared on the Register of Members on the Record Date fixed for the purpose. Bonus shares were listed on the Stock Exchanges, where the existing equity shares are listed.

Dividend:

In celebration of joining the billion dollar league of Indian Pharma Companies, your Directors are pleased to recommend a dividend of Rs. 6.25 [previous year Rs.5.00] per equity share on 204,748,520 equity shares of Rs. 5/- each fully paid-up for the financial year ended 31 st March, 2011. The dividend, if declared by the shareholders at the ensuing Annual General Meeting, will be paid to those shareholders, whose names stand registered in the Register of Members on 19 th July, 2011. The Dividend Payout ratio for the current year (inclusive of corporate tax on dividend distribution) is 23.36 percent.

Management Discussion and Analysis (MDA):

MDA, as required under the Listing Agreements with the Stock Exchanges is given as a separate statement, which forms part of this Annual Report.

Subsidiary Companies and Consolidated Financial Statements:

During the year, the Company has formed following two wholly owned subsidiaries to enter in the Mexican Pharma market;

(1) Zydus Pharmaceuticals Mexico S.A. de C.V., Mexico and

(2) Zydus Pharmaceuticals Mexico Service Company S.A. de C.V., Mexico.

As required under the Listing Agreements with the Stock Exchanges, Consolidated Financial Statements of the Company and all its subsidiaries are attached. The Consolidated Financial Statements have been prepared in accordance with Accounting Standards 21 and 23 issued by the Institute of Chartered Accountants of India and show the financial resources, assets, liabilities, income, profits and other details of the Company, its associates companies and its subsidiaries after elimination of minority interest, as a single entity.

Ministry of Corporate Affairs, Government of India has granted general exemption for the requirements to attach various documents in respect of subsidiary Companies vide circular No. 2/2011 vide its letter No. 51/12/2007-CL-III dated 8th February, 2011. Details of major subsidiaries of the Company are covered in Managements Discussion and Analysis Report forming part of the Annual Report.

The Company will make available the Annual Accounts of the subsidiary companies and the related detailed information to any member of the Company who may be interested in obtaining the same. The annual accounts of the subsidiary companies will also be kept open for inspection at the Registered Office of the Company and that of the respective subsidiary companies. The Consolidated Financial Statements presented by the Company include financial results of its subsidiary companies.

The statement containing the list of subsidiaries along with brief financial details of the subsidiaries is given in this Annual Report separately.

Directors:

Mr. Nitin Raojibhai Desai was appointed as an Additional Director effective from 6 th May, 2011. In terms of section 260 of the Companies Act, 1956, he shall hold office only upto the date of the ensuing Annual General Meeting. The Company has received a notice in writing under section 257 of the Companies Act, 1956 from a member proposing his candidature along with deposit of Rs. 500/- for the office of Director liable to retire by rotation.

Your Directors express their profound grief on the sad demise of Mr. Pranlal Bhogilal. The Board places on record its deep sense of appreciation for the valuable contributions made by late Mr. Pranlal Bhogilal during his tenure as a Director of the Company.

Mr. Humayun Dhanrajgir, Director of the Company retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. The Board of Directors recommends the re-appointment of Mr. Humayun Dhanrajgir.

The Board of Directors of the Company has, subject to approval of the shareholders at the ensuing Annual General Meeting re-appointed Mr. Pankaj R. Patel as Managing Director of the Company. An abstract of the terms and conditions of his appointment and memorandum of interest under section 302 of the Act have been sent to the members of the Company.

Brief profiles of the Directors proposed to be appointed / re-appointed as required under clause 49 of the Listing Agreement are annexed to the notice convening 16 th Annual General Meeting forming part of this Annual Report.

Directors Responsibility Statement:

Pursuant to the requirements under section 217 (2AA) of the Companies Act, 1956 and to the best of their knowledge and belief, and according to the information and explanations provided to them, your Directors hereby state that:

(a) the Annual Accounts for the year ended 31 st March, 2011 are prepared on going concern basis;

(b) in preparation of the Annual Accounts, all the applicable accounting standards have been followed. Necessary explanations are given for material departures, if any;

(c) sound accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31 st March, 2011 and of the profit of the Company for the year ended on that date and

(d) proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for prevention and detection of fraud and other irregularities.

Corporate Governance:

A detailed report on the Corporate Governance together with a certificate from the statutory auditors, confirming the compliance of conditions of Corporate Governance stipulated under clause 49 of the Listing Agreements with the Stock Exchanges forms part of the Annual Report.

Auditors:

M/s. Mukesh M. Shah & Co., Chartered Accountants, (Firm Registration No. 106625W) Statutory Auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment.

The Company has received a letter from them to the effect that their reappointment, if made, would be within the prescribed limits under section 224 (1B) of the Companies Act, 1956 and that they are not disqualified for reappointment within the meaning of section 226 of the said Act.

Auditors Report and Notes on Accounts:

The Board has duly reviewed the Statutory Auditors Report on the Accounts. The observations and comments, appearing in the Auditors Report are self-explanatory and do not call for any further explanation / clarification by the Board of Directors under section 217[3] of the Companies Act, 1956.

Cost Auditors:

The Central Government had directed an audit of the cost accounts maintained by the Company in respect of Formulations and Bulk Drugs businesses. For conducting the cost audit for these activities for the financial year ended 31 st March, 2011, the Central Government has approved the appointment of M/s A. G. Dalwadi & Co., Cost Accountants as Cost Auditors. The Cost Auditor has filed the cost audit report on 16 th September, 2010 as against the last date of filing it of 30 th September, 2010.

Particulars of Employees:

The names and other particulars of the employees as set out under section 217(2A) of the Companies Act, 1956 and rules made there under is provided in Annexure forming part of the Report. In terms of section 219(1) (b) (iv) of the Companies Act, 1956, the Report and Accounts are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the same may write to the Company Secretary. None of the employees listed in the said Annexure is related to any Director of the Company.

Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo:

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of Directors) Rules, 1988, are provided in the Annexure - A to this Report.

Acknowledgment:

Your Directors place on record their sincere appreciation for the continued co-operation extended to the Company by the Consortium Banks and Financial Institutions. Your Directors also thank the Medical Profession, the Trade and Consumers for their patronage of the Companys products. Your Directors also place on record sincere appreciation of the continued hard work put in by the employees at all levels. The Directors also thank the Companys vendors, investors, business associates, Government of India, State Government and various departments and Agencies for their support and co-operation.

By Order of the Board of Directors

Place : Ahmedabad Pankaj R. Patel

Date : 6th May, 2011 Chairman

Mar 31, 2010

The Directors take pleasure in presenting the 15th Annual Report of the Company with the Audited statement of Accounts for the year ended 31st March 2010.

Financial Results

INR-Millions Particulars Year ended March 31, Growth

2010 2009 (%)

Sales and Other Income 24684 20052 23.1

Profit Before Interest, Depreciation, Exceptional items and Tax (PBIDET) 6534 4798 36.2

Less: Depreciation, Amortisation and Impairment 900 826 9.0

Profit Before Interest, Exceptional items and Tax (PBIET) 5634 3972 41.8

Less: Interest 431 880 (51.0)

Less: Exceptional Expenses:

Expenses incurred pursuant to Composite Scheme of Arrangement 0 128

Profit Before Tax 5203 2964 75.5

Less: Provision for Tax 170 305 (44.3)

Profit After Tax 5033 2659 89.3

Add: Profit brought forward from the previous year 2030 1628

Add: Pursuant to a Composite Scheme of Arrangement 0 38

Profit available for appropriation, which is appropriated as follows: 7063 4325

Proposed Dividend 1024 614

Corporate Dividend Tax on Proposed Dividend [Net of CDT Credit] 116 105

Transferred to Debenture Redemption Reserve 100 0

Transferred to General Reserve 2500 1576

Balance carried to Balance Sheet 3323 2030

Total 7063 4325

Earnings per share [EPS] [Face Value of shares Rs.5/-] [in Rupees] Basic:

- Before Exceptional items 36.87 20.42

- After Exceptionalitems 36.87 19.48 Diluted :*

- Before Exceptional items 24.58 13.61

- After Exceptional items 24.58 12.99

* After considering bonus equity shares issued after 31st March, 2010.

Operations and Business Performance

During the year under review, the Company achieved sales of Rs.18549 mn, showing a growth of 6.8% compared to the previous year. The PBIDT increased by 36.2 % to modest Rs.6534 mn. The Profit before Tax was higher by 75.5 % to Rs. 5203 mn. The Profit after Tax increased to Rs. 5033 mn up by 89.3 % compared to Rs.2659 mn in 2008-09. The Company achieved EPS (After Exceptional items) of Rs.36.87 compared to Rs.19.48 in 2008-09. EPS on enhanced capital after considering the issue of Bonus Equity Shares was Rs.24.58. A detailed analysis of performance for the year has been included in the Management Discussion and Analysis, which forms part of the Annual Report.

After 31st March 2010, the Company has capitalized the entire amount of Rs.l 15,711,547/- from Security Premium Account and Rs. 225,535,988/- from General Reserves for issuing fully paid-up bonus equity shares.

Issue of Bonus shares and Dividend

The Board of Directors in February, 2010 recommended the issue of Bonus shares in the ratio of It2 to the shareholders of the Company. Subsequently, an Extra Ordinary General Meeting of the shareholders of the Company was held on 22 March 2010. The Shareholders approved the increase in Authorised Share Capital from Rs. 700 mn to Rs. 1100 mn divided into 220,000,000 Equity Shares of Rs. 5/- each and issue of Bonus Equity shares in the ratio ofl:2 i.e. One Equity share of Rs.5/-each fully paid-up for every Two Equity Shares of Rs.5/- each held by them on 6th April 2010, being the Record Date fixed by the Bonus Committee for the purpose to ascertain the names of the shareholders entitled to receive the Bonus shares. The said committee has allotted Bonus Equity Shares on 9th April 2010 to all the shareholders whose names were appearing on the Register of Members or in the respective beneficiary accounts with their Depository Participants as per the details provided by NSDL and CDSL ("the Depositories") on the Record Date. The demat accounts of the eligible shareholders were credited as per the confirmations provided by the depositories. For the Bonus shares issued in physical form, the corresponding share certificates were dispatched to the addresses of the respective shareholders.

Your Directors are pleased to recommend a dividend of Rs.5.00 (previous year Rs.4.50) per equity share on enhanced paid-up share capital consequent to Bonus Issue in the ratio of 1:2, which was 204,748,520 equity shares of Rs.5/- each for the financial year ended 31st March 2010. The dividend, if approved by the shareholders, will be paid to the eligible shareholders within the period stipulated under the Companies Act, 1956. The Dividend payout ratio for the current year (inclusive of corporate tax on dividend distribution) is 16.13 percent.

Funding

During the year, your Company issued Secured Redeemable Non-Convertible Debentures (NCDs) aggregating to Rs. 500 mn on a private placement basis. NCDs are listed on the Wholesale Debt market segment of National Stock Exchange of India Limited. NCDs were rated AA+ by CRISIL Limited, a renowned rating agency. IDBI Trusteeship Services Limited has been appointed as the Trustees for these NCDs.

The Company will continue to raise additional funds from banks, financial institutions, bond markets, commercial papers, etc. in line with the need for maintaining sustained growth of business. ÃÂ¦

Performance of Suhsidiary / loint Venturt Companies

The performance of subsidiaries and joint ventures as per the audited accounts of the respective subsidiary / joint venture companies is summarised hereunder. The accounts of the foreign subsidiaries are audited as at December, 2009 / February, 2010 whereas the January / February to March, 2010 accounts are subjected to limited review.

(INR-mn)

Sr. Name of the Subsidiary Cempaay % holding Main business

NO.

1 Zydus Pharmaceuticals Limited, India 100 Distribution of pharmaceuticals

2. German Remedies Limited, India 100 Marketing services

3. Dialforthealth India Limited, India 100 Operates a chain of retail

pharmacies

4. Liva Healthcare Limited, India 100 Marketing of Pharmaceuticals

5. Zydus Animal Health Umited, India 100 Manufacturingand marketing

of animal health products

6. Dialforhealth Unity Limited, India 55 Operates a chain of retail

pharmacies on Franchisee basis

7. Dialforhealth Greencross Limited, India* 100 Operates a chain of retail pharmacies in Maharashtra

8. Zydus Wellness Limited, India 72.51+ Manufacturing and marketing of consumer products

9. Zydus Technologies Limited, India 99 Manufacturing and marketing

of NDDS products.

10. Zydus International Private Limited, Ireland 100 Holds Companys Global Investments

11. tydusrlealthaWSAfjPty) Ltd., South Africa 100 Marketing of formulations in South Africa

12. Simayla Pharmaceuticals (Pty.) Ltd., South Africa** 100 Marketing of Pharmaceutical products 13 ZC Pharma Services (Proprietary)Ltd., 100 Providing marketing

South Africa*** intelligence and data management services to

pharmaceutical industry

14. Laboratorios Combix, Spain 100 Marketing and distribution of pharmaceutical products

15. Etna Biotech S.R.L (Italy) 100 Carrying out biotech research

16. Zydus Healthcare (USA) LLC, USA 100 Marketing of APIs in USA

Sr. Name of the Subsidiary Cempaay Year, Revenues Profit / (Loss)

ended on after tax

1 Zydus Pharmaceuticals Limited, India 31st March 2 1

2. German Remedies Limited, India31st March 71 70

3. Dialforthealth India Limited, India 31st March 140 (3)

4. Liva Healthcare Limited, India 31st March 502 67

5. Zydus Animal Health Umited, India 31st March 1213 171

6. Dialforhealth Unity Limited, India 31st March - (0.02)

7. Dialforhealth Greencross Limited, India* 31st March 0.08 (0.68)

8. Zydus Wellness Limited, India 31st March 2740 453

9. Zydus Technologies Limited, India 31st March - (5)

10. Zydus International Private Limited, Ireland 31st Dec. 99 56

11. tydusrlealthaWSAfjPty) Ltd., South Africa 28th Feb. 242 (9)

12. Simayla Pharmaceuticals (Pty.) Ltd., South Africa** 28th Feb. 519 (18)

13 ZC Pharma Services (Proprietary)Ltd., 31st March 10 0.06 South Africa***

14. Laboratorios Combix, Spain 31st Dec. 161 (207)

15. Etna Biotech S.R.L (Italy) 31st Oec. 29 (13)

16. Zydus Healthcare (USA) LLC, USA 31st Dec. 33 2

Performance of Subsidiary / joint Venture Companies

INR. mn

sr. Name of the Subsidiary Company % holding Main business

No.

17. Zydus Ptormaeeuticals USA Inc., USA 100 Marketing of formulaHons in USA

18. Zydus Noveltech Inc., USA 85 Developing, marketing,

selling and distribution of Pharmaceutical dosages

19. Zydus Netherlands B.V., the Netherlands 100 Holds investments in fellow

subsidiaries

20. Zydus Healthcare Brasil Ltda, Brazil 100 Marketing of formulations

21. Quimica E Farmaceutica Nikkho Do Brasil Ltda, 100 Manufacturing, marketing and Brazil Distribution of Pharmaceutical

Products

22. Zydus France SAS, France 100 Marketing of Pharmaceuticals

in France

23. Nippon Universal Pharmaceutical Company 100 Manufacturing, Marketing and Limited, Japan Distribittim of Pharmaceutical

Products

24. Zydus IntRus Limited, Russia 100 Providing logistic services and

distribution of Pharmaceutical products in Russia

sr. Name of the Subsidiary Company Year Revenues Profit / (Loss)

ended on aftertax

17. Zydus Ptormaeeuticals USA Inc., USA 31st Dec. 5709.0 79.0

18. Zydus Noveltech Inc., USA 31st Dec. 385.8 235.0

19. Zydus Netherlands B.V., the Netherlands 31st Dec. 0.5 (10.0)

20. Zydus Healthcare Brasil Ltda, Brazil 31st Dec. 447.3 (101.0)

21. Quimica E Farmaceutica Nikkho Do Brasil Ltda, 31st Dec. 1403.4 48.0 Brazil

22. Zydus France SAS, France 31st Dec. 2198.0 159.0

23. Nippon Universal Pharmaceutical Company 31st Dec. 315.8 (248-0) Limited, Japan

24. Zydus IntRus Limited, Russia 31st Dec. 63.0 12.0

* Became a 100% subsidiary during the year upon acquisition of 50% shares held by a joint venture partner pursuant to an agreement.

** Became a 100% subsidiary during the year upon acquisition of 30% shares held by a joint venture partner pursuant to an agreement.

*** Acquired during the year.

Particulars under section 212 of the Companies Act, 1956 Your Company has received an approval under section 212 (8) of the Companies Act, 1956 from the Ministry of Corporate Affairs, Government of India vide its letter No. 47/152/2010-CL-lll dated 19th April, 2010 exempting the Company from attaching the Annual Report of the subsidiary companies with the Annual Report of the Company. As required under the provisions of section 212 of the Companies Act, 1956, a statement of the holding Companys interest in the subsidiary companies is attached to this report. The annual accounts of the subsidiary companies are kept at the Companys Registered Office and also at the respective Registered Offices of the subsidiaries for inspection. Shareholders desirous of obtaining the annual accounts of subsidiaries may obtain the same upon request.

Consolidated Financial Statements

As stipulated in clause 41 of the Listing Agreement with the Stock Exchanges, the consolidated financial statements have been prepared by the Company in accordance with the Accounting Standard AS-21 on "Consolidated Financial Statements", as issued by the Institute of Chartered Accountants of India. The consolidated financial statements presented by the Company include the financial information of its subsidiaries.

Performance of Joint Venture Companies

Detailed discussion on performance of each joint venture Company is covered in Management Discussion and Analysis Report.

1 Zydus Nycomed Healthcare Private Limited (ZNHPL)

This 50:50 joint venture between the Company and Nycomed GmbH, is a 100% EOU situated at Navi Mumbai. This JV Company achieved turn over of Rs. 1786.5 mn for the year ended on 31st December 2009 as against Rs.1747.1 mn in the previous year. The net profit of the Company was Rs.l 139.4 mn as against Rs.1241.3 mn in the previous year.

2 Zydus Hospira Oncology Private Limited (ZHOPL)

This 50:50 joint venture Company has set up manufacturing facilities near Ahmedabad and got approval of USFDA, Medicines and Healthcare Products Regulatory Agency, UK (MHRA) and Department of Therapeutics Goods Administration, Australia (TGA). ZHOPL has commenced its commercial operations from May, 2009. ZHOPL has earned total income of Rs. 1702 mn and Profit after Tax of Rs. 504 mn for the year ended on 31st March, 2010.

3 Zydus BSV Pharma Private Limited (ZBSV)

This is a 50:50 joint venture between the Company and Bharat Serums and Vaccines Limited. ZBSVs novel and patented oncology product continued to perform well in the Indian market. ZBSV completed the Phase I clinical trial during the year and has initiated the Phase II / III Clinical Trials. ZBSV has also sought the opinion from the US FDA for the pivotal trials for approval in the US. ZBSVs patent has been granted by the EU Patent Office and few other countries during the year. As part of its generic business plans, ZBSV has submitted an ANDA during the year and is in talks with couple of buyers in Europe to leverage its manufacturing capabilities set up near Ahmedabad as SEZ unit. During the year, ZBSV has earned total income of Rs. 5.7 mn as compared to Rs.9.2 mn in the previous year.

4 Zydus Noveltech Inc., USA (ZN)

This Joint Venture is between the Company and Dr. Sharad Govil, a technocrat. ZN is formed for sates, marketing and distribution of non-oral dosage form generic and brand name drugs using drug delivery system technologies in several therapeutic areas targeted for North America, Western Europe and Japan. ZN is in the development stage. ZN has not commenced any commercial operations and therefore no revenue has been generated during the year ended on 31st December 2009.

5 Zydus Technologies Limited (ZTL)

This JV Company has set up its Research and Development and Manufacturing facilities at SEZ near Ahmedabad. ZTL will commence the developmental activities in 2010-11. ZTL will develop and manufacture NDDS products for export to the developed countries.

Overseas Acquisitions

During the year under report, your Company through its subsidiaries has made the following overseas acquisitions:

Pursuant to an agreement Zydus Healthcare S.A. (Pty.) Limited ("ZHSA") has acquired remaining 30% stake in Simayla

1 Pharmaceuticals (Pty.) Limited, South Africa (Simayla). The acquisition will open up several new opportunities for the group in a market which is USD 5 bn (IMS 2009). Now, Simayla has become a wholly owned subsidiary of ZHSA.

ZHSA has purchased 100% stake in Newshelf 1034 (Proprietary) Limited, South Africa from its promoters. The name of the

2 Company was changed to ZC Pharma Services (Proprietary) Limited. This Company will market intelligence and data management services in pharmacy market to ZHSA and Simayla.

International market initiatives

The Companys commercial operations in the regulated developed markets like US, Europe, japan and Brazil and other semi and non- reguiated markets of Asia Pacific and Africa and Middle East regions have continued their journey on the growth path and have made significant contribution in your companys overall business growth. With continuous endeavour to meet needs of the customers across all trade classes, Zydus Pharmaceuticals USA Inc., the subsidiary in US has achieved "Preferred Supplier" status from many of the customers and has gained good market share in the participated market. In Europe, the French subsidiary continued strong performance, with launch of several new products, including a couple of launches on day of patent expiry, which helped strengthen its position in the French generics market. Laboratorios Combix, the subsidiary in Spain, continued its thrust on new products and filing of more dossiers for launch in future. The subsidiary in Brazil launched new products in neuro - psychiatric segment to strengthen its position in branded market space. Continuing your companys initiatives to build presence in Japan, worlds second largest pharmaceutical market with promising potential for generics players, the subsidiary in Japan launched several in-licensed products. In a strategic move to get entry into the hospitals market in japan, your company has acquired brand "Aldomet", an anti-hypertensive drug. Zydus Healthcare SA (Proprietary) Limited, our subsidiary in South Africa acquired remaining 30% stake in Simayla Pharmaceuticals (Proprietary) Limited, from the co-promoters. With this, Simayla became 100% subsidiary of Zydus Healthcare SA (Proprietary) Limited. We aim to consolidate our position in this key market and contribute to the healthcare community in South Africa in a meaningful way. In the emerging markets of Asia Pacific, Africa and Middle East, your company continued its journey on the growth path and maintained leading positions in Sri Lanka, Myanmar, Uganda and Sudan. The product development and regulatory filing activities from India for global markets have kept their pace with development and filing of a range of products for regulatory and other markets.

A detailed discussion on the global operations is covered in Management Discussion and Analysis.

Fixed Deposits

During the year under review, your Company has not invited / accepted any fixed deposits pursuant to provisions of section 58A of the Companies Act, 1956.

Disclosures

As required under section 217(l)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of

Directors) Rules, 1988, the relevant information and data with respect to the conservation of energy, technology absorption and foreign exchange earnings/outgo have been provided in Annexure-A, attached to this report and forms part of this report.

There have been no material changes and commitments, which may affect the financial position of the Company between the end of the financial year and the date of the report.

As required under section 217(2) of the Companies Act, 1956, the Board of Directors inform the members that during the financial

year, there has been no change in the nature of the Companys business and its subsidiaries, except those specifically stated in this report.

Management Discussion and Analysis [MDA]

MDA covering details of operations, markets, research and development, opportunities and threats, etc. for the year under review is given as a separate statement, which forms part of this Annual Report.

Directors

In accordance with the provisions of the Companies Act, 1956 and Companys Articles of Association, Mr. Apurva S. Diwanji and Mr. Mukesh M. Patel, Directors of the Company will retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. The Board has recommended their re-appointment. As required under clause 49 of the Listing Agreement, a brief profile of these Directors is given as annexure to the notice of the ensuing Annual_General Meeting.

Mr. H. K. Bilpodiwala ceased to be a Director with effect from 29th July 2009 as he has not offered for re-appointment at the last Annual General Meeting. The Board records its appreciation for the services rendered by Mr. Bilpodiwala.

Auditors

The Auditors of the Company, M/s. Mukesh M. Shah & Co., Chartered Accountants retire at the forthcoming Annua! General Meeting and are eligible for re-appointment. The Audit Committee of the Board of Directors of the Company and Board of Directors have recommended that M/s. Mukesh M. Shah & Co., Chartered Accountants, be appointed as auditors to hold office until the conclusion of the next Annual General Meeting. The Company has received confirmation that their appointment, if made will be within the limits prescribed under section 224 (1B) of the Companies Act, 1956.

Internal Audit

During the year under review, the Company has engaged the services of KPMG India Limited, Mumbai as Internal Auditors to carry out internal audit on regular basis. The reports of the internal audit are presented for review before the Audit Committee. The Audit Committee also scrutinizes all the programmes and the adequacy of the internal audits.

Personnel

The statement of particulars of employees, providing information as per section 217(2A) of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975, form a part of this report. However, as per the provisions of section 219(1) (b) (iv) of the Companies Act, 1956, the Annual Report excluding this statement is being sent to all members. Any member interested in obtaining a copyof this statement may write to the Company Secretary at the Registered Office of the Company.

Directors Responsibility Statement

Pursuant to the requirements under section 217 (2AA) of the Companies Act, 1956 and to the best of their knowledge and belief, and according to the information and explanations provided to them, your Directors hereby state that:

(a) the Annual Accounts for the year ended 31st March 2010 are prepared on going concern basis;

(b) in preparation of the Annual Accounts, all the applicable accounting standards have been followed. Necessary explanations are given for material departures, if any;

(c) sound accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on 31st March 2010 and of the profit of the Company for the year ended on that date and

(d) proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the company and for prevention and detection of fraud and other irregularities.

Corporate Governance

In terms of clause 49 of the Listing Agreement with the Stock Exchanges a Corporate Governance Report is made part of this Annual report.

In compliance of section 292A of the Companies Act, 1956 and relevant clause of the Listing Agreement, an Audit Committee consisting of four Independent Directors has been formed.

A certificate from the Statutory Auditors of the Company regarding compliance of the conditions stipulated for Corporate Governance under clause 49 of the Listing Agreement is attached to the Corporate Governance Report.

The declaration by the Managing Director addressed to the members of the Company pursuant to clause 49 of the Listing Agreement regarding adherence of the Code of Conduct by the members of the Board and by the Senior Management Personnel of the Company is also attached to the Corporate Governance Report.

Acknowledgment

Your Directors wish to place on record their sincere appreciation for significant contribution made by the employees at all levels through their dedication, hard work and commitment, enabling the Company to achieve good performance during the year under review.

Your Directors also take this opportunity to place on record the valuable co-operation and continued support extended by the banks, financial institutions, government, medical professionals, foreign collaborators, business associates and the shareholders for their continued confidence reposed in the Company and look forward to having the same support in all future endeavors.

By Order of the Board of Directors

Place: Ahmedabad Pankaj R. Patel

Date : 29th April 2010 Chairman

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