Directors Report of Torrent Pharmaceuticals Ltd.

Mar 31, 2023

The Directors have the pleasure of presenting the Fiftieth Annual Report of your Company together with the Audited Financial

Statement for the year ended 31^st March, 2023.

HIGHLIGHTS

1. Expanding Horizons, Deepening Trust:

• The Company has made incremental investments in its branded business segment for augmenting growth and improving market share over the next few years.

• Acquisition of Curatio Health Care (I) Private Limited (“Curatio”), expansion of field force in India and Brazil to complement new launch focus and expand the customer coverage, strategic alliance with Boehringer Ingelheim India Private Limited ("Boehringer Ingelheim India") to co-market its anti-diabetic drug and its fixed dose combination in India, investments in new branded generic markets have been some of the important incremental capital allocations during the year.

• The Company invested in Hybrid Solar-Wind Power project, to meet its captive power requirements. The project will act as key catalyst in reducing the Company’s carbon footprints, which is one of key pillars of our ESG roadmap.

2. India business:

• Mergers & acquisitions: During the year, the Company acquired 100% of equity share capital of Curatio, positioning itself as the largest player in Cosmetic Dermatology and improving its ranking within overall dermatology therapy to 7^th. The acquisition will enable the Company to tap into high-growth opportunities in the Derma; more importantly, the Cosmo Derma segment. Curatio is a fast growing portfolio with underlying market growing by ~16% i.e. ~1.6 times of the growth of Indian Pharmaceutical Market (IPM). The integration strategy entails a blend of revenues, cost and margin synergies. With little less than 2 quarters of integration during the year, the Company has already started leveraging and realizing these synergies.

• Market outperformance: As per secondary market data (AIOCD), the Company’s growth (including growth of Curatio portfolio) for 2022-23, was 16% versus IPM growth of 9%. Growth was aided by strong performance of top brands, new launch momentum, market share gain in focus therapies and growth synergies bolstered by integration of Curatio Portfolio.

• Field force expansion: During the year, the Company has expanded field force to complement its new launches and selectively expand its reach amongst Consulting Physicians and General Practitioners. At the end of 2022-23, total number of field force stood at 5,500 (including field force from Curatio portfolio).

• Strategic alliance: With an objective of fortifying our presence in anti-diabetic and cardiovascular therapeutic segments, the Company entered into a strategic alliance with Boehringer Ingelheim India for in-licensing and co-marketing of novel SGLT-2 anti-diabetic medications in India viz. Empagliflozin & Combinations.

• OTC foray: By the end of financial year, the Company has also forayed in to Over-the-Counter (‘OTC’) segment by launching Shelcal 500 on the OTC platform. As a part of its OTC expansion strategy, the Company shall gradually add more brands to the OTC platform.

• IPM ranking: With the acquisition of Curatio and consistent market share gain in base business, the Company’s IPM rank has gained 2 ranks and now the Company is the 6^th largest player in the IPM (2021-22: 8^th).

• The Company’s growth levers includes - Continued market outperformance, new launches, in-clinic effectiveness and implementation of synergies from acquired portfolio.

3. Brazil business:

• The Company continues to be ranked no. 1 Indian Pharmaceutical Company in Brazil.

• In 2022-23, Brazil registered a growth of 26% (BRL growth of 14%). Brazil saw all round performance with improvement in market share of existing portfolio, decent / competitive share in the new product launches and the generic segment scaling up very fast.

• The Company launched six products in the CNS, diabetic and cardio segments with Rivaroxaban and Desvenlafaxine being the two biggest success.

• The Company has expanded its field force by ~40 representatives, with an objective to expand its market coverage as well as complement new launches.

• The Company’s plan is to enhance coverage in the CNS and Cardio markets over the medium term through calibrated expansion in field force, continued expansion of product portfolio and steady improvement in in-clinic effectiveness. We also plan to foray in to newer therapy in near to medium term.

4. Germany business:

• The Company is ranked no. 5 generic company and no. 1 Indian Pharmaceutical Company in Germany.

• The Company has seen sequential growth recovery from H2 of 2022-23 with new tender wins and better growth in the non-tender segments.

• The Company’s focus areas will include working on cost efficiency efforts to improve its market share in the tender segment, expanding non-tender segment & developing new segments.

5. US business:

• In 2022-23, US registered flattish growth due to lack of new product approvals pending USFDA clearance of Company’s Manufacturing facilities at Indrad and Dahej. The Company is fully committed to maintaining highest quality standards and has been continuously engaging with regulatory authorities to meet with their expectations.

• The legacy portfolio continued to be impacted by price erosion of mid to high single digit.

• At end of year, 46 ANDAs were pending approval with USFDA and 3 tentative approvals were received. During the year, 5 ANDAs were filed.

6. Rest of the World:

• ROW markets registered strong growth trends.

• The Company shall continue to invest in ROW markets, with an objective to develop them as growth engines for future.

7. Manufacturing:

• State-of-the-art Oral Oncology manufacturing facility [Gujarat], which will cater to both regulated and non-regulated markets, was inspected by USFDA and the Company has received its first product approval from the facility.

8. Financial performance:

• In 2022-23, the Company registered strong revenue growth of 13% and Operating EBITDA growth of 17%.

• In 2022-23, Operating EBITDA margins were 30% versus 29% in 2021-22.

• 2022-23 witnessed strong performance led by Branded Generic markets and sustained improvement in profitability aided by higher BGx share, operating leverage, cost efficiencies and margin synergies from the acquired portfolio.

• At end of 2022-23, leverage in terms of Net debt to EBITDA stands at 1.6x.

FINANCIAL RESULTS

The summary of Standalone (Company) and Consolidated (Company and its subsidiaries) operating results for the year and appropriation of divisible profit is given below:

(I in crores except per share data)
	Standalone		Consolidated
	2022-23	2021-22	2022-23	2021-22
Sales & Operating Income	7,695	6,742	9,620	8,508
Profit Before Depreciation, Net Finance Cost, Exceptional Items & Tax	2,545	2,301	2,883	2,621
Less: Depreciation & Amortization	672	602	707	662
Less: Net Finance Cost	296	233	329	248
Profit Before Exceptional Items & Tax	1,577	1,466	1,847	1,711
Less: Exceptional Items	-	-	-	485
Less: Tax Expense	526	475	602	449
Net Profit for the Year	1,051	991	1,245	777
Balance brought forward	3,213	2,900	2,917	2,807
Other Comprehensive income and other adjustments	(7)	(1)	4	10
Balance available for appropriation	4,257	3,890	4,166	3,594
Appropriated as under:
Transfer to General Reserve	-	-	-	-
Dividend	863	677	863	677
Tax on Distributed Profits for Dividend	-	-	-	-
Balance Carried Forward	3,394	3,213	3,303	2,917
Earnings Per Share (I per share)	31.07	29.29	36.79	22.96

Consolidated Operating Results

The consolidated sales and operating income increased to I 9,620 crores from I 8,508 crores in the previous year showing a growth of 13%. The consolidated operating profit for the year was I 2,883 crores as against I 2,621 crores in the previous year registering growth of 10%. The consolidated net profit stood at I 1,245 crores compared to I 777 crores in the previous year registering growth of 60%.

Management Discussion and Analysis (MDA)

The details of operating performance of the Company for the year, the state of affairs and the key changes in the operating environment have been analysed in the Management Discussion and Analysis section which forms a part of the Annual Report.

APPROPRIATIONS

i) Dividend

The Board in its meeting held on 30^th May, 2023 revised the Dividend Distribution Policy. The Company will now endeavor to distribute 50% of its annual consolidated net profit after tax without taking into account non-cash charges relating to the business acquisitions. The revised policy is available on the website http://www.torrentpharma.com/pdf/investors/Dividend Policy.pdf

During the year under review, an interim dividend of I 14/- per equity share of face value of I 5/- each (@ 280%) amounting to I 474 crores was paid to the shareholders. Further the Board considered it prudent to recommend the final dividend for 2022-23 as per the revised Dividend Distribution Policy and accordingly recommended a final dividend of I 8/- per equity share of face value of I 5/- each (@ 160%) amounting to I 271 crores for approval of shareholders at the 50^th Annual General Meeting (AGM) of the Company. Hence, the total dividend paid / payable with respect to the year under review was of I 22/- per equity share (@ 440%) amounting to I 745 crores.

ii) Transfer to Reserves

The Board of Directors of the Company has decided not to transfer any amount to the reserves for the year under review.

HUMAN RESOURCES

At Torrent Pharma, Human Resources are considered the Company''s most valuable assets and its growth would not have been possible without the commitment, loyalty and hard work put up by its employees at all levels. In order to sustain this, we continue to build competencies to embrace the new skills for a sustainable future. This has enabled the Company to develop an inclusive organization that is multicultural and inspires a sense of satisfaction and belonging in its employees. We believe that the Company''s success is the result of the combined efforts of all its employees. During the year, the Company took several initiatives to increase organizational performance and productivity in order to be value-driven and future-ready. With the acquisition of Curatio, Human Resources Department has continued to arrange various training and development programs that have helped smooth transition for all employees of Curatio in embracing the culture of Torrent. In addition, Managers from field and Corporate Office are provided continuous training to sharpen and understand new managerial skills.

The Company is committed to provide a safe and healthy working environment and achieving an injury and illness free work place. Economic considerations do not take precedence over the implementation of health and safety measures. While safety is everyone''s primary responsibility, at Torrent Pharma, leaders take the lead in exhibiting visible commitment to health and safety.

All lead and lag incidents are reported through an incident reporting system. The system has well-established procedures for reporting incidents, investigations, determining corrective actions and improvements and a non-retaliatory mechanism for employees and contract staff to report incidents.

Through cadre and capability building efforts, we remain focused on strengthening our talent processes and building the talent pipeline for the organization. Significant efforts have been made to strengthen our leadership and hire the best talent available. These have helped to bring a new perspective and energy to the organization. Our training and development activities also provided impetus for the development of talent and for sharpening new management skills amongst employees.

In order to promote a sense of togetherness among employees, the Company has taken various initiatives such as SAMPARK, where management regularly interacts with new employees. This initiative is divided into three cycles that provide employees with Orientation program, Comfort rating, and employees'' futuristic approach to the organization. Aside from coaching and mentoring, which make an employee more valuable to your organization by developing and improving their skills both professionally and personally, our other initiatives such as Sahyog, Baat-cheet and uCoffee sessions also help employees to learn new skills.

The Company recognizes that safety is everyone''s responsibility and that to foster a culture of safety, all of our employees must consider how their actions affect others and our workplace, and engage in meaningful, open and respectful advice on health issues. Various women-friendly initiatives such as day care centers and flexi timings support female employees in pursuing their careers, among other things.

The Company will continue to invest in the professional development of its employees and instill in them the importance of responsible growth. As a result, they recognize that their success depends on providing innovative solutions to patient needs, community betterment and environmental protection.

The Company has a diverse workforce of 13,573 employees as on 31^st March, 2023 vis-a-vis 12,910 employees as on 31^st March, 2022.

VIGIL MECHANISM

Over the years, the Company has earned a reputation for conducting its business with honesty and integrity and has zero tolerance to any form of unethical behavior or misconduct. The Organization has a rigorous reporting system for reporting unethical behavior to promote professionalism, fairness, dignity and ethical behavior by all of its employees and stakeholders, details of which are covered in the Corporate Governance Report.

The system also protects employees who use the whistle blower mechanism and grant them direct access to the Audit Committee. In addition, the Company''s Code of Business Conduct which lays down the important corporate ethical practices that shapes the Company’s business practices and represent the Company''s valued principles.

Whistle-blower Policy and Code of Business Conduct have been hosted on the Company''s website www.torrentpharma.com.

In accordance 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 formulated a Policy on protection of women against sexual harassment at workplace. In this context, the Company regularly organizes a series of interactive awareness workshops for its employees. The Company has complied with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 relating to the formation of Internal Complaints Committee. During the year, no complaints were received under this policy.

In addition, the Company has rolled out Human Rights Policy defining the guiding principles for respecting and protecting the Human Rights across the Company’s operations.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR Activities undertaken by the Company were under the thrust areas of Community Healthcare, Sanitation & Hygiene, Education & Knowledge Enhancement and Social Care & Concern. During the year, the Company was required to spend '' 26.50 crores (2% of the average net profit of the past three financial years and surplus arising at implementing agency level from temporary investment of funds for FY 2021-22). The Company contributed to implementing agency '' 24.96 crores during the year. The total amount spent during the year was '' 22.96 crores. Further, the unspent amount at the end of the year was transferred to “Unspent CSR Account” of related ongoing projects at the implementing agency level. The Board in its meeting held on 30^th May, 2023 revised the existing CSR Policy of the Company to harmonize with the amendments carried out by the Ministry of Corporate Affairs in the Companies (Corporate Social Responsibility Policy) Rules, 2014. The brief details of the major CSR activities are described hereunder:

REACH: Driven by the belief of Chairman Emeritus, Sudhir Mehta ‘Children are the future of our nation and this future must be well preserved’, the flagship CSR program of the Group “REACH” - Reach EAch CHild was initiated in the year 2016 under the aegis of UNM Foundation, a Section 8 Company. REACH has three major pillars: (a) Grass Root Interventions (b) Green Field Actions and (c) Other Allied Initiatives. Salient achievements are:

• Grassroot Interventions:

It targets to establish baseline health status of children in age group of 6 months to 6 years, through medical camps in villages around Surat, Dahej, Indrad and Balasinor. In Pre-Covid period, over 71,000 children were screened in 351 villages. Post-covid, an additional 649 villages were covered, addressing malnutrition in over 7,500 children with Mauji biscuits, bringing the total to 1,000 villages and over 78,000 children. Appropriate treatment regime resulted in benefiting more than 69% Malnourished children and more than 90% anaemic children. About 73% children having other ailments were also provided appropriate treatment with encouraging outcomes.

During the year, for the 1000 villages covered, fresh baseline medical camps were organized to identify underweight malnourished and anaemic children across all four locations. 748 villages have been covered and more than 37,000 children have been screened. Supplement distribution and follow-up activities for identified malnourished and anaemic children are ongoing.

In order to expand the coverage of REACH initiative, started conducting baseline medical camps in Banaskantha and Radhanpur in Gujarat and more than 7,300 children have been screened in 238 villages across these two locations.

Pilot projects have also been started in Agra, Bhiwandi and Union Territory of Dadra and Nagar Haveli. 14 villages are covered and more than 500 children have been screened across these three locations.

Till FY 2022-23, on cumulative basis, more than 1,24,000 children of 1,252 villages are screened. Baseline screening camps in villages and subsequent follow-up activities continue.

• Greenfield Actions:

Healthcare services are provided to children up to 18 years. There are 3 Pediatric Health Centres (PHCs) with basic laboratory and day-care facility at Dahej, Balasinor and Indrad, while fourth major centre near Sugen Power Plant has a 150 bed paediatric hospital ‘UNM Children Hospital’ which is part of ‘Rangtarang’ complex started in FY 2019-20. In FY 2022-23, more than 94,000 OPDs have been carried out across all 4 locations.

Further, 2 PHCs have been started at Waghai and Chhapi during FY 2021-22 and 3 PHCs have been started at Dediapada, Naswadi and Radhanpur during FY 2022-23. Regular OPDs are conducted at Waghai, Dediapada and Chhapi while weekly OPDs are conducted at Naswadi and Radhanpur. In FY 2022 23, more than 14,000 OPDs had been carried out across these PHCs.

These PHCs will be scaled up appropriately in future depending on feedback as well as demand of health care services from the respective local population.

In FY 2022-23, more than 1,00,000 OPDs had been carried out across all 9 locations. Cumulative OPDs are more than 4,34,000 till 31^st March, 2023 across all locations.

• Other Allied Initiatives:

Counselling and Support was provided to rural adolescent girls around Sugen, Dahej & Indrad centres covering menstrual hygiene and sanitation, by providing sanitary napkins absolutely free of cost to the beneficiaries. This has resulted in reducing prevalent social taboos and ultimately increasing confidence and self-esteem amongst beneficiaries.

During the year, based on encouraging feedback of pilot experiment for biodegradable and reusable sanitary napkins, more than 27,000 beneficiaries of 615 villages have been switched over to such napkins. More than 7,800 beneficiaries of 167 villages were enrolled and provided regular sanitary napkins on monthly basis.

More than 35,000 beneficiaries have been covered in 800 villages across Sugen, Dahej & Indrad centers. More than 28,000 beneficiaries of 633 villages have been switched to Bio-degradable reusable sanitary napkins

• UNM Children Hospital:

Previously known as Balsangam, the hospital underwent a name change to UNM Children''s Hospital in October, 2022. Towards expanding its operations, the focus has been to offer regular as well as complex surgeries.

In FY 2022-23, more than 44,000 OPD consultations for children were done culminating into an average of 142 per day as opposed to 37 average per day in FY 2021-22. More than 1,400 IPD cases handled during the year.

A total of 209 patients were served through the Neo-natal ICU (NICU) and Paediatric ICU (PICU) for their critical conditions. Looking to the continuous growing need, the capacities of the NICU and PICU were enhanced in February, 2023.

The Hospital handled more than 700 surgeries in FY 2022-23, which included major and supra- major operations.

Facilities and services offered under UNM Children Hospital have been enhanced to cover paediatric super specialties like Ophthalmology, Orthopaedic, Neurology, Plastic surgery, Endocrinology, Haematology, and Pulmonology. The number of visiting Doctors in FY 2022-23 have been increased to 27 covering a total of 14 speciality disciplines.

To spread awareness of the hospital, various camps were organized in village schools and temples, targeting areas with less healthcare facilities like Vankal (Mangrol), Sutharvada, Kalwada (Near Valsad), Kamrej, Vyara etc. Team of Doctors screen children and provide treatment. In appropriate cases, counselling is also provided to them. Awareness campaigns have also been done via newspapers, leaflets distribution, radio advertisement, hoardings, community meetings, etc.

Through Founder’s Day documentary and video clip regarding hospital subsequently circulated, we could reach out to patients from Pan India, and have recorded 157 patients coming to the hospital for treatment, of which 25 were operated upon in the hospital.

Pratiti - Development of Public Parks: The Pratiti initiative is supported & funded by the UNM Foundation and all the gardens are designed and developed with a mission to provide the best environmental conditions to live in, by providing the citizens with recreational areas by creating parks, gardens, ponds, and lakes near their neighborhood with reduced level of air and noise pollution by improving micro-alignment at the city level and to recharge groundwater through ponds and lakes.

The Company along with one of India’s best known landscape design firms developed an approach for development of urban public parks. In Ahmedabad, total 9 nos. of parks measuring more than 98,000 sq. mt. area were fully developed and opened for Public use in last five years. Further, 5 parks admeasuring approx. 2,70,000 sq. mts have been taken for redevelopment by the Company in Ahmedabad.

Lake Development: The Company has also taken two Lakes for development at Zolapur and Kesardi villages in Sanand and Bavla districts respectively for providing the citizens with basic facilities and recreational areas. The major activities to be undertaken include refurbishing of crematorium, community hall & surrounding area near by temple, development of gazebo with siting arrangement, children play area, open gym area and Green belt development with walking track. In addition to above, the Company continued other social activities during the year, as described here under.

Community Healthcare: Post COVID-19, the OPD and day care clinic “Sumangal”, part of the ‘Rangtarang’ hospital complex, has also been scaled up and caters to the communities and villages around. The footfalls at “Sumangal” are now about 300 patients per day. Cumulatively, more than 3,92,000 OPDs have been carried out till March, 2023. Services being provided include ENT, Dental Care, Physiotherapy, Pathology and Radiology facilities and special consultations in ophthalmology, dermatology, gynaecology etc.

The Report on CSR activities is annexed herewith as Annexure B.

ENVIRONMENT, HEALTH & SAFETY (HSE)

The Pharmaceutical industry is unique as it faces ethical dilemmas distinct from other industries. Given the evolving global regulatory environment & Safety, there is substantial increase in regulatory scrutiny and stakeholder expectations.

Environment (E), Health (H) and Safety (S), HSE is an abbreviation for the set that studies and implements the practical aspects of protecting the environment and maintaining health and safety at occupation. We have made it a cornerstone of our mindset at Torrent Pharma to have a mission Zero Accidents for health and safety of our workforce. In simple terms, Organization goes beyond the statutory call to ensure that our activities do not cause harm to anyone in any aspects.

We believe HSE Management Systems are attributing to our sustainable business growth and we continuously strive to embed HSE in every aspect of the business way beyond compliance.

We have well defined HSE Policy, applicable uniformly across the organization. HSE Policy affirms by top management depicts the clear vision and reiterating commitment in totality for adopting safe, secure and sustainable practices for its day to day operations.

The HSE Policy covers the fundamentals of not only complying with the regulatory requirements but also excelling in improving the HSE performance through continual improvement and regular & focused efforts are made to ensure a safe and healthy work environment for our employees. Our facilities are designed in accordance with the highest safety standards and state-of the-art safety controls for all our employees to generate awareness and nurture individual responsibility towards health and safety practices.

The governance and execution of the HSE management system, along with the mitigation plan for critical HSE risks, Environmental sustainability aspects come under the purview of Torrent HSE Leadership and site leadership team. Line functions implement sustainability initiatives in alignment with local HSE procedures based on corporate HSE standards and guidelines.

We have sustainability data management system to capture environmental sustainability parameters for strengthening integrity and completeness of data. The accuracy of data is assured by providing controls at different levels of data reported at site, which are reviewed by respective site HSE heads and approved by the site heads.

Our constant and focused endeavours in HSE domain like adopting various digitalization in our prevailing HSE practices like Online portal for reporting Unsafe Act / Conditions and Incidents with Corrective and Preventive actions, Continual Safety training and counselling on Technical and behavioural approach, Organizing various HSE Campaigns, Internal and External Safety Inspections & audits have contributed substantially to bring down incident rates and thus leading to sustainable, safe and healthy working environment for our work force and other Stakeholders. Health and Safety training is provided to all employees and contract workers on a regular basis by external and internal HSE Specialist. To foster a healthy HSE culture inside the firm, we encourage all employees, including contract workers to embrace safe working habits and behavior.

We are fully committed to optimize the use of natural resources in the operation by minimizing its use of natural resources, increasing the use of renewable energy resources employing state of art technology, reducing wastages, utilization of waste as an alternate fuel in cement industries etc. We are cognizant of the global climate change crisis and aims to reduce our Carbon footprint and positively strive to give back to the environment.

We aspire to become Zero Landfill Hazardous Waste generator in future.

As a responsible corporate citizen, we have been striving for green energy as resource by replacing fossil fuel fired Boiler with Briquette (Bio-mass) fired boiler at Indrad, Dahej and Baddi manufacturing facilities. It will bring down the consumption of fossil fuel and promoting the utilisation of green fuel (bio fuel-briquette) and thus, will reduce our environmental impact / carbon footprint significantly (Scope-1). In order to achieve this green initiative, the Company has invested the capital investment of around I 35 crores. The entire project will be commissioned in FY 2023-24 thereby resulting in annual saving of upto I 13 crores.

Further the Company has taken one more step in the direction of optimum utilization of renewable resources by way of commencement of installation of Hybrid Power generation plant with an investment of I 85 crores (Solar & Wind) for Indrad manufacturing facility, Bileshwarpura Project Site and R&D Centre. This generation facility is situated at Tal: Kalawad, Dist : Jamnagar, Gujarat and comprises of Two Wind Mills having capacity of 2.7 MW each and 5.0 MW AC Solar Power Plant. This will enable the Company to generate green energy equivalent to 2.88 crores KWH per annum. The entire project will be commissioned in FY 2023-24. This will reduce our environmental impact / carbon footprint significantly (Scope-2). This initiative will cater 30% of our total power consumption at Indrad Manufacturing Facility, Bileshwarpura Project Site and R&D Centre with an annual saving of upto I 17 crores.

We truly believe in 4Rs of circular economy - Reuse, Reduce, Recover and Recycle. Our continuous ongoing efforts in environment sustainability have certainly reduced our water consumption, hazardous waste and energy consumption.

Under the Plastic Waste Management Rules, 2016 and its subsequent amendment, the Company is registered as a Brand Owner with Central Pollution Control Board (CPCB). Under Extended Producer Responsibility (EPR), the Company is collecting back the plastic waste across Pan India and disposing them off safely.

All our manufacturing facilities across India including few functions of our corporate office are certified for ISO 14001:2015 (Environment Management System) and ISO 45001:2018 (Occupational Health & Safety Management System). Two manufacturing facilities and R&D Centre of the Company are also accredited with ISO 50001:2018 (Energy Management System).

Our efforts are directed towards building and enhancing employee capacity on HSE through training programmes.

Concisely, in order to achieve the organization goal as “Zero Harm, Zero Injury, Zero Accident”, Company has come up with unique concept of Consequence Management System (CMS) as a decision-making policy for further fostering the safety culture amongst employees and contract workers at manufacturing facilities and R&D Centre.

FINANCE

(a) Share Capital

During the year, pursuant to the approval of the shareholders by passing requisite resolution through postal ballot, the Authorised Capital of the Company was increased from I 150 crores (divided into 25 crores Equity Shares of I 5/- each and 25 lakh Preference Shares of I 100/- each) to I 225 crores (divided into 40 crores Equity Shares of I 5/- each and 25 lakh Preference Shares of I 100/- each) by creation of 15 crores Equity Shares of I 5/- each ranking pari passu with the existing Equity Shares.

Further, pursuant to the approval of the Scheme of Amalgamation of Curatio with the Company and their respective shareholders and creditors (“Scheme”) by the Hon’ble National Company Law Tribunal, Ahmedabad Bench vide its Order dated 17^th May, 2023, with an appointed date as 14^th October, 2022, the Authorised Share Capital of Curatio aggregating to I 10 crores has been consolidated with Authorised Capital of the Company. Pursuant to which, the Authorised Capital of the Company stands to I 235 crores, divided into 42 crores Equity Shares of I 5/- each and 25 lakh Preference Shares of I 100/- each.

(b) Bonus Issue

The Board, at its meeting held on 25^th May, 2022, approved and recommended the issue of bonus shares in proportion of 1:1 to commemorate completion of 50 years of Company’s successful and rewarding business operations and considering the accumulated reserves.

Such bonus issue was approved by shareholders through postal ballot on 30^th June, 2022.

Pursuant to the above, 169,222,720 bonus shares of I 5 each fully paid up were issued and allotted to the eligible shareholders by way of capitalization of I 4.34 crores from Securities Premium Account and I 80.27 crores from General reserve. Post bonus issue, the issued and paid up capital of the Company was increased from I 84.62 crores to I 169.23 crores.

(c) Deposits and Loans, Guarantees and Investments

The Company has neither accepted nor renewed any deposits. None of the deposits earlier accepted by the Company remained outstanding, unpaid or unclaimed as on 31^st March, 2023.

Details of Loans, Guarantees and Investments by Company under the provisions of Section 186 of the Companies Act, 2013, during the year, are provided in Note 10 and 11 to the Standalone Financial Statements.

(d) Debentures and other debt instruments

The Company has raised an amount of I 500 crores by way of issue of Unlisted Non-Convertible Debentures on private placement basis during the year. The outstanding amount of Non-Convertible Debentures issued by the Company is I 1273.56 crores as on 31^st March, 2023.

(e) Contracts or Arrangements with Related Parties

All Related Party transactions are entered in compliance to the provisions of law, the Policy on Materiality of and dealing with Related Party Transactions (“Related Party Policy”) and were entered with the approval of Audit Committee, Board and Shareholders if and as applicable. The particulars of material contracts and arrangements entered into with the related parties in accordance with the Related Party Policy of the Company and pursuant to the provisions of Section 188(1) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014 are annexed herewith as Annexure A.

(f) Internal Financial Control System

The Company has a formal framework of Internal Financial Control (“IFC”) in alignment with the requirement of Companies Act, 2013 and has also laid down specific responsibilities on the Board, Audit Committee, Independent Directors and Statutory Auditors with regard to IFC.

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

• The orderly and efficient conduct of its business,

• Safeguarding of its assets,

• The prevention and detection of frauds and errors,

• The accuracy and completeness of the accounting records and

• 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 controls.

Based on this evaluation, no significant events had come to notice during the year 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 year 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 Annexure B to the Independent Auditors’ Report under Standalone Financial Statements and Consolidated Financial Statements.

(g) Material changes affecting the Company

No material changes and commitments have occurred after the close of the year till the date of this Report which may affect the financial position of the Company.

INSURANCE

The Company’s manufacturing facilities, properties, equipment and stocks are adequately insured against all major risks including loss on account of business interruption caused due to property damage. The Company has appropriate liability insurance covers particularly for product liability, clinical trials and cyber liability. The Company has also taken Directors’ and Officers’ Liability Policy to provide coverage against the liabilities arising on them.

BUSINESS RISK MANAGEMENT

Risk Management is an integral part of our strategy for stakeholders’ value enhancement and is embedded in to governance & decision making process across the Organisation. The Company has in place the Risk Management Policy to ensure effective responses to strategic, operational, financial and compliance risks faced by the Organisation.

As a part of this Policy, all the risks are discussed and deliberated with the concerned functional heads and business process owners to continually identify, assess, mitigate and monitor risks across the entity, its business functions and units. The Policy also encompasses identification, assessment and mitigation of ESG risks. The Risk Management Committee meets periodically to assess and deliberate on the key risks and adequacy of mitigation plan. It has formulated a comprehensive ‘Risk Register’, which is periodically updated to capture new risks / threats augmenting from changes in internal / external environment. Inputs from risk assessment are also embedded into annual internal audit programme. Key risks and mitigation measures are summarised in Management Discussion and Analysis section of the Annual Report.

SUBSIDIARIES & JOINT VENTURES

As of 31^st March, 2023, the Company has 16 subsidiaries, out of which 3 are step down subsidiaries.

During the year, the Company acquired 100% stake in Curatio including its two subsidiaries at Sri Lanka and Philippines w.e.f. 14^th October, 2022.

The Board approved the Scheme of Amalgamation of Curatio with the Company and their respective shareholders and creditors (“Scheme”) pursuant to provisions of Section 230 to 232 of the Companies Act, 2013 read with the rules framed thereunder on 21^st December, 2022. The said Scheme has been sanctioned by the Hon’ble National Company Law Tribunal, Ahmedabad Bench vide its Order dated 17^th May, 2023 with an Appointed Date as 14^th October, 2022 and the same is now effective.

The highlights of performance of major subsidiaries of the Company have been discussed and disclosed under the Management Discussion and Analysis section of the Annual Report. The contribution of each of the subsidiaries in terms of the revenue and profit is provided in Form AOC-1, which forms part of the Annual Report.

The details of UNM Foundation, associate company of the Company is also shown in the AOC-1. This associate company is Section 8 Company and primarily floated with another company of the Torrent group to carry out the CSR activities.

The annual accounts of the subsidiary companies will be made available to any Member of the Company seeking such information at any point of time and are also available for inspection by any Member of the Company at the Registered Office of the Company on any working day during business hours up to the date of the AGM. The annual accounts of the subsidiary companies are also available on the website of the Company at www.torrentpharma.com.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

(a) Board of Directors

The Board of Directors of the Company is led by the Executive Chairman and comprises nine other Directors as on 31^st March, 2023, including two Whole-time Director, six Independent Directors which includes two Women Directors and one Non-Executive Director (other than Independent Directors).

All the Independent Directors of the Company have furnished declarations that they meet the criteria of independence as prescribed under the Companies Act, 2013 and under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”).

During the year under review, the members of the Company have approved (through Postal Ballot):

• Appointment of Dr. Maurice Chagnaud (holding DIN: 09592878) as an Independent Director of the Company for a term of 3 (three) consecutive years effective from 11^th May, 2022.

• Appointment of Manish Choksi (holding DIN: 00026496) as an Independent Director of the Company for a term of 5 (five) consecutive years effective from 29^th July, 2022.

• Appointment of Aman Mehta (holding DIN: 08174906) as Director and also appointed as a Whole-time Director of the Company for a term of 5 (five) years effective from 01^st August, 2022.

1. Dr. Maurice Chagnaud was appointed as member of the Committee with effect from 11^th May, 2022.

During the year, the Board has accepted all the recommendations made by the Audit Committee.

(d) Appointment of Directors

(i) Criteria for Appointment of Directors

The Board of Directors of the Company has identified following criteria for determining qualification, positive attributes and independence of Directors:

1) Proposed Director (“Person”) shall meet all statutory requirements and should:

• possess the highest ethics, integrity and values;

• not have direct / indirect conflict with present or potential business / operations of the Company;

• have the balance and maturity of judgment;

• be willing to devote sufficient time and energy;

• have demonstrated high level of leadership and vision, and the ability to articulate a clear direction for an organization;

• have relevant experience (in exceptional circumstances, specialization / expertise in unrelated areas may also be considered);

• have appropriate comprehension to understand or be able to acquire that understanding

- Relating to Corporate Functioning

- Involved in scale, complexity of business and specific market and environment factors affecting the functioning of the Company.

In the opinion of the Board, the directors appointed during the year possess requisite expertise, integrity and experience (including proficiency) for appointment as Independent Directors of the Company.

As per the provisions of the Companies Act, 2013, Samir Mehta, Executive Chairman (holding DIN 00061903), retires by rotation at the ensuing AGM and being eligible has offered himself for re-appointment.

The brief resume and other relevant information of the Director being re-appointed is given in the explanatory statement to the Notice convening the AGM, for your perusal.

(b) Meetings of Board of Directors

Regular meetings of the Board are held to review performance of the Company, to discuss and decide on various business strategies, policies and other issues. A calendar of Board / Committee meetings for the year is prepared and circulated to the Directors well in advance to enable them to plan their schedule for effective participation in the meetings. During the year, seven meetings of the Board of Directors were convened and held on 11^th May, 2022, 25^th May, 2022, 29^th July, 2022, 21^st October, 2022, 02^nd November, 2022, 21^st December, 2022 and 25^th January, 2023. The intervening gap between two consecutive meetings was not more than one hundred and twenty days. Detailed information on the meetings of the Board is included in the Corporate Governance Report which forms part of the Annual Report.

(c) Audit Committee

The composition of the Audit Committee is in compliance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of the Listing Regulations. The composition of the Committee as on 31^st March, 2023 is given below:

Name of Director	Category of Directorship
Shailesh Haribhakti, Chairman	Independent Director
Haigreve Khaitan	Independent Director
Ameera Shah	Independent Director
Nayantara Bali	Independent Director
Dr. Maurice Chagnaud1	Independent Director

2) The appointment shall be in compliance with the Board Diversity Policy of the Company.

The key qualifications, skills and attributes which the Board is collectively expected to have for the effective discharge of their duties are explained in Corporate Governance Report of the Company.

(ii) Process for Identification / Appointment of Directors

• Board members may (formally or informally) suggest any potential person to the Chairman of the Company meeting the above criteria. If the Chairman deems fit, necessary recommendation shall be made by him to the Nomination and Remuneration Committee (NRC).

• Chairman of the Company can himself also refer any potential person meeting the above criteria to the NRC.

• NRC delibrates the matter and recommends such proposal to the Board.

Board considers such proposal on merit and decide suitably.

(e) Familiarisation Programme of Independent Directors

The Independent Directors have been updated with their roles, rights and responsibilities in the Company by specifying them in their appointment letter along with necessary documents, reports and internal policies to enable them to familiarise with the Company’s procedures and practices. The Company endeavours, through presentations at regular intervals, to familiarise the Independent Directors with the strategy, operations and functioning of the Company and also with changes in the regulatory environment having a significant impact on the operations of the Company and the pharmaceutical industry as a whole. Site visits to various plant locations and CSR sites get organized for the Directors to enable them to understand the operations of and CSR activities carried out by the Company. The Independent Directors also meet with senior management team of the Company in formal / informal gatherings.

The details of such familiarisation programs for Independent Directors are posted on the website of the Company and can be accessed at https://www.torrentpharma.com/pdf/cms/Familiarization Programme 2022-23.pdf

(f) Board Evaluation

The Evaluation of Board, its Committees, Individual Directors (Independent and Non Independent Directors) and Chairperson was carried out as per the process and criteria laid down by the Board of Directors based on the recommendation of the NRC:

• Chairperson of meeting of Independent Directors briefed the Board that the Independent Directors have carried out the performance evaluation of the Board as a whole, its committees, the Non Independent Directors, Chairman and flow of information between the management and the Board.

• The evaluation of Chairperson was co-ordinated by the Chairperson of the Independent Directors meeting.

• Pursuant to above, the Board expressed the satisfaction on the functioning of the Board, the Committees and performance of Individual Directors.

• The Independent Directors met on 25^th January, 2023 with respect to the above process.

(g) Key Managerial Personnel

Chintan Trivedi was appointed as Company Secretary and Compliance Officer of the Company being Whole-time Key Managerial Personnel of the Company with effect from 1^st August, 2022 in place of Mahesh Agrawal, who has attained the age of superannuation and was retired from the services with effect from close of working hours of 31^st July, 2022.

Except as mentioned above and other than the directors as already captured in this report, there has been no change in the key managerial personnel of the Company during the year under review.

(h) Directors’ Responsibility Statement

In terms of Section 134(3)(c) of the Companies Act, 2013, in relation to financial statements of the Company for the year ended 31^st March, 2023, the Board of Directors state that:

i. the applicable Accounting Standards have been followed in preparation of the financial statements and there are no material departures from the said standards;

ii. reasonable and prudent accounting policies have been used in preparation of the financial statements and that they have been consistently applied and that reasonable and prudent judgments and estimates have been made in respect of items not concluded by the year end, so as to give a true and fair view of the state of affairs of the Company as at 31^st March, 2023 and of the profit for the year ended on that date;

iii. proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the financial statements have been prepared on a going concern basis;

v. proper internal financial controls were in place and were adequate and operating effectively; proper systems to ensure compliance with the provisions of applicable laws were in place and were adequate and operating effectively.

REMUNERATION

(a) Remuneration Policy

The Remuneration policy covers the remuneration for the Directors (Chairman, Managing Director, Whole-time Directors, Independent Directors and other non-executive Directors) and other employees (under senior management cadre and management cadre). The Policy has been formulated with the following key objectives:

• To ensure that employee remuneration is in alignment with business strategy & objectives, organisation values and long-term interests of the organisation.

• To ensure objectivity, fairness and transparency in determination of employees’ remuneration.

• To ensure the level and composition of remuneration are reasonable and sufficient to attract, retain and motivate a high performance workforce and are in compliance with all applicable laws.

It covers various heads of remuneration including benefits for Directors and employees. It also covers the process followed with respect to annual performance reviews and variables considered for revision in the remuneration. The said Policy is available on the website of the Company www.torrentpharma.com.

(b) Criteria for Remuneration to Non-Executive Directors (NEDs):

1. The payment of commission to the Directors of the Company who are neither in the whole time employment nor Managing Director(s) (NEDs) is approved by the shareholders of the Company and is subject to the condition that total commission paid to the NEDs shall not exceed the percentage limits of the net profit of the Company as specified in the Companies Act, 2013 (presently 1% of the net profit), calculated in accordance with Section 197 read with Section 198 and any other applicable provisions of the Companies Act, 2013.

Further, as per the Regulation 17(6)(ca) of the Listing Regulations, approval of the shareholders by special resolution shall be required every year, in which the annual remuneration payable to a single NED exceeds fifty per cent of the total annual remuneration payable to all NEDs, giving details of the remuneration thereof.

2. The Board or its Committee specifically authorised for this purpose, determines the manner and extent upto which the commission is paid to the NEDs within the limit as approved by the shareholders. The commission is determined based on the participation of the Directors in the meetings of Board and / or Committees thereof, as well as on industry practice, performance of the Company and contribution by the Directors, etc.

3. Payment of Commission is made annually on determination of profit.

4. Sitting fees of I 1 lakh is paid to Independent Directors for each meeting of the Board or any Committee thereof attended by them.

5. Independent Directors are reimbursed for all the expenses incurred for attending any meeting of the Board or Committees thereof and which may arise from performance of any special assignments given by the Board.

(c) Remuneration to Managerial Personnel

The details of remuneration paid to the Managerial Personnel forms part of the Corporate Governance Report.

(d) Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, disclosures pertaining to remuneration and other details are provided in the Annexure C to this Report.

AUDITORS

(a) Statutory Auditors

As per Section 139 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014, the members of the Company in Forty Ninth AGM of the Company approved the re-appointment of B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022) as Statutory Auditors of the Company for a term of 5 (five) consecutive years from the conclusion of Forty Ninth AGM until the conclusion of the Fifty Forth AGM to be held with respect to the financial year 2026-27.

(b) Cost Auditors

In terms of the Section 148 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, the Company has prepared and maintained the cost accounts and records for the year 2022-23.

The Company has appointed M/s. Kirit Mehta & Co., Cost Accountants, Mumbai (Firm Registration No. 000353) as the Cost Auditors of the Company for audit of cost accounting records of its activities (Formulation & Bulk Drugs activities) for the financial year ended 31^st March, 2023. The Cost Audit Report to the Central Government for the financial year ended 31^st March, 2022 was filed on 24^th August, 2022, within the statutory timeline. Further, the Board of Directors has appointed M/s. Kirit Mehta & Co. as the Cost Auditor of the Company for the financial year 2023-24 and fixed their remuneration, subject to ratification by the shareholders in the ensuing AGM of the Company.

(c) Secretarial Auditor

The Board, pursuant to Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, had appointed M/s. M. C. Gupta & Co., Company Secretaries, as the Secretarial Auditors of the Company to conduct the Secretarial Audit as per the provisions of the Companies Act, 2013 for the year 2022-23.

M/s. M. C. Gupta & Co. have carried out the Secretarial Audit accordingly and their report in Form MR-3, is annexed with this Report as Annexure D. There were no qualification / observations in the report.

During the year 2022-23, the Company has complied with all the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

CORPORATE GOVERNANCE

As required by Regulation 34 read with Schedule V of the Listing Regulations, a separate Report on Corporate Governance forms part of the Annual Report. The Report on Corporate Governance also contains certain disclosures required under the Companies Act, 2013. A certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause E of Schedule V of the Listing Regulations forms part of this Report as Annexure E.

ANNUAL RETURN

In terms of Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company is available on the website of the Company at the link https://torrentpharma.com/index.php/ investors/annual return

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.

A statement containing the necessary information on Conservation of energy, Technology absorption and Foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed to this Report as Annexure F.

APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors appreciate the trust reposed by the medical fraternity and patients in the Company and look forward to their continued patronage. The Directors are also grateful and pleased to place on record their appreciation for the excellent support, guidance and cooperation extended by the Government of India and various State Governments specifically the Governments of Gujarat, Himachal Pradesh, Sikkim, Madhya Pradesh and Andhra Pradesh, Central and State Government Bodies and Authorities, Financial Institutions and Banks. The Board also expresses its appreciation of the understanding and support extended by the shareholders and the commitment shown by the employees of the Company.

For and on behalf of the Board of Directors

Samir Mehta

Mumbai Executive Chairman

30^th May, 2023 DIN: 00061903

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Mar 31, 2022

The Directors have the pleasure of presenting the Forty Ninth Annual Report of your Company together with the Audited Financial

Statement for the year ended 31^st March, 2022.

HIGHLIGHTS

1. 2021-22: Accelerating growth with Sustainability:

• While the financial year witnessed gradual recovery trends across the markets, the recovery trends were impacted intermittently by second and third wave of pandemic. Torrent’s business in Branded generic markets [viz. India, Brazil and ROW] witnessed continued growth momentum backed by market recovery, performance of top brands and new launches. Our business in generic-generic focused markets mainly US and Germany witnessed de-growth during the year. While Germany performance was impacted mainly by market factors and competition intensity, US continues to be impacted due to lack of new product approvals which depends on the re-inspection of facilities and consequent clearance by USFDA.

• At Torrent, sustainability has been bedrock of doing business and has always been an integral part of growth and decision-making. During the year, the Company adopted a structured ESG [Environment, Social, and Governance] framework & strategy, based on international ESG standards and frameworks. The Company has designed multi-fold strategy, with four core ESG pillars that will enable it to navigate its growth in a manner that maximizes stakeholders’ value, consistently and sustainably.

2. India business:

• After muted 2020-21, the Indian Pharmaceutical Market (‘IPM’), witnessed a steady recovery throughout the year with growth of 15% including COVID portfolio and 11% excluding COVID portfolio. The Company outperformed the market with growth of 17% complemented by top brands and new launches.

• During the year, The Company entered into collaborations on COVID Drugs:

- Voluntary licensing agreements for Baricitinib and Molnupiravir

- Non-exclusive licensing agreement to use the patents and know-how in relation to the compound nirmatrelvir with Medicine Patent Pool for manufacture and commercialisation of the generic version of PAXLOVID™

• As at the year end, field force productivity is '' 9.2 lacs per month, an improvement of 10% over previous year. Field Force expansion during the year was around 20%.

• Torrent is ranked 8^th in the IPM with 10 brands with sales of more than '' 100 crores.

• Torrent will continue to strengthen in competitive position through focus on new launches, market expansion, field force productivity and brand building.

3. Brazil business:

• Torrent continues to be ranked the no. 1 Indian Pharmaceutical company in Brazil.

• For 2021-22, Brazil registered strong growth of 18% with strong recovery of the market, market outperformance, performance of top brands and strengthening of Brazilian currency. The market grew by 10.1% in 2021-22.

• With high chronicity of its portfolio, Torrent will continue to focus on brand building, in-clinic effectiveness, new launches and foraying into new therapies.

4. US business:

• US revenues continued to be impacted due to high price erosion on the base portfolio coupled with lack of new launches pending re-inspection of its facilities [at Dahej and Indrad]. Torrent has already completed its CAPAs and submitted the closure report and it continues to await guidance from the USFDA on re-inspection.

• In 2021-22, Torrent has filed 5 ANDAs (PY 11) and launched 4 products.

• Torrent is ranked amongst top 3 players in 26 molecules.

5. Germany business:

• Torrent is ranked the no. 5 generic company and no. 1 Indian Pharmaceutical company in Germany.

• Germany revenues were impacted due to muted market growth, normalization in channel inventory and increasing competition in some of the large volume tenders.

• Torrent has taken initiatives to strengthen its cost and price competitiveness. It shall continue to expand its market coverage through new launches, and expansion of its non-tender & OTC business.

6. Rest of the World:

• ROW markets registered strong growth.

• Torrent will continue its focus on key ROW markets to develop them as growth engines of the future.

7. The state-of-the-art Oral Oncology manufacturing facility in Gujarat, which will cater to both regulated and non-regulated markets,

is on track.

8. Financial performance:

• During the year, Torrent registered EBITDA margins at 30.8% (PY 31.6%). While branded businesses for the Company continue to contribute positively to the overall margins for the Company, US business was negative due to high double digit pricing pressure and lack of new product launches pending the USFDA re-inspection of the manufacturing facilities. The Company has initiated cost optimization measures to counter the margin impact from US business.

• Leverage (Net Debt-to-EBITDA) reduced to 1.3x as of 31^st March, 2022 compared to 1.6x as of 31^st March, 2021.

FINANCIAL RESULTS

The summary of Standalone (Company) and Consolidated (Company and its subsidiaries) operating results for the year and appropriation

of divisible profit is given below:

('' in crores except per share data)
	Standalone		Consolidated
	2021-22	2020-21	2021-22	2020-21
Sales & Operating Income	6,742	6,451	8,508	8,005
Profit Before Depreciation, Net Finance Cost, Exceptional Items & Tax	2,301	2,306	2,621	2,532
Less: Depreciation & Amortization	602	610	662	658
Less: Net Finance Cost	233	330	248	348
Profit Before Exceptional Items & Tax	1,466	1,366	1,711	1,526
Less: Exceptional Items	-	-	485	-
Less: Tax Expense	475	228	449	274
Net Profit for the Year	991	1,138	777	1,252
Balance brought forward	2,900	2,093	2,807	1,893
Other Comprehensive income and other adjustments	(1)	7	10	-
Balance available for appropriation	3,890	3,238	3,594	3,145
Appropriated as under:
Transfer to General Reserve	-	-	-	-
Dividend	677	338	677	338
Tax on Distributed Profits for Dividend	-	-	-	-
Balance Carried Forward	3,213	2,900	2,917	2,807
Earnings Per Share ('' per share)	58.59	67.24	45.93	73.98

Consolidated Operating Results

The consolidated sales and operating income increased to '' 8,508 crores from '' 8,005 crores in the previous year showing a growth of 6%. The consolidated operating profit for the year was '' 2,621 crores as against '' 2,532 crores in the previous year registering growth of 4%. The consolidated net profit decreased to '' 777 crores from '' 1,252 crores in the previous year due to exceptional item of '' 485 crores.

Exceptional Item

Basis assessment of the financial viability of liquid business of its wholly owned subsidiary in the US taking into account incremental investments required for bringing the pipeline products into the market and increased competition intensity, the Company has considered it to be prudent to discontinue the liquid facility operations. Based on best estimate assumptions of the recoverable value of the assets of liquid facility, the Company has recognized an impairment provision in aggregating to '' 439 crores during the year ended 31^st March, 2022. Further, management has considered provision for expenses of '' 46 crores related to discontinuation of liquid facility. The impairment provision as well as the provision for expenses are presented as exceptional items.

Management Discussion and Analysis (MDA)

The details of operating performance of the Company for the year, the state of affairs and the key changes in the operating environment have been analysed in the Management Discussion and Analysis section which forms a part of the Annual Report.

APPROPRIATIONS

i) Dividend

The Company endeavours to distribute 40% of its annual consolidated net profit after tax without taking into account non-cash charges relating to the business acquisitions as dividend, in accordance with the dividend policy. The policy is available on the website http://www.torrentpharma.com/pdf/investors/Dividend Policy.pdf

During the year under review, an interim dividend of '' 25/- per equity share of face value of '' 5/- each (@ 500%) amounting to '' 423 crores was paid to the shareholders. The Company is completing 50 years of its incorporation this year. To commemorate the same, the Board has, inter alia, recommended to the members, a final dividend of '' 23/- per equity share of face value of '' 5/- each (@ 460%) including the special dividend of '' 15/- per equity share of face value of '' 5/- each amounting to '' 389 crores for approval of shareholders at the 49^th Annual General Meeting (AGM) of the Company. Hence, the total dividend paid / payable with respect to the year under review was of '' 48/- per equity share (@960%) amounting to '' 812 crores.

ii) Transfer to Reserves

The Board of Directors of the Company has decided not to transfer any amount to the reserves for the year under review.

BONUS ISSUE

Along with the recommendation of special dividend, the Board has also recommended the issue of Bonus Shares in the proportion of 1:1 i.e. 1 (one) new fully paid-up Equity share of '' 5/- each for every 1 (one) fully paid-up Equity share of '' 5/- each, to the eligible shareholders of the Company as on the Record Date as may be fixed by the Board or a Committee thereof authorised for the purpose and increase in Authorised Share Capital and consequent amendment to Capital clause of the Memorandum of Association of the Company. Pursuant to Section 110 of the Companies Act, 2013 read with the rules thereunder, the Board seeks shareholder’s approval through passing of necessary resolutions by Postal Ballot for the above.

HUMAN RESOURCES

Torrent values its employees and believes that the Company''s success is a result of the collective efforts of all of its employees. The Human Resource Development team strives to create a positive work environment that influences employees’ ability, motivation and creates opportunities for them to perform. Our work environment encourages high performance work culture with focus on employee health / safety, welfare, engagement, development, diversity, productivity, Cost and Quality. Comprehensive policies of the Company covers the entire spectrum of the life cycle of an employee from recruitment to retention. We are committed to hiring, nurturing and developing exceptionally talented human resources. Company’s unique culture and robust People Practices & Policies, inspire and ensure that every employee aspires to grow in the organization.

The Company strongly believes in providing a safe and harassment free workplace through various interventions and practices. During the pandemic, the Organization’s top priority was the health and safety of its employees. Safety awareness programs and counselling sessions were critical in spreading necessary knowledge and assisting employees in dealing with the challenges of working in the midst of the COVID pandemic. Efforts are also taken towards improving employee connect.

Through cadre and capability building interventions, we continue to focus on strengthening our talent processes and building the talent pipeline for the organization. Significant efforts were made to strengthen our leadership and hire the best available talent. These have aided in bringing a new perspective and renewed energy in the organization. Our Training & Development activities further gave fillip towards the development of talent as well as sharpening of new management skills of the employees. On-the-job training, meaningful interactions with senior leadership and development programs created an enabling culture in harnessing the necessary competencies in their work environment, whether technical, managerial, or behavioral. For holistic development of employees, periodic job rotation programs are implemented to allow every employee to understand the nuances of the function, preparing them to take on a larger role in the future. This empowers everyone in the organization, resulting in job enrichment and satisfaction. On the industrial front, the Company maintained positive Industrial Relations with its workforce throughout the year.

Various gender diversity initiatives, such as flexi-shift hours, have helped female workers balance work and other responsibilities. Special events that promote woman’s personal and professional development are frequently planned, with an emphasis on fitness, well-being and a stress-free lifestyle.

The Company will continue to invest in employees'' professional development and instill in them the importance of a responsible growth. As a result, they recognize that their success is dependent on the provision of innovative solutions to patient needs, community upliftment and environmental protection.

The Company has a diverse workforce of 12,910 employees as on 31^st March, 2022 vis-a-vis 12,531 employees as on 31^st March, 2021.

VIGIL MECHANISM

Over the years, 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. The Organization has in place a stringent vigil system to report unethical behaviour in order to promote professionalism, fairness, dignity and ethical behaviour in its employees and stakeholders, the details of which are covered in the Corporate Governance Report.

The system also protects employees who use the vigil mechanism from victimisation and gives them direct access to the Audit Committee. Furthermore, the Company’s Code of Business Conduct defines critical corporate ethical practices that underpin the Company’s belief structure and business operations, as well as representing the Company''s valued principles.

Whistle-blower Policy and Code of Business Conduct have been hosted on Company’s website www.torrentpharma.com

In accordance 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 adopted a Policy on protection of women against sexual harassment at workplace. In this regard, the Company has organized a number of interactive awareness workshops for its employees. The Company has complied with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and Redressal) Act, 2013 relating to the formation of Internal Complaints Committee. During the year, no complaints were received under this policy.

CORPORATE SOCIAL RESPONSIBILITY

During the year, the Company was required to spend '' 22.84 Crore (2% of the average net profit of the past three financial years and surplus arising at implementing agency level from temporary investment of funds for FY 2020-21). The Company contributed, directly or to implementing agency '' 23.00 Crore during the year. The total amount spent during the year was '' 13.08 Crore. Further, unspent amount at the end of the year at the implementing agency level was transferred to “Unspent CSR Account” of related ongoing project. The CSR Activities undertaken by the Company were under the thrust areas of Community Healthcare, Sanitation & Hygiene, Education & Knowledge Enhancement and Social Care & Concern. The brief details of the major CSR activities are described hereunder:

REACH: Driven by the belief of Chairman Emeritus, Sudhir Mehta ''Children are the future of our nation and this future must be well preserved'', the flagship CSR program of the Group “REACH” - Reach EAch CHild was initiated in the year 2016 under the aegis of UNM Foundation (earlier known as Tornascent Care Institute), a Section 8 Company. REACH has three major pillars: (a) Grass Root Interventions (b) Green Field Actions and (c) Other Allied Activities. Salient achievements are:

• Grassroot Intervention Model: It targets to establish baseline health status of children in age group of 6 months to 6 years, through medical camps in communities and villages surrounding the industrial establishments of the Group. In pre-covid period, 71,387 children in 351 villages have been screened. Appropriate treatment regime resulted in benefiting more than ~74% Malnourished children and more than ~90% Anaemic children. About ~73% children having chronic illnesses were also provided appropriate treatment with encouraging outcomes.

During FY 2021-22, as second wave of COVID-19 ebbed, REACH program was extended to additional 649 villages starting from June, 2021, making total number of villages covered under REACH to 1,000. Anganwadi Model is followed in additional villages to identify and serve Malnourished children. 7,511 Malnourished Children have been provided with Mauji biscuits as special nutritional supplement. Till now 39% of children from additional villages have been treated out of malnourishment. Additionally, intensive Awareness activities about prevention of Malnourishment and Anemia is carried out including audio-visual film show in vernacular language.

• Greenfield Actions: Healthcare services are provided to children up to 18 years. There are three Primary Pediatric Health Centers (PPHCs) with basic laboratory and day care facility at Dahej, Balasinor and Indrad, while fourth major center near SUGEN Power Plant has a 150 bed pediatric hospital ‘Balsangam’ which is part of ‘Rangtarang’ hospital complex started in FY 2019-20. Till Date more than 3,25,000 patients have been treated under OPDs across all four centers since its inception in 2017. More than 40,000 OPD cases have been handled across all Locations in FY 2021-22.

Balsangam, a 150-bed state-of-the-art paediatric hospital is fully operational within the Rangtarang complex which also has Sumangal, a multi-disciplinary clinic for patients of all age groups. Activities at Balsangam, which were affected during covid period, have been scaled up post pandemic at a fast pace from June, 2021.

Additionally, two more multi purpose Satellite centers have been started at Waghai and Chhappi in Gujarat and three more would be started at Radhanpur, Naswadi and Dediapada, Gujarat. These multi purpose centers will be scaled up appropriately in future depending on feedback as well as demand of healthcare services from the respective local population.

• Other Allied Initiatives: Counseling and Support was provided to rural adolescent girls around SUGEN, Dahej & Indrad centers covering menstrual hygiene and sanitation, by providing free health and hygiene kits. This has resulted in reducing prevalent social taboos and ultimately increasing confidence and self-esteem amongst beneficiaries. Hygiene Kits were provided to total 14,000 Adolescent girls from all camp villages, between 11-18 years of age on monthly basis under this programme. Biodegradable and Reusable Sanitary Napkins were provided as a pilot project to solve issue of disposal and Initial feedback from the beneficiaries was encouraging.

Shiksha Setu: Phase-III of Shiksha Setu i.e. the Teaching and Learning Support Programme, conducted through UNM Foundation, was initiated during FY 2021-22. The program covers 45 Government primary schools located near SUGEN power plant, Chhatral, Chhapi, Memadpur and Ahmedabad reaching out to 15,000 students and 480 teachers of 1^st to 8^th standard. Due to Covid, schools were closed for about two years which had adversely impacted student learning levels. Remedial classes for more than 4,000 Students from Grade for 3^rd to 8^th were organized to support students achieve basic reading and arithmetic skills. About 1,500 mothers were reached through Mothers'' Engagement and School Readiness activities.

During the year “Second Chance” programme was initiated at Chhatral cluster in Mehsana District of Gujarat aiming to support School dropout Students for clearing Grade 10^th examination and enhance percentage of Students going for Higher Education / Vocational Training. Total 112 Students were enrolled in the Programme out of which 104 Students were mobilized and provided coaching for preparation of Grade 10^th examination. 93 Students appeared for Grade 10^th examination through National Institute of Open School out of which more than 70% students passed.

During the year “Vocational Skills Development Programme” was initiated at Chhatral cluster in Mehsana District of Gujarat to enhance employable skills of Women and Youth. The Programme aims at enhancing employable skills of 300 Women and Youth and providing them employment opportunities. Total 100 Women and Youth were mobilized and trained on various skills viz. Sewing machine operator, Data entry operator, General duty assistant etc.

Pratiti - Development of Public Parks: The Company along with one of India’s best known landscape design firm developed an approach for development of urban public parks. In Ahmedabad, six small sized parks measuring approx. 33,000 sq. mt. have been fully developed and opened for public use during FY 2018-19, one small sized park admeasuring 740 sq. mt. was fully developed and opened for public use in FY 2020-21 and one large sized park measuring approx. 28,300 sq. mt. was fully developed and opened for public use in FY 2021-22. One more large sized park measuring approx. 36,700 sq. mt. is at advanced stage of completion and will be opened for public in FY 2022-23 in Ahmedabad.

In addition to above, the Company continued other social activities during the year, as described hereunder:

Community Healthcare: Post COVID-19, the day care clinic “Sumangal” which is a community health care clinic under the ‘Rangtarang’ hospital complex, has also been scaled up and caters to the communities and villages around. The footfalls at “Sumangal” are now about ~150 patients per day. Services being provided include ENT, Dental Care, Physiotherapy, Pathology and Radiology facilities and special consultations in ophthalmology, dermatology, gynaecology etc.

ENVIRONMENT, HEALTH & SAFETY (HSE)

The Company is sensitizing, believing and committed in inculcating a proactive and well matured HSE culture across the group. Conservation of our natural capital and resources including Environment, ensuring the safety and well being of our colleagues and other communities at large are essential for Sustainable future.

The Company’s HSE function is efficiently driven by well-established HSE Policy, which is commonly applied across the group. HSE Policy affirms by top management depicts the clear vision and reiterating commitment by top management in totality for adopting safe, secure and sustainable practices for its day to day operations.

Our constant and focused endeavors in HSE domain like adopting various digitalization in our prevailing HSE practices like Online portal for reporting Unsafe Act / Conditions and Incidents with Corrective and Preventive actions. Frequent Safety training and counselling on Technical and behavioral approach (BBS), Organizing various HSE Campaigns, Internal and External Safety Inspections and audits, Adopting various best in class new technologies, Process and System Improvements have helped us substantially to bring down incident rates and thus leading to sustainable, safe and healthy working environment for our work force and interested parties / stake holders at large.

We always remain deeply concerned about the cause of the environment protection and in this direction, the Company has undertaken initiatives, where, we have achieved measurable reduction in waste generation, Utilization of waste as an alternative fuel in cement industries, Conservation of energy (Saving of 7000 Tons of steam consumption per annum by installation of Heat pumps in place of conventional hot water system), Usage of renewable energy (Cumulatively generation of 2.20 Million KWH energy by installation of Solar Power panels of 1688 KW capacity at Indrad manufacturing facility, Bileshwarpura project site and R&D Centre). These activities have reduced our environmental impact /carbon footprint significantly.

We are constantly endeavoring to make our employees feel valued, respected, empowered and inspired to achieve our EHS goals. We truly believe in 4Rs of circular economy - Reuse, Reduce, Recover and Recycle. Our continuous ongoing efforts in environment sustainability have certainly reduced our water consumption, hazardous waste and energy consumption. Green building concepts are being introduced to maximize the usage of day light, 43% developed lust green area, rain water harvesting systems, usage of nonconventional energy sources like generation of solar power by installing roof top solar panels and captive usage of biogas are some unique concepts being implemented. The Company has also taken proactive steps to recycle water using state-of-art technologies to reduce fresh water dependency; Treated effluents are reused in cooling towers and horticulture activities. On account of these initiatives, most of our manufacturing facilities are now zero landfill and had achieved 53% reduction in landfill waste disposal compared to previous year. We have also targeted to dispose-off more than 90% of total such waste generation for co-processing in upcoming years.

Majority of Company’s manufacturing facilities including few functions of our corporate office are accredited with ISO 14001:2015 (Environment Management Systems) and ISO 45001:2018 (Occupational Health & Safety Management system). This truly brings harmonization in HSE Systems and bringing more awareness amongst the working force at large.

Rainwater harvesting systems have been installed at manufacturing facilities with 57 state of art injection wells with large sunken catchment area of approx. 25,000 sq mt and 10 nos. of inverted umbrella system (Ulta Chhata).

Under the Plastic Waste Management Rules, 2016, the Company is registered as a Brand Owner with Central Pollution Control Board (CPCB). Pursuant to this, 1016 MT per annum equivalent quantity of plastic waste was collected from PAN India during the year under review and recycled and co-processed in cement industries. The Company has joined the hands with local and state government for promoting various programmes under Extended Producer Responsibility (EPR) under the state initiative of AZADI KA AMRIT MAHOTSAV. This includes the adoption of total 8 nearby villages (5 Villages near Indrad manufacturing facility and 3 villages near Dahej manufacturing facility) and the Company has extensively worked for more than 100 days to collect and safe dispose off the plastic waste and educated the community to bring awareness on sparingly usage of plastics and other natural resources. Under this initiative, the Company had managed to collect and safely dispose off 6.3 MT of Plastic waste.

During the year, the Company and its employees of all locations joined hand in facing and combating 2^nd wave of COVID-19 by devising and implementing various strategies to curb this pandemic situation and thus ensures the safer plant operations as well as well-beings of all working force at large. Such strategies include, encouraging the employees work from home (Other than those front-line working force), Virtual Meetings to ascertain the social distances, spreading awareness on Do’s & Don’ts in pandemic situation, developing and arming the COVID-19 task forces which in turn ensure the compliance of their respective area / departments. The Company has gone extra mile in ensuring that, all its work force have undergone required vaccination and various in-house initiatives were undertaken by management in depth. Frequent Health Surveillance programs were well executed as a proactive approach by the Company’s medical staff.

In-house cross-functional teams, global customers, regulators and external third party auditors, which helps us in achieving benchmark / highest levels of compliance, are regularly auditing all the manufacturing facilities and R&D Centre. This also helps us to review our own system through third eye, which enables us to understand risk / opportunities / area of improvisation of our process / manufacturing facilities at large.

As a part of consultation and participation of contractors’ workers in our day-to-day operation, they all have been well covered under various HSE Drives. It is essential for all contractors’ workers to undergo HSE training and follow stipulated guidelines. All contractors’ workers are encouraged to maintain safety standards by abiding Company’s guidelines and procedures. Moreover, the Company has in place the “Conviction of Safety Policy” which provides for substantial compensation to the personnel (Employees as well as Contractors’ workers) and their families, who are adversely affected by any accident.

Concisely, in order to achieve the organization goal as “Zero Harm, Zero Injury, Zero Accident”, Company has brought in the unique concept of “Consequence Management System” as a decision-making policy for further fostering the safety culture amongst employees and contractors’ workers at manufacturing facilities and R&D centre.

FINANCE

(a) Share Capital

As on 31^st March, 2022 the Authorised Capital of the Company is '' 150 crores, divided into 25 crores Equity Shares of '' 5/- each and 25 lakhs Preference Shares of '' 100/- each.

(b) Deposits and Loans, Guarantees and Investments

The Company has neither accepted nor renewed any deposits. None of the deposits earlier accepted by the Company remained outstanding, unpaid or unclaimed as on 31^st March, 2022.

Details of Loans, Guarantees and Investments by Company under the provisions of Section 186 of the Companies Act, 2013, during the year, are provided in Note 10 and 11 to the Standalone Financial Statements.

(c) Debentures and other debt instruments

The outstanding amount of Non-Convertible Debentures issued by the Company is '' 1241.42 crores as on 31^st March, 2022.

(d) Contracts or Arrangements with Related Parties

All Related Party transactions are entered in compliance to the provisions of law, the Policy on Materiality of and dealing with Related Party Transactions (“Related Party Policy”) and were entered with the approval of Audit Committee, Board and Shareholders if and as applicable. The particulars of material contracts and arrangements entered into with the related parties in accordance with the Related Party Policy of the Company and pursuant to the provisions of Section 188(1) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014 are annexed herewith as Annexure A.

(e) Internal Financial Control System

The Company has a formal framework of Internal Financial Control (“IFC”) in alignment with the requirement of Companies Act, 2013 and has also laid down specific responsibilities on the Board, Audit Committee, Independent Directors and Statutory Auditors with regard to IFC.

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

• The orderly and efficient conduct of its business,

• Safeguarding of its assets,

• The prevention and detection of frauds and errors,

• The accuracy and completeness of the accounting records and

• 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 year 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 year 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 Annexure B and Annexure A to the Independent Auditors’ Report under Standalone Financial Statements and Consolidated Financial Statements respectively.

(f) Material changes affecting the Company

No material changes and commitments have occurred after the close of the year till the date of this Report which may affect the financial position of the Company.

INSURANCE

The Company’s manufacturing facilities, properties, equipment and stocks are adequately insured against all major risks including loss on account of business interruption caused due to property damage. The Company has appropriate liability insurance covers particularly for product liability, clinical trials and cyber liability. The Company has also taken Directors’ and Officers’ Liability Policy to provide coverage against the liabilities arising on them.

BUSINESS RISK MANAGEMENT

Risk Management is an integral part of our strategy for stakeholders’ value enhancement and is embedded in to governance & decisionmaking process across the Organisation. The Company has in place the Risk Management Policy to ensure effective responses to strategic, operational, financial and compliance risks faced by the Organisation.

As a part of this Policy, all the risks are discussed and deliberated with the concerned functional heads and business process owners to continually identify, assess, mitigate and monitor risks across the entity, its business functions and units. The Policy also encompasses identification, assessment and mitigation of ESG risks. The Risk Management Committee meets periodically to assess and deliberate on the key risks and adequacy of mitigation plan. It has formulated a comprehensive ‘Risk Register’, which is continuously updated to capture new risks / threats augmenting from changes in internal / external environment. Inputs from risk assessment are also embedded into annual internal audit programme. Key risks and mitigation measures are summarised in Management Discussion and Analysis section of the Annual Report.

SUBSIDIARIES & JOINT VENTURES

As of 31^st March, 2022, the Company has 14 subsidiaries, out of which 3 are step down subsidiaries.

During the year, TPL (Malta) Limited, wholly owned subsidiary of the Company and Torrent Pharma (Malta) Limited wholly owned subsidiary of TPL (Malta) Limited were incorporated on 17^th August, 2021.

Further, Torrent Pharma SRL, Romania and Torrent Pharma France S.A.S, France, wholly owned subsidiaries of the Company were liquidated w.e.f 11^th January, 2022 and 13^th January, 2022 respectively.

The highlights of performance of major subsidiaries of the Company have been discussed and disclosed under the Management Discussion and Analysis section of the Annual Report. The contribution of each of the subsidiaries in terms of the revenue and profit is provided in Form AOC-1, which forms part of the Annual Report.

The details of UNM Foundation (earlier known as Tornacent Care Institute), associate company of the Company is also shown in the AOC-1. This associate company is Section 8 Company and primarily floated with another company of the Torrent group to carry out the CSR activities.

The annual accounts of the subsidiary companies will be made available to any Member of the Company seeking such information at any point of time and are also available for inspection by any Member of the Company at the Registered Office of the Company on any working day during business hours up to the date of the AGM. The annual accounts of the subsidiary companies are also available on the website of the Company at www.torrentpharma.com.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

(a) Board of Directors

The Board of Directors of the Company is led by the Executive Chairman and comprises six other Directors as on 31^st March, 2022, including one Whole Time Director, four Independent Directors which includes two Women Director and one Non-Executive Director (other than Independent Directors).

All the Independent Directors of the Company have furnished declarations that they meet the criteria of independence as prescribed under the Companies Act, 2013 and under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”).

The Board had at its meeting dated 11^th May, 2022 appointed Dr. Maurice Chagnaud (holding DIN: 09592878) as an Independent and Additional Director of the Company w.e.f 11^th May, 2022 for a term of 3 (three) consecutive years subject to approval of shareholders, not liable to retire by rotation. The Board seeks the approval of shareholders through special resolution by Postal Ballot Notice dated 25^th May, 2022 in relation to the above matter.

During the last AGM held on 27^th July, 2021, the members approved:

• the re-appointment of Ameera Shah as an Independent Director of the Company for the second term of 5 (five) consecutive years effective from 2^nd August, 2021;

• the re-appointment of Nayantara Bali as an Independent Director of the Company for the second term of 5 (five) consecutive years effective from 7^th March, 2022;

In the opinion of the Board, the directors appointed / re-appointed during the year possess requisite expertise, integrity and experience (including proficiency) for appointment / reappointment as an Independent Directors of the Company.

As per the provisions of the Companies Act, 2013, Jinesh Shah, Director (Operations) (holding DIN 00406498), retires by rotation at the ensuing AGM and being eligible has offered himself for re-appointment.

The brief resume and other relevant information of the Director being re-appointed is given in the explanatory statement to the Notice convening the AGM, for your perusal.

(b) Meetings of Board of Directors

Regular meetings of the Board are held to review performance of the Company, to discuss and decide on various business strategies, policies and other issues. A calendar of Board / Committee meetings for the year is prepared and circulated to the Directors well in advance to enable them to plan their schedule for effective participation in the meetings. During the year, five meetings of the Board of Directors were convened and held on 7^th May, 2021, 18^th May, 2021,27^th July, 2021,26^th October, 2021 and 25^th January, 2022. The intervening gap between two consecutive meetings was not more than one hundred and twenty days. Detailed information on the meetings of the Board is included in the Corporate Governance Report which forms part of the Annual Report.

(c) Audit Committee

The composition of the Audit Committee is in compliance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of the Listing Regulations. The composition of the Committee as on 31^st March, 2022 is given below:

Name of Director	Category of Directorship
Shailesh Haribhakti, Chairman	Independent Director
Haigreve Khaitan	Independent Director
Ameera Shah	Independent Director
Nayantara Bali	Independent Director

The Committee was expanded by the Board by appointing Dr. Maurice Chagnaud as its Member with effect from 11^th May, 2022.

During the year, the Board has accepted all the recommendations made by the Audit Committee.

(d) Appointment of Directors

(i) Criteria for Appointment of Directors

The Board of Directors of the Company has identified following criteria for determining qualification, positive attributes and independence of Directors:

1) Proposed Director (“Person”) shall meet all statutory requirements and should:

• possess the highest ethics, integrity and values;

• not have direct / indirect conflict with present or potential business / operations of the Company;

• have the balance and maturity of judgment;

• be willing to devote sufficient time and energy;

• have demonstrated high level of leadership and vision, and the ability to articulate a clear direction for an organization;

• have relevant experience (in exceptional circumstances, specialization / expertise in unrelated areas may also be considered);

• have appropriate comprehension to understand or be able to acquire that understanding

- Relating to Corporate Functioning

- Involved in scale, complexity of business and specific market and environment factors affecting the functioning of the Company.

2) The appointment shall be in compliance with the Board Diversity Policy of the Company.

The key qualifications, skills and attributes which the Board is collectively expected to have for the effective discharge of their duties are explained in Corporate Governance Report of the Company.

(ii) Process for Identification / Appointment of Directors

• Board members may (formally or informally) suggest any potential person to the Chairman of the Company meeting the above criteria. If the Chairman deems fit, necessary recommendation shall be made by him to the Nomination and Remuneration Committee (NRC).

• Chairman of the Company can himself also refer any potential person meeting the above criteria to the NRC.

• NRC delibrates the matter and recommends such proposal to the Board.

Board considers such proposal on merit and decide suitably.

(e) Familiarisation Programme of Independent Directors

The Independent Directors have been updated with their roles, rights and responsibilities in the Company by specifying them in their appointment letter along with necessary documents, reports and internal policies to enable them to familiarise with the Company''s procedures and practices. The Company endeavours, through presentations at regular intervals, to familiarise the Independent Directors with the strategy, operations and functioning of the Company and also with changes in the regulatory environment having a significant impact on the operations of the Company and the pharmaceutical industry as a whole. Site visits to various plant locations and CSR sites get organized for the Directors to enable them to understand the operations of and CSR activities carried out by the Company. The Independent Directors also meet with senior management team of the Company in formal / informal gatherings.

The details of such familiarisation programmes for Independent Directors are posted on the website of the Company and can be accessed at http://www.torrentpharma.com/pdf/cms/Familiarization Programme 2021-22.pdf

(f) Board Evaluation

The Evaluation of Board, its Committees, Individual Directors (Independent and Non Independent Directors) and Chairperson was carried out as per the process and criteria laid down by the Board of Directors based on the recommendation of the NRC:

• Chairperson of meeting of Independent Directors briefed the Board that the Independent Directors have carried out the performance evaluation of the Board as a whole, its committees, the Non Independent Directors, Chairman and flow of information between the management and the Board.

• The evaluation of Chairperson was co-ordinated by the Chairperson of the Independent Directors meeting.

• Pursuant to above, the Board expressed the satisfaction on the functioning of the Board, the Committees and performance of Individual Directors.

• The Independent Directors met on 25^th January, 2022 with respect to the above process.

(g) Key Managerial Personnel

There was no change in the Key Managerial Personnel during the year under review

(h) Directors'' Responsibility Statement

In terms of Section134(3)(c) of the Companies Act, 2013, in relation to financial statements of the Company for the year ended 31^st March, 2022, the Board of Directors state that:

i. the applicable Accounting Standards have been followed in preparation of the financial statements and there are no material departures from the said standards;

ii. reasonable and prudent accounting policies have been used in preparation of the financial statements and that they have been consistently applied and that reasonable and prudent judgments and estimates have been made in respect of items not concluded by the year end, so as to give a true and fair view of the state of affairs of the Company as at 31^st March, 2022 and of the profit for the year ended on that date;

iii. proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the financial statements have been prepared on a going concern basis;

v. proper internal financial controls were in place and were adequate and operating effectively; proper systems to ensure compliance with the provisions of applicable laws were in place and were adequate and operating effectively.

REMUNERATION

(a) Remuneration Policy

The Remuneration policy covers the remuneration for the Directors (Chairman, Managing Director, Whole-time Directors, Independent Directors and other non-executive Directors) and other employees (under senior management cadre and management cadre). The Policy has been formulated with the following key objectives:

• To ensure that employee remuneration is in alignment with business strategy & objectives, organisation values and long-term interests of the organisation.

• To ensure objectivity, fairness and transparency in determination of employees’ remuneration.

• To ensure the level and composition of remuneration are reasonable and sufficient to attract, retain and motivate a high performance workforce and are in compliance with all applicable laws.

It covers various heads of remuneration including benefits for Directors and employees. It also covers the process followed with respect to annual performance reviews and variables considered for revision in the remuneration. The said Policy is available on the website of the Company www.torrentpharma.com.

(b) Criteria for Remuneration to Non-Executive Directors (NEDs):

1. The payment of commission to the Directors of the Company who are neither in the whole time employment nor Managing Director(s) (NEDs) is approved by the shareholders of the Company and is subject to the condition that total commission paid to the NEDs shall not exceed the percentage limits of the net profit of the Company as specified in the Companies Act, 2013 (presently 1% of the net profit), calculated in accordance with Section 197 read with Section 198 and any other applicable provisions of the Companies Act, 2013.

Further, as per the Regulation 17(6)(ca) of the Listing Regulations, approval of the shareholders by special resolution shall be required every year, in which the annual remuneration payable to a single NED exceeds fifty per cent of the total annual remuneration payable to all NEDs, giving details of the remuneration thereof.

2. The Board or its Committee specifically authorised for this purpose, determines the manner and extent upto which the commission is paid to the NEDs within the limit as approved by the shareholders. The commission is determined based on the participation of the Directors in the meetings of Board and / or Committees thereof, as well as on industry practice, performance of the Company and contribution by the Directors, etc.

3. Payment of Commission is made annually on determination of profit.

4. Sitting fees of '' 1 lakh is paid to Independent Directors for each meeting of the Board or any Committee thereof attended by them.

5. Independent Directors are reimbursed for all the expenses incurred for attending any meeting of the Board or Committees thereof and which may arise from performance of any special assignments given by the Board.

(c) Remuneration to Managerial Personnel

The details of remuneration paid to the Managerial Personnel forms part of the Corporate Governance Report.

(d) Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, disclosures pertaining to remuneration and other details are provided in the Annexure C to this Report.

AUDITORS

(a) Statutory Auditors

B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022), were appointed as the Statutory Auditors of the Company to hold office for five years from the conclusion of Forty Fourth AGM held with respect to the financial year 2016-17, up to the conclusion of the Forty Ninth AGM.

The Board of Directors of the Company at their meeting held on 25^th May, 2022, based on the recommendation of the Audit Committee have made recommendation for re-appointment of B S R & Co. LLP as the Statutory Auditors of the Company by the Members at the Forty Ninth AGM of the Company for a second term of five years i.e. from the conclusion of Forty Ninth AGM till the conclusion of Fifty Forth AGM of the Company to be held with respect to the financial year 2026-27. Accordingly, a resolution, proposing to the aforesaid re-appointment of M/s. B S R & Co. LLP, as the Statutory Auditors of the Company forms part of the Notice of the Forty Ninth AGM of

the Company. The Company has received their written consent and a certificate that they satisfy the criteria provided under Section 141 of the Companies Act, 2013 and that the appointment, if made, shall be in accordance with the applicable provisions of the Companies Act, 2013 and rules framed thereunder.

(b) Cost Auditors

In terms of the Section 148 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, the Company has prepared and maintained the cost accounts and records for the year 2021-22.

The Company has appointed M/s. Kirit Mehta & Co., Cost Accountants, Mumbai (Firm Registration No. 000353) as the Cost Auditors of the Company for audit of cost accounting records of its activities (Formulation & Bulk Drugs activities) for the financial year ended 31^st March, 2022. The Cost Audit Report to the Central Government for the financial year ended 31^st March, 2021 was filed on 10^th August, 2021, within the statutory timeline. Further, the Board of Directors has appointed M/s. Kirit Mehta & Co. as the Cost Auditor of the Company for the financial year 2022-23 and fixed their remuneration, subject to ratification by the shareholders in the ensuing AGM of the Company.

(c) Secretarial Auditor

The Board, pursuant to Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, had appointed M/s. M. C. Gupta & Co., Company Secretaries, as the Secretarial Auditors of the Company to conduct the Secretarial Audit as per the provisions of the Companies Act, 2013 for the year 2021-22.

M/s. M. C. Gupta & Co. have carried out the Secretarial Audit accordingly and their report in Form MR-3, is annexed with this Report as Annexure D. There were no qualification / observations in the report.

During the year 2021-22, the Company has complied with all the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

CORPORATE GOVERNANCE

As required by Regulation 34 read with Schedule V of the Listing Regulations, a separate Report on Corporate Governance forms part of the Annual Report. The Report on Corporate Governance also contains certain disclosures required under the Companies Act, 2013. A certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause E of Schedule V of the Listing Regulations forms part of this Report as Annexure E.

ANNUAL RETURN

In terms of Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company is available on the website of the Company at the link https://torrentpharma.com/index.php/investors/annual return

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.

A statement containing the necessary information on Conservation of energy, Technology absorption and Foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed to this Report as Annexure F.

APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors appreciate the trust reposed by the medical fraternity and patients in the Company and look forward to their continued patronage. The Directors are also grateful and pleased to place on record their appreciation for the excellent support, guidance and cooperation extended by the Government of India and various State Governments specifically the Governments of Gujarat, Himachal Pradesh, Sikkim, Madhya Pradesh and Andhra Pradesh, Central and State Government Bodies and Authorities, Financial Institutions and Banks. The Board also expresses its appreciation of the understanding and support extended by the shareholders and the commitment shown by the employees of the Company.

For and on behalf of the Board of Directors

Ahmedabad Samir Mehta

25^th May, 2022 Executive Chairman

DIN:00061903

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Mar 31, 2021

The Directors have the pleasure of presenting the Forty Eighth Annual Report of your Company together with the Audited Financial Statement for the year ended 31^st March, 2021.

Highlights

1. 2020-21: An unprecedented year:

• The COVID-19 pandemic and its resurgence has posed an unprecedented challenge to global economy and corporations. While the pharmaceutical sector is relatively insulated from the pandemic and lockdowns, it did have impact on the industry’s growth trajectory.

• Employees’ safety and business continuity has been at the core of our day to day focus during these times. Torrent has taken all appropriate proactive measures to ensure continuity of supplies to patients. It laid the highest emphasis on safety of its employees and their families through a number of employee centric and safety related initiatives.

2. India business:

• The Indian Pharmaceutical Market registered a rather muted growth of 2.1% owing to pandemic induced lockdowns and economic slowdown. Torrent outperformed the market with growth of 6.1% due to high chronicity of its portfolio.

• Torrent continued its focus on new introductions during the year, launching several important introductions in key markets:

- Dapagliflozin & Rivaroxaban in the Cardiovascular therapy;

- Brivaracetam in the Central Nervous System therapy;

- Obeticholic Acid within the Gastro Intestinal therapy;

- NDDS Tapentadol Nasal spray in Pain Analgesic therapy.

• At the year end, field force productivity is ''8.4 Lakhs per month, an improvement of 17% over previous year.

• Torrent is ranked 8^th in the IPM with 10 brands with sales of more than ''100 crores.

3. US business:

• US revenues were impacted on account of pending new approvals, due to OAI / WL classification of its facilities at Dahej, Indrad and Levittown, US.

• For all the three facilities, Torrent has already completed its CAPAs and submitted the closure report. Torrent continues to await guidance from the USFDA on the next steps and re-inspection of the facilities.

• Despite a lack of new approvals, Torrent continued to strengthen its pipeline and has filed 12 ANDAs (PY 12) during the year. 3 products were launched during the year.

• Torrent is ranked amongst top 3 players in 25 molecules.

4. Brazil business:

• Torrent continues to be ranked the no. 1 Indian Pharmaceutical company in Brazil.

• Brazil sales in constant currency grew by 11% during the year vs market growth of 8.9% backed by new launches & growth

in BGx and GGx segments.

• Torrent will maintain its high focus of chronic therapies in Brazil, similar to the Indian portfolio and will enter new therapies which would be important growth levers.

5. Germany business:

• Torrent is ranked the no. 5^th generic company and no. 1 Indian Pharmaceutical company in Germany.

• Germany sales were stable and were impacted by the pandemic induced lockdowns & market slow down and temporary supply disruption caused due to upgradation of quality management systems.

• Torrent has resolved the supply related issues and has regained its market share. Torrent continues to expand its market coverage through new launches, while expanding its non-tender and OTC business.

6. Rest of the World:

• ROW markets registered strong growth at 17%.

• Torrent will continue its focus on key ROW markets to develop them as growth engines of the future.

7. The state-of-the-art Oral Oncology manufacturing facility in Gujarat, which will cater to both regulated and non-regulated markets,

is on track and regulatory approvals are being initiated.

8. Financial performance:

• EBITDA margins improved by 292 bps over last year. Margins were complemented by improvement levers inherent to Torrent’s business model and certain cost savings & efficiencies resulting from pandemic linked lockdowns across different markets during the year.

• Leverage (Net Debt-to-EBITDA) reduced to 1.6x as of 31^st March, 2021 compared to 2.2x as of 31^st March, 2020.

Financial Results

The summary of Standalone (Company) and Consolidated (Company and its subsidiaries) operating results for the year and

appropriation of divisible profit is given below:

('' in crores except per share data)
	Standalone		Consolidated
	2020-21	2019-20	2020-21	2019-20
Sales & Operating Income	6,451	6,168	8,005	7,939
Profit Before Depreciation, Net Finance Cost, Exceptional Items & Tax	2,311	2,148	2,537	2,284
Less: Depreciation & Amortisation	610	607	658	654
Less: Net Finance Cost	335	424	353	443
Profit Before Exceptional Items & Tax	1,366	1,117	1,526	1,187
Less: Exceptional Items	-	-	-	-
Less: Tax Expense	228	178	274	162
Net Profit for the Year	1,138	939	1,252	1,025
Balance brought forward	2,093	1,884	1,893	1,616
Other Comprehensive income and other adjustments	7	(11)	0	(14)
Balance available for appropriation	3,238	2,812	3,145	2,627
Appropriated as under:
Transfer to General Reserve	-	-	-	-
Dividend	338	609	338	609
Tax on Distributed Profits for Dividend	-	110	-	125
Balance Carried Forward	2,900	2,093	2,807	1,893
Earnings Per Share ('' per share)	67.24	55.46	73.98	60.55

Consolidated Operating Results

The consolidated sales and operating income increased to ''8,005 crores from ''7,939 crores in the previous year showing a growth of 1%. The consolidated operating profit for the year was ''2,537 crores as against ''2,284 crores in the previous year registering growth of 11%. The consolidated net profit stood at ''1,252 crores compared to ''1,025 crores in the previous year registering growth of 22%.

Management Discussion and Analysis (MDA)

The details of operating performance of the Company for the year, the state of affairs and the key changes in the operating environment have been analysed in the Management Discussion and Analysis section which forms a part of the Annual Report.

Appropriations

i) Dividend

The Board had in its meeting held on 18^th May, 2021 revised the existing Dividend Distribution Policy to increase the distribution of dividend to 40% of its annual consolidated net profit after tax without taking into account non-cash charges relating to the business acquisitions. The revised policy is available on the website http://www.torrentpharma.com/pdf/investors/Dividend Policy.pdf

During the year under review, an interim dividend of ''20/- per equity share of face value of ''5/- each (@ 400%) amounting to ''338 crores was paid to the shareholders. Further, the Board considered it prudent to recommend the final dividend for 2020-21 as per the revised Dividend Distribution Policy and accordingly recommended a final dividend of ''15/- per equity share of face value of ''5/- each (@ 300%) amounting to ''254 crores for approval to shareholders at the 48^th Annual General Meeting (AGM) of the Company. Hence, the total dividend paid / payable with respect to the year under review was of ''35 per equity share (@700%) amounting to ''592 crores.

ii) Transfer to Reserves

The Board of Directors of the Company has decided not to transfer any amount to the Reserves for the year under review.

Human Resources

At Torrent, we value our employees and believe that Torrent’s success is an outcome of the collective contribution of all our employees. The Human Resource Development team continuously strives to create a conducive work environment that aims to influence the employees’ ability, motivation and designs opportunities for one to perform. This ensures the long-term viability of this valuable resource. The Company continues to invest in meritocracy, which allows the organisation to develop employees who become ready to accept new challenges in the future. A sound system has been designed that has resulted in improved implementation of the HR processes leading to better work environment and greater employee job satisfaction.

During the Pandemic period, health and safety of employees were the most important priority for the Organisation. Safety awareness programmes / counselling sessions played an important part to spread necessary knowledge and helped employees to cope-up with the challenge of working amidst the COVID pandemic. Focused efforts were undertaken to improve employee connect. Regular surveys were conducted to understand the difficulties faced by the employees and their families and the same were resolved in time.

Fresh expertise, both seasoned and new recruits to the workforce, were acquired and aligned to the Organisation''s ethos through consistent initiatives. The HR team continued to coordinate training and development activities that have assisted in the nurturing of talent, as well as sharpening of new management skills. On the Job training, meaningful interactions with senior professionals and development programmes, aid employees to build the right competencies in their work arena, be it technical, managerial or behavioural. Periodic job rotation programmes are undertaken enabling every employee to understand the nuances of the function, thereby developing to take a bigger role in the future. This helps to empower everyone in the Organisation leading to job enrichment and satisfaction. On the Industrial front, the Company continued to foster cordial Industrial Relations with its workforce during the year.

Various gender diversity initiatives, such as exi-shift hours have aided female workers in balancing work and other duties. Special events promoting a woman''s personal and career development are often planned, with an emphasis on fitness, well-being, and a stress-free life.

The consistency in performance and commitment of our employees helps both the leadership and the employees to regularly achieve Company’s objectives and improve overall Company’s performance.

The Company has a diverse workforce of 12,531 employees as on 31^st March, 2021 vis-a-vis 12,881 employees as on 31^st March, 2020.

Vigil Mechanism

The Company has built a reputation for doing business with honesty and integrity over the years, and has shown zero tolerance for any sort of unethical behaviour or wrongdoing. The Organisation has in effect a rigorous vigil system to report unethical conduct in order to promote professionalism, fairness, dignity, and ethical behaviour in its staff and stakeholders, the particulars of which are covered in the Corporate Governance Report.

The said system also safeguards the employees who use the vigil mechanism from being victimised and provides them direct access to the Audit Committee. In addition, the Company''s Code of Business Conduct defines essential corporate ethical practices that form the Company''s belief structure and business operations, as well as representing the Company''s valued principles.

Whistle-blower Policy and Code of Business Conduct have been hosted on Company’s website www.torrentpharma.com

Internal complaints committees have been established for all administrative units / offices to redress complaints received regarding sexual harassment as part of the Policy for the Prevention of Sexual Harassment of Women at Workplace. During the year, no complaints were received under this policy.

Corporate Social Responsibility

During the year 2020-21, the Company incurred CSR expenditure of ''22.29 crores, which is 2.56% of the average net profit of the past three financial years as against statutory requirement of 2%. Additionally, ''1.39 crores was utilised by the CSR implementing agency out of the surplus arising from funds invested temporarily pending the expenditure. This has resulted in total CSR expenditure of ''23.68 crores for the year. The CSR activities undertaken by the Company were under the thrust areas of Community Healthcare, Sanitation & Hygiene, Education & Knowledge Enhancement and Social Care & Concern. The Board in its meeting held on 18^th May, 2021 revised the existing CSR Policy of the Company to harmonise with the amendments carried out by the Ministry of Corporate Affairs in the Section 135 of the Companies Act, 2013 read with the Companies (Corporate Social Responsibility Policy) Rules, 2014. The brief details of the major CSR activities are described hereunder:

REACH: Driven by the belief of Chairman Emeritus, Sudhir Mehta ‘Children are the future of our nation and this future must be well preserved’, the flagship CSR program of the Group “REACH” - Reach EAch CHild was initiated in the year 2016 under the aegis of Tornascent Care Institute, a section 8 company. REACH has three major pillars: (a) SHAISHAV (b) JATAN and (c) MUSKAN. Salient achievements are:

• “Shaishav”, the first pillar of the programme, targets to establish baseline health status of children in age group of 6 months to 6 years, through medical camps in 351 villages surrounding the industrial establishments of the Group. Till date 71,387 children have been screened, and by providing appropriate treatment more than 80% Malnourished children, more than 90% Anaemic children and 73% children having chronic illnesses were provided appropriate treatment with very encouraging outcomes. During 2020-21, inspite of massive challenges posed by COVID-19 pandemic, maintained an optimum balance of serving the community and at the same time avoiding any exposure by adopting ‘Minimum Human Intervention Model’, weight assessment of 5,307 Malnourished children was carried out, Mauji Biscuits were provided to beneficiaries and encouraging results have been observed. Similarly on, Anaemic front, Iron supplement were provided to 6,765 children without reassessment.

• “Jatan”, the second pillar of the programme, encompasses provision of healthcare services to children upto 18 years. There are three primary paediatric health centres (PPHCs) with basic laboratory and day care facility at Dahej, Balasinor and Indrad, while fourth centre near SUGEN Power Plant was converted into 150 bed paediatric hospital ‘Balsangam’ (part of ‘Rangtarang’ hospital complex) in 2019-20. Due to outbreak of COVID-19 pandemic and consequent nationwide lockdown in H1 2020-21, telephonic conversations with 46,000 parents of the beneficiaries across all four PPHCs were arranged for spreading awareness of consumption of healthy diet to boost immune system and maintain proper hygiene to reduce risk of COVID-19.

With all precautions like sanitizing, social distancing and avoiding direct exposure to the patients, PPHC facilities at Balasinor and Indrad were started from September, 2020 and 7,225 beneficiaries were served in 2020-21. From September, 2020 onwards, started audio visual consultation of patients at PPHC facilities near SUGEN Power Plant and Dahej and 4,099 beneficiaries have been served in 2020-21.

• Under “Muskaan”, the third pillar of the programme, counselling and support was provided to rural adolescent girls around SUGEN, Dahej and Indrad centres covering menstrual hygiene and sanitation, by providing free health and hygiene kits. However, due to COVID-19 pandemic, this activity was not carried out till August, 2020 and with appropriate safety measures and also to avoid beneficiaries going back to using conventional practice, health and hygiene kits were provided to around 5,000 beneficiaries in 125 villages.

Shiksha Setu: The Teaching and Learning Programme, conducted through UNM Foundation (amalgamated with Tornascent Care Institute w.e.f. 26^th April, 2021 having appointed date as 1^st April, 2020) completed fifth year of Phase II. This programme covers 13 government primary schools located near SUGEN, Chhatral, Chhapi, Memadpur and Ahmedabad having 4,500 students and 150 teachers of 1^st to 8^th standard. During 2020-21, practice assignments prepared for students containing questions and activities based on skills of previous standards and current curriculum. These assignments were based on learning outcomes prescribed in National Curriculum Framework on the expected skills / Knowledge for each standard, and the same was well received by 4500 students from 3^rd to 8^th standard and 120 teachers.

Various virtual workshops on important concepts of Maths, Science and Computer as per revised curriculum were organised for teachers of 6^th to 8^th standard, in which 78 teachers from 36 schools of Shiksha Setu / Chappi/ Memadpur / other schools (around project schools) participated and benefitted. Continuous interaction was carried out with teachers, students and parents to provide support, counsel and address specific concerns regarding education.

Development and Maintenance of Public Parks: The Company along with one of India’s best known landscape design firm developed an approach for development of urban public parks. Six small sized parks measuring approx. 33,000 sq. mt. have

been fully developed and opened for public use since 2018-19 and one small sized park was fully developed and opened for public use in 2020-21. Another two large parks measuring approx. 66,975 sq. mt. are under development and will be opened for public in 2021-22, if situation caused due to COVID-19 allows. Maintenance of above public parks is also funded from CSR funds of the Company.

Community Healthcare : Sumangal - a daycare Clinic for Adults (the erstwhile ‘Swadhar’), a community healthcare facility was integrated into ‘Rangtarang’ hospital complex, which caters to medical requirements of nearby 500 villages by providing specialized consultations in the areas of dental care, ophthalmology, dermatology, gynaecology, physiotherapy and orthopedic. Due to outbreak of COVID-19 pandemic and consequent nationwide lockdown, a method of Minimum Human Intervention (Audio calls / Tele- Consultation) evolved wherein there is no / minimum contact with the community and hence, all the safety precautions followed to the maximum extend possible and hence, the community is still being served and there is a constant rapport with the community. This model maintains an optimum balance between serving the beneficiaries and not putting any employee at the risk of exposure to COVID-19.

The Report on CSR activities is annexed herewith as Annexure B.

Environment, Health & Safety

The Company firmly believes and is committed in inculcating a proactive and well matured HSE culture across the group. Sustainable future is essential in ensuring the health and well-being of our colleagues, the people who use our products and the communities we touch. With the sense of this purpose, we are in pursuit of a Safe, Secure & Healthy workplace for our employees, surrounding communities as well as all interested parties associated with our business operations directly or indirectly.

The Company’s EHS function is efficiently driven by established EHS Policy which is applied uniformly to all its manufacturing facilities and R&D centre. Policy is being regularly evaluated and updated with consideration of International Organisation for Standardisation (ISO) and other global requirements to ensure that the Company’s EHS systems remains globally oriented and best in class.

Our sincere and focused endeavours in EHS domain has substantially brought down incidents and thus leading to safe and healthy working environment for our work force at large.

We always remain deeply concerned about the cause of the environment protection and in this direction, Company has undertaken initiatives, where we have achieved measurable reduction in waste generation utilisation of waste as an alternative fuel in cement industries. Conservation of energy (saving of 40 MT / Day of steam consumption by installation of Heat pumps in place of conventional hot water system at Indrad manufacturing facility), usage of renewable energy (cumulatively generation of 2.5 million KWH energy by installation of Solar Power panels of 1688 KW capacity at Indrad and Oncology (upcoming) manufacturing facilities and R&D Centre). These activities have reduced our environmental impact / carbon footprint significantly.

Our workplace environment is designed to make our employees feel valued, respected, empowered and inspired to achieve our EHS goals. Our continuous ongoing efforts in environment sustainability has reduced our water consumption, hazardous waste and energy consumption.

We are striving for continuously bringing down the waste quantity to incineration facilities. This year, we have achieved disposal of 65-70% high calorific value hazardous waste for co-processing / pre-processing in cement industries (as an alternate fuel) instead of incineration. We have targeted to dispose-off 90% of total such waste generation for co-processing in upcoming years.

As a part of waste to energy concept, we are using canteen food waste and biological waste from ETP for generation of bio gas which has significantly reduced annual waste disposal under landfill category.

Majority of the Company’s manufacturing facilities are accredited with ISO 14001:2015 (Environment Management Systems) and ISO 45001:2018 (Occupational Health & Safety Management system).

Rain water harvesting systems are installed at manufacturing facilities with 57 state of art injection wells with large sunken catchment area of approx. 25,000 sq mt and 10 nos. of inverted umbrella system (Ulta Chhata). Approximate 40% of dense and lust green belt area has been developed across all locations.

Under the Plastic Waste Management Rules, 2016, the Company is registered as a Brand Owner with Central Pollution Control Board (CPCB). The Company has initiated Extended Producer Responsibility (EPR) programme under these Rules. 1000 MT / Annum plastic waste was collected from Pan India during the year under review and recycled and co-processed in cement industries.

During the year, Company at all its facilities has implemented a COVID-19 guidelines and strictly adhered to it to de-risk employees'' health and uninterrupted and consistent productivity. Department wise core steering team were formed who had individually supervised the COVID-19 protocols deliberately. The Company as a responsible corporate had comprehensively worked in strategising and implementing various government and IPA (Indian Pharmaceuticals Alliance) guidelines to curb the spread of pandemic disease at large.

All the manufacturing facilities and R&D Centre are being regularly audited internally and externally by In-house cross functional teams, global customers, regulators and external third party auditors which helps us in achieving benchmark / highest levels of compliance.

This also helps us to review our system through third eye and thus helps us to understand risk / opportunities / area of improvisation of our process / manufacturing facilities at large.

The Company’s Contractors are well covered under various HSE Drives. It is essential for all contractors to undergo HSE training and follow stipulated guidelines. All contractors are encouraged to maintain safety standards by abiding Company’s guidelines and procedures.

Moreover, the Company has in place the “Conviction of Safety Policy” which provides for substantial compensation to the personnel (Employees as well as Contractors) and their families, who are adversely affected by any accident.

The Company is constantly striving up to standardise Health, Safety and Environment Management System (HSEMS) to reach the goal of zero injuries. Various objectives are being taken and achieved for continual improvement in areas of productivity, quality & HSE.

Finance

(a) Share Capital

As on 31^st March, 2021 the Authorised Capital of the Company is ''150 crores, divided into 25 crores Equity Shares of ''5/- each and 25 Lakhs Preference Shares of ''100/- each.

(b) Deposits and Loans, Guarantees and Investments

The Company has neither accepted nor renewed any deposits. None of the deposits earlier accepted by the Company remained outstanding, unpaid or unclaimed as on 31^st March, 2021.

Details of Loans, Guarantees and Investments by Company under the provisions of Section 186 of the Companies Act, 2013, during the year, are provided in Note 10 and 11 to the Standalone Financial Statements.

(c) Debentures and other debt instruments

The Company has raised an amount of ''395 crores by way of issue of Non-Convertible Debentures on private placement basis during the year. The outstanding amount of Non-Convertible Debentures issued by the Company is ''1,559.28 crores as on 31^st March, 2021.

During the year the Company issued Commercial Papers (CPs) aggregating to ''100 crores on private placement basis.

(d) Contracts or Arrangements with Related Parties

All Related Party transactions are entered in compliance to the provisions of law, the Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions and were entered with the approval of Audit Committee, Board and Shareholders if and as applicable. The particulars of material contracts and arrangements entered into with the related parties in accordance with the Related Party Policy of the Company and pursuant to the provisions of Section 188(1) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014 are annexed herewith as Annexure A.

(e) Internal Financial Control System

The Company has a formal framework of Internal Financial Control (IFC) in alignment with the requirement of Companies Act, 2013 and has also laid down specific responsibilities on the Board, Audit Committee, Independent Directors and Statutory Auditors with regard to IFC.

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

• The orderly and efficient conduct of its business,

• Safeguarding of its assets,

• The prevention and detection of frauds and errors,

• The accuracy and completeness of the accounting records and

• The timely preparation of reliable financial information.

The Board reviews the effectiveness of controls documented as part of IFC framework, and take necessary corrective 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 year 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 year 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 Annexure B and Annexure A to the Independent Auditors’ Report under Standalone Financial Statements and Consolidated Financial Statements respectively.

(f) Material changes affecting the Company

No material changes and commitments have occurred after the close of the year till the date of this Report which may affect the financial position of the Company.

Insurance

The Company’s manufacturing facilities, properties, equipment and stocks are adequately insured against all major risks including loss on account of business interruption caused due to property damage. The Company has appropriate liability insurance covers particularly for product liability, clinical trials and cyber liability. The Company has also taken Directors’ and Officers’ Liability Policy to provide coverage against the liabilities arising on them.

Business Risk Management

Risk Management is an integral part of our strategy for stakeholders’ value enhancement and is embedded in to governance & decision-making process across the organisation. The Company has implemented an integrated risk management framework to ensure effective responses to strategic, operational, financial and compliance risks faced by the organisation.

As a part this framework, all the risks are discussed and deliberated with the concerned functional heads and business process owners to continually identify, assess, mitigate and monitor risks across the entity, its business functions and units. The Risk Management Committee meets periodically to assess and deliberate on the key risks and adequacy of mitigation plan. It has formulated a comprehensive ‘Risk Register’, which is continuously updated to capture new risks / threats augmenting from changes in internal / external environment. Inputs from risk assessment are also embedded in to annual internal audit programme. Key risks and mitigation measures are summarised in Management Discussion and Analysis section of the Annual Report.

Subsidiaries & Joint Ventures

As of 31^st March, 2021, the Company has 14 subsidiaries, out of which 2 are step down subsidiaries. Norispharm GmbH, a wholly owned subsidiary of Torrent Pharma GmbH was liquidated w.e.f. 16^th March, 2021.

The highlights of performance of major subsidiaries of the Company have been discussed and disclosed under the Management Discussion and Analysis section of the Annual Report. The contribution of each of the subsidiaries in terms of the revenue and profit is provided in Form AOC-1, which forms part of the Annual Report.

The details of two associate companies of the Company is also shown in the AOC-1. These associate companies are Section 8 companies and primarily floated with another company of the Torrent group to carry out the CSR activities. UNM Foundation, an associate Company of the Company has been amalgamated with Tornascent Care Institute another associate Company of the Company by the order of NCLT filed with Ministry of Corporate Affairs on 26^th April 2021 with appointed date as 01^st April 2020.

The annual accounts of the subsidiary companies will be made available to any Member of the Company seeking such information at any point of time and are also available for inspection by any Member of the Company at the Registered Office of the Company on any working day during business hours up to the date of the AGM. The annual accounts of the subsidiary companies are also available on the website of the Company at www.torrentpharma.com.

Directors and Key Managerial Personnel

(a) Board of Directors

The Board of Directors of the Company is led by the Executive Chairman and comprises six other Directors as on 31^st March, 2021, including one Whole-time Director, four Independent Directors which includes two Women Director and one Non-Executive Director (other than Independent Directors).

All the Independent Directors of the Company have furnished declarations that they meet the criteria of independence as prescribed under the Companies Act, 2013 and under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”).

During the year under review, Dr. Chaitanya Dutt has completed his tenure as Director (Research & Development) of the Company and also stepped down as the Director of the Company with effect from 31^st December, 2020.

The Board places on record its deep appreciation for the guidance and support provided by him for the overall growth of the Company during his tenure as a member of the Board and its Committees.

As per the provisions of the Companies Act, 2013, Samir Mehta, Executive Chairman (holding DIN: 00061903), retires by rotation at the ensuing AGM and being eligible has offered himself for re-appointment.

The Board has recommended:

• the re-appointment of Ameera Shah as an Independent Director of the Company for the second term of 5 (five) consecutive years effective from 2^nd August, 2021;

• the re-appointment of Nayantara Bali as an Independent Director of the Company for the second term of 5 (five) consecutive years effective from 7^th March, 2022;

for the approval of shareholders in the ensuing AGM. The brief resume and other relevant documents of the Directors being re-appointed are given in the Explanatory Statement to the Notice convening the AGM, for your perusal.

(b) Meetings of Board of Directors

Regular meetings of the Board are held to review performance of the Company, to discuss and decide on various business strategies, policies and other issues. A calendar of Board / Committee meetings for the year is prepared and circulated to the Directors well in advance to enable them to plan their schedule for effective participation in the meetings. During the year, five meetings of the Board of Directors were convened and held on 26^th May, 2020, 30^th July, 2020, 26^th October, 2020, 8^th February, 2021 and 2^nd March, 2021. The intervening gap between two consecutive meetings was not more than one hundred and twenty days. Detailed information on the meetings of the Board is included in the Corporate Governance Report which forms part of the Annual Report.

(c) Audit Committee

The composition of the Audit Committee is in compliance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of the Listing Regulations. The composition of the Committee as on 31^st March, 2021 is given below:

Name of Director	Category of Directorship
Shailesh Haribhakti, Chairman	Independent Director
Haigreve Khaitan	Independent Director
Ameera Shah	Independent Director
Nayantara Bali	Independent Director

During the year, the Board has accepted all the recommendations made by the Audit Committee.

(d) Appointment of Directors

(i) Criteria for Appointment of Directors

The Board of Directors of the Company has identified following criteria for determining qualification, positive attributes and independence of Directors:

1) Proposed Director (“Person”) shall meet all statutory requirements and should:

• possess the highest ethics, integrity and values;

• not have direct / indirect conflict with present or potential business / operations of the Company;

• have the balance and maturity of judgement;

• be willing to devote sufficient time and energy;

• have demonstrated high level of leadership and vision, and the ability to articulate a clear direction for an organisation;

• have relevant experience (in exceptional circumstances, specialisation / expertise in unrelated areas may also be considered);

• have appropriate comprehension to understand or be able to acquire that understanding

- Relating to Corporate Functioning

- Involved in scale, complexity of business and specific market and environment factors affecting the functioning of the company.

2) The appointment shall be in compliance with the Board Diversity Policy of the Company.

The key qualifications, skills and attributes which the Board is collectively expected to have for the effective discharge of their duties are explained in Corporate Governance Report of the Company.

(ii) Process for Identification / Appointment of Directors

• Board members may (formally or informally) suggest any potential person to the Chairman of the Company meeting the above criteria. If the Chairman deems fit, necessary recommendation shall be made by him to the Nomination and Remuneration Committee (NRC).

• Chairman of the Company can himself also refer any potential person meeting the above criteria to the NRC.

• NRC delibrates the matter and recommends such proposal to the Board.

Board considers such proposal on merit and decide suitably.

(e) Familiarisation Programme of Independent Directors

The Independent Directors have been updated with their roles, rights and responsibilities in the Company by specifying them in their appointment letter along with necessary documents, reports and internal policies to enable them to familiarise with the Company’s procedures and practices. The Company endeavours, through presentations at regular intervals, to familiarise the Independent Directors with the strategy, operations and functioning of the Company and also with changes in the regulatory environment having a significant impact on the operations of the Company and the pharmaceutical industry as a whole. Site visits to various plant locations and CSR sites get organised for the Directors to enable them to understand the operations of and CSR activities carried out by the Company. The Independent Directors also meet with senior management team of the Company in formal / informal gatherings.

The details of such familiarisation programmes for Independent Directors are posted on the website of the Company and can be accessed at http://www.torrentpharma.com/pdf/cms/Familiarisation Programme 2020-21.pdf

(f) Board Evaluation

The Evaluation of Board, its Committees, Individual Directors (Independent and Non Independent Directors) and Chairperson was carried out as per the process and criteria laid down by the Board of Directors based on the recommendation of the NRC:

• The obtaining and consolidation of feedback from all directors for the evaluation of the Board and its Committees and Individual Directors (i.e. Independent and Non Independent Directors) were co-ordinated by the Chairman of the Board. The feedback on evaluation of the Board and its Committees was discussed in their respective meetings and the feedback on the evaluation of Individual Directors was discussed individually with them.

• The evaluation of Chairperson was co-ordinated by the Chairperson of the Independent Directors meeting.

• The Independent Directors met on 8^th February, 2021 with respect to the above process.

(g) Key Managerial Personnel

There was no change in the Key Managerial Personnel during the year under review other than the directors as already captured in this report.

(h) Directors’ Responsibility Statement

In terms of Section134(3)(c) of the Companies Act, 2013, in relation to financial statements of the Company for the year ended 31^st March, 2021, the Board of Directors state that:

i. the applicable Accounting Standards have been followed in preparation of the financial statements and there are no material departures from the said standards;

ii. reasonable and prudent accounting policies have been used in preparation of the financial statements and that they have been consistently applied and that reasonable and prudent judgements and estimates have been made in respect of items not concluded by the year end, so as to give a true and fair view of the state of affairs of the Company as at 31^st March, 2021 and of the profit for the year ended on that date;

iii. proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the financial statements have been prepared on a going concern basis;

v. proper internal financial controls were in place and were adequate and operating effectively; proper systems to ensure compliance with the provisions of applicable laws were in place and were adequate and operating effectively.

Remuneration

(a) Remuneration Policy

The Remuneration policy covers the remuneration for the Directors (Chairman, Managing Director, Whole-time Directors, Independent Directors and other non-executive Directors) and other employees (under senior management cadre and management cadre). The Policy has been formulated with the following key objectives:

• To ensure that employee remuneration is in alignment with business strategy & objectives, organisation values and long-term interests of the organisation.

• To ensure objectivity, fairness and transparency in determination of employees'' remuneration.

• To ensure the level and composition of remuneration are reasonable and sufficient to attract, retain and motivate a high performance workforce and are in compliance with all applicable laws.

It covers various heads of remuneration including benefits for Directors and employees. It also covers the process followed with respect to annual performance reviews and variables considered for revision in the remuneration. The said Policy is available on the website of the Company www.torrentpharma.com.

(b) Criteria for Remuneration to Non-Executive Directors (NEDs):

1. The payment of commission to the Directors of the Company who are neither in the whole time employment nor Managing Director(s) (NEDs) is approved by the shareholders of the Company and is subject to the condition that total commission paid to the NEDs shall not exceed the percentage limits of the net profit of the Company as specified in the Companies Act, 2013 (presently 1% of the net profit), calculated in accordance with Section 197 read with Section 198 and any other applicable provisions of the Companies Act, 2013.

Further, as per the Regulation 17(6)(ca) of the Listing Regulations, approval of the shareholders by special resolution shall be required every year, in which the annual remuneration payable to a single NED exceeds fifty per cent of the total annual remuneration payable to all NEDs, giving details of the remuneration thereof.

2. The Board or its Committee specifically authorised for this purpose, determines the manner and extent upto which the commission is paid to the NEDs within the limit as approved by the shareholders. The commission is determined based on the participation of the Directors in the meetings of Board and / or Committees thereof, as well as on industry practice, performance of the Company and contribution by the Directors, etc.

3. Payment of Commission is made annually on determination of profit.

4. Sitting fees of ''1 Lakh is paid to Independent Directors for each meeting of the Board or any Committee thereof attended by them.

5. Independent Directors are reimbursed for all the expenses incurred for attending any meeting of the Board or Committees thereof and which may arise from performance of any special assignments given by the Board.

(c) Remuneration to Managerial Personnel

The details of remuneration paid to the Managerial Personnel forms part of the Corporate Governance Report.

(d) Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, disclosures pertaining to remuneration and other details are provided in the Annexure C to this Report.

Auditors

(a) Statutory Auditors

B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022), were appointed as the Statutory Auditors of the Company to hold office for five years from the conclusion of Forty Fourth AGM held with respect to the financial year 2016-17, up to the conclusion of the Forty Ninth AGM to be held with respect to the financial year 2021-22.

(b) Cost Auditors

In terms of the Section 148 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, the Company has prepared and maintained the cost accounts and records for the year 2020-21.

The Company has appointed M/s. Kirit Mehta & Co., Cost Accountants, Mumbai (Firm Registration No. 000353) as the Cost Auditors of the Company for audit of cost accounting records of its activities (Formulation & Bulk Drugs activities) for the financial year ended 31^st March, 2021. The Cost Audit Report to the Central Government for the financial year ended 31^st March, 2020 was filed on 25^th August, 2020, within the statutory timeline. Further, the Board of Directors has appointed M/s. Kirit Mehta & Co. as the Cost Auditor of the Company for the financial year 2021-22 and fixed their remuneration, subject to ratification by the shareholders in the ensuing AGM of the Company.

(c) Secretarial Auditor

The Board, pursuant to Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, had appointed M/s. M. C. Gupta & Co., Company Secretaries, as the Secretarial Auditors of the Company to conduct the Secretarial Audit as per the provisions of the Companies Act, 2013 for the year 2020-21.

M/s. M. C. Gupta & Co. have carried out the Secretarial Audit accordingly and their report in Form MR-3, is annexed with this Report as Annexure-D. There were no qualification / observations in the report.

During the year 2020-21, the Company has complied with all the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

Corporate Governance

As required by Regulation 34 read with Schedule V of the Listing Regulations, a separate Report on Corporate Governance forms part of the Annual Report. The Report on Corporate Governance also contains certain disclosures required under the Companies Act, 2013. A certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause E of Schedule V of the Listing Regulations forms part of this Report as Annexure-E.

Annual Return

In terms of Section 92(3) of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014, the Annual Return of the Company is available on the website of the Company at the link https://torrentpharma.com/pdf/investors/ Annual Return 2020-21.pdf

Conservation of Energy, Technology Absorption, etc

A statement containing the necessary information on Conservation of energy, Technology absorption and Foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed to this Report as Annexure-F.

Appreciation and Acknowledgements

Your Directors appreciate the trust reposed by the medical fraternity and patients in the Company and look forward to their continued patronage. The Directors are also grateful and pleased to place on record their appreciation for the excellent support, guidance and cooperation extended by the Government of India and various State Governments specifically the Governments of Gujarat, Himachal Pradesh, Sikkim, Madhya Pradesh and Andhra Pradesh, Central and State Government Bodies and Authorities, Financial Institutions and Banks. The Board also expresses its appreciation of the understanding and support extended by the shareholders and the commitment shown by the employees of the Company.

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Mar 31, 2019

The Shareholders

The Directors have the pleasure of presenting the Forty Sixth Annual Report of your Company together with the Audited Financial Statement for the year ended 31^st March, 2019.

HIGHLIGHTS

1. India business:

- Integration objectives with respect to the Unichem India business acquisition were successfully achieved and the business has become cash accretive in the first year of acquisition.

- Torrent is ranked 7^th (without bonus units) in the Indian Pharmaceuticals Market and registered growth of 15% compared to 10% growth of the market (as per AIOCD).

- Torrent has 19 brands (PY18) in Top 500 brands of IPM and has 8 brands (PY 7) with sales of more than Rs. 100 crores.

- Shelcal XT got recognized as one of the best new introduction in chronic segment by AIOCD.

2. Brazil business:

- Torrent continues to be ranked no. 11ndian Pharmaceutical company in Brazil.

- Brazil business registered growth of 10% compared to 8% growth of the market.

- Launched 2 products during the year.

3. US business:

- Torrent’s volume market share in covered market improved from 12.4% as of 31^st March, 2018 to 16.4% as of 31^st March, 2019, as per IMS data.

- Strengthened product pipeline by filing 20 ANDA (PY 13) and launching 9 products (PY 7).

- Recalled 107 batches of Valsartan and 132 batches of Losartan due to detection of certain impurities in outsourced API.

4. Germany:

- Torrent continues to be 4^th largest generic company in Germany, with strong growth backed by new launches and gain in tender as well as non-tender business.

5. Rest of the World (ROW) business registered growth of 22%.

6. Torrent has invested in the state of art Oral Oncology manufacturing facility at Bileshwarpura, Indrad which will cater to the regulated and non-regulated markets in the near term.

7 Dahej (India) & Levittown (US) manufacturing facilities were audited by USFDA during the year. The Company has responded comprehensively within the stipulated time on the observations received.

8. Leverage of the Company (Net Debt-to-EBITDA) reduced to 2.37 as of 31^st March, 2019 compared to 3.11 as of 31^st March, 2018.

FINANCIAL RESULTS

The summary of Standalone (Company) and Consolidated (Company and its subsidiaries) operating results for the year and appropriation of divisible profit is given below:

(Rs. in crores except per share data)

	Standalone		Consolidated
	2018-19	2017-18	2018-19	2017-18
Sales & Operating Income	5,762	4,244	7,673	5,950
Profit Before Depreciation, Net Finance Cost, Exceptional Items & Tax	1,977	1,227	2,025	1,641
Less Depreciation and Amortization	579	384	618	409
Less Net Finance Cost	463	281	488	301
Profit Before Exceptional Items & Tax	935	562	919	931
Less Exceptional Items	-	-	357	-
Less Tax Expense	190	80	126	253
Less Minority Interest	-	-	-	-
Net Profit for the Year	745	482	436	678
Balance brought forward	1,453	1,613	1,554	1,514
Other Comprehensive income and other adjustments	(5)	(2)	(6)	2
Balance available for appropriation	2,193	2,093	1,984	2,194
Appropriated as under:
Transfer to Debenture Redemption Reserve	-	375	-	375
Transfer to General Reserve	-	-	-	-
Dividend	305	220	305	220
Tax on Distributed Profits for Dividend	4	45	63	45
Balance Carried Forward	1,884	1,453	1,616	1,554
Earnings Per Share ('' per share)	44.05	28.48	25.78	40.07

Consolidated Operating Results

The consolidated sales and operating income increased to Rs. 7673 crores from Rs. 5,950 crores in the previous year showing a growth of 29%. The consolidated operating profit for the year was Rs. 2,025 crores as against Rs. 1,641 crores in the previous year registering growth of 23%. The consolidated net profit decreased to Rs. 436 crores from Rs. 678 crores in the previous year mainly due to exceptional items of Rs. 357 crores (Impairment provision of Rs. 217 crores on acquired business in US and product recall charges of Rs.140 crores in US) and due to full year impact of intangibles amortization pertaining to acquired business in India of Rs. 170 crores.

Management Discussion and Analysis (MDA)

The details of operating performance of the Company for the year, the state of affairs and the key changes in the operating environment have been analysed in the Management Discussion and Analysis section which forms a part of the Annual Report.

APPROPRIATIONS

i) Dividend

The Company endeavours to distribute 30% of its annual consolidated net profit after tax without taking into account non-cash charges relating to the business acquisitions as dividend, in accordance with the dividend policy, copy of which is attached as Annexure-A. The policy is also available on the website http://www.torrentpharma.com/pdf/investors/Dividend_Policy.pdf.

Pursuant to this, Interim dividend of Rs. 13/- per equity share of face value of Rs. 5/- each (@ 260%) amounting to Rs. 220 crores was paid to the shareholders during the year under review. Further, the Board has recommended a final dividend of Rs. 4/- per equity share of face value of Rs. 5/- each (@ 80%) amounting to Rs. 68 crores for approval to shareholders at the 46^th Annual General Meeting (AGM) of the Company. The aggregate distribution amount without tax on distributed profits works out to be Rs. 288 crores (previous year Rs. 237 crores).

ii) Transfer to Reserves

The Board of Directors of the Company has decided not to transfer any amount to the Reserves for the year under review.

HUMAN RESOURCES

At Torrent, we firmly believe in a people first approach. The organisation takes pride in its human capital, which comprises of people from diverse backgrounds and cultures. Guided by the core values which are deeply imbibed in each of the employees; the organisation’s achievements are an outcome of efforts, dedication and conviction demonstrated by its people. In order to sustain this vital resource, the Company continues to build on meritocracy that will aid the organisation to be ready to embrace the new competencies for a sustainable future. The HR department plays a major role in developing an inspiring work culture weaved by the values and processes that enables everyone to recognize their true potential and focus on individual growth along with the successful growth of Company.

An emphasis on creating a conducive work environment and development of a robust and consistent approach towards talent management & leadership development is one of the significant roles that the HR plays. It evaluates the requirement of staff based on the demands of the business and also projects future requirements, thus playing a crucial role in corporate decision-making. It also strategically aligns HR Practices with the business objectives and priorities.

During the year, the Company took initiatives to increase organizational capability and productivity so as to be value driven and future ready. The HR department continued to arrange training and development programs which has helped to nurture talent, sharpen and understand new management skills.

In an endeavor to encourage this feeling of oneness amongst the employees, the Company celebrates various events where employees and their families participate thereby imbibing the reflection of a big Torrent family.

Various women friendly facilities like availability of creche, flexi-work timing and extended maternity leave has supported the women employees in carrying on with their career along with other responsibilities. Special activities focusing on health, well being and stress free life is also organized thereby fostering a woman’s personal and professional growth.

The year also saw reinforcement of the already existing “Whistle Blower Policy” in order to emphasize and encourage reporting of any wrongdoing or unethical practice.

The HR department has successfully integrated the Human Resources acquired from Unichem. This includes the manpower integration and the cultural integration of both the entities. This has led to a cohesive team which strongly believes in our values and various practices adopted by Torrent.

On the Industrial front, the Company continued to foster cordial Industrial Relations with its workforce during the year.

The Company has a diverse workforce of 13,598 employees as on 31^st March, 2019 vis-a-vis 14,700 employees as on 31^st March, 2018.

VIGIL MECHANISM

The Company believes in the conduct of its affairs in a fair and transparent manner to foster professionalism, honesty, integrity and ethical behavior in its employees & stakeholders. The Company has adopted a Whistle Blower Policy as a part of vigil mechanism.

Also the Code of Business Conduct (Code) lays down important corporate ethical practices that shape the Company’s value system and business functions and represents cherished values of the Company.

Details of the above are explained in the Report of Corporate Governance.

As a part of Policy for Prevention of Sexual Harassment of Women at Workplace, internal complaints committees had been set up for all the administrative units / offices to redress complaints received regarding sexual harassment. Under this Policy, one complaint was received during the year, which was addressed appropriately.

CORPORATE SOCIAL RESPONSIBILITY

The CSR activities by the Company were under the thrust areas of Community Healthcare, Sanitation & Hygiene, Education & Knowledge Enhancement and Social Care & Concern. During the financial year ended 31^st March, 2019, the Company incurred CSR expenditure of Rs. 26.45 crores which was higher than the obligation to spend 2% of average net profit for the past three financial years amounting to Rs. 26.35 crores. The brief outline of the Corporate Social Responsibility (CSR) Policy of your Company and the details of key CSR programs and activities undertaken at Group level are provided in the Annual Report on CSR Activities is annexed as Annexure-C to this Report.

In addition to above, the Company also made donations amounting to Rs. 6.10 crores to various organisations for activities related to healthcare, education, community and social services, socio-economic development including de-addiction, self-help groups, youth, upliftment of women, integrated development of tribes etc.

ENVIRONMENT, HEALTH & SAFETY

The Company is committed in cultivating a proactive safety culture across the group. We are in pursuit of a safe & secure workplace for our employees as well as all the interested parties with our business operations.

Our sincere and focused endeavors in EHS domain has brought down all possible causes of incidents leading to safe working environment.

As a part of green initiative, we achieved major reduction in waste generation, utilization of waste as an alternative fuel and conservation of energy to reduce environmental impact arising from the plant activities. We have disposed off more than 55% high calorific value hazardous waste for Co-processing / Pre-processing in cement industry (as an alternate fuel) instead of incineration. We have targeted to dispose off 90% of total such waste generation for co-processing in upcoming years. We have initiated the efforts to use canteen food waste and biological waste for generation of bio gas which will help us in reduction of 20% waste disposal under landfill category.

Under the Plastic Waste Management Rules, 2016, the Company has been registered as a brand owner with Central Pollution Control Board (CPCB). The Company, as a part of the Extended Producer’s Responsibility, under the initiative named ‘EPR CONNECT- Towards a Sustainable Future’ stated in the said rules, has engaged a service provider who shall be responsible for Collection and Sustainable End Disposal of Multi Layered Plastic (MLP) and Plastic waste. The service provider will take back 30% Plastic waste being generated for the first year (started from March, 2019) and reach to 100% by third year as per CPCB guidelines.

During the year, Company at all its facilities has implemented a drive on Behavior Based Safety (BBS) to build the proactive safety culture and encourage employees to immediately correct unsafe acts / conditions.

All of the Company’s facilities have obtained certifications such as ISO-14001:2015 & OHSAS-18001:2007. Regular audits of our operational units by our cross functional teams, global customers, regulators and external third party auditors help us in achieving benchmark / highest levels of compliance. Further to this, implementation of New Standard ISO-45001:2018 (Occupational Health and Safety Management System) in place of OHSAS - 18001 has already been initiated.

The Company’s Contractors are well conversant with our various EHS drives and execute the whole project activities following the Torrent’s Project Safety Manual. Abiding by the provisions of this manual is one of the key terms of the contract.

Throughout the year, all of the Company’s facilities remained compliant with applicable regulatory requirements pertaining to Environment, Health & Safety.

Moreover, the Company has in place the “Conviction of Safety Policy” which provides for substantial compensation to the personnel (Employees as well as Contractors) and their families, who are adversely affected by any accident.

FINANCE

(a) Share Capital

As on 31^st March, 2019 the Authorised Capital of the Company is Rs. 150 crores, divided into 25 crores Equity Shares of Rs. 5/each and 25 lacs Preference Shares of Rs. 100/- each.

(b) Deposits and Loans, Guarantees and Investments

The Company has neither accepted nor renewed any deposits. None of the deposits earlier accepted by the Company remained outstanding, unpaid or unclaimed as on 31^st March, 2019.

Details of Loans, Guarantees and Investments by Company under the provisions of Section 186 of the Companies Act, 2013, during the year, are provided in Note 9 and 10 to the Financial Statements.

(c) Debentures and other debt instruments

The outstanding amount of Non-Convertible Debentures issued by the Company is Rs. 1,956.95 crores as on 31^st March, 2019.

During the year the Company issued Commercial Papers (CPs) aggregating to Rs. 300 crores on private placement basis.

(d) Contracts or Arrangements with Related Parties

All Related Party transactions are entered in compliance to the provisions of law, the Policy on Materiality of Related Party Transactions and Dealing with Related Party Transactions and were entered with the approval of Audit and Risk Management Committee, Board and Shareholders if and as applicable. The particulars of material contracts and arrangements entered into with the related parties in accordance with the Related Party Policy of the Company and pursuant to the provisions of Section 188(1) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014 are annexed herewith as Annexure-B.

(e) Internal Financial Control System

The Companies Act, 2013 has mandated the Company to have a formal framework of Internal Financial Controls (IFC) and has also laid down specific responsibilities on the Board, Audit Committee, Independent Directors and Statutory Auditors with regard to IFC.

Accordingly, the Company has adopted financial control system and framework to ensure:

- The orderly and efficient conduct of its business,

- Safeguarding of its assets,

- The prevention and detection of frauds and errors,

- The accuracy and completeness of the accounting records and

- The timely preparation of reliable financial information.

The Board reviews the effectiveness of controls documented as part of IFC framework, and take necessary corrective 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 year 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 year 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 Annexure B and Annexure A to the Independent Auditors’ Report under Standalone Financial Statements and Consolidated Financial Statements respectively.

(f) Material changes affecting the Company

No material changes and commitments has occurred after the close of the year till the date of this Report which may affect the financial position of the Company.

INSURANCE

The Company’s plants, properties, equipment and stocks are adequately insured against all major risks including loss on account of business interruption caused due to property damage. The Company has appropriate liability insurance covers particularly 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.

BUSINESS RISK MANAGEMENT

The Company has in place a Risk Management Framework for a systematic approach to control risks. The Risk Management process is reviewed and monitored by functional heads / business process owners. The Audit and Risk Management Committee (ARMC) discharges functions of Risk Management and Risk minimization and has designated Chief Financial Officer as the Chief Risk Officer (CRO) to assist the committee by presenting the details of the risk profile of the Company, coordinate with the functional heads who are the risk owners and monitor the status of the risk mitigation plan for the identified risks. The ARMC is periodically updated on key business risks including strategic and acquisition related risks along with their mitigation plan / strategy.

The Company in the Management and Discussion Analysis section of the Annual Report identifies the key risks which can affect the performance of the Company. As on date, there is no risk envisaged which could threaten the existence of the Company.

The Board in its meeting held on 20^th May, 2019, has constituted a separate Risk Management Committee by segregating it from the Audit and Risk Management Committee.

SUBSIDIARIES & JOINT VENTURES

As of 31^st March, 2019, the Company has 16 subsidiaries, out of which 4 are step down subsidiaries.

Bio-Pharm Inc., a wholly owned subsidiary of Torrent Pharma Inc. USA (“TPI”) merged with TPI with effect from 1^st January, 2019. The merger aims at administrative convenience and to achieve higher operational efficiencies.

The highlights of performance of major subsidiaries of the Company have been discussed and disclosed under the Management Discussion and Analysis section of the Annual Report. The contribution of each of the subsidiaries in terms of the revenue and profit is provided in Form AOC-1, which forms part of the Annual Report.

The details of two associate companies of the Company is also shown in the AOC-1. These associate companies are Section 8 companies and primarily floated with another company of the Torrent group to carry out the CSR activities.

The annual accounts of the subsidiary companies will be made available to any Member of the Company seeking such information at any point of time and are also available for inspection by any Member of the Company at the Registered Office of the Company on any working day during business hours up to the date of the AGM. The annual accounts of the subsidiary companies are also available on the website of the Company at www.torrentpharma.com.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

(a) Board of Directors

The Board of Directors of the Company is led by the Executive Chairman and comprises six other Directors as on 31^st March, 2019¹, including one Whole Time Director, four Independent Directors which includes two Woman Director and one Non-Executive Director (other than Independent Directors).

All the Independent Directors of the Company have furnished declarations that they meet the criteria of independence as prescribed under the Companies Act, 2013 and under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“Listing Regulations”).

During the year under review:

- Shri Markand Bhatt retired from the Board with effect from 2^nd August, 2018 (i.e. date of last AGM).

- Smt. Renu Challu and Shri Pradeep Bhargava have completed their tenure as Independent Director of the Company on 26^th July, 2018 and 31^st March, 2019 respectively.

The Board places on record its deep appreciation for the guidance and support provided by them for the overall growth of the Company during their tenure as a member of the Board and its Committees.

During the last AGM held on 2^nd August, 2018, the members approved:

- the appointment of Ms. Ameera Shah as an Independent Director to hold office for a term of 3 (three) consecutive years effective from the date of AGM;

- the re-appointment of Shri Shailesh Haribhakti and Shri Haigreve Khaitan as Independent Directors of the Company for a second term of 5 (five) consecutive years effective from 1^st April, 2019.

Further, the members of the Company have approved (through Postal Ballot) the appointment of Ms. Nayantara Bali as an Independent Director of the Company w.e.f. 7^th March, 2019 for a term of 3 (three) consecutive years.

As per the provisions of the Companies Act, 2013, Shri Samir Mehta, Executive Chairman, (holding DIN 00061903), retires by rotation at the ensuing AGM and being eligible has offered himself for re-appointment.

Shri Mehta has been re-appointed by the Board of directors in its meeting held on 20^th May, 2019 as Executive Chairman of the Company with effect from 30^th July, 2019 till 31^st March, 2020, subject to approval of the members.

The brief resume and other relevant documents of the Director being re-appointed are given in the Explanatory Statement to the Notice convening the AGM, for your perusal.

(b) Meetings of Board of Directors

Regular meetings of the Board are held to review performance of the Company, to discuss and decide on various business strategies, policies and other issues. A calendar of Board / Committee meetings for the year is prepared and circulated to the Directors well in advance to enable them to plan their schedule for effective participation in the meetings. During the year, four meetings of the Board of Directors were convened and held on 30^th May, 2018, 2^nd August, 2018, 3^rd November, 2018 and 30^th January, 2019. The intervening gap between two consecutive meetings was not more than one hundred and twenty days. Detailed information on the meetings of the Board is included in the Corporate Governance Report which forms part of the Annual Report.

(c) Audit and Risk Management Committee

The composition of the Audit and Risk Management Committee is in compliance with the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of the Listing Regulations. The composition of the Committee as on 31^st March, 2019 is given below:

Name of Director	Category of Directorship
Shri Shailesh Haribhakti, Chairman	Independent Director
Shri Pradeep Bhargava1	Independent Director
Shri Haigreve Khaitan	Independent Director
Ms. Ameera Shah	Independent Director

1. Shri Pradeep Bhargava ceased to be the Member of the Committee consequent to completion of his term on the Board on 31^st March, 2019. The Committee was expanded by appointing Ms. Nayantara Bali as its member with effect from 6^th April, 2019.

The Committee was renamed as Audit Committee on constitution of separate Risk Management Committee on 20^th May, 2019.

During the year, the Board has accepted all the recommendations made by the Audit and Risk Management Committee.

(d) Appointment of Directors

(i) Criteria for Appointment of Directors

The Board of Directors of the Company has identified following criteria for determining qualification, positive attributes and independence of Directors:

1) Proposed Director (“Person”) shall meet all statutory requirements and should:

-possess the highest ethics, integrity and values;

- not have direct / indirect conflict with present or potential business / operations of the Company;

- have balance and maturity of judgment;

- be willing to devote sufficient time and energy;

- have demonstrated high level of leadership and vision, and the ability to articulate a clear direction for an organization;

- have relevant experience (in exceptional circumstances, specialization / expertise in unrelated areas may also be considered);

- have appropriate comprehension to understand or be able to acquire that understanding

- Relating to Corporate Functioning

- Involved in scale, complexity of business and specific market and environment factors affecting the functioning of the company.

2) The appointment shall be in compliance with the Board Diversity Policy of the Company.

The key qualifications, skills and attributes which the Board is collectively expected to have for the effective discharge of their duties are explained in Corporate Governance Report of the Company.

(ii) Process for Identification / Appointment of Directors

- Board members may (formally or informally) suggest any potential person to the Chairman of the Company meeting the above criteria. If the Chairman deems fit, necessary recommendation shall be made by him to the Nomination and Remuneration Committee (NRC).

- Chairman of the Company can himself also refer any potential person meeting the above criteria to the NRC.

- NRC delibrates the matter and recommends such proposal to the Board.

Board considers such proposal on merit and decide suitably.

(e) Familiarisation Programme of Independent Directors

The Independent Directors have been updated with their roles, rights and responsibilities in the Company by specifying them in their appointment letter alongwith necessary documents, reports and internal policies to enable them to familiarise with the Company’s procedures and practices. The Company endeavours, through presentations at regular intervals, to familiarise the Independent Directors with the strategy, operations and functioning of the Company and also with changes in the regulatory environment having a significant impact on the operations of the Company and the pharmaceutical industry as a whole. Site visits to various plant locations and CSR sites get organized for the Directors to enable them to understand the operations of and CSR activities carried out by the Company. The Independent Directors also meet with senior management team of the Company in informal gatherings. During the year 2018-19, the Company has conducted 11 programs for familiarising the Directors for a total duration of 6 hours.

On cumulative basis since 1^st April, 2015, the Company has conducted 48 programs for familiarising the Directors for a total duration of 42 hours and 55 minutes.

The details of such familiarisation programs for Independent Directors are posted on the website of the Company and can be accessed at http://www.torrentpharma.com/pdf/cms/Familiarisation_Programme_2018-19.pdf.

(f) Board Evaluation

The Evaluation of Board, its Committees, Individual Directors (Independent and Non Independent Directors) and Chairperson was carried out as per the process and criteria laid down by the Board of Directors based on the recommendation of the NRC:

- The obtaining and consolidation of feedback from all directors for the evaluation of the Board and its Committees, Individual Directors (i.e. Independent and Non Independent Directors), were co-ordinated by the Chairman of the Board. The feedback on evaluation of the Board and its Committees was discussed in their respective meetings and the feedback on the evaluation of Individual Directors was discussed individually with them.

- The evaluation of Chairperson was co-ordinated by the Chairman of the Independent Directors meeting.

- The Independent Directors met on 30^th January, 2019 with respect to the above.

(g) Key Managerial Personnel

Shri Sudhir Menon was designated as the Chief Financial Officer and Whole-time Key Managerial Personnel of the Company w.e.f 1^st September, 2018 consequent to the relinquishment of such position by Shri Ashok Modi w.e.f closing hours of 31^st August, 2018.

(h) Directors’ Responsibility Statement

In terms of Section134(3)(c) of the Companies Act, 2013, in relation to financial statements of the Company for the year ended 31^st March, 2019, the Board of Directors state that:

i. the applicable Accounting Standards have been followed in preparation of the financial statements and there are no material departures from the said standards;

ii. reasonable and prudent accounting policies have been used in preparation of the financial statements and that they have been consistently applied and that reasonable and prudent judgments and estimates have been made in respect of items not concluded by the year end, so as to give a true and fair view of the state of affairs of the Company as at 31^st March, 2019 and of the profit for the year ended on that date;

iii. proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the financial statements have been prepared on a going concern basis;

v. proper internal financial controls were in place and were adequate and operating effectively; proper systems to ensure compliance with the provisions of applicable laws were in place and were adequate and operating effectively.

REMUNERATION

(a) Remuneration Policy

During the year under review, new Remuneration Policy was introduced replacing the existing policy considering the amendments introduced under the Companies Act, 2013 and the Listing Regulations. The policy covers the remuneration for the Directors (Chairman, Managing Director, Whole-time directors, Independent Directors and other non-executive Directors) and other employees (under senior management cadre and management cadre). The Policy has been formulated with the following key objectives:

- To ensure that employee remuneration is in alignment with business strategy & objectives, organisation values and long-term interests of the organisation.

- To ensure objectivity, fairness and transparency in determination of employees remuneration.

- To ensure the level and composition of remuneration are reasonable and sufficient to attract, retain and motivate a high performance workforce and are in compliance with all applicable laws.

It covers various heads of remuneration including benefits for Directors and employees. It also covers the process followed with respect to annual performance reviews and variables considered for revision in the remuneration. The said Policy is available on the website of the Company www.torrentpharma.com.

(b) Criteria for Remuneration to Non-Executive Directors (NEDs):

1. The payment of commission to the Directors of the Company who are neither in the whole time employment nor Managing Director(s) (NEDs) is approved by the shareholders of the Company and is subject to the condition that total commission paid to the NEDs shall not exceed the percentage limits of the net profit of the Company as specified in the Companies Act, 2013 (presently 1% of the net profit), calculated in accordance with Section 197 read with Section 198 and any other applicable provisions of the Companies Act, 2013.

Further, as per the Regulation 17(6)(ca) of the revised Listing Regulations, approval of the shareholders by special resolution shall be required every year, in which the annual remuneration payable to a single NED exceeds fifty per cent of the total annual remuneration payable to all NEDs, giving details of the remuneration thereof.

2. The Board or its Committee specifically authorised for this purpose, determines the manner and extent upto which the commission is paid to the NEDs within the limit as approved by the shareholders. The commission is determined based on the participation of the Directors in the meetings of Board and / or Committees thereof, as well as on industry practice, performance of the Company and contribution by the Directors, etc.

3. Payment of Commission is made annually on determination of profit.

4. Sitting fees of Rs. 1 lac is paid for each meeting of the Board or any Committee thereof attended by them.

5. Independent Directors are reimbursed for all the expenses incurred for attending any meeting of the Board or Committees thereof, and which may arise from performance of any special assignments given by the Board.

(c) Remuneration to Managerial Personnel

The details of remuneration paid to the Managerial Personnel forms part of the Corporate Governance Report.

(d) Particulars of Employees and related disclosures

In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, disclosures pertaining to remuneration and other details are provided in the Annexure-D to this Report.

AUDITORS

(a) Statutory Auditors

B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022), were appointed as the Statutory Auditors of the Company to hold office for five years from the conclusion of Forty Fourth AGM held in the year 2016-17, up to the conclusion of the Forty Ninth AGM to be held in the year 2021-22.

(b) Cost Auditors

In terms of the Section 148 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, the Company has made and maintained the cost accounts and records for the year 2018-19.

The Company has appointed M/s. Kirit Mehta & Co., Cost Accountants, Mumbai (Firm Registration No. 000353) as the Cost Auditors of the Company for audit of cost accounting records of its activities (Formulation & Bulk Drugs activities) for the financial year ended 31^st March, 2019. The Cost Audit Report to the Central Government for the financial year ended 31^st March, 2018 was filed on 29^th August, 2018, within the statutory timeline. Further, the Board of Directors has, appointed M/s. Kirit Mehta & Co. as the Cost Auditor of the Company for the financial year 2019-20 and fixed their remuneration, subject to ratification by the shareholders in the ensuing AGM of the Company.

(c) Secretarial Auditor

The Board, pursuant to Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, had appointed M/s. M. C. Gupta & Co., Company Secretaries, as the Secretarial Auditors of the Company to conduct the Secretarial Audit as per the provisions of the Companies Act, 2013 for the year 2018-19.

M/s. M. C. Gupta & Co. have carried out the Secretarial Audit of the Company for year 2018-19 and the Report of Secretarial Auditors in Form MR-3, is annexed with this Report as Annexure-E. There were no qualification / observations in the report.

During the year 2018-19, the Company has complied with all the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

CORPORATE GOVERNANCE

As required by Regulation 34 read with Schedule V of the Listing Regulations, a separate Report on Corporate Governance forms part of the Annual Report. The Report on Corporate Governance also contains certain disclosures required under the Companies Act, 2013. A certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause E of Schedule V of the Listing Regulations forms part of this Report as Annexure-F.

EXTRACT OF ANNUAL RETURN

As required under the provisions of Section 134(3)(a) and 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of annual return in Form No. MGT-9 forms part of this Report as Annexure-G.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.

A statement containing the necessary information on Conservation of energy, Technology absorption and Foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed to this Report as Annexure-H.

APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors appreciate the trust reposed by the medical fraternity and patients in the Company and look forward to their continued patronage. The Directors are also grateful and pleased to place on record their appreciation for the excellent support, guidance and cooperation extended by the Government of India and various State Governments specifically the Governments of Gujarat, Himachal Pradesh, Sikkim, Madhya Pradesh and Andhra Pradesh, Central and State Government Bodies and Authorities, Financial Institutions and Banks. The Board also expresses its appreciation of the understanding and support extended by the shareholders and the commitment shown by the employees of the Company.

For and on behalf of the Board

Ahmedabad Samir Mehta

20^th May, 2019 Executive Chairman

---

Mar 31, 2018

To

The Shareholders

The Directors have the pleasure of presenting the Forty Fifth Annual Report of your Company together with the Audited Financial

Statement for the year ended 31^st March, 2018.

HIGHLIGHTS

- Torrent becomes the 8^th largest Company in the Indian Pharmaceutical Market with the acquisition of branded business of Unichem Laboratories Limited (“Unichem”) for India and Nepal, including its Sikkim manufacturing facility. The acquisition included portfolio of more than 120 brands including one brand of Rs.200 crores (Losar) & three brands of more than Rs.50 crores (Ampoxin, Unienzyme & Telsar).

- India Business registered 9% growth as compared to 6% growth ofthe market.

- Continued to experience sharp price reductions in US - partially compensated with higher market shares and volumes. 13 (thirteen) ANDAs filed during the year.

- Acquired Bio Pharm Inc. (“Biopharm”), a US based liquids and suppositories company along with a manufacturing facility.

- Torrent becomes 4^th largest generic Company in Germany with continued good performance.

- Brazil registered value growth of 14% in covered market and having unit market share of 25% of covered market without generics.

- All plants fully compliant with the respective regulatory requirements. Current USFDA Establishment Inspection Report for Indrad, Dahej, Pithampur and Vizag plants.

- Sikkim capacity expansion including from new facility completed - increasing the capacity to 700 crores units. The Unichem manufacturing facility adds another 100 crores units to the capacity.

FINANCIAL RESULTS

The summary of Standalone (Company) and Consolidated (Company and its subsidiaries) operating results for the year and appropriation of divisible profit is given below:

(Rs. in crores except per share data)

	Standalone		Consolidated
	2017-18	2016-17	2017-18	2016-17
Sales & Operating Income	4248	4593	6002	5857
Profit Before Depreciation, Finance Cost, Exceptional Items & Tax	1240	1426	1648	1601
Less Depreciation	384	269	409	307
Less Finance Cost	294	202	308	206
Profit Before Exceptional Items & Tax	562	955	931	1088
Less Exceptional Items	--	--	--	--
Less Tax Expense	80	101	253	154
Less Minority Interest	--	--	--	--
Net Profit for the Year	482	854	678	934
Balance brought forward	1613	1620	1514	1442
Other Comprehensive income and other adjustments	(2)	(7)	2	(8)
Balance available for appropriation	2093	2467	2194	2368
Appropriated as under:
Transfer to General Reserve	--	400	--	400
Transfer to Debenture Redemption Reserve	375	250	375	250
Dividend	220*	169	220*	169
Tax on Distributed Profits for Dividend	45*	35	45*	35
Balance Carried Forward	1453	1613	1554	1514
Earnings Per Share (Rs. per share)	28.48	50.48	40.07	55.17

*Includes final dividend of Rs.68 crores and dividend distribution tax of Rs.14 crores pertaining to FY 2016-17.

Consolidated Operating Results

The consolidated sales and operating income increased to Rs.6002 crores from Rs.5857 crores in the previous year showing a growth of 2.48%. The consolidated operating profit for the year was Rs.1648 crores as against Rs.1601 crores in the previous year registering growth of 2.94%. The consolidated net profit decreased to Rs.678 crores from Rs.934 crores in the previous year registering a degrowth of 27.41%. Current year’s profits have been impacted by the acquisition related interest and amortization of Unichem and Biopharm, while the previous year included exceptional sales and profits on account of launch of new product in US which had limited competition.

Management Discussion and Analysis (MDA)

The details of operating performance of the Company for the year, the state of affairs and the key changes in the operating environment have been analysed in the Management Discussion and Analysis section which forms a part of the Annual Report.

Dividend

The Company endeavours to distribute 30% of its annual consolidated net profit after tax without taking into account non-cash charges relating to the business acquisitions as dividend, in accordance with the revised dividend policy, copy of which is attached as Annexure-A.

Pursuant to this, Interim dividend of Rs.9/- per equity share of face value of Rs.5/- amounting to Rs.152 crores was paid to the shareholders during the year under review. Further, the Board has recommended a final dividend of Rs.5/- per equity share amounting to Rs.85 crores for approval to shareholders at the 45^th Annual General Meeting (AGM) of the Company. The aggregate distribution amount including tax on distributed profits works out to be Rs.286 crores (previous year Rs.286 crores).

HUMAN RESOURCES

Innovation in Human Resource practices is one of the key integral facet of an organization’s growth, for it to be ahead of the curve. At Torrent, it is derived from a diverse workforce, an inclusive culture and people-first approach that encourages new perspectives and novel ideas.

The Human Resource department through its various initiatives and advance programs has kept pace with the fluctuating economic dynamics and the environmental changes.

Training is an integral part of the skill development program initiated for the employees.

The Human Resource department has organized training and development programs which has helped to nurture talent. Managers from field and corporate offices are trained to sharpen and understand new management skills.

The Company also has taken several other initiatives to help employees maintain a work life balance, thereby enabling them to excel in every phase of life. Women friendly facilities like creche and flexi-work timings at workplace has provided much needed care to them. Also, continuous efforts were taken to implement Gender Diversity initiatives, in various areas to ensure enhanced representation of women employees.

On the Statutory front, during the year under review, there was no case received pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The year also saw reinforcement of the already existing “Whistle Blower Policy” in order to emphasize and encourage reporting of any wrongdoing or any unethical practice.

The Human Resource department is in the process of integrating the Human Resources acquired from Unichem. This includes not only the manpower integration but also the cultural integration of both the entities. Impactful bridge building activity between Torrentians and the erstwhile Unichemites was organized for them to gain knowledge about the values and the good practices adopted by Torrent in various functionalities.

On the Industrial front, the Company continued to foster cordial Industrial Relations with its workforce during the year.

The Company has a diverse workforce of 14700 employees as on 31^st March, 2018 vis-a-vis 11781 employees as on 31^st March, 2017. Going forward, the Company will continue to focus on nurturing the right talent to achieve the business goal.

VIGIL MECHANISM

The Company believes in the conduct of its affairs in a fair and transparent manner to foster professionalism, honesty, integrity and ethical behavior in its employees & stakeholders. The Company has adopted a Whistle Blower Policy as a part of vigil mechanism, details of the same is explained in the Report of Corporate Governance.

Also, the Code of Business Conduct (“Code”) lays down important corporate ethical practices that shape the Company’s value system and business functions and represents cherished values of the Company.

The Code provides guidance to employees in recognizing and dealing with important ethical and legal issues and fosters a culture of honesty and accountability. The code of conducts includes Integrity, Gifts, Conflict of Interest, Legal compliance, Respect for people, Environmental commitment, Safety, Confidential & Proprietary Information, Financial Information, Company assets, Computer Network use & Security, Records maintenance and Management.

CORPORATE SOCIAL RESPONSIBILITY

Following the path shown by its founder Shri U N Mehta, Torrent Group believes in the well being of the society at large and understands its responsibilities as a Corporate Citizen. The Company, as a part of its Corporate Social Responsibility, made focused efforts in the fields of Community Healthcare, Sanitation & Hygiene, Education & Knowledge Enhancement and Social Care & Concern. These efforts are all driven by the Founder’s philosophy of “Think of others also when you think about yourself”

In line with the provisions of the Companies Act, 2013 and Rules made thereunder, a Corporate Social Responsibility (CSR) Committee has been formed by the Board of Directors. The Composition of the CSR Committee is as under:

Name of Director	Category of Directorship
Shri Pradeep Bhargava, Chairperson	Independent Director
Dr. Chaitanya Dutt	Whole time Director
Smt. Renu Challu	Independent Director

During FY 2017-18, the key CSR programs and activities undertaken at Group level are described hereunder:

1. REACH:

‘Children are the future of our nation and this future must be well preserved’. Echoing this philosophy, in January 2016, Torrent Pharmaceuticals Limited and Torrent Power Limited jointly initiated a Child Centric Health Care Program - REACH - Reach EAch CHild under the aegis of Tornascent Care Institute (Section 8 company of Torrent Group). The program encompasses three major pillars: (a) SHAISHAV for Grass root intervention; (b) JATAN for greenfield action; and (c) MUSKAN for other allied initiatives. This Paediatric Health Care program has progressed significantly in the current year at all the four centres viz. Sugen (near Surat), Dahej, Indrad and Nadiad / Balasinor and across all the three pillars, with increase in the reach and scope.

- Under the first pillar of the program SHAISHAV, so far 266 paediatric camps covering 341 villages and 51,000 underserved children (in the age group of 6 months to 6 years) were conducted; to obtain their base line health status, identify and treat anaemia and malnutrition and provide specialised treatment to those identified with cardiac, neurological, respiratory and the like disorders. Periodic assessments and follow up actions for all such cases are being undertaken under the supervision of qualified Paediatricians. As a result of thorough follow up activities, more than 83% of children are cured of their anaemic condition and around 73% of children pulled out of severe malnourishment. Of all the children provided specialised treatment for specific ailments mentioned above, 670 cases have been successfully treated. SHAISHAV expanded the coverage of children to include those beyond the age group of 6 years through mobile OPDs. Till March, 2018, 39,000 children were provided free of cost treatment including the operative and consultation costs at referral hospitals under this expanded coverage.

- JATAN, the second pillar of the program, focuses on providing the care needed to alleviate the problem identified in SHAISHAV through Paediatric centres. 4 Paediatric centres at Sugen, Dahej, Balasinor and Indrad are operational and are additionally supporting the basic medical needs of the villages close to these four areas. Treatment by Paediatricians / doctors, medicines & basic laboratory tests are provided free of cost to children in the age group of 0-18 years. 54,500 children have benefitted so far till 31^st March, 2018.

- Under MUSKAAN, counselling and support is being provided to the adolescent girls at the Sugen centre for menstrual hygiene and sanitation by giving them free health and hygiene kits which include sanitary pads, soap, shampoo, etc. 4000 adolescent girls of 70 villages between 11-18 years of age are provided kits on monthly basis. This activity has also been replicated at Pakhajan & Indrad Centres. As an impact of these activities, there has been gradual eradication of physiological and social taboos and increased confidence and self-esteem amongst them.

2. SHIKSHA SETU

The Teaching and Learning Program being conducted through UNM Foundation, completed second year of Phase II of the program. This program covers 13 schools located at Sugen, Chhatral, Chappi, Memadpur and Ahmedabad locations and about 4,300 students and 150 teachers in such schools. In the first year i.e FY 2016-17, focus was on setting the new technology based infrastructure and software in the schools and training the students and teachers on the same. During FY 2017-18, 3,370 (84%) students from standard 3-8 have started working regularly on Tablets while above 90% teachers are confidently teaching their subjects through smart boards. This year, for the first time, 5,281 students from 3-8 standards participated in technology based assessment on Tablets. For Teachers, 496 subject workshops were organized at all locations and more than 2,000 students were provided academic & behavioral inputs during school visits. About 1,000 parents attended parents’ sensitization meetings at schools and were elated to see their children studying through tablets and smart boards in classrooms. School Principals expressed their views that technology based classrooms have immensely helped teachers in making teaching interesting, while tablets provided to students is helpful in bringing irregular students to school.

3. PUBLIC PARK DEVELOPMENT:

A city that has good public parks and gardens expresses the level of social and cultural health of a city. The Company along with M/s. Prabhakar B. Bhagwat, which is one of India’s best known landscape design firm, developed a detailed process that is an exemplar on how public projects should be undertaken and embarked upon. Six other firms in the city, namely Arya Architects, Earthscapes, Arianee Landscapes, Design Module, Shared Ground and Studio 603, have joined hands under LEAF (Landscape Environment and Advancement Foundation) to undertake this work, that focuses on transparency, communicating and working on design and ideas with local communities and keeping them informed at all times.

Over a period of 12 months, many parks in the city have been visited and studied for their usage patterns. 15 parks with differing sizes, which were equally distributed in the city, were chosen for development. Many studies were carried out to better express the idea of the park, from its relation to mental health, to bio diversity, to safe playgrounds, to water harvesting, to art in parks, to appropriate lighting, to using this initiative to develop new ways of designing parks. This rigorous exercise culminated in the finalization of 6 parks measuring 32,000 Sqmt under Phase I. The development of such 6 parks / gardens is under progress. The Design of the Other Parks of Phase II is under development.

The Annual Report on CSR Activities (Annexure C to this Report) indicates that the Company has spent Rs.27.70 crores in this regard.

Other CSR initiatives undertaken by the Company during FY 2017-18 include:

- The Company has contributed Rs.0.12 crores during FY 2017-18 towards reparing and maintenance of Sharda Mandir Primary School at Indrad along with the donation towards Medical OPD at Village - Indrad.

- The Company has contributed an amount of Rs.0.34 crores towards the Community Development Park and other community development work in Baddi. Further, the Company has been supporting the School situated near Company’s plant at Baddi to ensure personality development of the students by conducting various programmes through involvement of employees and provides other support with respect to extra curricular activities and academics.

- The Company also made donations to various organisations involved in activities related to education, health, socio-economic development, culture, integrated development of tribes, relief to disaster victims, promotion of social welfare, etc.

ENVIRONMENT, HEALTH & SAFETY

The Company is committed in cultivating a proactive safety culture across the group. We are in pursuit of a safe & secure workplace for our employees as well as all stakeholders engaged in our business operations.

We strive proactively to prevent or minimize all possible causes of injury and ill health of our employees as well as our stakeholders, prevent environmental pollution, reduction in waste generation and utilization of waste as an alternative fuel, conserve energy, enhance safety awareness, prepare for emergencies and to reduce environmental impact arising from the workplace.

We have adopted a well-defined strategy for waste management that focusses on reduction in waste generation and alternative utilization of waste as energy. We have disposed off 50% high calorific value hazardous waste for co-processing in cement industry (alternate fuel) instead of incineration. We have targeted to dispose off 90% of total such waste generation for co-processing in the coming year.

Most of our facilities have achieved various recognitions / certifications such as ISO-14001:2015 & OHSAS-18001:2007. Regular audits of our operational units by our cross functional teams, global customers and regulators, help in achieving benchmark / highest levels of compliance. Further to these, Company has initiated drive to implement upgraded standard of OHSAS-18001:2007 to ISO-45001:2015.

During the year, all our manufacturing units remained compliant with applicable regulatory and other Environment, Health & Safety requirements to which we subscribe.

We strive to build a strong Health, Safety and Environment culture at each of our units. Environment, Health & Safety is not just something we do as part of our regular jobs but is something different in which we believe, we value & act upon.

Moreover, the Company has in place the “Conviction of Safety Policy, which provides for substantial compensation to the personnel (Employees as well as Contractors) and their families, who are adversely affected by accidents.

FINANCE

(a) Share Capital

During the year, the Authorised Capital of the Company was increased from Rs.125 crores, divided into 20 crores Equity Shares of Rs.5/- each and 25 lacs Preference Shares of Rs.100/- each, to Rs.150 crores, divided into 25 crores Equity Shares of Rs.5/- each and 25 lacs Preference Shares of Rs.100/- each, by creation of 5 crores Equity Shares of Rs.5/- each ranking pari passu with the existing Equity Shares.

(b) Deposits

The Company has neither accepted nor renewed any deposits. None of the deposits earlier accepted by the Company remained outstanding, unpaid or unclaimed as on 31^st March, 2018.

(c) Loans, Guarantees and Investments

Details of Loans, Guarantees and Investments by Company under the provisions of Section 186 of the Companies Act, 2013, during the year, are provided in Note 9 and 10 to the Financial Statements.

(d) Debentures and other debt instruments

The Company has raised an amount of Rs.1500 crores by way of issue of Non-Convertible Debentures on private placement basis during the year. The said Non-Convertible Debentures are listed on the National Stock Exchange of India Ltd. The outstanding amount of Non-Convertible Debentures issued by the Company is Rs.2,898.80 crores as on 31^st March, 2018.

During the year the Company issued Commercial Papers (CPs) aggregating to Rs.300 crores on private placement basis.

(e) Contracts or Arrangements with Related Parties

All Related Party transactions during the year were in ordinary course of business and were on arm’s length basis and were entered with the approval of Audit and Risk Management Committee, Board and Shareholders if and as applicable. The particulars of material contracts and arrangements entered into with the related parties in accordance with the Related Party Policy of the Company and pursuant to the provisions of Section 188(1) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014 are annexed herewith as Annexure - B.

(f) Internal Financial Control System

The Companies Act, 2013 has mandated the Company to have a formal framework of Internal Financial Controls (IFC) and has also laid down specific responsibilities on the Board, Audit Committee, Independent Directors and Statutory Auditors with regard to IFC.

The financial control system and framework is required to ensure:

- The orderly and efficient conduct of its business,

- Safeguarding of its assets,

- The prevention and detection of frauds and errors,

- The accuracy and completeness of the accounting records and

- The timely preparation of reliable financial information.

The Board reviews the effectiveness of controls documented as part of IFC framework, and take necessary corrective actions where 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 year 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 year and is adequate considering the business operations of the Company.

The Statutory Auditors of the Company has audited the IFC over Financial Reporting and their Audit Report is annexed as Annexure A to the Independent Auditors’ Report under Standalone Financial Statements and Consolidated Financial Statements.

INSURANCE

The Company’s plants, properties, equipment and stocks are adequately insured against major risks. The Company also has appropriate liability insurance covers particularly 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.

BUSINESS RISK MANAGEMENT

The Company has in place a Risk Management Framework for a systematic approach to control risks. The Risk Management process is reviewed and monitored by functional heads / business process owners. The Audit and Risk Management Committee (ARMC) discharges functions of Risk Management and Risk minimization and has designated Chief Financial Officer as the Chief Risk Officer (CRO) to assist the committee by presenting the details of the risk profile of the Company, coordinate with the functional heads who are the risk owners and monitor the status of the risk mitigation plan for the identified risks. The ARMC is periodically updated on key business risks including strategic and acquisition related risks along with their mitigation plan / strategy.

The Company in the Management and Discussion Analysis section of the Annual Report identifies the key risks which can affect the profitability of the Company. As on date, there is no risk envisaged which could threaten the existence of the Company.

SUBSIDIARIES & JOINT VENTURES

As of 31^st March, 2018, the Company has 17 subsidiaries, out of which 5 are step down subsidiaries.

Torrent Pharma Inc., USA, a wholly owned subsidiary of the Company has acquired 100% stake in Bio Pharm Inc., a generic pharmaceuticals and OTC Company based in USA.

The highlights of performance of major subsidiaries of the Company have been discussed and disclosed under the Management Discussion and Analysis section of the Annual Report. The contribution of each of the subsidiries in terms of the revenue and profit is provided in Form AOC-1, which forms part of Annual Report.

The details of two Joint Ventures of the Company is also shown in the AOC -1. These Joint Ventures are Section 8 companies and primarily floated with another company of the Torrent group to carry out the CSR activities.

The annual accounts of the subsidiary companies will be made available to any Member of the Company seeking such information at any point of time and are also available for inspection by any Member of the Company at the Registered Office of the Company on any working day during business hours up to the date of the AGM. The annual accounts of the subsidiary companies are also available on the website of the Company at www.torrentpharma.com.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

(a) Board of Directors

The Board of Directors of the Company is led by the Executive Chairman and comprises seven other Directors as on 31^st March, 2018, including one Whole Time Director, four Independent Directors which includes one Woman Director and two Non-Executive Directors (other than Independent Directors).

All the Independent Directors of the Company have furnished declarations that they meet the criteria of independence as prescribed under the Companies Act, 2013 and under Listing Regulations.

At the AGM of the Company held on 31^st July, 2017, the members approved the re-appointment of Dr. Chaitanya Dutt, Director (Research and Development) as the Whole time Director of the Company for a period of three years effective from 1^st January, 2018. He also retired by rotation and being eligible, was re-appointed as director in the said AGM.

Shri Ashish Nanda had resigned from the Board of Directors of the Company w.e.f. 21^st July, 2017. The Board placed on record its deep appreciation for the guidance & support provided by him for the overall growth of the Company during his association with the Company.

Shri Markand Bhatt, Director, has expressed his unwillingness to be re-appointed at the ensuing AGM.

Shri Bhatt has been on the Board of the Company since October, 2000. A post graduate of IIM, Ahmedabad, he has over 50 years of professional and managerial experience in multi-disciplinary areas across various businesses, dominated by more than three decades of involvement with Torrent group.

The Board and the Company has always been benefitting from his counsel and advice on key business and strategic matters emanating from his considerable wisdom and vast experience and places on record their profound appreciation for the same.

Smt. Renu Challu will be completing her tenure as an Independent Director of the Company on 26^th July, 2018. The Board places on record its deep appreciation for the guidance and support provided by Smt. Challu for the overall growth of the Company during her tenure as a member of the Board and its Committees.

The Board has recommended:

- the appointment of Ms. Ameera Shah as an independent Director to hold office for a term of 3 (three) consecutive years effective from the date of AGM;

- the re-appointment of Shri Shailesh Haribhakti and Shri Haigreve Khaitan as Independent Directors of the Company for a second term of 5 (five) consecutive years effective from 1^st April, 2019;

for the approval of shareholders at the ensuing AGM. The brief resume and other relevant details of Ms. Shah, Shri Haribhakti and Shri Khaitan are given in the Explanatory Statement to the Notice convening the AGM, for your perusal.

(b) Meetings of Board of Directors

Regular meetings of the Board are held to review performance of the Company, to discuss and decide on various business strategies, policies and other issues. A calendar of Board / Committee meetings for the year is prepared and circulated to the Directors well in advance to enable them to plan their schedule for effective participation in the meetings. During the year, six meetings of the Board of Directors were convened and held on 26^th May, 2017, 31^st July, 2017, 3^rd November, 2017, 18^th January, 2018, 25^th January, 2018, and 8^th February, 2018. The intervening gap between two consecutive meetings was not more than one hundred and twenty days. Detailed information on the meetings of the Board is included in the Corporate Governance Report which forms part of the Annual Report.

(c) Committees of the Board of Directors

In compliance with the requirement of applicable laws and as part of best governance practices, the Company has following Committees of the Board as on 31^st March, 2018:

i. Audit and Risk Management Committee

ii. Securities Transfer and Stakeholders Relationship Committee

iii. Nomination and Remuneration Committee

iv. Corporate Social Responsibility Committee

The details with respect to the aforesaid Committees forms part of the Corporate Governance Report.

(d) Appointment of Directors

(i) Criteria for Appointment of Directors

The Board of Directors of the Company has identified following criteria for determining qualification, positive attributes and independence of Directors:

1) Proposed Director (“Person”) shall meet all statutory requirements and should:

- possess the highest ethics, integrity and values;

- not have direct I indirect conflict with present or potential business I operations of the Company;

- have the balance and maturity of judgment;

- be willing to devote sufficient time and energy;

- have demonstrated high level of leadership and vision, and the ability to articulate a clear direction for an organization;

- have relevant experience (In exceptional circumstances, specialization I expertise in unrelated areas may also be considered);

- have appropriate comprehension to understand or be able to acquire that understanding

- Relating to Corporate Functioning

- Involved in scale, complexity of business and specific market and environment factors affecting the functioning of the company.

2) The appointment shall be in compliance with the Board Diversity Policy of the Company.

(ii) Process for Identification / Appointment of Directors

- Board members may (formally or informally) suggest any potential person to the Chairman of the Company meeting the above criteria. If the Chairman deems fit, necessary recommendation shall be made by him to the Nomination and Remuneration Committee (NRC).

- Chairman of the Company can himself also refer any potential person meeting the above criteria to the NRC.

- NRC delibrates the matter and recommends such proposal to the Board.

Board considers such proposal on merit and decide suitably.

(e) Familiarisation Programme of Independent Directors

The Independent Directors have been updated with their roles, rights and responsibilities in the Company by specifying them in their appointment letter alongwith necessary documents, reports and internal policies to enable them to familiarise with the Company’s procedures and practices. The Company endeavours, through presentations at regular intervals, to familiarise the Independent Directors with the strategy, operations and functioning of the Company and also with changes in the regulatory environment having a significant impact on the operations of the Company and the pharmaceutical industry as a whole. Site visits to various plant locations and CSR sites are organized for the Directors to enable them to understand the operations of and CSR activities carried out by the Company. The Independent Directors also meet with senior management team of the Company in informal gatherings. During the FY 2017-18, the Company has conducted 9 programs for familiarising the Directors for a total duration of 9 hours and 25 minutes.

On cumulative basis since 1^st April, 2015, the Company has conducted 37 programs for familiarising the Directors for a total duration of 36 hours and 55 minutes.

The details of such familiarisation programs for Independent Directors are posted on the website of the Company and can be accessed at http://www.torrentpharma.com/pdf/cms/Familiarisation_Programme_2017-18.pdf

(f) Board Evaluation

The Evaluation of Board, its Committees, Individual Directors (Independent and Non Independent Directors) and Chairperson was carried out as per the process and criteria laid down by the Board of Directors based on the recommendation of the NRC:

- The obtaining and consolidation of feedback from all directors for the evaluation of the Board and its Committees, Individual Directors (i.e. Independent and Non Independent Directors), were co-ordinated by the Chairman of the Board. The feedback on evaluation of the Board and its Committees was discussed in their respective meetings and the feedback on the evaluation of Individual Directors was discussed individually with them.

- The evaluation of Chairperson was co-ordinated by the Chairman of the Independent Directors meeting.

- The Independent Directors met on 8^th February, 2018 with respect to the above.

(g) Key Managerial Personnel

There was no change in the Key Managerial Personnel during the year under review.

(h) Directors’ Responsibility Statement

In terms of Section134(3)(c) of the Companies Act, 2013, in relation to financial statements of the Company for the year ended 31^st March, 2018, the Board of Directors state that:

i. the applicable Accounting Standards have been followed in preparation of the financial statements and there are no material departures from the said standards;

ii. reasonable and prudent accounting policies have been used in preparation of the financial statements and that they have been consistently applied and that reasonable and prudent judgments and estimates have been made in respect of items not concluded by the year end, so as to give a true and fair view of the state of affairs of the Company as at 31^st March, 2018 and of the profit for the year ended on that date;

iii. proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the financial statements have been prepared on a going concern basis;

v. proper internal financial controls were in place and were adequate and operating effectively; proper systems to ensure compliance with the provisions of applicable laws were in place and were adequate and operating effectively.

REMUNERATION

(a) Remuneration Policy

The Company has formulated policy relating to the remuneration for the Directors, Key Managerial Personnel and other employees of the Company. The remuneration policy is available on the website of the Company www.torrentpharma.com. The salient features of this policy are as under:

1. Components of Remuneration

1.1. Fixed Pay comprising of Basic Salary, HRA, Car Allowance (applicable to General Manager and above employees), Conveyance Allowance / Reimbursement, Company’s Contribution to Provident Fund, Superannuation Fund, Gratuity, etc.

1.2. Variable Pay which is either in the form of:

(i) Commission to Managing Directors

(ii) Commission to Whole - time Directors

(iii) Performance Based Pay to General Managers and above [upto 20% of Cost to Company (CTC)], based on unit performance grades.

(iv) One time reward, given in exceptional cases to identified directors, employees who undertake tasks, which go beyond their normal call of duties and play a crucial role in success of an event.

1.3. Retention Pay: In case where stability is an issue, part of the CTC is kept as retention pay which is being paid after 3 years or more.

2. Annual Appraisal Process:

2.1. Annual Appraisals are conducted following which annual increments and promotions in deserving cases are decided once in a year based on:

(i) Employees Self-Assessment

(ii) Assessment of Immediate Superior and

(iii) Assessment of Head of Department

2.2. The increments as decided for a particular financial year are paid during the subsequent financial year. e.g. the performance appraisal of an employee for the FY 2016-17 is conducted in FY 2017-18 and his / her salary rise in FY 2017-18 reflects his performance for FY 2016-17.

2.3. Performance Based Pay is also based on annual appraisal process.

2.4. Annual increment consist of -

i. Economic Rise: Based on All India Consumer Price Index published by the Government of India or Internal survey wherein inflation on commonly used items is calculated; and

ii. Performance Rise: Based on Industry and overall business scenario and factoring the following aspects:

1) Company’s performance vis-a-vis the industry

2) Unit Performance* (Grades ranging from A to C-)

3) Individual Performance / track record including care for health / balance between quality of work and family life.

*Unit Performance is carried out based on various financial and non-financial parameters (also used for working out overall ceiling at unit level and performance based pay) such as -

a) Comparison of Company’s Revenue and Profit growth with competition

b) Employee Cost

c) Return on Equity

d) Production, Quality and Regulatory compliance

Unit: Domestic and International Operations, Manufacturing, Research & Development and Corporate.

2.5. Promotion Rise (Other than Executive Directors and Directors)

(b) Criteria for Remuneration to Non-Executive Directors (NEDs):

1. T he payment of commission to the Directors of the Company who are neither in the whole time employment nor Managing Director(s) (NEDs) is approved by the shareholders of the Company and is subject to the condition that total commission paid to the NEDs shall not exceed the limit of 1% of net profit in a financial year as per the provisions of Section 197(1) of the Companies Act, 2013 read with Section 198 of the said Act.

2. The Board or its Committee specifically authorised for this purpose, determines the manner and extent upto which the commission is paid to the NEDs in accordance with the shareholders’ approval. The commission is determined based on the participation of the Directors in the meetings of Board and / or Committees thereof, as well as on industry practice, performance of the Company and contribution by the Directors, etc.

3. Payment of Commission is made annually on determination of profit.

4. Sitting fees of Rs.1 lac is paid for each meeting of the Board or any Committee thereof attended by them.

5. Independent Directors are reimbursed for all the expenses incurred for attending any meeting of the Board or Committees thereof, and which may arise from performance of any special assignments given by the Board.

(c) Information as required pursuant to Section 197 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

1. the ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:

Sr. No.	Name of the Director	Ratio of the Remuneration of Director to Median Remuneration
1.	Shri Sudhir Mehta	107.62
2.	Shri Samir Mehta$	322.86
3.	Shri Markand Bhatt	#
4.	Shri Shailesh Haribhakti	7.75
5.	Shri Haigreve Khaitan	6.03
6.	Shri Pradeep Bhargava	8.18
7.	Smt Renu Challu	7.96
8.	Prof. Ashish Nanda	1.08*
9.	Dr. Chaitanya Dutt$	132.25

$ Remuneration does not include premium for group personal accident and group mediclaim policy.

# No remuneration has been paid during the year 2017-18 and hence ratio has not been calculated.

* Prof. Ashish Nanda resigned w.e.f. 21^st July, 2017.

2. the percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary:

Sr. No.	Name of the Director / Key Managerial Personnel	Designation	% increase in Remuneration
1.	Shri Sudhir Mehta	Chairman Emeritus	(33.33)
2.	Shri Samir Mehta#	Executive Chairman	Nil
3.	Shri Shailesh Haribhakti	Independent Director	12.50
4.	Shri Haigreve Khaitan	Independent Director	27.27
5.	Shri Pradeep Bhargava	Independent Director	26.67
6	Smt Renu Challu	Independent Director	12.12
7.	Prof. Ashish Nanda	Independent Director	(64.29)a
8.	Dr. Chaitanya Dutt#	Whole-time Director	18.10
9.	Shri Ashok Modi#	Chief Financial Officer	16.65*
10.	Shri Mahesh Agrawal#	Company Secretary	12.99*

No remuneration has been paid in 2016-17 and 2017-18 to Shri Markand Bhatt and hence % increase has not been calculated.

^A Prof. Ashish Nanda resigned w.e.f. 21^st July, 2017.

* The percentage change in remuneration is excluding onetime reward and performance pay.

# Remuneration does not include premium for group personal accident and group mediclaim policy.

3. The percentage increase in the median remuneration of employees in the financial year under review is 8.82%. The employees whose remuneration is determined based on negotiations and the employees at representative offices of the Company abroad have been excluded for this purpose.

4. The Company has 14,700 employees on the rolls of Company as on 31^st March, 2018.

5. The increase made in the salaries of employees other than managerial personnel in the last financial year, based on the performance of the Company for 2016-17, was 11.16% while the increase in managerial remuneration was 4.70%. There was no change in salary of Shri Samir Mehta.

During the year under review, profits were impacted by the interest and amortization of Unichem and Biopharm acquisitions. The Company has been making significant investments targeted to maintain a steady growth in future by strengthening its position in its largest market, i.e. India. After the Elder investment in 2014-15, the Unichem acquisition in India was accomplished in a record time during the year, which has helped the Company to leapfrog to 8^th position in the Indian Pharma Market. In addition, Bio-pharm acquisition in US was concluded providing a foothold in the niche liquids and suppository market including a manufacturing facility - the first one overseas by the Company.

6. The remuneration paid is as per the Remuneration Policy of the Company.

(d) Remuneration to Managerial Personnel

The details of remuneration paid to the Managerial Personnel forms part of the Corporate Governance Report.

(e) Particulars of Employees

The information required under Section 134(3)(q) and 197(12) of the Companies Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this Report as Annexure-D. However, as per the provisions of Section 134 and Section 136 of the Companies Act, 2013, the Reports and Accounts are being sent to the Members excluding the information on employees’ particular which are available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of ensuing AGM. Any Member interested in obtaining a copy of such statement may write to the Company Secretary at the Registered Office of the Company.

AUDITORS

(a) Statutory Auditors

B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022), were appointed as the Statutory Auditors of the Company to hold office for five years from the conclusion of Forty Fourth AGM held in the FY 2016-17, up to the conclusion of the Forty Ninth AGM to be held in the FY 2021-22.

(b) Cost Auditors

The Company has appointed M/s. Kirit Mehta & Co., Cost Accountants, Mumbai (Firm Registration No. 000353) as the Cost Auditors of the Company for audit of cost accounting records of its activities (Formulation & Bulk Drugs activities) for the financial year ended 31^st March, 2018. The Cost Audit Report to the Central Government for the financial year ended 31^st March, 2017 was filed on 28^th August, 2017, within the statutory timeline. Further, the Board of Directors has, appointed M/s. Kirit Mehta & Co. as the Cost Auditor of the Company for the financial year 2018-19 and has also fixed their remuneration. The Board has recommended the remuneration approved in its meeting, for ratification by the shareholders in the ensuing AGM of the Company.

(c) Secretarial Auditor

The Board, pursuant to Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, including any statutory modification(s) or re-enactment thereof, had appointed M/s. M. C. Gupta & Co., Company Secretaries, as the Secretarial Auditors of the Company to conduct the Secretarial Audit as per the provisions of the Companies Act, 2013 for the year 2017-18 (Apr-17 to Mar-18).

M/s. M. C. Gupta & Co., Company Secretaries have carried out the Secretarial Audit of the Company for FY 2017-18 and the Report of Secretarial Auditors in Form MR-3, is annexed with this Report as Annexure-E. There were no qualification / observations in the report.

CORPORATE GOVERNANCE

As required by Regulation 34 read with Schedule V of the Listing Regulations, a separate Report on Corporate Governance forms part of the Annual Report. The report on Corporate Governance also contains certain disclosures required under the Companies Act, 2013. A certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause E of Schedule V of the Listing Regulations forms part of this report as Annexure - F.

EXTRACT OF ANNUAL RETURN

As required under the provisions of Section 134(3)(a) and of Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of annual return in Form No. MGT-9 forms part of this report as Annexure-G.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.

A statement containing the necessary information on Conservation of energy, Technology absorption and Foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed to this report as Annexure-H.

APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors appreciate the trust reposed by the medical fraternity and patients in the Company and look forward to their continued patronage. The Directors are also grateful and pleased to place on record their appreciation for the excellent support, guidance and cooperation extended by the Government of India, Governments of Gujarat, Himachal Pradesh, Sikkim, Madhya Pradesh and Andhra Pradesh, Central and State Government Bodies and Authorities, Financial Institutions and Banks. The Board also expresses its appreciation of the understanding and support extended by the shareholders and the commitment shown by the employees of the Company.

For and on behalf of the Board

Ahmedabad Samir Mehta

30^th May, 2018 Executive Chairman

---

Mar 31, 2017

The Directors have the pleasure of presenting the Forty Fourth Annual Report of your Company together with the Audited Financial Statement for the year ended 31^st March, 2017

HIGHLIGHTS

- India Business registered 13% growth as compared to 11% growth of the market.

- Sharp price erosion in the US market including in the limited competition product launched last year; ongoing customer consolidation accelerated the price erosion; sixteen ANDAS filed in US in the last fiscal year including six FTF and two derma products.

- Strong growth of 25% in top line in Brazil in Brazilian Reals (BRL) (37% in INR) vis a vis industry growth of 14%; five brands achieved annual sales greater than 20 million BRL.

- Indrad Plant approval by USFDA and European regulatory authorities; Establishment Inspection Report (EIR) received from USFDA for Pithampur plant; Dahej facility approved by all major markets i.e. US, EU & BR.

- Acquired a USFDA approved API manufacturing facility at Vizag, Andhra Pradesh.

- Commenced commercial dispatches from new facility at Sikkim during March 2017. Total capacity enhancement of 400 crores tablets when fully completed.

FINANCIAL RESULTS

The summary of Standalone (Company) and Consolidated (Company and its subsidiaries) operating results for the year and appropriation of divisible profit is given below:

(Rs. in crores except per share data)

	Standalone		Consolidated
	2016-17	2015-16	2016-17	2015-16
Sales & Operating Income	4593	5439	5857	6687
Profit Before Depreciation, Finance Cost, Exceptional Items & Tax	1426	2934	1601	2959
Less Depreciation	269	213	307	238
Less Finance Cost	202	180	206	184
Profit Before Exceptional Items & Tax	955	2541	1088	2537
Less Exceptional Items	--	193	--	194
Less Tax Expense	101	605	154	610
Less Minority Interest	--	--	--	--
Net Profit for the Year	854	1743	934	1733
Balance brought forward	1620	1497	1442	1327
Other Comprehensive income and other adjusments	(7)	43	(8)	45
Balance available for appropriation	2467	3283	2368	3105
Appropriated as under:
Transfer to General Reserve	400	700	400	700
Transfer to Debenture Redemption Reserve	250	123	250	123
Dividend	169	698*	169	698*
Tax on Distributed Profits for Dividend	35	142*	35	142*
Balance Carried Forward	1613	1620	1514	1442
Earnings Per Share (Rs. per share)	50.48	102.99	54.99	102.42

*Includes final dividend of Rs.106 crores and dividend distribution tax of Rs.21 crores pertaining to FY 2014-15.

Consolidated Operating Results

The consolidated sales and operating income decreased to Rs.5857 crores from Rs.6687 crores in the previous year showing a degrowth of 12.41%. The consolidated operating profit for the year was Rs.1601 crores as against Rs.2959 crores in the previous year registering degrowth of 45.89%. The consolidated net profit decreased to Rs.934 crores from Rs.1733 crores in the previous year registering a degrowth of 46.11%. Previous year include exceptional sales and profit, primarily on account of the launch of a new product in US market which had limited competition.

Management Discussion and Analysis (MDA)

The details of operating performance of the Company for the year, the state of affairs and the key changes in the operating environment have been analysed in the Management Discussion and Analysis section which forms a part of the Annual Report.

Dividend

As per the provisions of the Regulation 43 (A) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (“Listing Regulations”), the Company adopted a Dividend Policy which is broadly based on the same policy as has been followed by the Company since long. Copy of the Policy is attached as Annexure - A. As per the Policy, the Company endeavours to distribute 30% of its annual consolidated net profit after tax as dividend in one or more tranches.

Interim dividend of Rs.10/- per equity share of face value of Rs.5/- amounting to Rs.169 crores was paid to the shareholders during the year under review. Further, the Board has recommended a final dividend of Rs.4/- per equity share amounting to Rs.68 crores for approval to shareholders at the 44^th Annual General Meeting of the Company. The aggregate distribution amount including dividend distribution tax works out to be Rs.286 crores (previous year Rs.713 crores). The total distribution towards dividend of Rs.14/per equity share of face value of Rs.5/- each amounts to 30.53% of annual consolidated net profit after tax.

HUMAN RESOURCES

Adapting to change is quintessential to a growing organization’s longevity. Over the time, Torrent has changed to adapt and evolve with the changing economic landscape, while keeping its core values firmly entrenched.

The Human Resource Department has strategic and functional responsibilities for all of the Human Resource disciplines in this changing scenario. There are four corresponding roles for Human Resource: (a) as a strategic partner working to align Human Resource and business strategy, (b) as an administrative expert working to improve organizational processes and deliver basic Human Resource services, (c) as an employee champion, listening and responding to employees’ needs, and (d) as a change agent managing change processes to increase the effectiveness of the organization.

Within organization, Human Resource Department has active engagement with employee issues, listening to their concerns, and building a professional and stable relation between employees and employers. Managing expectations, being flexible, communicating and adequate training are few of the most significant factors in keeping employees contented. Human Resource Department conducts performance appraisals, career development and up skilling, developing effective reward systems and designing jobs to fit both the needs of the business and employees.

On the Statutory front, during the year under review, there was one case received pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 which was duly addressed. The year also saw reinforcement of the already existing “Whistle Blower Policy" in order to emphasize and encourage reporting of any wrongdoing or any unethical practice.

On the Industrial front, the Company continued to foster cordial Industrial Relations with its workforce during the year.

The Company has a diverse workforce of 11781 employees as on 31^st March, 2017 vis-a-vis 10892 employees as on 31^st March, 2016. Going forward, the Company will continue to focus on nurturing the right talent to achieve the business goal.

VIGIL MECHANISM

The Company has adopted Whistle Blower Policy to provide a formal mechanism to all the stakeholders of the Company to report their concerns about unethical behaviour, actual or suspected fraud that may affect its business or reputation. The policy provides for adequate safeguarding to the person who avail the mechanism. The investigations are conducted in a fair manner and after the conclusion of the investigation, a written report of the finding is prepared. The outcome of the investigation is informed to all the concerned. The Audit and Risk Management Committee reviews the functioning of the Whistle Blower mechanism on a quarterly basis.

The details of the Whistle Blower Policy is explained in the Report of Corporate Governance and the Policy is available on the website of the Company at http://www.torrentpharma.com/pdf/whistleblower/Clean_Pharma_whishtleblower.pdf

CORPORATE SOCIAL RESPONSIBILITY

(‘ Sarve bhavantu sukhinah, sarve santu niramayah, sarve bhadrani paschyantu, ma kaschita dukh bhagbhavet’). Torrent Group believes in the well being of the society at large. As a social corporate citizen, it has always believed in the philosophy of “Think of others also when you think about yourself’.’ Over past many years, the Group has contributed to the society in the field of Community Healthcare, Sanitation and Hygiene, Education & Knowledge enhancement and Social Care and Concern.

In line with the provisions of the Companies Act, 2013 and Rules made thereunder, a Corporate Social Responsibility (CSR) Committee has been formed by the Board of Directors. The Composition of the CSR Committee is as under:

Name of Director	Category of Directorship
Shri Pradeep Bhargava, Chairperson	Independent Director
Dr. Chaitanya Dutt	Whole time Director
Smt. Renu Challu	Independent Director

During FY 2016-17 the CSR programs and activities undertaken at Group level are described hereunder:

- REACH: In January 2016, Torrent Power Limited and Torrent Pharmaceuticals Limited jointly initiated a Child Centric Health Care Program - REACH - Reach EAch CHild under the aegis of Tornascent Care Institute. The program encompasses three major activities - (a) SHAISHAV for grass root intervention, (b) JATAN for greenfield action and (c) MUSKAN for other allied initiatives. The focus during current year was mainly on SHAISHAV:

- Identification of villages with underserved population around the four regions where Torrent Group has its manufaturing facilities i.e. Indrad, Nadiad, Surat and Dahej.

- Conducting 157 paediatric camps covering 219 villages and 36,142 children to obtain the base line health status of children in the age group of 6 months to 6 years, identify and treat anaemia and malnutrition and provide speciality treatment to those identified with other ailments like cardiac, neurological and respiratory disorders.

Periodic assessments and follow up actions for all such cases under the supervision of qualified Paediatricians. The intial results were encouraging with 66% children cured of their anemic condition and around 52% of children pulled out of severe malnourishment. Around 405 children were provided specialised treatment for cardiac, neurological, respiratory, etc. disorder.

During later part of the year, the following activities under Greenfield Action - ‘JATAN’ were initiated:

a) Procurement of Mobile vans for all the four locations providing mobile OPDs and reaching out to the villages covered under SHAISHAV.

b) Starting of two fully equiped Paediatric Centres at Sugen (near Surat) and Pakhajan (near Dahej) to provide free high quality primary medical treatment to the nearby villages.

- Shiksha Setu - During FY 2016-17, through UNM Foundation, Phase II of the Program was initiated in 13 schools, located in Sugen, Chhatral, Chhapi, Memadpur and Ahmedabad locations covering about 4300 students and 150 teachers and with following components:

i) ‘sLate’ - technology based teaching tool provided through Smartboards and Tablets

ii) ‘sLearn’ - skill based adaptive learning tool for students provided on Tablets

iii) ‘sLQuiz’ - technology based learning assessment tool

iv) Continuous teachers support trainings for subject related topics, soft skills and leadership skills Further, following activities were conducted under the programme in FY 2016-17:

a) Provision of ~ 1,250 Tablets and 20 Smartboards in 13 programme schools.

b) Training to the students and teachers on the new educational tools.

c) Step by step improvisation in the tools based on the feedbacks received from the teachers and students from different schools.

d) Community meetings involving more than 1500 parents to seek their support.

The Annual Report on CSR Activities is given as Annexure C to this Report which indicates that the Company has spent Rs.27.55 crores in this regard.

Other CSR initiatives undertaken by the Company during FY 2016-17 include:

a) Conducted various programs among the students at Middle School at Bhud, Baddi through employee volunteers for their development and advancement.

b) The Company had also made donations to various organizations involved in education, healthcare, promotion of social welfare, culture, social economic development, etc.

ENVIRONMENT, HEALTH & SAFETY

We believe that Environment, Health and Safety (EHS) are essential and paramount pillars for sustainable growth of our business.

We have developed policies and guidelines which take our EHS compliance beyond the regulatory requirements. The policies also ensure consistent and continuous implementation of the EHS requirements throughout the Company.

A responsibility towards the environment is part of our mandate. We continuously endeavour to minimize adverse environmental impact, and demonstrate our commitment to protect the environment by adopting various green technologies for maximising usage of natural light in office buildings. The waste water generated in various units is treated and reused in the green belt and spaces across all units.

Most of our facilities have achieved various recognition / certifications such as ISO-14001 - 2015 & OHSAS - 18001 - 2007. Regular audits of our locations by our global customers and regulators help in our efforts to benchmark with the highest levels of compliance.

During the year, all our manufacturing sites remained compliant with applicable EHS regulations monitored through online systems.

Moreover, the Company has in place the “Conviction of Safety Policy, which provides for substantial compensation to the personnel (Employees as well as Contractors) and their families, who are adversely affected by accidents.

FINANCE

(a) Deposits

The Company has neither accepted nor renewed any deposits. None of the deposits earlier accepted by the Company remained outstanding, unpaid or unclaimed as on 31^st March, 2017.

(b) Loans, Guarantees and Investments

Details of Loans, Guarantees and Investments by Company under the provisions of Section 186 of the Companies Act, 2013, during the year, are provided in Note 9 and 10 to the Financial Statements.

(c) Debentures

The Company has raised an amount of Rs.1000 crores by way of issue of Non-Convertible Debentures on private placement basis during the year. The said Non-Convertible Debentures are listed on the National Stock Exchange of India Ltd. The aggregate Non-Convertible Debentures issued by the Company amounts to Rs.1490 crores as on 31^st March, 2017

(d) Contracts or Arrangements with Related Parties

All Related Party transactions that were entered during the year were in ordinary course of business and were on arm’s length basis. Pursuant to Regulation 23 of the Listing Regulations and applicable provisions of the Companies Act, 2013, the Company has formulated "Related Party Transactions Policy" for dealing with Related Party transactions. Details of the said Policy are provided under the Corporate Governance Report of this Annual Report. In accordance with the Related Party Transactions Policy of the Company and pursuant to the provisions of Section 188(1) of the Companies Act, 2013 and Rule 8(2) of the Companies (Accounts) Rules, 2014, particulars of material contracts and arrangements entered between the Company and the Related Parties are annexed herewith as Annexure - B. The Company had also adopted ‘Criteria for granting omnibus approval by Audit and Risk Management Committee’ for the Related Parties transactions.

(e) Internal Financial Control System

The Companies Act, 2013 has mandated the Company to have a formal framework of Internal Financial Controls (IFC) and has also laid down specific responsibilities on the Board, Audit Committee, Independent Directors and Statutory Auditors with regard to IFC. The IFC system and framework is required to ensure:

- The orderly and efficient conduct of its business,

- Safeguarding of its assets,

- The prevention and detection of frauds and errors,

- The accuracy and completeness of the accounting records and

- The timely preparation of reliable financial information.

The Board reviews the effectiveness of controls documented as part of IFC framework, and take necessary corrective actions where 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 year 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 year and is adequate considering the business operations of the Company.

The Statutory Auditors of the Company has audited the IFC over Financial Reporting and their Audit Report is annexed as Annexure A to the Independent Auditors’ Report under Standalone Financial Statements and Consolidated Financial Statements.

INSURANCE

The Company’s plant, property, equipments and stocks are adequately insured against major risks. The Company also has appropriate liability insurance covers particularly 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.

BUSINESS RISK MANAGEMENT

The Company has in place a Risk Management Framework for a systematic approach to control risks. The Risk Management process is reviewed and monitored by functional heads / business process owners. The Audit and Risk Management Committee (ARMC) discharges functions of Risk Management and Risk minimization and has designated Chief Financial Officer as the Chief Risk Officer (CRO) to assist the committee by presenting the details of the risk profile of the Company, coordinate with the functional heads who are the risk owners and monitor the status of the risk mitigation plan for the identified risks. The ARMC is periodically updated on key business risks including strategic and acquisition related risks along with their mitigation plan / strategy.

The Company in the Management and Discussion Analysis section of the Annual Report identifies the key risks which can affect the profitability of the Company. As on date, there is no risk envisaged which could threaten the existence of the Company.

SUBSIDIARIES

As of 31^st March, 2017, the Company has 16 Subsidiaries, out of which 4 are step down subsidiaries.

The highlights of performance of major Subsidiaries of the Company have been discussed and disclosed under the Management Discussion and Analysis section of the Annual Report. The contribution of each of the Subsidiries in terms of the revenue and profit is provided in Form AOC-1, marked as Note 43 of the Consolidated Financial Statements. The details of two Associates of the Company is also shown in the AOC-1. These Associates are Section 8 companies and primarily floated with another company of the Torrent group to carry out the CSR activities. On account of various economic, market and regulatory isssues, the operations in Romania and France are no longer viable. The business is being wound up and the subsidiary companies in these countries would be closed during the coming year.

The annual accounts of the Subsidiary Companies will be made available to any Member of the Company seeking such information at any point of time and are also available for inspection by any Member of the Company at the Registered Office of the Company on any working day during business hours up to the date of the Annual General Meeting. The annual accounts of the Subsidiary Companies are also available on the website of the Company at http://www.torrentpharma.com/subsidiaries-financials.php.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

(a) Board of Directors

The Board of Directors of the Company is led by the Executive Chairman and comprises eight other Directors as on 31^st March, 2017, including one Whole Time Director, five Independent Directors which includes one Woman Director as required under Section 149(1) of the Companies Act, 2013 and two Non-Executive Directors (other than Independent Directors).

All the Independent Directors of the Company have furnished declarations that they meet the criteria of independence as prescribed under the Companies Act, 2013 and under Listing Regulations.

At the Annual General Meeting of the Company held on 27^th July, 2016, the members approved the reappointment of Shri Samir Mehta (holding DIN 00061903) who had retired by rotation.

As per the provisions of the Companies Act, 2013, Dr. Chaitanya Dutt, Director (Research and Development), (holding DIN 00110312), retires by rotation at the ensuing Annual General Meeting and being eligible has offered himself for re-appointment.

Dr. Dutt has been re-appointed as a Whole time Director for a period of 3 (three) years effective from 1^st January, 2018, subject to approval of the shareholders.

The brief resume and other relevant documents of the Director being re-appointed are given in the Explanatory Statement to the Notice convening the Annual General Meeting, for your perusal.

(b) Meetings of Board of Directors

Regular meetings of the Board are held to review performance of the Company, to discuss and decide on various business strategies, policies and other issues. A calendar of Board / Committee meetings for the year is prepared and circulated to the Directors well in advance to enable them to plan their schedule for effective participation in the meetings. During the year, four meetings of the Board of Directors were convened and held on 23^rd May, 2016, 27^th July, 2016, 26^th October, 2016 and 3^rd February, 2017 The intervening gap between two consecutive meetings was not more than one hundred and twenty days. Detailed information on the meetings of the Board is included in the Corporate Governance Report which forms part of the Annual Report.

(c) Committees of the Board of Directors

In compliance with the requirement of applicable laws and as part of best governance practices, the Company has following Committees of the Board as on 31^st March, 2017:

i. Audit and Risk Management Committee

ii. Securities Transfer and Stakeholders Relationship Committee

iii. Nomination and Remuneration Committee

iv. Corporate Social Responsibility Committee

The details with respect to the aforesaid Committees forms part of the Corporate Governance Report.

(d) Appointment of Directors

(i) Criteria for Appointment of Directors

The Board of Directors of the Company has identified following criteria for determining qualification, positive attributes, and independence of Directors:

1) Proposed Director (“Person”) shall meet all statutory requirements and should:

- possess the highest ethics, integrity and values;

- not have direct / indirect conflict with present or potential business / operations of the Company;

- have the balance and maturity of judgment;

- be willing to devote sufficient time and energy;

- have demonstrated high level of leadership and vision, and the ability to articulate a clear direction for an organization;

- have relevant experience (In exceptional circumstances, specialization / expertise in unrelated areas may also be considered);

- have appropriate comprehension to understand or be able to acquire that understanding o Relating to Corporate Functioning

o Involved in scale, complexity of business and specific market and environment factors affecting the functioning of the Company.

2) The appointment shall be in compliance with the Board Diversity Policy of the Company.

(ii) Process for Identification / Appointment of Directors

- Board members may (formally or informally) suggest any potential person to the Chairman of the Company meeting the above criteria. If the Chairman deems fit, necessary recommendation shall be made by him to the Nomination and Remuneration Committee (NRC).

- Chairman of the Company can himself also refer any potential person meeting the above criteria to the NRC.

- NRC delibrate the matter and recommend such proposal to the Board.

Board considers such proposal on merit and decide suitably.

(e) Familiarization Programme of Independent Directors

The Independent Directors have been updated with their roles, rights and responsibilities in the Company by specifying them in their appointment letter alongwith necessary documents, reports and internal policies to enable them to familiarise with the Company’s procedures and practices. The Company endeavours, through presentations at regular intervals to familiarize the Independent Directors with the strategy, operations and functioning of the Company and also with changes in the regulatory environment having a significant impact on the operations of the Company and the Pharmaceutical Industry as a whole. Site visits to various plant locations and CSR sites are organized for the Directors to enable them to understand the operations of and CSR activities carried out by the Company. The Independent Directors also met with senior management team of the Company in informal gatherings. During the FY 2016-17 the Company has conducted 15 programmes for familiarizing the Directors for a total duration of 18 hours.

On cumulative basis, the Company has conducted 28 programmes for familiarizing the Directors for a total duration of 27 hours and 30 minutes.

The details of such familiarization programmes for Independent Directors are posted on the website of the Company and can be accessed at http://www.torrentpharma.com/pdf/bod/Familiarisation_Program_of_Independent_Directors.pdf

(f) Board Evaluation

Some clarificatory notes were added to the existing the Evaluation Criteria considering the SEBI’s Guidance Note on Board Evaluation. The Evaluation of Board, its Committees, Individual Directors (Independent and Non Independent Directors) and Chairperson was carried out as per the process and criteria laid down by the Board of Directors based on the recommendation of the Nomination and Remuneration Committee:

- The obtaining and consolidation of feedback from all directors for the evaluation of the Board and its Committees, Individual Directors (i.e. Independent and Non Independent Directors), were co-ordinated by the Chairman of the Board. The feedback on evaluation of the Board and its Committees was discussed in their respective meetings and the feedback on the evaluation of Individual Directors was discussed individually with them.

- The evaluation of Chairperson was co-ordinated by the Chairman of the Independent Directors meeting.

- The Independent Directors met twice on 2^nd February, 2017 and 1^st May, 2017 with respect to the above.

(g) Key Managerial Personnel

There was no change in the Key Managerial Personnel during the year under review.

(h) Directors’ Responsibility Statement

In terms of Section134(3)(c) of the Companies Act, 2013, in relation to financial statements of the Company for the year ended 31^st March, 2017, the Board of Directors state that:

i. the applicable Accounting Standards have been followed in preparation of the financial statements and there are no material departures from the said standards;

ii. reasonable and prudent accounting policies have been used in preparation of the financial statements and that they have been consistently applied and that reasonable and prudent judgments and estimates have been made in respect of items not concluded by the year end, so as to give a true and fair view of the state of affairs of the Company as at 31^st March, 2017 and of the profit for the year ended on that date;

iii. proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

iv. the financial statements have been prepared on a going concern basis;

v. proper internal financial controls were in place and were adequate and operating effectively; proper systems to ensure compliance with the provisions of applicable laws were in place and were adequate and operating effectively.

REMUNERATION

(a) Remuneration Policy

The Company has formulated policy relating to the remuneration for the Directors, Key Managerial Personnel and other employees of the Company. The salient features of this policy are as under:

1. Components of Remuneration

1.1. Fixed Pay comprising of Basic Salary, HRA, Car Allowance (applicable to General Manager and above employees), Conveyance Allowance / Reimbursement, Company’s Contribution to Provident Fund, Superannuation Fund, Gratuity, etc.

1.2. Variable Pay which is either in the form of :

(i) Commission to Managing Directors

(ii) Commission to Whole - time Directors for special one-time reward

(iii) Performance based Pay to General Managers and above [upto 20% of Cost to Company (CTC)], based on unit performance grades.

(iv) One time reward for identified employees, given in exceptional cases to employees who undertake tasks, which go beyond their normal call of duties and play a crucial role in success of an event.

1.3. Retention Pay: In case where stability is an issue, part of the CTC is kept as retention pay which is being paid after 3 years or more.

2. Annual Appraisal Process:

2.1. Annual Appraisals are conducted following which annual increments and promotions in deserving cases are decided once in a year based on:

(i) Employees Self-Assessment

(ii) Assessment of Immediate Superior and

(iii) Assessment of Head of Department

2.2. The increments as decided for a particular financial year are paid during the subsequent financial year. e.g. the performance appraisal of an employee for the year FY 2015-16 is conducted in FY 2016-17 and his / her salary rise in FY 2016-17 reflects his performance for FY 2015-16.

2.3. Performance Based Pay is also based on annual appraisal process.

2.4. Annual increment consist of

(i) Economic Rise: Based on All India Consumer Price Index published by the Government of India or Internal survey wherein inflation on commonly used items is calculated; and

(ii) Performance Rise: Based on Industry and overall business scenario and factoring the following aspects:

1) Company’s performance vis-a-vis the industry

2) Unit Performance* (Grades ranging from A to C-. Higher the grades, higher the rating)

3) Individual Performance / track record including care for health / balance between quality of work and family life.

*Unit Performance is carried out based on various financial and non-financial parameters (also used for working out overall ceiling at unit level and performance based pay) such as

a) Comparison of Company’s Revenue and Profit growth with competition.

b) Employee Cost.

c) Return on Equity.

d) Production, Quality and Regulatory compliance.

Unit: Domestic and International Operations, Manufacturing, Research & Development and Corporate.

2.5. Promotion Rise (Other than Managing Director)

(b) Criteria for Remuneration to Non-Executive Directors (NEDs):

1. T he payment of commission to the Directors of the Company who are neither in the whole time employment nor Managing Director(s) (NEDs) is approved by the shareholders of the Company. The Board or its Committee specifically authorised for this purpose, determines the manner and extent upto which the commission is paid to the NEDs in accordance with the shareholders’ approval. The commission is determined based on the participation of the Directors in the meetings of Board and / or Committees thereof, as well as on industry practice, performance of the Company and contribution by the Directors, etc.

2. Payment of Commission to be made annually on determination of profit.

3. Commission as per above criteria is subject to the condition that total commission paid to all Directors (other than Managing Director or Whole-time Director) including service tax thereon shall not exceed the limit of 1% of net profit in a financial year as laid down under the provisions of Section 197(1) of the Companies Act, 2013 read with Section 198 of the said Act.

4. Independent Directors will be reimbursed for all the expenses incurred for attending any meeting of the Board or Committees thereof, and which may arise from performance of any special assignments given by the Board.

(c) Information as required pursuant to Section 197 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014

1. the ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year:

Sr. No.	Name of the Director	Ratio of the Remuneration of Director to Median Remuneration
1.	Shri Sudhir Mehta	182.04
2.	Shri Samir Mehta$	364.08
3.	Shri Markand Bhatt	#
4.	Shri Shailesh Haribhakti	7.77
5.	Shri Haigreve Khaitan	5.34
6.	Shri Pradeep Bhargava	7.28
7.	Smt Renu Challu	8.01
8.	Prof. Ashish Nanda	3.40
9.	Dr. Chaitanya Dutt$	126.28

$ Remuneration does not include premium for group personal accident and group mediclaim policy.

# No remuneration has been paid during the year 2016-17 and hence ratio has not been calculated.

2. The percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary.

Sr. No.	Name of the Director / Key Managerial Personnel	Designation	% increase in Remuneration
1.	Shri Sudhir Mehta	Chairman Emeritus	(25)
2.	Shri Samir Mehta#	Executive Chairman	Nil
3.	Shri Shailesh Haribhakti$	Independent Director	(33.33)	(a)
4.	Shri Haigreve Khaitan$	Independent Director	22.22	(a)
5.	Shri Pradeep Bhargava$	Independent Director	(31.82)	(a)
6	Smt Renu Challu$	Independent Director	10.00	(a)
7.	Prof. Ashish Nanda$	Independent Director	(30.00)	(a)
8.	Dr. Chaitanya Dutt#	Whole-time Director	16.39	(b)
9.	Shri Ashok Modi#	Chief Financial Officer	14.69	(c)
10.	Shri Mahesh Agrawal#	Company Secretary	15.12	(c)

No remuneration has been paid in 2015-16 and 2016-17 to Shri Markand Bhatt and hence % increase has not been calculated.

(a) The % change in remuneration after considering the payment of one time additional commission paid during the last year to the Independent Directors namely Shri Shailesh Haribhakti, Shri Haigreve Khaitan, Shri Pradeep Bhargava, Smt. Renu Challu and Prof. Ashish Nanda is (67.35%), (67.65%), (68.09%), (58.75%), and (80.00%) respectively.

(b) The percentage change in remuneration for the year after considering onetime commission paid during the last year is (4.84%).

(c) The percentage change in remuneration is excluding onetime reward and performance pay.

$ Remuneration of INEDs is based on their membership in the board committees and their attendance in the meeting of the committees and the board.

# Remuneration does not include premium for group personal accident and group mediclaim policy.

3. The percentage increase in the median remuneration of employees in the financial year under review is 21.65%. The unionized employees whose remuneration is determined based on negotiations have been excluded for this purpose.

4. The Company has 11,781 employees on the rolls of Company as on 31^st March, 2017.

5. The increase already made in the salaries of employees other than managerial personal in the last financial year, based on the performance of the Company for 2015-16, was 18.53%. There was no rise in salary of Shri Samir Mehta and rise of 16.39% in the salary of Dr. Chaitanya Dutt (without considering the onetime reward paid during the year 2015-16).

The year 2016-17 was a watershed year in the momentous journey of the Company, after the boost from significant growth from low competition products in the US market and post the major overhauling of domestic business practices relating to institutional and discounted business, free goods, etc., during the previous year. The subdued growth in both domestic and international markets and the enhanced outlay on research and development, critical to ensure survival in ever changing market conditions, has resulted in a moderate bottom-line growth for the year. To overcome the issues like pricing pressures on generic products across the globe, uncertain currency fluctuations and aggressive regulatory scrutiny, there is a need for the businesses to pause to regroup and ring fence itself to be able to survive this pressure and outpace the market.

6. The remuneration paid is as per the Remuneration Policy of the Company.

(d) Remuneration to Managerial Personnel

The details of remuneration paid to the Managerial Personnel forms part of the Corporate Governance Report.

(e) Particulars of Employees

The information required under Section 134(3)(q) and 197(12) of the Companies Act, 2013, read with Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, forms part of this Report as Annexure-D. However, as per the provisions of Section 134 and Section 136 of the Companies Act, 2013, the Reports and Accounts are being sent to the Members excluding the information on employees’ particulars which are available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of ensuing Annual General Meeting. Any Member interested in obtaining a copy of such statement may write to the Company Secretary at the Registered Office of the Company.

AUDITORS

(a) Statutory Auditors

Deloitte Haskins & Sells, Ahmedabad (Firm Registration No. 117365W), Statutory Auditors of the Company along with their network of firms of Chartered Accountants has completed more than 10 years as Statutory Auditors of your Company. Considering the requirements of Section 139(2) of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, the Board of Directors of the Company at their meeting held on 26^th May, 2017 based on the recommendation of the Audit and Risk Management Committee, have made its recommendation for appointment of M/s. B S R & Co. LLP, (Firm Registration No 101248W/W - 100022), as the Statutory Auditors of the Company by the Members at the 44^th Annual General Meeting of the Company for a term of five consecutive years i.e. from the conclusion of 44^thAnnual General Meeting till the conclusion of 49^th Annual General Meeting of the Company, subject to ratification of appointment for each year by shareholders at Annual General Meeting pursuant to Section 139 of the Companies Act, 2013. Accordingly, a resolution, proposing to the aforesaid appointment of M/s. B S R & Co. LLP, as the Statutory Auditors of the Company forms part of the Notice of the 44^th Annual General Meeting of the Company. The Company has received their written consent and a certificate that they satisfy the criteria provided under Section 141 of the Act and that the appointment, if made, shall be in accordance with the applicable provisions of the Act and rules framed thereunder.

(b) Cost Auditors

The Company has appointed M/s. Kirit Mehta & Co., Cost Accountants, Mumbai (Firm Registration No. 000353) as the Cost Auditors of the Company for audit of cost accounting records of its activities (Formulation & Bulk Drugs activities) for the financial year ended 31^st March, 2017 Further, the Cost Audit Report to the Central Government for the financial year ended 31^st March, 2016 was filed on 24^th August, 2016, within the statutory timeline. The Board of Directors has, on recommendation of the Audit and Risk Management Committee, at its meeting held on 26^th May, 2017 appointed M/s. Kirit Mehta & Co. as the Cost Auditor of the Company for audit of cost accounting records of its activities (Formulation & Bulk Drugs activities) for the FY 2017-18 and has also fixed their remuneration. In terms of Section 148(3) of the Companies Act, 2013 and Rule 14 of the Companies (Audit & Auditors) Rules, 2014, it is proposed by the Board to recommend the remuneration approved in its meeting, for ratification by the shareholders in the ensuing Annual General Meeting of the Company.

(c) Secretarial Auditor

The Board, pursuant to Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, including any statutory modification(s) or re-enactment thereof, had appointed M/s. M. C. Gupta & Co., Company Secretaries, as the Secretarial Auditors of the Company to conduct the Secretarial Audit as per the provisions of the Companies Act, 2013 for the year 2016-17 (Apr-16 to Mar-17).

M/s. M. C. Gupta & Co., Company Secretaries have carried out the Secretarial Audit of the Company for FY 2016-17 and the Report of Secretarial Auditors in Form MR-3, is annexed with this Report as Annexure-E. There were no qualification / observations in the report.

CORPORATE GOVERNANCE

As required by Regulation 34 read with Schedule V of the Listing Regulations, a separate Report on Corporate Governance forms part of the Annual Report. The report on Corporate Governance also contains certain disclosures required under the Companies Act, 2013. A certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under Clause E of Schedule V of the Listing Regulations forms part of this report as Annexure - F.

EXTRACT OF ANNUAL RETURN

As required under the provisions of Section 134(3)(a) and of Section 92(3) of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extracts of annual return in Form No. MGT-9 forms part of this report as Annexure-G.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.

A statement containing the necessary information on Conservation of energy, Technology absorption and Foreign exchange earnings and Outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed to this report as Annexure-H.

APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors appreciate the trust reposed by the medical fraternity and patients in the Company and look forward to their continued patronage. The Directors are also grateful and pleased to place on record their appreciation for the excellent support, guidance and cooperation extended by the Government of India, Governments of Gujarat, Himachal Pradesh, Sikkim, Madhya Pradesh and Andhra Pradesh, Central and State Government Bodies and Authorities, Financial Institutions and Banks. The Board also expresses its appreciation of the understanding and support extended by the shareholders and the commitment shown by the employees of the Company.

For and on behalf of the Board

Ahmedabad Samir Mehta

26^th May, 2017 Executive Chairman

---

Mar 31, 2014

The Shareholders

The Directors have the pleasure of presenting the Forty First Annual Report of your Company together with the audited accounts for the year ended 31st March, 2014.

FINANCIAL RESULTS

The summary of consolidated (Company and its subsidiaries) and standalone (Company) operating results for the year and appropriation of divisible profits is given below:

(Rs.in crores except per share data)

Consolidated Standalone 2013-14 2012-13 2013-14 2012-13

Sales & Operating Income 4185 3212 3365 2766

Profit Before Depreciation, Finance Cost, Exceptional Items & Tax 990 736 1096 811

Less Depreciation 87 83 79 72

Less Finance Cost 59 34 58 37

Profit Before Exceptional Items & Tax 844 619 958 702

Less Exceptional Items - 37 - 37

Less Tax Expense 180 147 196 119

Less Minority Interest - 2 - -

Net Profit for the Year 664 433 762 547

Balance brought forward 317 167 538 274

Distributable Profits 981 600 1300 821

Appropriated as under:

Transfer to General Reserve 76 55 76 55

Interim Dividend 85 51 85 51

Proposed Final Dividend 85 144 85 144

Tax on Distributed Profits for Interim Dividend 14 8 14 8

Tax on Distributed Profits for Final Dividend 14 25 14 25

Balance Carried Forward 707 317 1026 538

Earnings Per Share (Rs.per share) 39.23 25.58 45.05 32.29

Consolidated Operating Results

The consolidated sales and operating income increased to Rs. 4185 crores from Rs. 3212 crores in the previous year yielding a growth of 30.29%. The consolidated operating profit for the year was Rs. 990 crores as against Rs. 736 crores in the previous year registering an increase of 34.51%. The consolidated net profit increased to Rs. 664 crores from Rs. 433 crores in the previous year registering a growth of 53.35%. Adjusted for the exceptional item during the last year, consolidated net profit has grown by 41.28%.

Standalone Operating Results

The sales and operating income increased to Rs. 3365 crores from Rs. 2766 crores in the previous year yielding a growth of 21.66%. The operating profit for the year under review increased to Rs. 1096 crores as against Rs. 811 crores in the previous year registering a growth of 35.14%. The profits after tax for the year under review increased to Rs. 762 crores as against Rs. 547 crores in the previous year registering a growth of 39.31%. Adjusted for the exceptional item during the last year net profit has grown by 32.06%.

Merger and Acquisition:

1. During the year under review, the Company had entered into a defnite binding Business Transfer Agreement with Elder Pharmaceuticals Limited ("Elder"), for acquisition of Identified Indian Branded Formulation Business ("Identified Business") in India and Nepal on slump sale basis for a total consideration of Rs. 2004 crores on a debt free & cash free basis. Elder''s Identified Business comprises a portfolio of 30 brands including market leading brands in the Women''s Healthcare, Pain Management, Wound Care and Nutraceuticals therapeutic segments. The final closing of the transaction is subject to satisfactory completion of all terms and conditions laid down in the Business Transfer Agreement. This acquisition shall strengthen the Company''s position in said segments by enhancing & accelerating market access. It is also expected to enable cost & revenue synergies in the Company''s domestic formulations business.

2. The Company has also acquired portfolios of marketing authorisations in UK (through Torrent Pharma (UK) Ltd) and in France. This will speed up the Company''s efforts to strength its position in the respective markets.

Management Discussion and Analysis (MDA)

The detailed analysis of the operating performance of the Company for the year, the state of affairs and the key changes in the operating environment have been included in the Management Discussion and Analysis section which forms a part of the Annual Report.

APPROPRIATIONS

Dividend

As a policy, the Company endeavours to distribute 30% of its annual consolidated net profit after tax as dividend in one or more tranches.

Normal annual dividend of Rs. 5.00 per equity share of fully paid up face value of Rs. 5.00 amounting to Rs. 84.61 crores was paid to the shareholders as interim dividend during the year under review. The tax on distributed profits was Rs. 14.38 crores making the aggregate distribution to Rs. 98.99 crores. Further, the Board has recommended a special dividend as final dividend of Rs. 5.00 per equity share amounting to Rs. 84.61 crores. Total distribution including tax of Rs. 14.38 crores works out to be Rs. 98.99 crores towards such final dividend. Aggregate dividend for the year under review works out to be Rs. 10.00 (previous year Rs. 13.00) per equity share, post issue of bonus shares in the ratio of 1:1 on 25th July, 2013. In addition, Rs. 10.00 per share was also paid as special dividend in previous year for commemorating four decades of business operations of the Company, taking the total dividend for the year 2012-13 to Rs. 23.00 per share. The aggregate distribution amount including tax on distributed profit works out to be Rs. 197.98 crores (previous year Rs. 227.30 crores) post issue of bonus shares. These dividends are tax free in the hands of the shareholders.

Transfer to Reserves

The Board has recommended a transfer of Rs. 76.00 crores to the general reserve and an amount of Rs. 1026.00 crores is retained in the Statement of profit and Loss of Standalone financials.

SHARE CAPITAL

During the year, pursuant to the approval of shareholders by passing requisite resolutions through postal ballot, the Authorised Capital of the Company was increased from Rs. 100 crores, divided into 15 crores Equity Shares of Rs. 5/- each and 25 lacs Preference Shares of Rs. 100/- each, to Rs. 125 crores, divided into 20 crores Equity Shares of Rs. 5/- each and 25 lacs Preference Shares of Rs. 100/- each, by creation of 5 crores Equity Shares of Rs. 5/- each ranking pari passu with the existing Equity Shares.

Shareholders have also approved, by passing requisite resolution through postal ballot, issue of Bonus Shares in the proportion of 1:1 i.e. 1 (one) new fully paid-up Equity Share of Rs. 5.00 each for every 1 (one) fully paid-up Equity Share of Rs. 5.00 each.

Pursuant to above, 8,46,11,360 Bonus Equity Shares of Rs. 5.00 each fully paid-up were issued and allotted to the eligible shareholders by way of capitalization of Rs. 38.46 crores from the securities premium account and Rs. 3.85 crores from capital redemption reserve. Post bonus issue, the issued and paid up capital of the Company was increased from Rs. 42.31 crores to Rs. 84.61 crores. The Net worth (stand alone) stands at Rs. 2289.81 crores as at 31st March, 2014 resulting an increase of Rs. 638.72 crores, on account of retained earnings.

DIRECTORS'' RESPONSIbILITy STATEMENT

In terms of Section 217(2AA) of the Companies Act, 1956, in relation to financial statements of the Company for the year ended 31st March, 2014, the Board of Directors state that:

i the applicable Accounting Standards have been followed in preparation of the financial statements and there are no material departures from the said standards;

ii reasonable and prudent accounting policies have been used in preparation of the financial statements and that they have been consistently applied and that reasonable and prudent judgments and estimates have been made in respect of items not concluded by the year end, so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2014 and of the profit for the year ended on that date;

iii 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 preventing and detecting fraud and other irregularities; and

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

SUbSIDIARIES

Brief review of the important subsidiaries is given below:

Torrent Pharma Inc., USA (Torrent USA)

During the year, Torrent USA earned revenues of USD 124.25 million (Rs. 756.92 crores), as compared with USD 57.90 million (Rs. 315.12 crores) in previous year registering a growth of 140.20% in Rupees. Net profit for the year was at USD 2.32 million (Rs. 39.10 crores) as against a net profit of USD 1.05 million (Rs. 7.95 crores) for the previous year. The Company received 5 ANDA approvals in 2013-14. Company plans to launch 8-12 products every year. The Company has 48 ANDA''s approvals (including 5 tentative approvals), 22 pending approvals and 47 flings under development. Steady fow of product approvals from this pipeline is expected to sustain growth momentum.

Torrent do brasil Ltda., brazil (Torrent brazil)

During the year, Torrent Brazil achieved revenues of Reais 195.01 million (Rs. 524.18 crores), as compared with Reais 180.29 million (Rs. 488.58 crores) in the previous year, registering a growth of 7.29% in Rupees. Torrent Brazil has incurred a net loss after tax of Reais 15.67 million (Rs. 41.50 crores), as compared to a net loss after tax of 2.47 million (Rs. 9.23 crores) in the previous year. The losses during the year are largely attributable to the provisions made with respect to certain labour law related litigations.

Heumann Pharma GmbH & Co Generica KG, Heunet Pharma GmbH and Norispharm GmbH at Germany (Torrent Germany)

Torrent Germany posted revenues of Euro 71.32 million (Rs. 580.49 crores) for the financial year 2013-14 as compared with Euro 55.96 million (Rs. 392.28 crores) for the previous year, registering a growth of 47.98% in Rupees. Net loss for the year was Euro 8.79 million (Rs. 40.89 crores) as against a net loss of Euro 0.97 million (profit of Rs. 2.93 crores in Rupee) for the previous year. The increase in loss was due to legal claims and damages.

Laboratorios Torrent S.A. de C.V. (Torrent Mexico)

During the year, Torrent Mexico earned revenues of Mexican Peso 86.63 million (Rs. 40.51 crores) as compared with Mexican Peso 78 million (Rs. 32.51 crores) for the previous year registering a growth of 24.61% in Rupees. Net profit for the year was at Mexican Peso 7.63 million (Rs. 3.75 crores) as against a loss of Mexican Peso 2.71 million (Rs. 1.09 crores) for the previous year.

HUMAN RESOURCES

Committed and motivated employees are one of the most important assets for the Company. The Company is committed towards excellence in action through development and administration of opportunities for its employees that helps attract, retain and develop a diverse workforce.

Performance management area was also given prime attention. Contribution of each individual employee in the organization''s growth was evaluated and their efforts were rewarded. The Company is committed to creating a healthy, conducive and safe working environment. During the year, there were significant areas of achievement around processes and policy development. Continuous efforts were taken to implement Gender Diversity initiatives, undertaken by the Company, in various areas to ensure enhanced representation of women employees. On the industrial front, the Company continued to strengthen cordial industrial relations during the year.

The Company has taken special initiatives to communicate more with its employees and to foster unity on occasions like Independence Day, Republic Day and Founder''s Day.

The Company has a diverse workforce of 8,628 employees as on 31st March, 2014 vis-a-vis 8,719 as on 31st March 2013.

CORPORATE SOCIAL RESPONSIbILITy

Concern for Society and Environment is a deeply rooted core value of the Company. As a part of its CSR, the Company makes concentrated efforts in the felds of Community Healthcare, Sanitation and Hygiene, Education and Knowledge Enhancement and Social Care and Concern. During the year, the Company was involved in following CSR activities taken up on its own or along with other Torrent group companies:

On its own

Initiated Sanitation Health Education at "Sharda Mandir" Primary school at Indrad village which focused on importance of personal hygiene. Besides this, art and craft activities were also promoted.

Conducted various personality development programmes among the students at Middle School at Bhud, Baddi Plant through employee volunteers.

At Group level

Shiksha Setu: Teaching Learning Enhancement Programme in its third year included more than 4800 students and 250 teachers as benefciaries. Outcomes included increase in participation of parents in parents-teachers meetings especially in rural areas, 55% cumulative learning level improvement over baseline year, enhanced learning interest in ICT based adaptive tool and improvement in attendance. 523 employee volunteers contributed towards implementation of the project activities effectively during the year.

Construction work is in progress for new building for high school comprising 24 class rooms, science & computer lab, library, administrative block, assembly & dining hall, kitchen area, sports complex, etc. for accommodating 1500 students of class 9 - 12 at Chhapi village in Gujarat.

Reconstruction activities at Memadpur school were completed during the year, which included renovation of existing school building and construction of new facilities including assembly hall and utility facility.

A survey of 1769 households was conducted by 154 employee volunteers to understand women health issues and child health aspects, in order to conceptualize and design a community health care programme in the vicinity of Sabarmati area in Ahmedabad.

Besides the above, the Company has also made donations to various organizations involved in education, healthcare, providing relief to disaster victims and promotion of social welfare, harmony & nationalism.

In line with the provisions of the Companies Act, 2013 and rules made thereunder ("the Act"), a Corporate Social Responsibility (CSR) Committee has been formed by the Board of Directors through circular resolution dated 3rd May, 2014. Shri Pradeep Bhargava, Shri Markand Bhatt and Dr. Chaitanya Dutt are the members of the CSR Committee. The Board of Directors at their meeting held on 9th May, 2014 approved a CSR policy as recommended by the CSR Committee which include, inter alia, the CSR activities falling under the purview of Schedule VII of the Act.

ENVIRONMENT, HEALTH & SAFETy

The ''Conviction for Safety Policy'' implemented during 2012-13 has been very successful in creating awareness about the safety at work place and compliances of safety norms. Also the personnel affected adversely were paid substantially higher compensation under this Policy.

The Company has continued with OHSAS 18001 and ISO 14001 for occupational health, safety & environment management system & ISO 9001 for quality management.

INSURANCE

The Company''s plant, property, equipments and stocks are adequately insured against major risks. After taking into account all the relevant factors, including the risk benefit trade-off, the Company has consciously decided not to take insurance cover for loss of profit under the Consequential Loss (Fire) Policy. The Company also has appropriate liability insurance covers particularly 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.

DIRECTORS / KEY MANAGERIAL PERSONNEL

During the year under review, Dr. Prasanna Chandra and Shri Sanjay Lalbhai retired from the Board with effect from 26th July, 2013 (i.e. date of last Annual General Meeting). Dr. Leena Srivastava resigned as a member on the Board of Directors with effect from 26th April, 2014.

The Board at its meeting held on 9th May, 2014, subject to approval of the shareholders, appointed Shri Pradeep Bhargava (holding DIN 00525234), Shri Shailesh Haribhakti (holding DIN 00007347) and Shri Haigreve Khaitan (holding DIN 00005290), existing Independent Directors, as Independent Directors on the Board of Directors of the Company, for a period of five consecutive years from 1st April, 2014 upto 31st March, 2019, pursuant to the provisions of Sections 149, 150, 152, 178 and other applicable provisions of the Companies Act, 2013 and the rules made thereunder ("the Act") read with Schedule IV of the Act.

The Board has also recommended to shareholders the appointment of Shri Ashish Nanda and Smt. Bhavna Doshi as Independent Directors on the Board of the Company for a period of five years effective from the date of ensuing Annual General Meeting.

Brief resume, area of expertise and other details of terms of appointment of these Directors forms integral part of the Notice of the Annual General Meeting.

All the Independent Non-Executive Directors of the Company have furnished declarations that they qualify the conditions of being Independent as per Section 149(6) & (7) of the Companies Act, 2013.

Shri Sudhir Mehta, at the meeting of the Board of Directors held on 9th May, 2014, communicated to the Board his desire to relinquish the position as the Chairman of the Board and the Company, with a view to spend more time on social activities in which he is already involved and also spare more time for himself. The Board has agreed to his request with great reluctance, in view of Shri Sudhir Mehta continuing as a permanent member of the Board of the Company and accepting the position of Chairman Emeritus, so that his counsel and advise emanating from his vast experience would continue to be available to the Board and the Company.

The Board has further at their aforesaid meeting, subject to the approval of the shareholders, appointed Shri Samir Mehta, Executive Vice Chairman, as Executive Chairman of the Company.

The above arrangements would be effective from the conclusion of the Annual General Meeting of the Company scheduled on 30th July 2014.

This step of Shri Sudhir Mehta assuming the role of Chairman Emeritus, while continuing to be permanent member on the Board and elevating Shri Samir Mehta as Executive Chairman, has been taken as part of good governance initiative to achieve the objective of smooth succession to younger leadership.

Pursuant to the provisions of Sections 203, 178 and other applicable provisions of the Companies Act, 2013 and Rule 8 of the Companies (Meetings of Board and its Powers) Rules, 2014, the Board at its aforesaid meeting also appointed Shri Samir Mehta, Executive Vice Chairman, Shri Ashok Modi, Executive Director and Chief Financial officer (CFO) & Shri Mahesh Agrawal, Vice President (Legal) and Company Secretary, as Whole-time Key Managerial Personnel of the Company.

CORPORATE GOVERNANCE

As required by Clause 49 of the Listing Agreement, a separate Report on Corporate Governance forms part of the Annual Report. A certifcate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance forms part of this report as Annex 3.

AUDITORS

- Statutory Auditors

The term of appointment of Deloitte Haskins & Sells, Ahmedabad (Firm Registration No. 117365W), Statutory Auditors of the Company will expire at the ensuing Annual General Meeting. The Company has received a certifcate from them about their eligibility for appointment as Statutory Auditors in accordance with Rule 4 of the Companies (Audit and Auditors) Rules, 2014 read with third proviso of Section 139(2) of the Companies Act, 2013. The Board has recommended to the shareholders their appointment for the year 2014-15 at the ensuing Annual General Meeting.

- Cost Auditors

The Company has appointed Kirit Mehta & Co., Cost Accountants, Mumbai (Firm Registration No. 000353) as the Cost Auditor of the Company for audit of cost accounting records of its activities (Formulation & Bulk Drugs activities) for the financial year ended 31st March, 2014. Further, due date of fling the Cost Audit Report to the Central Government for the financial year ended 31st March, 2013 was 27th September, 2013 and the same was fled on 11th September, 2013. The Board of Directors has, on recommendation of the Audit Committee, at its meeting held on 21st January, 2014 appointed Kirit Mehta & Co. as the Cost Auditor of the Company for audit of cost accounting records of its activities (Formulation & Bulk Drugs activities) for the financial year 2014-15 and has also fixed the remuneration for audit of cost accounting records for the said financial year. In terms of Section 148(3) of the Companies Act, 2013 and Rule 14 of the Companies (Audit & Auditors) Rules, 2014, it is proposed by the Board to recommend the remuneration approved in its meeting, for ratifcation by the shareholders in the ensuing Annual General Meeting of the Company.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.

A statement containing the necessary information required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed to this report as Annex 1.

PARTICULARS OF EMPLOYEES

The information required under Section 217(2A) of the Companies Act, 1956, read with Companies (Particular of Employees) Rules, 1975 as amended, forms part of this report as Annex 2. Having regards to the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, this Annual Report is being sent to all shareholders excluding the said Annexure. Any shareholder interested in obtaining the particulars may obtain it by writing to the Company Secretary at the registered office of the Company.

APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors appreciate the trust reposed by the medical fraternity and patients in the Company and look forward to their continued patronage. The Directors are also grateful and pleased to place on record their appreciation for the excellent support, guidance and cooperation extended by the Government of India, Government of Gujarat, Government of Himachal Pradesh, Government of Sikkim, Central and State Government Bodies and Authorities, Financial Institutions and Banks. The Board also expresses its appreciation of the understanding and support extended by the shareholders and employees of the Company.

For and on behalf of the Board

Ahmedabad Sudhir Mehta

9th May, 2014 Chairman

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Mar 31, 2013

To The Shareholders

The Directors have the pleasure of presenting the Fortieth Annual Report of your Company together with the audited accounts for the year ended 31st March, 2013.

FINANCIAL RESULTS

The summary of consolidated (Company and its subsidiaries) and standalone (Company) operating results for the year and appropriation of divisible profits is given below:

(Rs. in crores except per share data)

Consolidated Standalone

2012-13 2011-12 2012-13 2011-12

Sales & Operating Income 3212 2696 2766 2076

Profit Before Depreciation, Finance Cost,Exceptional Items & Tax 736 544 811 536

Less Depreciation 83 82 72 64

Less Finance Cost 34 39 37 40

Profit Before Exceptional Items & Tax 619 423 702 432

Less Exceptional Items 37 65 37 61

Less Tax Expense 147 72 119 60

Less Minority Interest 2 2 0 0

Net Profit for the Year 433 284 547 311

Balance brought forward 167 158 274 237

Distributable Profits 600 442 821 548

Appropriated as under:

Transfer to General Reserve 55 191 55 191

Interim Dividend 51 51 51 51

Proposed Final Dividend 144 21 144 21

Tax on Distributed Profits for Interim Dividend 8 8 8 8

Tax on Distributed Profits for Final Dividend 25 4 25 3

Balance Carried Forward 317 167 538 274

Earnings Per Share (Rs. per share) 51.15 33.57 64.58 36.79

Consolidated Operating Results

The consolidated sales and operating income increased to Rs. 3212 crores from Rs. 2696 crores in the previous year yielding a growth of 19.14%. The consolidated operating profit for the year was Rs. 736 crores as against Rs. 544 crores in the previous year registering an increase of 35.29%. The consolidated net profit increased to Rs. 433 crores from Rs. 284 crores in the previous year registering a growth of 52.46%. During the current year, exceptional item pertaining to provision for diminution in the value of long term investment amounting to Rs. 37 crores is charged to the Statement of Profit and Loss. Adjusting for the exceptional item (net of tax), consolidated net profit has grown by 39.88%.

Standalone Operating Results

The sales and operating income increased to Rs. 2766 crores from Rs. 2076 crores in the previous year yielding a growth of 33.24%. The operating profit for the year under review increased to Rs. 811 crores as against Rs. 536 crores in the previous year registering a growth of 51.31%. The profits after tax for the year under review increased to Rs. 546 crores as against Rs. 311 crores in the previous year registering a growth of 75.56%. During the current year, exceptional item pertaining to provision for diminution in the value of long term investment amounting to Rs. 37 crores is charged to the Statement of Profit and Loss. Adjusting for the exceptional item (net of tax), net profit has grown by 61.94%.

Management Discussion and Analysis (MDA)

The detailed analysis of the operating performance of the Company for the year, the state of affairs and the key changes in the operating environment have been included in the Management Discussion and Analysis section which forms a part of the Annual Report.

APPROPRIATIONS

Dividend

As a policy, the Company endeavours to distribute 30% of its annual consolidated net profit after tax as dividend in one or more tranches.

Normal annual dividend of Rs. 6.00 per equity share of fully paid up face value of Rs. 5.00 amounting to Rs. 50.77 crores was paid to the shareholders as interim dividend during the year under review. The tax on distributed profits was Rs. 8.24 crores making the aggregate distribution to Rs. 59.00 crores. Further, the Board has recommended an additional dividend of Rs. 7.00 per equity share (pre bonus) amounting to Rs. 59.23 crores. Commemorating four decades of business operations, the Board has also recommended a special dividend of Rs. 10.00 per equity share (pre bonus) amounting to Rs. 84.61 crores. Total distribution including tax of Rs. 24.45 crores works out to be Rs. 168.29 crores towards such additional and special dividend. Aggregate dividend works out to be Rs. 23.00 per share (previous year Rs. 8.50 including special dividend of Rs. 2.50 per share) and distribution amount including tax on distributed profit works out to be Rs. 227.30 crores (previous year Rs. 83.58 crores). These dividends are tax free in the hands of the shareholders.

Transfer to Reserves

The Board has recommended a transfer of Rs. 55.00 crores to the general reserve and an amount of Rs. 538.00 crores is retained in the Statement of Profit and Loss of Standalone financials.

BONUS ISSUE

The Board has recommended the issue of Bonus Shares in the proportion of 1:1 i.e. 1 (one) new fully paid-up Equity Share of Rs. 5.00 each for every 1 (one) fully paid-up Equity Share of Rs. 5.00 each, to the eligible shareholders of the Company as on the Record Date as may be fixed by the Board or a Committee thereof authorized for the purpose and for approving the increase in the Authorized Share Capital & consequent amendment to Capital clause of the Memorandum of Association of the Company. Pursuant to Section 192A(2) of the Companies Act,1956 read with the Companies (Passing of the Resolution by Postal Ballot) Rules, 2011, the Board seeks shareholders'' approval through passing of necessary resolutions by Postal Ballot for the above.

DIRECTORS'' RESPONSIBILITY STATEMENT

In terms of Section 217(2AA) of the Companies Act, 1956, in relation to financial statements of the Company for the year ended 31st March, 2013, the Board of Directors state that:

i the applicable Accounting Standards have been followed in preparation of the financial statements and there are no material departures from the said standards;

ii reasonable and prudent accounting policies have been used in preparation of the financial statements and that they have been consistently applied and that reasonable and prudent judgments and estimates have been made in respect of items not concluded by the year end, so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2013 and of the profit for the year ended on that date;

iii 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 preventing and detecting fraud and other irregularities; and

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

SUBSIDIARIES

Brief review of the important subsidiaries is given below:

Heumann Pharma GmbH & Co Generica KG (Heumann), Heunet Pharma GmbH and Norispharm GmbH at Germany

Heumann along with Heunet Pharma GmbH and Norispharm GmbH at Germany posted revenues of Euro 58.76 million (Rs. 412.07 crores) for the financial year 2012-13 as compared with Euro 55.43 million (Rs. 365.33 crores) for the previous year, registering a growth of 12.79% in Rupees. Net loss for the year was Euro 0.97 million (Rs. 2.93 crores) as against a net loss of Euro 0.13 million (profit of Rs. 7.41 crores in Rupee) for the previous year. The increase in loss was due to one-time penalty and legal cost.

Torrent do Brasil Ltda.(TdBL), Brazil

During the year, TdBL achieved revenues of Reai 180.29 million (Rs. 488.58 crores), as compared with Reai 165.88 million (Rs. 467.80 crores) in the previous year, registering a growth of 4.44% in Rupees. TdBL has incurred a net loss after tax of Reai 2.47 million (Rs. 9.23 crores), as compared to a net profit after tax of Reai 8.46 million (Rs. 26.27 crores) in the previous year. The losses during the year are largely attributable to price reduction of one of key product and field force expansion.

Torrent Pharma Inc. (TPI), USA

During the year, TPI earned revenues of USD 57.90 million (Rs. 315.12 crores), as compared with USD 44.50 million (Rs. 214.57 crores) in previous year registering a growth of 46.86% in Rupees. Net profit for the year was at USD 1.05 million (Rs. 7.95 crores) as against a net profit of USD 0.89 million (Rs. 10.39 crores) for the previous year. The Company has 43 ANDA''s approvals, 24 pending approvals and 33 filings under development. Steady flow of product approvals from this pipeline is expected to sustain growth momentum.

Laboratorios Torrent S.A. de C.V. (LTSA)

During the year, LTSA earned revenues of Mexican Peso 78 million (Rs. 32.51 crores) as compared with Mexican Peso 70.93 million (Rs. 26.85 crores) for the previous year registering a growth of 21.08% in Rupees. Net loss for the year was at Mexican Peso 2.71 million (Rs. 1.09 crores) as against a loss of Mexican Peso 1.33 million (Rs. 0.56 crores) for the previous year.

HUMAN RESOURCES

To enhance the effectiveness & efficiency of human resources towards better productivity and competitiveness, the Company during the year undertook focused recruitment & induction of management trainees as well as lateral hires in middle & upper management levels and up-gradation of technical & marketing skills. The performance management area also received requisite attention at individual as well as organizational levels. On the industrial relations front, the Company enjoyed a cordial rapport during the year.

The Company makes an effort to bring together (including through webcast), all the employees across all locations as well as the Senior Management team, on various occasions. Such occasions during the year were:

- The Founder''s Day, 2013 - The employees of Torrent pay respect to the legendary and visionary founder Chairman, Shri U. N. Mehta. Also, on this day, two employees selected from across the group are awarded the "Torrentian" title for their dedication, commitment and contribution in the overall development of the organization and the society.

- Independence Day 2012 - The Vice Chairman, addressed all the employees on the theme of "Understanding Past, Interpreting Present and Decoding Future" in the context of Group''s business.

- Republic Day 2013-The Chairman in his address on the theme "Unity in Diversity", solicited views from all employees on various significantly important matters including but not limited to core values and steps needed to achieve equal involvement and participation of both genders at all levels.

CORPORATE SOCIAL RESPONSIBILITY

Concern for Society and Environment is a deeply rooted core value of the Company. As a part of its CSR, the Company makes concentrated efforts in the fields of Community Healthcare, Sanitation and Hygiene, Education and Knowledge Enhancement and Social Care and Concern. During the year, the Company was mainly involved in the following CSR activities:

- Getting a new High School building constructed with total outlay of Rs. 1500 lacs and an existing School building reconstructed at a total outlay of Rs. 155 lacs at group level out of which Company''s contribution is expected to be 30%.

- Shiksha Setu - Teaching Learning Enhancement Programme in its second year included more than 3400 students and 150 teachers as beneficiaries. Relevant outcomes observed include increase in attendance, 10% learning level improvement and enhanced learning interest through ICT based adaptive tool.

- Shardashish Scholarship Programme provided scholarship support to 32 meritorious students from economically weak background.

- Holistic Psychometric Test and Counseling for 685 students of 9th standard focusing on their career paths in three schools were conducted.

- More than 70 teachers were trained with the purpose of developing them as Counselors for further counseling & development of students.

- Primary Dental Health check up Camp was organized for 865 students of Sharda Mandir Primary School at Indrad, which ensured secondary and tertiary treatment for needy students.

ENVIRONMENT, HEALTH & SAFETY

The Company provides the highest importance to safety in its various operations. In line with that philosophy, last year the Company implemented "Conviction for Safety" policy which was first of its kind in the country. This has resulted into better awareness at the work place about safety and compliance of safety norms and substantially higher compensation to the personnel and their families adversely affected by any accident.

The Company was awarded ''Sword of Honor'' along with Five Star rating by British Safety Council. HSE audit is conducted by the Company not only for its own plants but also for its loan licensees. The Company has also successfully commissioned solar evaporation pond with improved evaporation efficiency of high TDS water and new ETP exclusively for API with latest energy saving concept and efficiently removal of COD/ BOD/ammonical nitrogen by two stage bio-reaction.

The Company has received ISO-50001-2011 certification for Energy Management System at its Indrad Plant, which is helping to achieve continual improvement in energy use and consumption.

INSURANCE

The Company''s plant, property, equipments and stocks are adequately insured against major risks. After taking into account all the relevant factors, including the risk benefit trade-off, the Company has consciously decided not to take insurance cover for loss of profit under the Consequential Loss (Fire) Policy. The Company also has appropriate liability insurance covers particularly 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.

DIRECTORS

During the year under review, Shri Shashikant Bhojani retired from the Board with effect from 23rd July, 2012 (i.e. date of last Annual General Meeting).

During the year, Shri Pradeep Bhargava was appointed as Additional Director of the Company with effect from 26th October, 2012. It is proposed to appoint him as Director of the Company, liable to retire by rotation, at the ensuing Annual General Meeting. Brief resume of Shri Pradeep Bhargava forms part of the Notice of the ensuing Annual General Meeting. The Board recommends his appointment.

Dr. Prasanna Chandra and Shri Sanjay Lalbhai retire by rotation at the ensuing Annual General Meeting. Dr. Chandra and Shri Lalbhai have expressed their intention to retire and consequently not getting re-appointed. The Directors place on record their deep appreciation for the able guidance & support provided and invaluable contributions made by Dr. Chandra and Shri Lalbhai for the overall growth of the Company during their long tenure on the Board and fruitful association for more than a decade.

As per the provisions of Section 255 of the Companies Act, 1956 and subject to approval of the shareholders at the ensuing Annual General Meeting, it is proposed by the Board to make Shri Sudhir Mehta, Non-Executive Chairman of the Company as permanent member on the Board not liable to retire by rotation.

CORPORATE GOVERNANCE

As required by Clause 49 of the Listing Agreement, a separate Report on Corporate Governance forms part of the Annual Report. A certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance forms part of this report as Annex 3.

AUDITORS

- Statutory Auditors

The term of appointment of Deloitte Haskins & Sells, Ahmedabad (Firm Registration No. 117365W), Statutory Auditors of the Company will expire at the ensuing Annual General Meeting. The Company has received a certificate from them about their eligibility for appointment as Statutory Auditors as per Section 224(1B) of the Companies Act, 1956. The Audit Committee in their meeting held on 30th May, 2013 has recommended their appointment for the year 2013-14.

- Cost Auditors

The Company has appointed Kirit Mehta & Co., Cost Accountants, Mumbai (Firm Registration No. 000353) as the Cost Auditor of the Company for audit of cost accounting records of its activities (Formulation & Bulk Drugs activities) for the financial year ended 31st March, 2013. Further, due date of filing the Cost Audit Report for the financial year ended 31st March, 2012 was 28th February, 2013 and the same was filed on 11* January, 2013. Subject to the approval of the Central Government under Section 233B of the Companies Act, 1956, Kirit Mehta & Co. were appointed as the Cost Auditor of the Company for audit of cost accounting records of its activities (Formulation & Bulk Drugs activities) for the financial year 2013-14.

CONSERVATION OF ENERGY,TECHNOLOGY ABSORPTION, ETC.

A statement containing the necessary information required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed to this report as Annex 1.

PARTICULARS OF EMPLOYEES

The information required under Section 217(2A) of the Companies Act, 1956, read with Companies (Particular of Employees) Rules, 1975 as amended, forms part of this report as Annex 2. Having regards to the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, this Annual Report is being sent to all shareholders excluding the said Annexure. Any shareholder interested in obtaining the particulars may obtain it by writing to the Company Secretary at the registered office of the Company.

APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors appreciate the trust reposed by the medical fraternity and patients in the Company and look forward to their continued patronage. The Directors are also grateful and pleased to place on record their appreciation for the excellent support, guidance and cooperation extended by the Government of India, Government of Gujarat, Government of Himachal Pradesh, Government of Sikkim, Central and State Government Bodies and Authorities, Financial Institutions and Banks. The Board also expresses its appreciation of the understanding and support extended by the shareholders and employees of the Company.

For and on behalf of the Board

Ahmedabad Sudhir Mehta

30th May,2013 Chairman

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Mar 31, 2012

To

The Shareholders

The Directors have the pleasure of presenting the Thirty Ninth Annual Report of your Company together with the audited accounts for the year ended 31st March, 2012.

FINANCIAL RESULTS

The summary of consolidated (Company and its subsidiaries) and standalone (Company) operating results for the year and appropriation of divisible Profits is given below:

(Rs. in crores except per share data)

Consolidated Standalone

2011-12 2010-11 2011-12 2010-11

Sales & Operating Income 2696 2198 2076 1752

Profit Before Depreciation, Finance Cost, Exceptional Items & Tax 544 443 536 455

Less Depreciation 82 62 64 58

Less Finance Cost 39 39 40 39

Profit Before Exceptional Items & Tax 423 342 432 358

Less Exceptional Items 65 0 61 0

Less Tax Expense 72 72 60 67

Less Minority Interest 2 0 0 0

Net Profit for the Year 284 270 311 291

Balance brought forward 158 119 237 178

Distributable Profits 442 389 548 469

Appropriated as under:

Transfer to General Reserve 191 153 191 153

Interim Dividend 51 0 51 0

Proposed Final Dividend 21 68 21 68

Tax on Distributed Profits for Interim Dividend 8 0 8 0

Tax on Distributed Profits for Final Dividend 3 11 3 11

Balance Carried Forward 167 157 274 237

Earnings Per Share (Rs.per share) 33.57 31.93 36.79 34.38

Consolidated Operating Results

The consolidated sales and operating income increased to Rs. 2696 crores from Rs. 2198 crores in the previous year yielding a growth of 22.66%. The consolidated operating Profit for the year was Rs. 544 crores as against Rs. 443 crores in the previous year registering an increase of 22.80%. The consolidated net Profit increased to Rs. 284 crores from Rs. 270 crores in the previous year registering a growth of 5.19%. During the current year, exceptional item pertaining to sales returns provision amounting to Rs. 65 crores is charged to the statement of profi t and loss. Adjusting for the exceptional item (net of tax), consolidated net Profit has grown by 24.44%.

Standalone Operating Results

The sales and operating income increased to Rs. 2076 crores from Rs. 1752 crores in the previous year yielding a growth of 18.49%. The operating Profit for the year under review increased to Rs. 536 crores as against Rs. 455 crores in the previous year registering a growth of 17.80%. The Profits after tax for the year under review increased to Rs. 311 crores as against Rs. 291 crores in the previous year registering a growth of 6.87%. During the current year, exceptional item pertaining to sales returns provision amounting to Rs. 61 crores is charged to the statement of Profit and loss. Adjusting for the exceptional item (net of tax), net Profit has grown by 23.71%.

Management Discussion and Analysis (MDA)

The detailed analysis of the operating performance of the Company for the year, the state of affairs and the key changes in the operating environment have been included in the Management Discussion and Analysis section which forms a part of the Annual Report.

APPROPRIATIONS

Dividend

As a policy, the Company endeavours to distribute 30% of its annual consolidated net Profit after tax as dividend in one or more tranches.

Normal annual dividend of Rs. 6.00 per equity share of fully paid up face value of Rs. 5.00 amounting to Rs. 50.77 crores was paid to the shareholders as interim dividend during the year under review. The tax on distributed Profits was Rs. 8.24 crores making the aggregate distribution to Rs. 59.00 crores. Further, the Board has recommended a special dividend as final dividend of Rs. 2.50 per equity share amounting to Rs. 21.15 crores. Total distribution including tax of Rs. 3.42 crores works out to be Rs. 24.58 crores towards such final dividend. Aggregate dividend works out to be Rs. 8.50 per share (previous year Rs. 8.00 including special dividend of Rs. 2.00 per share) and distribution amount including tax on distributed Profit works out to be Rs. 83.58 crores (previous year Rs. 78.67 crores). These dividends are tax free in the hands of the shareholders.

Transfer to Reserves

The Board has recommended a transfer of Rs. 191.00 crores to the general reserve and an amount of Rs. 274.04 crores is retained in the Statement of Profit and Loss of Standalone financials.

DIRECTORS' RESPONSIBILITY STATEMENT

In terms of Section 217(2AA) of the Companies Act, 1956, in relation to financial statements of the Company for the year ended 31st March, 2012, the Board of Directors state that:

i the applicable Accounting Standards have been followed in preparation of the financial statements and there are no material departures from the said standards;

ii reasonable and prudent accounting policies have been used in preparation of the financial statements and that they have been consistently applied and that reasonable and prudent judgments and estimates have been made in respect of items not concluded by the year end, so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2012 and of the Profit for the year ended 31st March, 2012;

iii proper and suffi cient 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 preventing and detecting fraud and other irregularities; and

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

SUBSIDIARIES

Brief review of the important subsidiaries is given below:

Heumann Pharma GmbH & Co Generica KG (Heumann), Heunet Pharma GmbH and Norispharm GmbH at Germany

Heumann along with Heunet Pharma GmbH and Norispharm GmbH at Germany posted revenues of Euro 55.43 million (Rs. 365.33 crores) for the fi nancial year 2011-12 as compared with Euro 50.29 million (Rs. 303.53 crores) for the previous year, registering a growth of 20.35% in Rupees. Net loss for the year was Euro 0.13 million (Rs. 7.41 crores) as against a net Profit of Euro 2.30 million (Rs. 9.73 crores) for the previous year. Current year losses are on account of two one off items i.e. actuarial losses on pension liability and provision for sales returns.

Torrent do Brasil Ltda. (TdBL), Brazil

During the year, TdBL achieved revenues of Reai 165.88 million (Rs. 467.80 crores), as compared with Reai 131.27 million (Rs. 346.28 crores) in the previous year, registering a growth of 35.09% in Rupees. TdBL earned a net Profit after tax of Reai 8.46 million (Rs. 26.27 crores), as compared to a net Profit after tax of Reai 2.98 million (Rs. 8.06 crores) in the previous year.

ZAO Torrent Pharma (ZAO TP), Russia

During the year, ZAO TP achieved revenue of RRU 293.37 million (Rs. 47.62 crores) as compared with RRU 238.88 million (Rs. 36.02 crores) in the previous year, registering a growth of 32.20% in Rupees. Net loss for the year was at RRU 27.85 million (Rs. 2.74 crores) as against a net Profit after tax of RRU 92.08 million (Rs. 12.99 crores) for the previous year. Previous year Profits were exceptionally high on account of loan write back from parent and hence not strictly comparable. Efforts are on to improve sales performance and to turnaround.

Torrent Pharma Inc. (TPI), USA

During the year, TPI earned revenues of USD 44.50 million (Rs. 214.57 crores), as compared with USD 22.88 million (Rs. 104.13 crores) in previous year registering a growth of 106.06% in Rupees. Net Profit for the year was at USD 0.89 million (Rs. 10.39 crores) as against a net Profit of USD 0.30 million (Rs. 0.12 crores) for the previous year. The Company has 37 ANDA's approvals, 29 pending approvals and 16 fi lings under development. Steady fl ow of product approvals from this pipeline is expected to sustain growth momentum.

Laboratorios Torrent S.A. de C.V. (LTSA), Mexico

During the year, LTSA earned revenues of Mexican Peso 70.93 million (Rs. 26.85 crores) as compared with Mexican Peso 69.45 million (Rs. 25.52 crores) for the previous year. Net loss for the year was at Mexican Peso 1.33 million (Rs. 0.56 crores) as against a loss of Mexican Peso 2.00 million (Rs. 0.66 crores) for the previous year.

CORPORATE SOCIAL RESPONSIBILITY

The Company's Corporate Social Responsibility (CSR) initiatives are highly infl uenced by the philosophies of its group Founder Chairman, Shri U. N. Mehta. He fi rmly believed that it was the responsibility of every member of the society to give back for all the good that the society has bestowed upon us. The Company continues to make focused efforts for fulfilling its CSR, with the thrust areas being education, health & sanitation and public awareness.

During the year, the Company was involved in the following CSR activities:

- Shiksha Setu, the programme spread over 5 years for Teaching Learning Enhancement in all 20 project schools covering approximately 2700 students in the financial year ended 31st March, 2012 which comprise four components viz.

- Low Stakes Learning Assessment of students

- Post-Assessment Analysis Workshop

- Continuous Teachers' Support Programme

- Individualized ICT-based learning support

- Completion of Sharda Mandir School project, which was to the populace of Indrad Village.

- Shardashish Scholarship Programme which provided scholarship support to 46 meritorious students from economically weak background.

ENVIRONMENT, HEALTH AND SAFETY

In line with its philosophy of highest importance to safety in its various operations and in an effort to create more awareness at the work place about safety and compliance of safety norms so as to avoid accidents at the workplace as also to substantially compensate the personnel and their families who have been adversely affected by accidents, the "Conviction for Safety" policy has been implemented by the Company which is fi rst of its kind in the country. Safety campaigns and public awareness programs have also been enhanced.

INSURANCE

The Company's plant, property, equipments and stocks are adequately insured against major risks. After taking into account all the relevant factors, including the risk benefit trade-off, the Company has consciously decided not to take insurance cover for loss of Profit under the Consequential Loss (Fire) Policy. The Company also has appropriate liability insurance covers particularly for product liability and clinical trials. The Company has also taken Directors' and Offi cers' Liability Policy to provide coverage against the liabilities arising on them.

DIRECTORS

During the year under review, the Board of Directors re-appointed Dr. Chaitanya Dutt, Director (Research & Development), whose terms of appointment expired on 31st December, 2011, for a period of three years with effect from 1st January, 2012 subject to the approval of shareholders at the ensuing Annual General Meeting.

During the year, Smt. Renu Sud Karnad was appointed as Additional Director with effect from 20th April, 2011 and as regular Director at the Annual General Meeting on 30th July, 2011. She has resigned from the directorship of the Company with effect from 10th October, 2011.

Dr. Leena Srivastava and Shri Haigreve Khaitan were appointed as Additional Directors of the Company with effect from 18th October, 2011 and 23rd January, 2012 respectively. It is proposed to appoint them as Directors of the Company, liable to retire by rotation, at the ensuing Annual General Meeting.

Shri Sudhir Mehta and Shri Shashikant Bhojani retire by rotation at the ensuing Annual General Meeting. Shri Mehta, being eligible, has been proposed for re-appointment. Shri Bhojani has expressed his intention to retire and consequently not getting re-appointed. The Directors place on record their appreciation for the contribution made by Shri Bhojani during his long tenure on the Board since 25th May, 2001.

Brief resumes of the Directors being appointed / re-appointed together with other relevant details form part of the Notice of the ensuing Annual General Meeting. The Board recommends their appointment / re-appointment.

CORPORATE GOVERNANCE

As required by Clause 49 of the Listing Agreement, a separate Report on Corporate Governance forms part of the Annual Report. A certifi cate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance forms a part of this report as Annex 3.

AUDITORS

- Statutory Auditors

The term of appointment of Deloitte Haskins & Sells, Ahmedabad (Firm Registration No. 117365W), Statutory Auditors of the Company will expire at the ensuing Annual General Meeting. The Company has received a certifi cate from them about their eligibility for appointment as Statutory Auditors as per Section 224(1B) of the Companies Act, 1956. The Audit Committee in their meeting held on 18th May, 2012 has recommended the appointment of Deloitte Haskins & Sells, Ahmedabad (Firm Registration No. 117365W) as Statutory Auditors of the Company for the year 2012-13.

- Cost Auditors

Pursuant to the approval of the Central Government under Section 233B of the Companies Act, 1956, the Company has appointed Kirit Mehta & Co., Cost Accountants, Mumbai (Firm Registration No. 00015) as the Cost Auditor of the Company for audit of cost accounting records of its Pharmaceutical activities (Formulation & Bulk Drugs activities) for the financial year ended 31st March, 2012. Further, due date of fi ling the Cost Audit Report in respect of Formulation activities of the Company for the financial year ended 31st March, 2011 was 30th September, 2011 and the same has been fi led on 17th September, 2011.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.

A statement containing the necessary information required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed to this report as Annex 1.

PARTICULARS OF EMPLOYEES

The information required under Section 217(2A) of the Companies Act, 1956, read with Companies (Particular of Employees) Rules, 1975 as amended, forms part of this report as Annex 2. Having regards to the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, this Annual Report is being sent to all shareholders excluding the said Annexure. Any shareholder interested in obtaining the particulars may obtain it by writing to the Company Secretary at the registered offi ce of the Company.

APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors appreciate the trust reposed by the medical fraternity and patients in the Company and look forward to their continued patronage. The Directors are also grateful and pleased to place on record their appreciation for the excellent support, guidance and cooperation extended by the Government of India, Government of Gujarat, Government of Himachal Pradesh, Government of Sikkim, Gujarat Urja Vikas Nigam Limited, Himachal Pradesh State Electricity Board, other Central and State Government Bodies and Authorities, Financial Institutions and Banks. The Board also expresses its appreciation of the understanding and support extended by the shareholders and employees of the Company.

For and on behalf of the Board

Gangtok, Sikkim Sudhir Mehta

18th May, 2012 Chairman

---

Mar 31, 2011

The Directors have the pleasure of presenting the Thirty Eighth Annual Report of your Company together with the audited accounts for the year ended 31st March, 2011.

FINANCIAL RESULTS

The summary of consolidated (Company and its subsidiaries) and standalone (Company) operating results for the year and appropriation of divisible profits is given below:

(Rs. in Crores except per share data)

Consolidated Standalone

2010-11 2009-10 2010-11 2009-10

Sales & Operating Income 2226 1916 1778 1449

profit Before Depreciation, Interest and Tax (PBDIT) 417 430 430 422

Less Depreciation 62 66 58 54

Less Net Interest Expense 12 17 14 17

profit Before Exceptional Items & Tax 343 347 358 351

Less Exceptional Items 0 0 0 37

Less Tax Expense 73 116 67 107

Net profit for the Year 270* 231 291 207

Balance brought forward 119 3 178 86

Distributable profits 389 234 469 293

Appropriated as under:

Transfer to General Reserve 153 56 153 56

Proposed Equity Dividend 68 51 68 51

Tax on Distributed profits 11 8 11 8

Balance Carried Forward 157 119 237 178

Earnings Per Share (Rs. per share) 31.93 27.32 34.38 24.51

*Consolidated Net profit for the year is net of minority interest amounting to Rs. (0 .41) Lacs

Consolidated Operating Results

The consolidated sales and operating income increased to Rs. 2226.48 crores from Rs. 1916.04 crores in the previous year yielding a growth of 16.20%. The consolidated operating profit for the year was Rs. 417.29 crores as against Rs. 429.81 crores in the previous year registering a decrease of 2.91%. The consolidated net profit increased to Rs. 270.17 crores from Rs. 231.20 crores in the previous year registering a growth of 16.86%. During the previous year, MAT credit entitlement of Rs. 52.86 crores was written off. Adjusting for the same, consolidated net profi t has de-grown by 4.89%.

Standalone Operating Results

The sales and operating income increased to Rs. 1778.19 crores from Rs. 1448.96 crores in the previous year yielding a growth of 22.72%. The operating profit for the year under review increased to Rs. 430.52 crores as against Rs. 422.03 crores in the previous year registering a growth of 2.01%. The profits after tax for the year under review increased to Rs. 290.86 crores as against Rs. 207.37 crores in the previous year registering a growth of 40.26%. Growth in the net profit adjusted for the MAT write off as stated above is 11.77%.

Management Discussion and Analysis (MDA)

The detailed analysis of the operating performance of the Company for the year, the state of affairs and the key changes in the operating environment has been included in the Management Discussion and Analysis Section which forms a part of the Annual Report.

APPROPRIATIONS

Dividend

The Board of Directors has decided that the Company as a policy will endeavour to distribute 30% of its annual consolidated net profit after tax as dividend. The said distribution is expected to be in one or more tranches.

In line with the said policy, the Board has recommended a normal annual dividend of Rs. 6.00 per equity share and a special dividend of Rs. 2.00 per equity share (previous year dividend Rs. 6.00 per equity share) of fully paid up face value of Rs. 5, amounting to Rs. 67.69 crores (previous year Rs. 50.77 crores). The tax on distributed profits payable on this dividend shall be Rs. 10.98 crores (previous year Rs. 8.43 crores) making the aggregate distribution to Rs. 78.67 crores (previous year Rs. 59.20 crores). The distributed profits are 29% (previous year 26%) of the consolidated net profits for the year. The proposed dividend would be tax free in the hands of the shareholders.

Transfer to Reserves

The Board has recommended a transfer of Rs. 153 crores to the general reserve and an amount of Rs. 237 crores is retained in the profit and loss account of Standalone financials.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of Section 217 (2AA) of the Companies Act, 1956, in relation to financial statements of the Company for the year 2010-11, the Board of Directors state that:

i the applicable Accounting Standards have been followed in preparation of the financial statements and there are no material departures from the said standards;

ii reasonable and prudent accounting policies have been used in preparation of the financial statements and that they have been consistently applied and that reasonable and prudent judgments and estimates have been made in respect of items not concluded by the year end, so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2011 and of the profit for the year ended 31st March, 2011;

iii proper and suffi cient 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 preventing and detecting fraud and other irregularities; and

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

SUBSIDIARIES

During the year under review, the Company incorporated three wholly owned subsidiaries, one each at United Kingdom, Romania and Malaysia under the names of Torrent Pharma (UK) Ltd, Torrent Pharma S.R.L. and Laboratories Torrent (Malaysia) Sdn. Bhd. respectively. Torrent Pharma Japan Co., Ltd, a wholly owned subsidiary at Japan, was wound up during the year.

Brief review of the important subsidiaries is given below:

Heumann Pharma GmbH & Co Generica KG (Heumann), Heunet Pharma GmbH and Norispharm GmbH at Germany

Heumann along with Heunet Pharma GmbH and Norispharm GmbH at Germany posted revenues of Euro 48.15 million (Rs. 290.65 crores) for the fi nancial year 2010-11 as compared with Euro 40.07 million (Rs. 267.87 crores) for the previous year, registering a growth of 8.51% in Rupees. Net profit for the year was Euro 2.07 million (Rs. 8.40 crores) as against a net profit of Euro 0.48 million (Rs. 4.63 crores) for the previous year. During the year, Heumann was successful in obtaining several tenders announced by the various health insurance funds.

Torrent do Brasil Ltda. (TdBL), Brazil

During the year, TdBL achieved revenues of Reai 131.27 million (Rs. 346.28 crores), as compared with Reai 118.04 million (Rs. 300.97 crores) in the previous year, registering a growth of 15.06% in Rupees.

TdBL earned a net profit after tax of Reai 2.90 million (Rs. 7.83 crores), as compared to a net profit after tax of Reai 4.84 million (Rs. 18.38 crores) in the previous year.

ZAO Torrent Pharma (ZAO TP), Russia

During the year, ZAO TP achieved revenue of RRU 238.88 million (Rs. 36.02 crores) as compared with RRU 195.27 million (Rs. 30.06 crores) in the previous year, registering a growth of 19.83% in Rupees. Net profit after tax for the year was at RRU 92.08 million (Rs. 13.05 crores) as against a net loss after tax of RRU 56.88 million (Rs. 9.09 crores) for the previous year.

Torrent Pharma Inc. (TPI), USA

During the year, TPI earned revenues of USD 24.47 million (Rs. 111.36 crores), as compared with USD 19.66 million (Rs. 93.10 crores) in previous year registering a growth of 19.61% in Rupees. Net profit for the year was at USD 0.30 million (Rs. 0.12 crores) as against a net profi t of USD 0.21 million (Rs. 0.14 crores) for the previous year. The Company has 25 ANDAs approvals, 30 pending approvals and 30 fi lings under development. Steady flow of product approvals from this pipeline is expected to sustain growth momentum.

Laboratorios Torrent S.A. de C.V. (LTSA)

During the year, LTSA earned revenues of Mexican Peso 69.50 million (Rs. 25.54 crores) as compared with Mexican Peso 1.68 million (Rs. 0.60 crores) for the previous year. Net loss for the year was at Mexican Peso 2 million (Rs. 0.66 crores) as against a loss of Mexican Peso 17.23 million (Rs. 6.20 crores) for the previous year.

CORPORATE SOCIAL RESPONSIBILITY

The Company is conscious about its social obligations and has been taking various social and community initiative with special focus on health and education. The Company has actively supported the Torrent Groups initiatives to expand the U N Mehta Institute of Cardiology and Research Centre and to take patient care effectively. The Company has contributed Rs. 275 lacs during the year and cumulatively Rs. 675 lacs toward this project.

In education fi eld, your Company has taken up a project to re-build & expand primary & middle school infrastructure & improve the quality of education imparted by the school at village Indrad, Gujarat with an outlay of Rs. 400 lacs. It has also adopted a primary school at village Bhud, Baddi, Himachal Pradesh.

INSURANCE

The Companys plant, property, equipments and stocks are adequately insured against major risks. After taking into account all the relevant factors, including the risk benefit trade-off, the Company has consciously decided not to take insurance cover for loss of profit under the Consequential Loss (Fire) Policy. The Company also has appropriate liability insurance covers particularly for product liability and clinical trials. The Company has also taken Directors and Offi cers Liability Policy to provide coverage against the liabilities arising on them.

DIRECTORS

During the year under review, Samir Mehta was appointed as Executive Vice Chairman of the Company with effect from 1st August, 2010 for a period of fi ve years by pre closing his earlier terms of appointment as Managing Director of the Company.

Kiran Karnik has resigned from the directorship of the Company with effect from 23rd October, 2010. The Board places on records its appreciation for the contribution made by Mr. Karnik during his tenure as a Director.

Shailesh Haribhakti and Renu Sud Karnad were appointed as Additional Directors of the Company with effect from 23rd October, 2010 and 18th April, 2011 respectively. It is proposed to appoint them as directors of the Company, liable to retire by rotation, at the ensuing Annual General Meeting.

Markand Bhatt and Sanjay Lalbhai are liable to retire by rotation at the ensuing Annual General Meeting and being eligible have been proposed for re-appointment.

Brief resumes of the directors being appointed/ re-appointed together with other relevant details form part of the Notice of the ensuing Annual General Meeting. The Board recommends their appointment/ reappointment.

CORPORATE GOVERNANCE

As required by Clause 49 of the listing agreement, a separate report on corporate governance forms part of the Annual Report. A certifi cate from the statutory auditors of the Company regarding compliance of conditions of corporate governance forms a part of this report as Annex 3.

AUDITORS

The term of appointment of Deloitte Haskins & Sells, Ahmedabad (Firm Registration No. 117365W), statutory auditors of the Company will expire at the ensuing Annual General Meeting. The Company has received a certifi cate from them about their eligibility for appointment as statutory auditors as per Section 224(1B) of the Companies Act, 1956. The Audit Committee in their meeting held on 28th May, 2011 has recommended the appointment of Deloitte Haskins & Sells, Ahmedabad (Firm Registration No. 117365W) as statutory auditors of the Company for the year 2011-12.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.

A statement containing the necessary information required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1988 is annexed to this report as Annex 1.

PARTICULARS OF EMPLOYEES

The information required under Section 217(2A) of the Companies Act, 1956, read with Companies (Particular of Employees) Rules, 1975 as amended, forms part of this report as Annex 2. Having regards to the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, this Annual Report is being sent to all shareholders excluding the said Annexure. Any shareholder interested in obtaining the particulars may obtain it by writing to the Company Secretary at the registered offi ce of the Company.

APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors appreciate the trust reposed by the medical fraternity and patients in the Company and look forward to their continued patronage. The Directors are also grateful and pleased to place on record their appreciation for the excellent support, guidance and cooperation extended by the Government of India, Government of Gujarat, Government of Himachal Pradesh, Government of Sikkim, Gujarat Urja Vikas Nigam Limited, Himachal Pradesh State Electricity Board, other Central and State Government Bodies and Authorities, Financial Institutions and Banks. The Board also expresses its appreciation of the understanding and support extended by the shareholders and employees of the Company.

For and on behalf of the Board

Ahmedabad Sudhir Mehta

28th May, 2011 Chairman

---

Mar 31, 2010

The Directors have the pleasure of presenting the Thirty Seventh Annual Report of your Company together with the audited accounts for the year ended 31st March, 2010.

FINANCIAL RESULTS

The summary of consolidated (Company and its subsidiaries) and standalone (Company) operating results for the year and appropriation of divisible profits is given below:

(Rs. in Crores except per share data)

Consolidated Standalone 2009-10 2008-09 2009-10 2008-09

Sales & Operating Income 1916 1631 1449 1185

Profit Before Depreciation Interest and Tax (PBDIT) 430 262 422 257

Less Depreciation 66 42 54 37

Less Net Interest Expense 17 19 17 20

Profit Before Exceptional Items & Tax 347 201 351 200

Less Exceptional Items 0 9 37 9

Less Tax Expense 116 7 107 4

Net Profit for the Year 231 185 207 187

Balance brought forward 3 3 86 84

Distributable Profits 234 188 293 271

Appropriated as under:

Transfer to General Reserve 56 145 56 145

Proposed Equity Dividend 51 34 51 34

Tax on Distributed Profits 8 6 8 6

Balance Carried Forward 119 3 178 86

Earnings Per Share (Rs. per share) 27.32 21.79 24.51 22.07

Consolidated Operating Results

The consolidated sales and operating income increased to Rs. 1916.04 crores from Rs. 1630.66 crores in the previous year yielding a growth of 1 7.50%. The consolidated operating profit for the year increased to Rs. 429.81 crores as against Rs. 262.24 crores in the previous year registering a growth of 63.90%. The consolidated net profit increased to Rs. 231.20 crores from Rs. 1 84.37 crores in the previous year registering a growth of 25.40%. The Company has reviewed realisability of MAT credit entitlement, recognized in earlier years. Based on the review, such MAT credit entitlement, amounting to Rs. 52.86 crores, has been written off during the year. Adjusted for this, the growth in consolidated net profit is 54.00%.

Standalone Operating Results

The sales and operating income increased to Rs. 1448.96 crores from Rs. 1184.89 crores in the previous year yielding a growth of 22.29%. The operating profit for the year under review increased to Rs. 422.03 crores as against Rs.256.75 crores in the previous year registering a growth of 64.37%. The profits after tax for the year under review increased to Rs. 207.37 crores as against Rs. 1 86.73 crores in the previous year registering a growth of 1 1.05 %. Growth in net profit adjusted for MAT credit write off as stated above, is 39.00%.

Management Discussion and Analysis (MDA)

The detailed analysis of the operating performance of the Company for the year, the state of affairs and the key changes in the operating environment has been included in the Management Discussion and Analysis Section which forms a part of the Annual Report.

APPROPRIATIONS

Dividend

The Board has recommended a dividend of Rs. 6.00 per equity share (previous year dividend Rs. 4.00 per equity share) of fully paid up face value of Rs. 5, amounting to Rs. 50.77 crores (previous year dividend Rs. 33.84 crores). The tax on distributed profits payable on this dividend is Rs. 8.43 crores (previous year Rs. 5.75 crores) making the aggregate distribution to Rs. 59.20 crores (previous year Rs. 39.60 crores). The distributed profits are 29.00% (previous year 21.00%) of the net profits for the year.

The proposed dividend would be tax free in the hands of the shareholders.

Transfer to Reserves

The Board has recommended a transfer of Rs. 56.00 crores to the general reserve and an amount of Rs. 1 78.1 9 crores is retained in the profit and loss account of Standalone financials.

DIRECTORS RESPONSIBILITY STATEMENT

In terms of Section 21 7 (2AA) of the Companies Act, 1956, in relation to financial statements of the Company for the year 2009-1 0, the Board of Directors state that:

i the applicable Accounting Standards have been followed in preparation of the financial statements and there are no material departures from the said standards;

ii reasonable and prudent accounting policies have been used in preparation of the financial statements and that they have been consistently applied and that reasonable and prudent judgments and estimates have been made in respect of items not concluded by the year end, so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2010 and of the profit for the year ended 31st March, 2010;

iii proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1 956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

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

SUBSIDIARIES

During the year under review, the Company incorporated two wholly owned subsidiaries, one each at Canada and Thailand under the names of Torrent Pharma Canada Inc. and Torrent Pharma (Thailand) Co., Ltd. respectively. Further, the wholly owned subsidiary of the Company, Torrent Pharma GmbH (TPG) at Germany, incorporated two subsidiaries namely Heunet Pharma GmbH and Norispharm GmbH at Germany.

Brief review of the important subsidiaries is given below:

Heumann Pharma GmbH & Co Generica KG (Heumann), Heunet Pharma GmbH and Norispharm GmbH at Germany

Heumann along with Heunet Pharma GmbH and Norispharm GmbH at Germany posted revenues of Euro 41.01 million (Rs. 273.88 crores) for the financial year 2009-10 as compared with Euro 40.24 million (Rs. 261.68 crores) for the previous year, registering a growth of 4.66 % in terms of rupees. Net profit for the year was Euro 0.48 million (Rs. 4.63 crores) as against a net profit of Euro 2.22 million (Rs. 18.84 crores) for the previous year. Charge on account of impairment of product licenses and increase in employee costs due to revision in actuarial value of pension liability were the primary reasons for lower profitability. During the year Heumann along with its subsidiaries was successful in several tenders and the sales toward these will flow in the coming years.

Torrent do Brasil Ltda. (TdBL), Brazil

During the year, TdBL achieved revenues of Reai 118.04 million (Rs. 300.97 crores), as compared with Reai 108.60 million (Rs. 256.79 crores) in the previous year, registering a growth of 9.00% in Reai and 17.00% in rupees.

TDBL earned a net profit aftertax of Reai 4.84 million (Rs. 18.38 crores), as compared to a net profit after tax of Reai 2.48 million (Rs. 6.25 crores) in the previous year. The increase in the profit is primarily due to reduction in overall spend level.

Zao Torrent Pharma (ZAO TP), Russia

During the year, ZAO TP achieved revenue of RRU 195.27 million (Rs. 30.06 crores) as compared with RRU 312.83 million (Rs. 52.69 crores) in the previous year, registering a decrease of 42.95% in terms of rupees. Net loss after tax for the year was at RRU 56.88 million (Rs.9.09 crores) as against a net loss after tax of RRU 113.79 million (Rs. 1 9.52 crores) for the previous year. Operations in Russia were affected by adverse economic conditions and dampened demand resulting in the de-growth in revenues.

Torrent Pharma Inc. (TPI)r USA

During the year, TPI earned revenues of USD 1 9.66 million (Rs. 93.10 crores), as compared with USD 7.1 3 million (Rs. 33.59 crores) in previous year registering a growth of 177.17% in terms of rupees. Net profit for the year was at USD 0.21 million (Rs. 0.14 crores) as against a net profit of USD 0.22 million (Rs. 2.20 crores) for the previous year. The Company has 13 ANDAs approvals, 29 pending approvals and 28 filings under development. Steady flow of product approvals from this pipeline is expected to sustain growth momentum.

Torrent Pharma GmbH (TPG), Germany

During the year, TPG earned revenues of Euro 2.51 million (Rs. 16.86 crores) as compared with Euro 2.94 million (Rs. 1 9.09 crores) for the previous year. Net loss for the year was at Euro 1.69 million (Rs. 11.10 crores) as against a profit of Euro 0.63 million (Rs. 4.09 crores) for the previous year. Significant expenditure was incurred in obtaining product registrations during 2009-1 0. Revenue against these will flow once the regulatory approvals come through.

Torrent Pharma Philippines Inc. (TPPI), Philippines

During the year, TPPI earned revenues of Pesos 230.94 million (Rs. 23.18 crores) as compared with Pesos 172.23 million (Rs. 17.18 crores) for the previous year. Net profit for the year was at Pesos 0.86 million (Rs. 0.02 crores) as against a profit of Pesos 5.81 million (Rs. 0.88 crores) for the previous year.

Laboratories Torrent S.A. de C.V is still to start its field promotion. Torrent Australasia Pty. Ltd, Torrent Pharma Japan Co. Ltd and Torrent Pharma Canada Inc. are at their formative stages and have not commenced any revenue generating activities.

CORPORATE SOCIAL RESPONSIBILITY

The Company is conscious about its social obligations and has been taking various social and community initiative with special focus on health and education. The Company is actively supporting the Torrent Groups initiatives to expand the U N Mehta Institute of Cardiology and Research Centre and to take patient care effectively.

In education field, your Company has adopted a primary school at village Bhud, Baddi, Himachal Pradesh. It has constructed additional class rooms and enhancing number of teachers to ensure the quality of the education. Similar initiatives are taken at village Indrad, Gujarat.

INSURANCE

The Companys plant, property, equipments and stocks are adequately insured against major risks. After taking into account all the relevant factors, including the risk benefit trade-off, the Company has consciously decided not to take insurance cover for loss of profit under the Consequential Loss (Fire) Policy. The Company also has appropriate liability insurance covers particularly for product liability and clinical trials.

DIRECTORS

S. H. Bhojani and Dr. Prasanna Chandra are liable to retire by rotation at the ensuing Annual General Meeting and being eligible have been proposed for re-appointment. The details of their re-appointment together with nature of their expertise in specific functional areas and names of the companies in which they hold office as Director and/or the Chairman/Membership of Committees of the Board, are provided in the Notice of the ensuing Annua! General Meeting.

CORPORATE GOVERNANCE

As required by Clause 49 of the listing agreement, a separate report on corporate governance forms part of the Annual Report. A certificate from the statutory auditors of the Company regarding compliance of conditions of corporate governance forms a part of this report as Annex 3.

AUDITORS

The term of appointment of statutory auditors C. C. Chokshi & Co. will expire at the ensuing Annual General Meeting. C.C.Chokshi & Co. is a part of network of firms of Chartered Accountants registered with The Institute of Chartered Accountants of India (ICAI) under the Rules of Network issued by the ICAI. Deloitte Haskins & Sells, Ahmedabad (Firm Registration No. 11 7365W) is a part of the Network. The Company proposes to appoint Deloitte Haskins & Sells, Ahmedabad as its statutory auditors at the ensuing Annual General Meeting. C. C. Chokshi & Co. has expressed their unwillingness to be re-appointed as statutory auditors of the Company and Deloitte Haskins & Sells, Ahmedabad has expressed their willingness io be appointed as the statutory auditors of the Company. The Company has received a certificate from Deloitte Haskins & Sells, Ahmedabad to the effect that the appointment, if made at the ensuing Annual General Meeting, will be in accordance with the limits specified in section 224(1 B) of the Companies Act, 1 956. The Audit Committee in their meeting held on 6* May, 2010 has recommended the appointment of Deloitte Haskins & Sells, Ahmedabad as statutory auditors of the Company for the year 201 0-11.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, ETC.

A statement containing the necessary information required under the Companies (Disclosure of Particulars in the Report of Board of Directors) Rules, 1 988 is annexed to this report as Annex 1.

PARTICULARS OF EMPLOYEES

The information required under section 21 7(2A) of the Companies Act, 1 956, read with Companies (Particular of Employees) Rules, 1975, forms part of this report as Annex 2. However, as permitted by section 219(1) (b)(iv) of the Companies Act, 1956, this Annual Report is being sent to all shareholders excluding the said Annexure. Any shareholder interested in obtaining the particulars may obtain it by writing to the Company Secretary at the registered office of the Company.

APPRECIATION AND ACKNOWLEDGEMENTS

Your Directors appreciate the trust reposed by the medical fraternity and patients in the Company and look forward to their continued patronage. The Directors are also grateful and pleased to place on record their appreciation for the excellent support, guidance and cooperation extended by the Government of India, Government of Gujarat, Government of Himachal Pradesh, Government of Sikkim, Gujarat Urja Vikas Nigam Ltd, Himachal Pradesh State Electricity Board, other Central and State Government Bodies and Authorities, Financial Institutions and Banks. The Board also expresses its appreciation of the understanding and support extended by the shareholders and employees of the Company.

For and on behalf of the Board

Ahmedabad Sudhir Mehta

6th May, 2010 Chairman