Equity Analysis

To,

The Members

The Board of Directors of your Company take great pleasure in presenting the 16^th Annual Report on the business and operations of the Company together with the Audited Financial Statements for the year ended March 31, 2023.

1. FINANCIAL RESULTS

The financial performance of the Company for the year ended March 31, 2023 is summarized below:

* Figures have been regrouped and reclassified, wherever required

2. FINANCIAL PERFORMANCE

During the year under review, total revenue earned by the Company was Rs. 7,189.15 Lakhs as compared to Rs. 7,760.89 Lakhs in previous year. The expenditure incurred during the year was Rs. 6,304.62 Lakhs as against the amount of Rs. 7,188.06 Lakhs during the previous year. The Company recorded a Net Profit after tax of Rs. 660.29 Lakhs as compared to the previous year of Rs. 402.35 Lakhs and it recorded increase by 64.12%. Your Directors are optimistic of future growth.

3. NATURE OF BUSINESS

The Company is into pharmaceutical business, mainly dealing in Active Pharmaceutical Ingredient, pharmaceutical formulations, surgical products, veterinary supplements operating in domestic and export markets.

The success of the Company depends significantly on ability to commercialize new pharmaceutical products in India and across various markets around the world.

4. DIVIDEND

Your Company is committed towards enhancing shareholder value for its investors. The Company has considered it prudent not to recommend the dividend for F.Y. 2022 - 2023 in order to maintain its liquidity position.

5. LISTING OF EQUITY SHARES

The equity shares of the Company are listed on the trading platform of National Stock Exchange of India Limited (NSE), a recognized stock exchange having nationwide trading terminal.

6. TRANSFER TO RESERVES

The Company has not transferred any amount to the reserves during the year ended March 31, 2023.

7. DEPOSITS

The Company has not accepted any deposits from public and as such no amount on account of principal or interest on deposits from public was outstanding as on March 31, 2023 in terms of Section 76 of the Companies Act, 2013.

8. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to the Financial Statements.

9. CHANGE IN THE NATURE OF BUSINESS

There has been no change in the nature of business during the year under review.

The Company has well placed, proper and adequate internal financial control system that commensurate with the size, scale and complexity of its operations. The Company has in place a mechanism to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the business and functions are systematically addressed through mitigation action on continuing basis. These are routinely tested by Internal Auditors. The Audit observations on internal financial controls are periodically reported to the Audit Committee.

During the year under review, the Company vide Members approval dated 5th August 2022 increased its Authorized share capital from existing Rs.11,00,00,000/- (Rupees Eleven Crores only) divided into (One Crore Ten Lakhs) equity shares of face value of Rs. 10/- each to Rs. 22,00,00,000/- (Rupees Twenty Two Crores only) divided into 2,20,00,000 (Two Crores Twenty Lakh) equity shares of face value of Rs. 10/- each.

The Equity paid up share capital of the Company stands at Rs.10,54,62,130 (Rupees Ten Crore Fifty Four Lakh Sixty Two Thousand One Hundred Thirty only) divided into 1,05,46,213 (One Crore Five Lakh Forty Six Thousand Two Hundred Thirteen) equity shares of Rs. 10/- each.

Apart from the above, there is no change in Share Capital of the Company during the year.

Further, during the year under review, the Company sought Members approval for issue of 2500000 (Twenty-Five Lakhs) convertible Share Warrants, on preferential basis at an issue price of Rs. 121.82/- (Rupees One Hundred Twenty One Rupees and Eighty Two Paisa Only) per warrant. For the same, the Company received "In-Principle approval" of the National Stock Exchange of India Limited (vide its letter reference no. NSE/LIST /33669) dated January 24, 2023.

Furthermore, the Board allotted 2500000 (Twenty-Five Lakhs) convertible Share Warrants on February 07, 2023 to the allottees.

There is no material change and commitment affecting the financial position of the Company that have occurred after closure of the financial year of the Company to which the financial statements relate and the date of the report.

During the period under review, the transactions entered into with related parties during the financial year were on arm's length pricing basis and in the ordinary course of business and do not attract the provisions of Section 188 of the Act. There were no materially significant transactions with related parties during the financial year which were in conflict with the interest of the Company. The particulars of contracts or arrangements with related parties referred to in Section 188(1) and applicable rules of the Companies Act, is disclosed in Form AOC-2 as shown in ANNEXURE A.

All Related Party Transactions are periodically placed before the Audit Committee and also before the Board for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are of a foreseeable and repetitive nature. The policy on Related Party Transactions as approved by the Board is available on website of the Company visa: https://www.vaishalipharma.com/investors/company-policy.

The Company does not have any Subsidiary, Joint Venture or Associate Company.

Pursuant to Section 134 of the Companies Act, 2013, with respect to Directors' Responsibility Statement, it is hereby confirmed that:

a) In the preparation of the annual accounts for the year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2023 and of the profit and loss of the Company for that period ended on that date;

c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors had prepared the annual accounts on a going concern basis; and

e) The Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively.

f) The Directors have devised proper system to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

The Board of Directors of the Company comprise of 6 (Six) Directors with combination of 3 (Three) Independent Directors and 3 (Three) Executive Directors as on March 31, 2023. The composition of the Board of Directors is as under:

In accordance with the provisions of Section 152(6) and other applicable provisions of the Act, Mrs. Jagruti Atul Vasani (DIN: 02107094) will retire by rotation at the ensuing Annual General Meeting of the Company and being eligible, offers herself for re-appointment and will continue as Whole-Time Director of the Company. The Board recommends her re-appointment.

Pursuant to Section 2(51) of the Companies Act, 2013, read with the Rules framed there under, the following persons have been designated as Key Managerial Personnel of the Company;

1. Mr. Hemanth Damodar Pathak - Chief Executive Officer

2. Mr. Ratnesh Raghunath Singh - Chief Financial Officer

3. Ms. Vishwa Bipinbhai Mekhia - Company Secretary and Compliance Officer

The Independent Directors were appointed at the Board meeting and hold office for a fixed term not exceeding five years and are not liable to retire by rotation. In accordance with Section 149(7) of the Companies Act 2013, All Independent Directors of the Company have submitted the requisite declarations confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act read with Regulation 16 and 25(8) of SEBI Listing Regulations. The Independent Directors have also confirmed that they have complied with

Schedule IV of the Act and the Company's Code of Conduct.

The Familiarization Programme for Independent Directors aims to provide them an opportunity to familiarize with the Company, its Management and its operations so as to gain a clear understanding of their roles, rights and responsibilities and contribute significantly towards the growth of the Company. They have full opportunity to interact with Senior Management Personnel and are provided all the documents required and sought by them for enabling them to have a good understanding of the Company, its business model and various operations and the industry of which it is a part. The policy undertaken by the Company in this respect has been disclosed on the website of the Company at https://www.vaishalipharma.com/investors/company-policy.

Pursuant to the provisions of Section 177 (9) & (10) of the Act read with Rule 7 of the Companies (Meeting of Board and its Powers) Rules, 2014, Vigil Mechanism for Directors and employees to report genuine concern and grievances has been established. The said mechanism is governed by the Audit Committee. The details of the policy is available on the website of the company at https://www.vaishalipharma.com/investors/company-policy.

The Board of Directors has carried out an annual evaluation of its own performance, Board, Committees and Individual Directors pursuant to the provisions of the Act and the Corporate Governance requirements as prescribed by Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations, 2015 ("SEBI Listing Regulations").

The performance of the Board was evaluated by the Board Members after seeking inputs from all the Directors on the basis of the criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning, etc.

The performance of the Committees was evaluated by the Board after seeking inputs from the Committee Members on the basis of the criteria such as the composition of Committees, effectiveness of Committee Meetings, etc.

The Board and the Nomination and Remuneration Committee reviewed the performance of the Individual Directors on the basis of the criteria such as the contribution of the Individual Director to the Board and Committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

In a separate meeting of Independent Directors, performance of Non-Independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views of Executive Directors and Non-Executive Directors. The same was discussed at the Board Meeting that followed the meeting of the Independent Directors, at which the performance of the Board, its Committees and Individual Directors was also discussed. Performance evaluation of Independent Directors was done by the entire Board, excluding the Independent Director being evaluated.

The Board has adopted a policy for selection and appointment of Directors, Senior Management and their remuneration in order to comply with the requirement under the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The brief information about Remuneration Policy is provided in the Corporate Governance Report which is annexed to this report.

The policy of the Company on director's appointment and remuneration is uploaded on to the Company's website and available at https://www.vaishalipharma.com/investors/company-policy/.

Total Eight (8) Board Meetings were held during the financial year 2022 - 2023. For details of the meeting of the Board please refer to the Corporate Governance Report which is a part of this report.

In compliance of SEBI Listing Regulations and provisions of Companies Act, 2013, the Board of Directors constituted three Committees to comply with the requirements of listing, the Company has constituted the following Committees

1. Audit Committee

2. Nomination and Remuneration Committee

3. Stakeholder Relationship Committee

Total Eight (8) Audit Committee Meetings were and held during the financial year 2022 - 2023. For details of the meeting and the composition of the Committee, kindly refer the Corporate Governance Report, which is a part of this report.

26. NOMINATION AND REMUNERATION COMMITTEE

Total Four (4) Nomination and Remuneration Committee Meetings were and held during the financial year 2022 - 2023. For details of the meeting and the composition of the Committee, kindly refer the Corporate Governance Report, which is a part of this report.

In accordance with the provisions of the Section 178 of the Companies Act, 2013 read along with the applicable

Rules, the Company has formulated "Nomination and Remuneration Policy" containing criteria for determining qualifications, positive attributes, independence of a director and other matters provided under section 178 of Companies Act, 2013 for selection of any Director, Key Managerial Personnel and Senior Management Employees.

The said policy is available on the Company's website and the web link thereto is https://www.vaishalipharma.com/investors/company-policy.

27. STAKEHOLDER RELATIONSHIP COMMITTEE

Total Four (4) Stakeholder Relationship Committee Meetings were and held during the financial year 2022 - 2023. For details of the meeting and the composition of the Committee kindly refer the Corporate Governance Report, which is a part of this report.

28. AUDITORS

In accordance with the provisions of Section 139 of the Companies Act, 2013 and Companies (Audit and Auditors) Rules, 2014, M/s Raman S. Shah & Associates, Chartered Accountants, having Firm Registration No. : 119891W has been appointed as Statutory Auditors of the Company by the members at their 15^th Annual General Meeting held on September 30, 2022 to hold office for second term of five consecutive years i.e. till the conclusion of Annual General Meeting for the financial year 2026-2027.

There being no qualification or adverse remark in the Auditor's Report and hence, the report is self-explanatory.

M/s. R. U. Kamath & Co., Chartered Accountants has been re-appointed as internal Auditor for the Financial Year 2023-2024.

The Internal Auditors reports to the Audit Committee of the Board, which helps to maintain its objectivity and Independence. The scope and authority of the Internal Audit function is defined by Audit Committee.

In compliance with the provisions of Section 204 of the Companies Act, 2013, the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and SEBI Listing Regulation, as amended, the Board of Directors has, on the recommendation of Audit Committee considered reappointment of M/s. Disha & Associates, Practicing Company Secretaries, as Secretarial Auditors of the Company for conducting Secretarial Audit for financial year 2023 - 2024.

The Secretarial Auditor's Report for Financial Year 2022-23 is annexed herewith as ANNEXURE B.

The maintenance of Cost Records has not been specified by the Central Government under sub-section (1) of the Section 148 of the Act in respect of the activities carried on by the Company.

30. SECRETARIAL STANDARDS

The Directors declared that applicable Secretarial Standards relating to ‘Meetings of the Board of Directors' and ‘General Meetings' respectively, has been duly followed.

Your Company is committed to maintain the highest standards of corporate governance. We believe in adherence to good corporate practices, implement policies and guidelines and develop a culture of the best management practices and compliance with the law coupled with the highest standards of integrity, transparency, accountability and ethics in all business matters to enhance and retain investor trust, long-term shareholder value and respect minority rights in all our business decisions.

The Corporate Governance Report of the Company confirming compliance with the conditions of corporate governance as stipulated under SEBI Listing Regulations forms part of the Annual Report.

The Certificate on Corporate Governance Compliance issued by Secretarial Auditor is enclosed in

ANNEXURE C.

As the provisions of section 135 of Companies Act, 2013 dealing with Corporate Social Responsibility are applicable to the Company during the financial year, the Corporate Social Responsibility Policy of the Company is available on the website of the Company at https://www.vaishalipharma.com/investors/company-policy/

Further, the Corporate Social Report activities carried out for FY21-22 forms part of the Annual Report, enclosed at ANNEXURE -D.

No employee was employed by the Company receiving remuneration prescribed under Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (Rules) and the rules framed thereunder.

Disclosures with respect to the remuneration of Directors and employees as required under Section 197 of the Act and Rule 5 (1) of the Rules have been appended as ANNEXURE - E to this report.

Management Discussion and Analysis Report for the financial year 2022 - 2023, as stipulated under Regulation 34(2)(e) of the SEBI(Listing obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as "the SEBI LODR"), is presented in a separate section forming part of the Annual Report as

ANNEXURE - F.

Equity Shares and Share warrants of the Company are in dematerialized form with Depositories viz. NSDL and CDSL.

The Equity ISIN No. allotted is INE972X01014.

The Share Warrant ISIN No. allotted is INE972X13019.

The Company is committed and dedicated in providing a healthy and harassment free work environment to every individual of the Company, a work environment that does not tolerate sexual harassment. We highly respect dignity of everyone involved at our work place, whether they are employees, suppliers or our customers. We require all employees to strictly maintain mutual respect and positive attitude towards each other.

The Company has adopted a policy for prevention of Sexual Harassment of Women at Workplace. No complaints or grievances were noticed under the aforesaid policy during the period under review.

The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

As on the date of this report, the constitution of the Internal Complaints Committee is as under:

Considering the nature of activities undertaken by the company, above clauses of Section 134 of the Companies Act, 2013 pertaining to the Conservation of Energy, Technology absorption are not applicable to the Company.

During the year there were foreign exchange inflow of Rs. 1755.31Lakhs (P.Y. - Rs. 1384.44 Lakhs) on account of export of goods on FOB basis and foreign outflow as follows:-

(Rs in Lakhs)

Business risks exist for any enterprise having national and international exposure. Your Company also faces some such risks, the key ones being - a longer than anticipated delay in economic revival, unfavorable exchange rate fluctuations, emergence of inflationary conditions, rise in counterfeits and look-alikes and any unexpected changes in regulatory framework.

The Company is well aware of these risks and challenges and has put in place mechanisms to ensure that they are managed and mitigated with adequate timely actions.

The Directors thank the Company's employees, investors and academic partners for their continuous support.

The Directors also thank the Government of India, Governments of various states in India, Governments of various countries and concerned Government departments and agencies for their co-operation.

Your Directors are thankful to the Vendors, Customers, Bankers, and Government together with their departments and the local authorities, Employees, Stakeholders for their valuable support and co-operation.