Directors Report of Mercury Laboratories Ltd.

Mar 31, 2025

Your Directors have pleasure in presenting the44^thAnnual Report of Mercury Laboratories Limited (''the Company'') on the business and operations of the Company together with the audited financial statements for the financial year ended on March 31,2025.

1. FINANCIAL SUMMARY

The financial performance of the Company for the financial year ended March 31,2025 along with figures of previous financial year is summarized below:.

	Particulars	(? in Lakhs)
		2024-25	2023-24
	Revenue from Operations	7,510.12	7,555.90
	Profit before Depreciation & Amortization, Interest & Tax	808.52	1,011.88
	Less: Interest	54.77	38.30
	Less: Depreciation & Amortization	287.58	281.55
	Profit before Exceptional Items , Extra Ordinary Items & Tax	466.17	692.03
	Exceptional Items	-	-
	Extra-Ordinary Item	-	-
	Profit before Tax	466.17	692.03
	Less: Current Tax including Income Tax of Previous Year & Deferred Tax	151.68	126.61
	Profit of the year	314.49	565.42
	Add: Balance brought forward from the previous year	593.13	419.71
	Less: Dividend paid for the previous year	(42.00)	(42.00)
	Less: Transfer to General Reserve	-	(350.00)
	Balance to be carried forward	865.62	593.13
	*Earning Per Share
	Basic	26.21	47.12
	Diluted	26.21	47.12
*Equity Shares are at par value of ? 10 per share.

2. Dividend:

Your Directors have recommended Final Dividend of ? 3.5/- (i.e. 35%) per Equity Share of? 10 each for the financial year ended on March 31,2025. The said dividend, if approved by the shareholders, would involve a cash outflow of ? 42.00 Lakhs. The dividend, if declared, is subject to deduction of Tax at source in accordance with applicable provisions under the Income TaxAct, 1961. The Dividend Distribution Policy of the Company is set out as Annexure-A. The Dividend Distribution Policy, in terms of Regulation 43Aofthe Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (here in after referred to as ‘SEBI Listing Regulations’) is also available on the website of the Company at https://investor.mercurylabs.com/wp-content/uploads/2022/03/DIVIDEND-DISTRIBUTION-POICY-2.pdf

3. Transferto Reserves:

The Board of Directors has decided to retain the entire amount of profit for the financial year 2024-25 in the statement of profit and loss.

4. Financial Performance and Operations Review:

During the financial year under review, the Company recorded 0.61% decline in revenue as compared to the previous year. The company registered ? 7,510.12 Lakhs revenue from operations compared to ? 7,555.90 Lakhs in the previous year. This reduction in revenue was primarily attributed to a slowdown in the domestic business which impacted overall sales performance. Despite the overall drop in turnover, the export business demonstrated strong growth, registering 11.39% increase over the previous year. However, the overall profitability was adversely affected. Net profit aftertax (before OCI) also decreased by 44.38% as compared to previous year. The Company registered a net profit after tax (before OCI) of ? 314.49 Lakhs as compared to net profit of ? 565.42 Lakhs for the previous year ended March 31, 2024. The drop in profitability was due to the combined impact of stagnant revenue and notable increase in employee costs, otherselling expenses and partial cost passthrough.

5. Future Prospects:

The global economy is forecast to grow at a moderate pace, with the IMF projecting global GDP growth of 3.2% in 2025, stabilizing after post-pandemic volatility. Advanced economies are expected to grow at around 1.8%, while emerging markets are projected to expand by 4.2%. Healthcare remains a strategic growth sector, with global healthcare expenditure expected to grow at a CAGR of 5.4% from 2024 to 2028, driven by aging populations and rising chronic disease burden.

The global pharmaceutical market is projected to reach USD 1.9 trillion by 2028, growing at a CAGR of 5.8%. Growth will be underpinned by increasing demand for innovative therapies, specialty drugs, and biologics. Biopharmaceuticals are set to grow even faster, with a projected CAGR of over 9%, especially in oncology, immunology, and rare disease segments.

Emerging markets, particularly in Asia-Pacific and Latin America, are expected to see double-digit pharma growth, offering significant long-term opportunities for global players. Governments are boosting healthcare investment post-COVID, with many nations allocating 7-10% of GDP to healthcare annually. This structural support benefits the entire pharma ecosystem.

While challenges persist—including inflationary pressures, regulatory tightening, and geopolitical tensions—the medium- to long-term outlook remains strong. In summary, the pharmaceutical sector is well-positioned to grow in step with the global economy, with innovation, market expansion, and public health priorities shaping a resilient and dynamic future.

MANAGEMENTDISCUSSIONSANDANALYSIS

As stipulated by regulation 34(3) read with Schedule V(B) of the SEBI Listing Regulations, Management Discussion and Analysis forms parts of this report.

a) Industry Structure and Development

The global pharmaceutical industry continues to evolve with a clear shift toward personalized and biologic therapies, driving growth in formulation manufacturing. The global drug formulation market is expected to reach USD 456 billion by 2026, growing at a CAGR of 5.4%. Increased demand for generic and specialty drugs, alongside advancements in drug delivery technologies, are key growth drivers.

During FY 2024-25, the industry witnessed significant developments:

1. Increased focus on innovation with growing investments in R&D, particularly in biologics, biosimilars, and novel drug delivery systems.

2. Expansion of digital health technologies, including telemedicine, AI in drug discovery, and automation in manufacturing processes.

3. Policy support from governments across geographies. In India, schemes such as the Production Linked Incentive (PLI) and Bulk Drug Parks have been key enablers for capacity building and import Substitution.

4. Geopolitical shifts and supply chain diversification have also led companies to reassess their sourcing strategies and strengthen local manufacturing ecosystems

b) Outlook, Risks and Concerns

The pharmaceutical industry’s outlook remains cautiously optimistic despite heightened geopolitical tensions, including ongoing conflicts and uncertainty in key regions. Global healthcare demand continues to rise, driven by aging populations and chronic diseases, but the sector faces significant risks from geopolitical instability.

Geopolitical tensions and the threat of war pose risks to global supply chains, particularly for raw materials and Active Pharmaceutical Ingredients (APIs). The U.S.-China trade tensions, in particular, could disrupt pharmaceutical imports and exports, creating potential shortages and driving up costs. Companies may also face higher tariffs, especially under new U.S. tariff policies, impacting pricing and margins.

Additionally, political uncertainty could delay regulatory approvals and complicate market access in emerging regions.Another concern is the increased regulatory scrutiny in response to geopolitical concerns, which could lead to more stringent compliance standards, adding pressure to manufacturing costs and timelines.

Despite these challenges, the pharmaceutical sector continues to be an essential part of the global economy. By investing in resilient supply chains, adapting to evolving regulatory landscapes, and focusing on innovation, companies can navigate these uncertainties and maintain long-term growth.

c) Economic overview & Global pharma landscape

The global economy in FY 2024-25 exhibited mixed trends amid ongoing geopolitical uncertainty, inflationary pressures, and shifting monetary policies. While advanced economies, particularly the United States and the Eurozone, experienced moderate recovery following 2023''s monetary tightening cycles, emerging markets faced a more uneven path due to currency volatility, elevateddebt levels, and climate-related disruptions. The global pharmaceutical industry is navigating a period of transformation, with innovation, shifting market dynamics, and evolving consumer needs shaping its future. As of 2025, the global pharmaceutical market is valued at approximately USD 1.4 trillion and is expected to reach USD 1.9 trillion by 2028, growing at a CAGRof5.4%.

One of the most significant trends in the pharmaceutical industry is the shift toward biologics and personalized medicine. The biopharmaceutical market is set to dominate, with a CAGR of 7.2%, as advancements in gene therapies, immunotherapies, and targeted treatments continue to redefine how diseases are treated. The rise of precision medicine is enabling more effective treatments tailored to individual genetic profiles, opening new therapeutic areas and improving patient outcomes. The obesity is considered as chronic disease in the present world. Some of the pharma companies globally and Indian pharma companies are working for obesity particularly reduction of weight and diabetes.This trend will continue to grow in faster speed of 10%. By addressing obesity, disease pattern will change in different are of diseases. Hence, pharmaceutical landscape will change in developed and under developed countries.

India is emerging as one of the largest economy and senior citizens with available disposable health equipment 2.0 billion at present will increase to 12.0 billion by USD 2030. The senior citizens population will also increase and there is a high risk of acquiring non-communicable / chronic disease. By 2047, in every 5 Indians , one will be senior citizen and this will open another business opportunity for Geriatric.

Emerging markets are leading the way in pharmaceutical demand, particularly in Asia-Pacific, Latin America, and Africa, where increased access to healthcare is driving consumption. By 2028, emerging markets are expected to account for over 40% of global pharmaceutical spending. These regions will benefit from rising disposable incomes, better healthcare infrastructure, and the growing burden of both chronic and infectious Diseases.

Sustainability has become a focal point, with the pharmaceutical sector investing in greener manufacturing processes, reducing carbon footprints, and ensuring sustainable sourcing of raw materials. In alignment with broader ESG (Environmental, Social, and Governance) principles, pharmaceutical companies are increasingly being evaluated on their sustainability practices, from product lifecycle to corporate governance. Regulatory bodies and investors are placing more pressure on companies to meet sustainability targets while ensuring patient accessibility to medications.

d) Financial Performance and Operation Review

During Financial Year 2024-25, revenue of the Company was ? 7,510.12 Lakhs as compared to ? 7,555.90 Lakhs for the previous year ended March 31,2024 (Marginal reduction in revenue by 0.61% from the previous year).The Company registered a net profit (before OCI) of? 314.49 Lakhs as compared to net profit of? 565.42 Lakhs for the previous year ended March 31,2024. Return on Net Worth has been decreased to 11.12% from 12.98% and Operating profit margin has been decreased to 10.77% from 13.39%. Deterioration in ratio is mainly due to revenue remained stagnant during the year coupled with increase in employee cost and other cost.

			(? in Lakhs)
Break-up of Sales	2024-25	2023-24	Growth / (Degrowth) In terms of %
Domestic	5,425.83	5,684.81	(4.56)
Direct Exports	2,084.29	1,871.09	11.39
Total	7,510.12	7,555.90	(0.61)
Details of significant changes in key Financial ratios are given at Note No. 62 of the Notes to financial statements with the details of significant changes and reason

e) Internal Control System and its adequacy

The Company has adopted policies and procedures covering all financial, operating and compliance functions. Mercury Laboratories believes that internal control is a prerequisite for governance and that business plans should be exercised within a framework of checks and balances. The Company has adequate internal control system including suitable monitoring procedures commensurate with its size and the nature of the business.

The internal control system provides for all documented policies, guidelines, authorization and approval procedures. The Company has an internal audit department which carries out audits throughout the year. The statutory auditors while conducting the statutory audit, review and evaluate the internal controls and their observations are discussed with the Audit Committee of the Board. Further the Company has in place adequate Internal Financial Controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operations were observed.

f) Human Resources

The Company values its employees as the most important asset and integral to its growth and competitive position. We promote a conducive, productive and harmonious work environment. We also motivate employees with recognition and rewards and support them through various training programs to enhance their skills and competencies. The company has built a competent team to handle challenging assignments. The Company''s employee strength stood at 503 as on March 31,2025

g) Threats

Drug Price Control:

The Health Ministry keeps on revising the list of Drugs under price control. It is likely that the Government may bring more drugs and formulations under price control or change the mechanism of calculating the ceiling price of the drugs, which are under the ambit of the revised policy, which in turn will affect the net margins of the Company.

Generics:

The Government of India is continuously bringing in policies to shift the market towards generic products. The implementation of this process requires action by all stakeholders. This may have impact on future business strategies of the Company.

Manufacturing & Supplying Risk:

Although a major portion of the Company''s finished formulations and injectable are being manufactured at inhouse facilities, the Company also depends on its suppliers for sourcing of its raw materials. Any significant disruption at in-house facilities or any of its suppliers'' locations due to economic, geo political & social factors or any other event may impair the Company''s ability to meet the markets demand on a timely basis. In addition, the Company''s manufacturing capabilities could be impacted by quality deficiencies in the products, which its suppliers provide, leading to impact on its financial performance.

Currency fluctuation risks:

Foreign currency risks arise out of overseas operations and financing activities. Exchange rate volatility significantly impacts earnings and net equity because of invoicing in foreign currencies, expenditure in foreign currencies and foreign currency borrowings. The Company has a defined foreign exchange risk management framework to manage these risks excluding translation risks.

International Taxation:

As the Company has potential tax exposure resulting from application of varying laws and interpretations, which include intercompany transactions with related parties in relation to various aspects of business. Although the Company believes, its cross border transactions between affiliates are based on internationally accepted practices, tax authorities in various jurisdictions may have different views or interpretations and subsequently challenge the amount of profits taxed in their jurisdiction resulting into increase in tax liability including interest and penalties causing the tax expenses to increase.

h) Formulation and Developments

The Company always works on quality and cost reduction by developing in house and re-engineering formulations. Company always consider Formulation and Development as crucial for sustain growth of the Company and tries to introduce newer and newer delivery systems for products available with regard to time by enhancing therapeutic values. To achieve this objective, we have experienced and qualified pharmacists whose activity is to maintain and find out newer and newer delivery system. This will help to the company to maintain its material consumption ratio.

I) Cautionary Statement

Certain statements in the above Report may be forward looking and are stated as required by the legislations in force. The actual results may be affected by many factors that may be different from what is envisaged in terms of future performance and the outlook presented above.

6. Directors'' Responsibility Statement

As required by Section 134(3) of the Act, your Directors, to the best of their knowledge and belief, confirm that

a. In the preparation of annual accounts for the year ended March 31, 2025, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b. Your 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 at March 31,2025 and of the Profit of the Company for the year ended on that date;

c. Your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of thisAct for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. Your Directors have prepared the annual accounts on a ''''going concern'''' basis;

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

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

7. Directors

As on March 31,2025, the Board comprised One Executive Directors, Two Non-Executive Independent Directors and Three Non-Executive Non- Independent Directors.

During the year under review, following changes occurred in the position of Directors of the Company:

• Mr. Divyakant Zaveri (DIN: 01382184) completed his second term as an Independent Director and ceased to be Director effective close of business hours on July 25, 2024 and Chairperson of the Board effective close of business hours on July 23, 2024. Mr. Bharat Mehta (DIN: 07180906), Independent Director was appointed as the Chairperson of the Board with effect from July 24,2024.

• Mr. Jayantilal Raval (DIN: 10662609) was appointed as an Independent Director of the Company for a period of five (5) years from July 24, 2024. His appointment was approved by the shareholders at the 43^rd AGM held on September 27, 2024

• In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Ms. Janki R Shah (DIN: 08686344), Non- Executive Director of the Company is liable to retire by rotation at the ensuing 44^th Annual General Meeting and being eligible, offered herself for reappointment. The retirement of director by rotation at the ensuing Annual General Meeting is determined in accordance with the provisions of the CompaniesAct, 2013.

• The second term of Mr. Bharat Mehta (DIN: 07180906) second term as an Independent Director would be completed on May 14,2025 and he would ceased to be Director and Chairperson of the Board effective close of business hours on May 14, 2025. Mr. Sanjay Patel (DIN: 00283429) was appointed as an Additional NonExecutive Independent Director with effect from May 14,2025 and was also appointed as a Chairperson of the Board with effect from May 15, 2025. He is also appointed as Chairperson of the Audit Committee effective from May 15,2025. The said appointment is subject to approval of the shareholders at the ensuing 44^thAnnual General Meeting (‘AGM’).

• There were no changes in Chief Financial Officer and Company Secretary of the Company during the year under review.

The Board and Management express their deepest gratitude to Mr. Divyakant Zaveri and Mr. Bharat Mehta for their guidance, consistent value creation, and direction to the Company during their association with the Company.

Necessary resolutions for appointment and re-appointment of the aforesaid directors and their detailed profiles as required under Regulation 36(3) of the SEBI Listing Regulations and SS - 2 (Secretarial Standards on General Meetings) have been included in the notice convening the ensuing AGM and details of proposal for appointment / reappointment are mentioned in the explanatory statement of the notice. Your directors commend their reappointment.

None of the Directors of your Company is disqualified as per provisions of Section 164(2) of the Companies Act, 2013. Your Directors have made necessary disclosures to this effect as required under CompaniesAct, 2013.

During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company except Mr. Paresh J Mistry & Ms. Janaki RShah, Director of the Company who are being paid for holding the position of Purchase Manager and Head of Export respectively in the Company.

Key Managerial Personnel as at March 31,2025 are as under:

1. Mr. Rajendra R Shah, Managing Director

2. Mr.Ashish Vasavada, Chief Financial Officer

3. Ms. Krishna Shah, Company Secretary

8. Number of Meetings of the Board and Committees

Four Meetings of the Board were held during the year on May 28,2024, July 24,2024, November 14,2024 & February 12,2025. For details of the meetings of the Board and Committees, please referto the Corporate Governance Report, which forms part of this report. The maximum interval between any two meetings did not exceed 120 days, as prescribed by theActand Listing Regulations.

9. Nomination Remuneration Policy

The Policy on appointment and remuneration of directors, key managerial persons (KMP) and senior management including criteria for determining qualifications, positive attributes and director’s independence as required under Section 178(3) of the Act, and Regulation 19 read with Schedule II Part D of SEBI Listing Regulations has been formulated by the Company. Policy on Nomination and Remuneration of Directors, Key/Senior Managerial Personnel may be accessed on the Company’s website at: https://investor.mercurvlabs.com/wp-content/uploads/2019/11/NOMINATION-AND-REMUNERATION-PQLICY.pdf

The remuneration paid to the Directors, Key Managerial Personnel and Senior Management is in accordance with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Act and Regulation 19 read with Schedule II of the SEBI Listing Regulations. Further details on the same are given in the Corporate Governance Report which forms part of thisAnnual Report.

10. Board Evaluation

Pursuant to SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the CompaniesAct, 2013 states that performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the Director being evaluated.

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 (SEBI) under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The performance of the Board was evaluated by the Board 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 (NRC) 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 addition, the Chairman was also evaluated on the key aspects of his role.

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 in 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.

11. Internal Financial Control Systems and their adequacy

The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report.

12. Audit Committee

The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report.

13. Share Capital

The paid-up Equity Share Capital of the Company as at March 31,2025 is ? 120 Lakhs. The Company currently has no outstanding shares issued with differential rights, sweat equity or ESOS.

14. Risk Management

Risks are events, situations or circumstances which may lead to negative consequences on the Company''s businesses. Risk management is a structured approach to manage uncertainty. Aformal enterprise wide approach to Risk Management is being adopted by the Company and key risks is getting managed within a unitary framework. Key business risks and their mitigation are considered in the annual/strategic business plans and in periodic management reviews. The Audit Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

15. Safety, Environment and Health

The Company considers safety, environment and health as the management responsibility. Regular employee training programs are carried out in the manufacturing facilities on safety, environment and health.

16. Particulars of Loans, Guarantees or Investments

The Company has not provided any loans and guarantees and no investments made pursuant to Section 186 of the CompaniesAct, 2013 during the year ended on March 31,2025. Details of loans, guarantees and investments covered under section 186 of theAct are given in the notes to the Financial Statements.

17. Particulars of contracts or arrangements with related parties:

There are no materially significant transactions made by the Company with related parties which may have potential conflict of interest with the Company at large. Particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act along with the justification in prescribed Form AOC-2 is furnished as ‘Annexure-B’ to this report.

Asa matter of policy, your Company carries out transactions with related parties on an arms’length basis. Statement of these transactions is given at Note No. 48 of the Notes to financial statements.

The Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions as approved by the Board is available on the Company’s website and can be accessed at https://investor.mercurvlabs.com/wp-content/uploads/2023/02/Related-Party-Transaction-Policy.pdf

18. Corporate Social Responsibility (CSR)

Company’s CSR initiatives and activities are aligned to the requirements of Section 135 of theAct.

A brief outline of the CSR policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in ‘Annexure-C’ of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.

This Policy is available on the Company’s website at https://investor.mercurylabs.com/wp-content/uploads/2024/06/Corporate-Social-Responsibilitv-Policv-2-1.pdf. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report.

19. Policy on prevention, prohibition and Redressal of sexual harassment at workplace

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure.

In compliance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company had constituted an Internal Complaints Committee. The Committee has not received any complaint of sexual harassment during the financial year 2024-25. The policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at work place is placed on website of the Company https://investor.mercurylabs.com/wp-content/uploads/2019/11/Policy-on-Prevention-of-Sexual-Harassment-at-Work-Place.pdf

20. Vigil Mechanism/Whistle Blower Policy

The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company''s Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to theAudit Committee. The Whistle Blower Policy is posted on the website of the Company https://investor.mercurylabs.com/wp-content/uploads/2022/03/Whistle Blower Policy MLL-1.pdf

21. Significant and material orders passed by the regulators or courts.

No significant material orders have been passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.

22. Conservation of Energy, TechnologyAbsorption, Foreign Exchange Earnings and Outgo

The information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134 (3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed as ‘Annexure-D’.

23. Particulars of Employees and Remuneration

The information under Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

A. The ratio of the remuneration of each director to the median remuneration of the employees of the Company and percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer and Company Secretary in the financial year:

Name of Director & KMP	Designation	Remuneration (f in Lakhs)	Ratio to Median Remuneration	Percentage increase/ decrease in the remuneration
Mr. Rajendra R Shah 2	Managing Director	20.96	9.19	10.97
Mr. Dilip R Shah	Non-Executive Director	—	—	—
Mr. Bharat Mehta	Independent Director	—	—	—
Mr. Paresh Mistry	Non-Executive Director	14.86	6.52	5.65
Ms. Janki R Shah 3	Non-Executive Director	18.22	7.99	—
Mr. Jayanti Raval	Independent Director	—	—	—
Mr. Ashish Vasavada	Chief Financial Officers	15.74	6.90	9.15
Ms. Krishna Shah	Company Secretary	6.61	2.90	39.03

Notes:

1. There was no change in the criteria for payment of remuneration to Managing Director. The variation reflected in column “% increase/(decrease) in remuneration in FY 2024-25” is due to change in amount of perquisites and other benefits. Basic salary was remaining same.

2. The remuneration to Directors is within the overall limits approved by the shareholders of the Company.

3. Ms. Janki RShah, Non-Executive Directorw.e.f. February 05,2020. Further, by way of Special Resolution passed at 42^nd Annual General Meeting of the Company held on September 27, 2023, the shareholders of the Company approved payment of remuneration not exceeding f 62 Lakhs to Ms. Janki RShah as Non-Executive Director of the Company for the period of 3 years from April 01,2024.

i. The percentage increase in the median remuneration of employees in the financial year:

The percentage increase in the median remuneration of employees in thefinancial year was 10.53%.

ii. The number of permanent employees on the rolls of the Company: 503

iii. Average percentile increase already made in the salaries of employees other than the Managerial Personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

Average percentile increase made in the salaries of employees other than the managerial personnel in the financial year ending March 31,2025 was approximately 5.67% and the average increase in the managerial personnel remuneration was 1.89%

iv. Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirms that the remuneration paid are as per the remuneration policy of the Company.

B. The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of theAct, the said annexure is open for inspection and any Member interested in obtaining a copy of the same may write to the Company Secretary, where upon a copy would be sent through email only.

24. Auditors & Their Reports

(1) StatutoryAuditors:

M/s. Naresh & Co., Chartered Accountants were appointed as StatutoryAuditors of your Company fora period of Five (5) years, commencing from the conclusion of the 41^st AGM held in the year 2022, until the conclusion of the 46^thAGM to be held in the year 2027.

The Statutory Auditors have confirmed their eligibility and submitted a certificate in affirming that they are not disqualified for holding the office of the Statutory Auditor. The report given by the Statutory Auditor on the financial statements of the Company forms part of the Annual Report. There was no instance of fraud during the year under review, which required the statutory auditors to report to theAudit Committee and/or Board under Section 143(12) of the Act, and the rules made thereunder. No fraud has been reported by the Auditors to theAudit Committee or the Board. The Notes on accounts, referred to in the Auditor''s Report, are self-explanatory and therefore do not call for any further comments.

(2) SecretarialAuditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. Dholakia & Associates LLP, Company Secretary in Practice to undertake the Secretarial Audit of the Company for the financial year 2024-25. The Report on the Secretarial Audit carried out by the Secretarial Auditor i.e. M/s. Dholakia & Associates LLP, Practicing Company Secretary during the Financial Year 2024-25 is annexed herewith as ''Annexure-E''. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Further, as per Regulation 24A(1)ofthe Listing Regulations, the Company may appoint an individual for not more than one term of five consecutive years and a SecretarialAudit Firm for not more than two terms of five consecutive years as SecretarialAuditors of the Company with the approval of its shareholders in its Annual General Meeting. In view of the same, your Directors, on the recommendation of the Audit Committee appointed M/s. Dholakia & Associates LLP, Mumbai, Practicing Company Secretary, for the first term of five consecutive years to carry out the Secretarial Audit of the Company from financial year 2025-26 upto financial year 2029-30 and to fix their remuneration.

Members''approval for appointment of M/s. Dholakia &Associates LLP, Mumbai, Practicing Company Secretary, under Regulation 24A(1)ofthe Listing Regulations has been sought in the Notice convening the 44^th Annual General Meeting of the Company.

Annual Secretarial Compliance Report

The Company has undertaken an audit for the Financial Year 2024-25 for all the applicable compliances as per Listing Regulations and Circulars/Guidelines issued by SEBI from time to time. The Annual Secretarial Compliance Report for aforesaid financial year shall be submitted to the stock exchanges within prescribed time limit as per Listing Regulations.

(3) CostAuditors:

Pursuant to the provisions of Section 148 read with Companies (Cost Records and Audit) Amendment Rules, 2014 and as recommended by theAudit Committee, the Board had appointed M/s. V.M. Patel & Associates, Practicing Cost Accountants, who have given their consent to act as CostAuditors and laid on the table the consent letter received from them & confirmed that his appointment met the requirements of Section 141(3)(g) of the Act for the year 2025-26 and that he was free from disqualification as specified under section 141 read with Section 148oftheAct.

In terms of Rule 14 of the Companies (Audit and Auditors) Rule, 2014, remuneration payable to the cost auditors is required to be ratified by members. Accordingly, an ordinary resolution will be passed by members at the 44^th Annual General Meeting approving the remuneration payable to M/s. V.M. Patel & Associates.

(4) InternalAuditors

The Board of Directors appointed M/s. K R & Associates, Chartered Accountant as InternalAuditors of the Company for financial year 2025-26.

25. Secretarial Standards:

The Company has complied with the all Secretarial Standards issued by the Institute of Company Secretaries of India and adopted undertheAct

26. Deposits:

The Company has no unpaid and / or unclaimed deposit. The Company has accepted deposit from the Shareholders and has complied with all applicable provisions of the Companies Act relating to acceptance and renewal of deposits.

The details relating to deposits, covered under Chapter V of theAct are as under:

Particulars	Amt (f in Lakhs)
Accepted during the year from the Directors and Members	217.07
Remained unpaid or unclaimed as at the end of the year	None
Whether there has been any default in repayment of deposits or payment of interest	None
thereon during the year and if so, number of such cases and the total amount involved
(i) at the beginning of the year;(ii) maximum during the year; and (iii) at the end of the
year;

27. Extract ofAnnual Return

A copy of Annual Return as required in accordance with Section 92(3) of the Act read with the Companies (Management and Administration) Rules, 2014, has been placed on Company’s website at http://investor.mercurvlabs.com/miscellaneous-shareholder-details/

28. Material Change & Commitments, if any

There is no material changes and commitments, that would affect financial position of the company from the end of the financial year of the company to which the financial statements relate and the date of signing of the Board’s Report

29. Corporate Governance Report

As stipulated by Regulation 34(3) read with Schedule V(C) of the Listing Regulations, Corporate Governance Report forms part of this Annual Report Annexed to the said report is the Auditor’s Certificate as prescribed under Schedule V(E) of the Listing Regulations certifying compliance with conditions of corporate governance. A detailed report on Corporate Governance is annexed as “Annexure-F” to this Report alongwith the Auditors’ Certificate on its compliance by the Company.

30. Independent Directors

The Independent Directors of the Company have given the declaration and confirmation to the Company as required under Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 confirming that they meet the criteria of independence and that they are not aware of any circumstances or situation which exists or may be reasonably anticipated that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

The Board of Directors of your company confirms that the Independent Directors fulfill the conditions specified in Section 149 (6) of the Act and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and are independent of the management.

31. Unclaimed DividendAmountsandTransferto IEPF

The Company has transferred dividend amounts which remained unpaid or unclaimed for a period of seven years from the date of their transfer to unpaid dividend account, from time to time, on due dates to the Investor Education and Protection Fund (IEPF) administered by the Central Government.

The Company has uploaded the details of unpaid and unclaimed dividends lying with the Company as on March 31, 2025 on the website of the Company.

During the year under review, the Company has transferred 3400 equity shares of ? 10/- (Rupees Ten only) each of 11 members whose dividend has remained unclaimed / unpaid for a consecutive period of 7 (seven) years to the demat account of IEPF after giving notice to the members and advertisement in newspaper to claim their shares and the Company has credited unclaimed dividend of ? 1,43,106 to the Investor Education and Protection Fund (IEPF) pursuant to Section 125(1) of the Act, pertaining to FY 2016-17. Details of shares transferred to IEPFAuthority during financial year 2024-25 are also available on the website of the Company http://investor.mercurylabs.com/details-of-shares-to-iepf/

32. Familiarisation Program for Independent Directors

All Independent Directors are familiarised with the operations and functioning of the Company at the time of their appointment and on an ongoing basis. The details of the training and familiarisation program are provided in the Corporate Governance Report and is also available on the website of the Company at https://investor. mercurylabs.com/wp-content/uploads/2023/06/Director-Familirazation-Programme 05.05.2023.pdf

33. Prohibition of InsiderTrading

In compliance with the SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”) as amended, the Company has framed a Code of Conduct to regulate, monitor and report trading by all the employees, directors, designated persons and their immediate relatives, connected persons and such employees of the Company who are expected to have access to the UPSI relating to the Company. The Code lays down guidelines, which advises them on procedure to be followed and disclosures to be made, while dealing in the shares of the Company. Company also maintains the structured digital database as mandated in the PIT Regulations.

34. Other Disclosures

i. During the year under review, there was no change in Company’s nature of business

ii. The Company has not failed to implement any corporate action during the year under review;

iii. The disclosure pertaining to explanation for any deviation or variation in connection with certain terms of Public issue, rights issue, preferential issue, etc. is not applicable to the Company;

iv. Company does not have any subsidiary, associate or joint venture Companies within the meaning of the Companies Act, 2013.

v. No application was made nor is any proceeding pending under the Insolvency and Bankruptcy Code, 2016.

vi. The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

vii. No settlements have been done with banks orfinancial institutions.

Viii. The Company doesn’t fulfill the criteria provided under Regulation 34(2)(f) of the SEBI Listing Regulations 2015, therefore Business Responsibility & Sustainability Report is not applicable to the Company

35. Acknowledgment

The Board of Directors wish to place on record their appreciation for the continued support extended by the Bankers, Business Associates, clients, vendors and suppliers, Government Authorities, Employees at all levels and Stakeholders, in furthering the interest of the Company.

---

Mar 31, 2024

Your Directors have pleasure in presenting the 43^rd Annual Report of Mercury Laboratories Limited (the Company) on the business and operations of the Company together with the audited financial statements for the financial year ended on March 31,2024.

1. FINANCIAL SUMMARY/PERFORMANCE OF THE COMPANY

The financial performance of the Company for the financial year ended March 31,2024 along with figures of previous financial year is summarized below:

Particulars	(f in Lakhs)
	2023-24	2022-23
Revenue from Operations	7,555.90	7,533.37
Gross Profit before Depreciation Interest & Tax	1,0 11.88	1,028.98
Less: Interest	38.30	36.19
Less: Depreciation	281.55	248.33
Profit before Exceptional Items , Extra Ordinary Items & Tax	692.03	744.46
Exceptional Items	-	-
Extra-Ordinary Item	-	-
Profit before Tax	692.03	744.46
Less: Current Tax including Income Tax of Previous Year &	126.61	186.58
Deferred Tax
Profit of the year	565.42	557.88
Add: Balance brought forward from the previous year	419.71	253.83
Less: Dividend paid for the previous year	(42.00)	(42.00)
Less: Transfer to G eneral Reserve	(350.00)	(350.00)
Balance to be carried forward	593.13	419.71
*Earni ng Per Share
Basic	47.12	46.49
Diluted	47.12	46.49

*Equity Shares are at par value of f 10 per share.

2. Dividend:

Your Directors have recommended Final Dividend of f 3.5/- (i.e. 35%) per Equity Share of f 10 each for the financial year ended on March 31,2024. The said dividend, if approved by the shareholders, would involve a cash outflow of f 42.00 Lakhs. The dividend, if declared, is subject to deduction of Tax at source in accordance with applicable provisions. The Dividend Distribution Policy of the Company is set out as Annexure-A. The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (here in after referred to as ‘SEBI Listing Regulations’) is also available on the website of the Company at https://investor.mercurylabs.com/wp-content/uploads/2022/03/DIVIDEND-DISTRIBUTION-POICY-2.pdf

3. Transfer to Reserves:

Your Company transferred an amount of f 350.00 Lakhs to the General Reserve during the Financial Year ended on March 31,2024.

4. Financial Performance and Operations Review:

During the year ended on March 31, 2024 your company registered ? 7,555.90 Lakhs revenue from operations compared to ? 7,533.37 Lakhs in the previous year. Revenue from domestic business increased by 2.40%. Profit before tax is decreased by 7.57% to ? 692.03 Lakhs from ? 744.46 Lakhs. Net profit after tax (before OCI) increased by 1.33% as compared to previous year. The Company registered a net profit after tax (before OCI) of ? 565.42 Lakhs as compared to net profit of ? 557.88 Lakhs for the previous year ended March 31,2023.

5. Future Prospects:

India has become the fifth largest economy in the world, overtaking UK in September 2022, by moving up from 11^th position in 2014. “I say with confidence that India will become the third largest economy in the world in next five years”, says our Hon’ble Prime Minister, Shri. Narendra Modi.

The Hon’ble Finance Minister, Smt. Nirmala Sitaraman states while presenting the Interim Budget-2024, “India will be a developed economy by 2047” and proposes to make major provisions for innovation in the Budget of July 2024. Our Hon’ble Minister of Commerce & Industry, Shri.Piyush Goyal says India becoming a USD 5 trillion economy is round the corner.

Our Indian Pharma Industry Association, is also poised for providing logistic support for quality growth and capitalintensive investment in coming years, as is evident. Our industry is poised for substantial growth in the coming decade by providing abundant opportunities for companies of various sizes and capabilities. The current value at USD 50 billion, the industry is roughly divided equally by export revenue and domestic revenue. The projections suggest that it is set to achieve a compound annual growth rate (CAGR) of 10% until 2047, reaching a staggering USD 500 billion industry. Over the next 5-10 years, we have the objective of achieving USD 73 billion and USD 120 billion respectively.

Our success can be attributed to various factors, including a large pool of skilled professionals, cost-effective manufacturing capabilities, and a robust regulatory frame work. The Contract Development and Manufacturing Organizations (CDMOs) and The Contract Manufacturing Organizations (CMOs) can play a pivotal role in supporting and sustaining India’s position in the global pharmaceutical landscape. According to Mordor intelligence, The India CMO market size is estimated at USD 22.5 billion in 2024, and is expected to reach USD 50 billion by 2030, growing at a CAGR of 14.67%.

India''s strategic geographical location provides an advantage for international logistics. The country''s proximity to key markets, coupled with well-developed transportation infrastructure, ensures efficient and timely delivery of pharmaceutical products.

MANAGEMENT DISCUSSIONS AND ANALYSIS

As stipulated by regulation 34(3) read with Schedule V(B) of the SEBI Listing Regulations, Management Discussion and Analysis forms parts of this report.

a) Industry Structure and Development

The government of India introduced administrative and effective implementation of Revised Schedule-M equivalent to international regulatory standard. The government also re-organized Regulatory education infrastructure by creating national pharmaceutical of India by replacing Pharmacy Council of India. The aim and objective is to improve smart learning to achieve smart quality products from time to time. Government also strengthen regulatory department, distribution department, storage conditions etc. All these activities will resultant into good quality products at affordable price available to common people in next near future. The act of this will enhance trust and enhance quality of the product, integrity and level of confidence in our industry.

b) Outlook, Risks and Concerns

The global growth is projected to 3% for the year 2023-24, however the current scenario, geo political situation war between Israel and Gaza, war situation with Ukraine & Russia, China & Taiwan, leads to disruptions in the global supply chain affecting availability of raw materials and components necessary for drug manufacturing. This may likely to generate short supply of medicines. These geo political conflicts can leads to volatile currency fluctuations.

As stated earlier, we expect Health requirement India will increase number of folds and in particular it will grow life style diseases like Cardiac, Hypertension and Geriatric. Our industry will become ever Sun Rise industry by 2047 in respect of Healthcare.

c) Economic overview & Global pharma landscape

Amid a challenging global economic landscape and deteriorating geopolitical conditions, India continues to shine as a bright spot. It is the fifth-largest economy in the world and is poised to retain its position as the world''s fastest-growing major economy. Its GDP growth remained buoyant at 7.3% in FY 2023-24 as against 7.2% in FY.

The Global economy is expected to experience moderate growth in FY 2023-24. The IMF projects global GDP growth to stabilize around 2.9 % in 2023, with slight improvements in 2024. This growth is uneven across regions, with emerging markets and developing economies outpacing advance economies. Inflation remains a concern, particularly in advanced economies. Central banks are expected to maintain tight monetary policies to control inflation, which could affect economic activity and consumer spending, including healthcare.

Healthcare spending continues to rise globally, driven by aging populations, the increasing prevalence of chronic diseases, and the aftermath of the COVID-19 pandemic. Governments and private sectors are prioritizing investments in healthcare infrastructure, which bodes well for pharmaceutical sector.

d) Financial Performance and Operation Review

During Financial Year 2023-24, revenue of the Company was ? 7,555.90 Lakhs as compared to ? 7,533.37 Lakhs for the previous year ended March 31,2023 (Increase in revenue by 0.30% from the previous year).The Company registered a net profit (before OCI) of ? 565.42 Lakhs as compared to net profit of ? 557.88 Lakhs for the previous year ended March 31,2023. Return on Net Worth has been decreased to 11.12% from 12.98% mainly due to no increase in sales.

Break-up of Sales	2023-24	2022-23	Growth / (Degrowth)
			In terms of %
Domestic	4,709.07	4,595.98	2.40 %
Deemed Exports	975.74	1,029.72	(5.53)%
Direct Exports	1,871.09	1,907.67	(1.95)%
Total	7,555.90	7,533.37

Details of significant changes in key Financial ratios given at Note No. 62 of the Notes to financial statements.

e) Internal Control System and its adequacy

The Company has adopted policies and procedures covering all financial, operating and compliance functions. Mercury Laboratories believes that internal control is a prerequisite for governance and that business plans should be exercised within a framework of checks and balances. The Company has adequate internal control system including suitable monitoring procedures commensurate with its size and the nature of the business.

The internal control system provides for all documented policies, guidelines, authorization and approval procedures. The Company has an internal audit department which carries out audits throughout the year. The statutory auditors while conducting the statutory audit, review and evaluate the internal controls and their observations are discussed with the Audit Committee of the Board. Further the Company has in place adequate Internal Financial Controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operations were observed.

f) Human Resources

The Company values its employees as the most important asset and integral to its growth and competitive position. We promote a conducive, productive and harmonious work environment. We also motivate employees with recognition and rewards and support them through various training programs to enhance their skills and competencies. The company has built a competent team to handle challenging assignments. The Company''s employee strength stood at 482 as on March 31,2024.

g) Threats

Drug Price Control:

The Health Ministry keeps on revising the list of Drugs under price control. It is likely that the Government may bring more drugs and formulations under price control or change the mechanism of calculating the ceiling price of the drugs, which are under the ambit of the revised policy, which in turn will affect the net margins of the Company.

Generics:

The Government of India is continuously bringing in policies to shift the market towards generic products. The implementation of this process requires action by all stakeholders. This may have impact on future business strategies of the Company.

Manufacturing & Supplying Risk:

Although a major portion of the Company''s finished formulations and injectable are being manufactured at inhouse facilities, the Company also depends on its suppliers for sourcing of its raw materials. Any significant disruption at in-house facilities or any of its suppliers'' locations due to economic, geo political & social factors or any other event may impair the Company''s ability to meet the markets demand on a timely basis. In addition, the Company''s manufacturing capabilities could be impacted by quality deficiencies in the products, which its suppliers provide, leading to impact on its financial performance.

Currency fluctuation risks:

Foreign currency risks arise out of overseas operations and financing activities. Exchange rate volatility significantly impacts earnings and net equity because of invoicing in foreign currencies, expenditure in foreign currencies and foreign currency borrowings. The Company has a defined foreign exchange risk management framework to manage these risks excluding translation risks.

International Taxation:

As the Company has potential tax exposure resulting from application of varying laws and interpretations, which include intercompany transactions with related parties in relation to various aspects of business. Although the Company believes, its cross border transactions between affiliates are based on internationally accepted practices, tax authorities in various jurisdictions may have different views or interpretations and subsequently challenge the amount of profits taxed in their jurisdiction resulting into increase in tax liability including interest and penalties causing the tax expenses to increase.

h) Formulation and Developments

The Company always works on quality and cost reduction by developing in house and re-engineering formulations. Company always consider Formulation and Development as crucial for sustain growth of the Company and tries to introduce newer and newer delivery systems for products available with regard to time by enhancing therapeutic values. To achieve this objective, we have experienced and qualified pharmacists whose activity is to maintain and find out newer and newer delivery system. This will help to the company to maintain its material consumption ratio.

I) Cautionary Statement

Certain statements in the above Report may be forward looking and are stated as required by the legislations in force. The actual results may be affected by many factors that may be different from what is envisaged in terms of future performance and the outlook presented above.

6. Directors'' Responsibility Statement

As required by Section 134(3) of the Act, your Directors, to the best of their knowledge and belief, confirm that:

a. In the preparation of annual accounts for the year ended March 31, 2024, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b. Your 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 at March 31, 2024 and of the Profit of the Company for the year ended on that date;

c. Your Directors have 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. Your Directors have prepared the annual accounts on a ''''going concern'''' basis;

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

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

7. Directors

During the year under review, following changes occurred in the position of Directors of the Company:

• In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Paresh J Mistry(DIN: 07893645), Non- Executive Director of the Company is liable to retire by rotation at the ensuing 43^rd Annual General Meeting and being eligible, offered himself for reappointment. The retirement of director by rotation at the ensuing Annual General Meeting is determined in accordance with the provisions of the Companies Act, 2013.

• There were no changes in Chief Financial Officer and Company Secretary of the Company during the year under review.

Necessary resolutions for re-appointment of the aforesaid directors and their detailed profiles have been included in the notice convening the ensuing AGM and details of proposal for appointment / reappointment are mentioned in the explanatory statement of the notice. Your directors commend their re-appointment.

During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company except Mr. Paresh J Mistry, Director of the Company who is being paid of holding position of Purchase Manager in the Company

Key Managerial Personnel as at March 31,2024 are as under:

1. Mr. Rajendra R Shah, Managing Director

2. Mr. Ashish Vasavada, Chief Financial Officer

3. Ms. Krishna Shah, Company Secretary

8. Number of Meetings of the Board and Committees

Four Meetings of the Board were held during the year on May 05, 2023, August 05, 2023, November 08, 2023 & February 12, 2024. For details of the meetings of the Board and Committees, please refer to the Corporate Governance Report, which forms part of this report. The maximum interval between any two meetings did not Exceed 120 days, as prescribed by the Act and Listing Regulations.

9. Nomination Remuneration Policy

The Policy on appointment and remuneration of directors, key managerial persons (KMP) and senior management including criteria for determining qualifications, positive attributes and director’s independence as required under Section 178(3) of the Act, and Regulation 19 read with Schedule II Part D of SEBI Listing Regulations has been formulated by the Company. Policy on Nomination and Remuneration of Directors, Key / Senior Managerial Personnel may be accessed on the Company’s website at: https://investor.mercurylabs.com/wp-content/uploads/2019/11/NOMINATION-AND-REMUNERATION-POLICY.pdf

The remuneration paid to the Directors, Key Managerial Personnel and Senior Management is in accordance with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Act and Regulation 19 read with Schedule II of the SEBI Listing Regulations. Further details on the same are given in the Corporate Governance Report which forms part of this Annual Report.

10. Board Evaluation

Pursuant to SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the Director being evaluated.

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 (SEBI) under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The performance of the Board was evaluated by the Board 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 (NRC) 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 addition, the Chairman was also evaluated on the key aspects of his role.

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 in 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.

11. Internal Financial Control Systems and their adequacy

The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report.

12. Audit Committee

The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report.

13. Share Capital

The paid-up Equity Share Capital of the Company as at March 31,2024 is ? 120 Lakhs. The Company currently has no outstanding shares issued with differential rights, sweat equity or ESOS.

14. Risk Management

Risks are events, situations or circumstances which may lead to negative consequences on the Company''s businesses. Risk management is a structured approach to manage uncertainty. A formal enterprise wide approach to Risk Management is being adopted by the Company and key risks is getting managed within a unitary framework. Key business risks and their mitigation are considered in the annual/strategic business plans and in periodic management reviews. The Audit Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

15. Safety, Environment and Health

The Company considers safety, environment and health as the management responsibility. Regular employee training programs are carried out in the manufacturing facilities on safety, environment and health.

16. Particulars of Loans, Guarantees or Investments

The Company has not provided any loans and guarantees and no investments made pursuant to Section 186 of the Companies Act, 2013 during the year ended on March 31,2024. Details of loans, guarantees and investments covered under section 186 of the Act are given in the notes to the Financial Statements.

17. Particulars of contracts or arrangements with related parties:

There are no materially significant related party transactions made by the Company with related parties which may have potential conflict of interest with the Company at large. As a matter of policy, your Company carries out transactions with related parties on an arms’ length basis. Statement of these transactions is given at Note No. 48 of the Notes to financial statements.

Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act along with the justification in prescribed Form AOC-2 is furnished as ‘Annexure-B’ to this report.

The Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions as approved by the Board is available on the Company’s website and can be accessed at https://investor.mercurylabs.com/wp-content/uploads/2023/02/Related-Party-Transaction-Policy.pdf

18. Corporate Social Responsibility (CSR)

Company’s CSR initiatives and activities are aligned to the requirements of Section 135 of the Act.

A brief outline of the CSR policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in ‘Annexure-C’ of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.

This Policy is available on the Company’s website at https://investor.mercurylabs.com/wp-content/uploads/2024/06/Corporate-Social-Responsibility-Policy-2-1.pdf. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report.

19. Policy on prevention, prohibition and Redressal of sexual harassment at workplace

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure.

In compliance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company had constituted an Internal Complaints Committee. The Committee has not received any complaint of sexual harassment during the financial year 2023-24. The policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at work place is placed on website of the Company https://investor.mercurylabs.com/wp-content/uploads/2019/11/Policy-on-Prevention-of-Sexual-Harassment-at-Work-Place.pdf

20. Vigil Mechanism/Whistle Blower Policy

The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company''s Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. The Whistle Blower Policy is posted on the website of the Company https://investor.mercurylabs.com/wp-content/uploads/2022/03/Whistle_Blower_Policy_MLL-1.pdf

21. Significant and material orders passed by the regulators or courts.

No significant material orders have been passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.

22. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134 (3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed as ‘Annexure-D’.

23. Particulars of Employees and Remuneration

The information under Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:

A. The ratio of the remuneration of each director to the median remuneration of the employees of the Company and percentage increase in remuneration of each Director, Chief Executive Officer, Chief Financial Officer and Company Secretary in the financial year:

Name of Director	Designation	Remuneration (? in Lakhs)	Ratio to Median Remuneration	Percentage increase/ decrease in the remuneration
*Mr. Divyakant R Zaveri	Independent Director & Chairman	2.5	1.23	—
Mr. Rajendra R Shah 2	Managing Director	18.66	9.15	(106)
Mr. Dilip R Shah	Non-Executive Director	---	---	---
Mr. Bharat Mehta	Independent Director	---	---	---
**Mr. Paresh Mistry	Non-Executive Director	14.02	6.87	5.89
Ms. Janki R Shah	Non-Executive Director	---	---	---
Mr. Ashish Vasavada	Chief Financial Officers	14.30	7.01	10.85
Ms. Krishna Shah	Company Secretary	4.03	1.98	21.75

*Mr. Divyakant R Zaveri, being Chartered Accountant has been paid professional fees during the year under review.

* *Mr. Paresh Mistry, Employee of the Company was appointed as director of the Company w.e.f October 01,2017 and he continue to draw remuneration in his capacity as employee holding office or place of profit in company.

Notes:

1. There was no change in the criteria for payment of remuneration to Managing Director. The variation reflected in column “% increase in remuneration in FY 2023-24” is due to change in amount of perquisites and other benefits. Basic salary was remaining same.

2. The remuneration to Directors is within the overall limits approved by the shareholders of the Company.

b. The percentage increase in the median remuneration of employees in the financial year:

The percentage increase in the median remuneration of employees in the financial year was 9.09%.

c. The number of permanent employees on the rolls of the Company: 482

d. Average percentile increase already made in the salaries of employees other than the Managerial Personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial Remuneration:

Average percentage increase made in the salaries of employees other than the managerial personnel in the financial year ending March 31, 2024 was approximately 4.89% and the average increase in the managerial personnel remuneration was 5.77%

e. Affirmation that the remuneration is as per the remuneration policy of the Company:

The Company affirms that the remuneration paid are as per the remuneration policy of the Company.

f. The statement containing names of top ten employees in terms of remuneration drawn and the particulars of employees as required under Section 197(12) of the Act read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is provided in a separate annexure forming part of this report. Further, the report and the accounts are being sent to the Members excluding the aforesaid annexure. In terms of Section 136 of the Act, the said annexure is open for inspection and any Member interested in obtaining a copy of the same may write to the Company Secretary.

24. Auditors & Their Reports

(1) Statutory Auditors:

M/s. Naresh & Co., Chartered Accountants were appointed as Statutory Auditors of your Company for a period of Five (5) years, commencing from the conclusion of the 41st AGM held in the year 2022, until the conclusion of the 46^th AGM to be held in the year 2027.

The Statutory Auditors have confirmed their eligibility and submitted a certificate in affirming that they are not disqualified for holding the office of the Statutory Auditor. The report given by the Statutory Auditor on the financial statements of the Company forms part of the Annual Report. There was no instance of fraud during the year under review, which required the statutory auditors to report to the Audit Committee and/or Board under Section 143(12) of the Act, and the rules made thereunder. No fraud has been reported by the Auditors to the Audit Committee or the Board. The Notes on accounts, referred to in the Auditor’s Report, are self-explanatory and therefore do not call for any further comments.

(2) Secretarial Auditors:

Pursuant to the provisions of the Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014, the Board of Directors of the Company had appointed M/s. Mitesh Rana & Co. a firm of Company Secretaries to carry out Secretarial Audit for the year ended on March 31,2024. The Secretarial Audit Report is annexed as ‘Annexure-E’

The Auditors'' Report and the Secretarial Audit Report for the financial year ended March 31,2024 do not contain any qualification, reservation, adverse remark.

The Board of Directors of your Company has appointed M/s. Dholakia & Associates LLP, Practicing Company Secretaries Firm, Mumbai to carry out Secretarial Audit of your Company for FY 2024-25.

(3) Cost Auditors:

Pursuant to the provisions of Section 148 read with Companies (Cost Records and Audit) Amendment Rules, 2014 and as recommended by the Audit Committee, the Board had appointed M/s. V.M. Patel & Associates, Practicing Cost Accountants, who have given their consent to act as Cost Auditors and laid on the table the consent letter received from them & confirmed that his appointment met the requirements of Section 141(3)(g) of the Act for the year 2024-25 and that he was free from disqualification as specified under section 141 read with Section 148 of the Act.

In terms of Rule 14 of the Companies (Audit and Auditors) Rule, 2014, remuneration payable to the cost auditors is required to be ratified by members. Accordingly, an ordinary resolution will be passed by members at the 43rd Annual General Meeting approving the remuneration payable to M/s. V.M. Patel & Associates.

(4) Internal Auditors

The Board of Directors appointed M/s. K R & Associates, Chartered Accountant as Internal Auditors of the Company for financial year 2024-25.

25. Secretarial Standards:

The Company has complied with the all Secretarial Standards issued by the Institute of Company Secretaries of India and adopted under the Act

26. Deposits:

The Company has no unpaid and / or unclaimed deposit. The Company has accepted deposit from Directors and the Shareholders and has complied with all applicable provisions of the Companies Act relating to acceptance and renewal of deposits.

The details relating to deposits, covered under Chapter V of the Act are as under:

Particulars	Amt in
Accepted during the year from the Directors and Members	None
Remained unpaid or unclaimed as at the end of the year	None
Whether there has been any default in repayment ofdeposits or payment of interest thereon during the year and if so, number of s uch cases and the total amount involved (i) at the beginning of the year;(ii) maximum during the year; and (iii) at the end of the year;	None

27. Extract of Annual Return

A copy of Annual Return as required in accordance with Section 92(3) of the Act read with the Companies (Management and Administration) Rules, 2014, has been placed on Company''s website at http://investor.mercurylabs.com/miscellaneous-shareholder-details/

28. Material Change & Commitments, if any

There is no material changes and commitments, that would affect financial position of the company from the end of the financial year of the company to which the financial statements relate and the date of director’s report.

29. Corporate Governance Report

As stipulated by Regulation 34(3) read with Schedule V(C) of the Listing Regulations, Corporate Governance Report forms part of this Annual Report Annexed to the said report is the Auditor’s Certificate as prescribed under Schedule V(E) of the Listing Regulations certifying compliance with conditions of corporate governance.

30. Independent Directors

The Independent Directors of the Company have given the declaration and confirmation to the Company as required under Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 confirming that they meet the criteria of independence and that they are not aware of any circumstances or situation which exists or may be reasonably anticipated that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

The Board of Directors of your company confirms that the Independent Directors fulfill the conditions specified in Section 149 (6) of the Act and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and are independent of the management.

31. Unclaimed Dividend Amounts and Transfer to IEPF

The Company has transferred dividend amounts which remained unpaid or unclaimed for a period of seven years from the date of their transfer to unpaid dividend account, from time to time, on due dates to the Investor Education and Protection Fund (IEPF) administered by the Central Government.

The Company has uploaded the details of unpaid and unclaimed dividends lying with the Company as on March 31, 2024 on the website of the Company.

During the year under review, the Company has transferred 1100 equity shares of ? 10/- (Rupees Ten only) each of 7 members whose dividend has remained unclaimed / unpaid for a consecutive period of 7 (seven) years to the demat account of IEPF after giving notice to the members and advertisement in newspaper to claim their shares and the Company has credited unclaimed dividend of ? 1,33,583 to the Investor Education and Protection Fund (IEPF) pursuant to Section 125(1) of the Act, pertaining to FY 2015-16. Details of shares transferred to IEPF Authority during financial year 2023-24 are also available on the website of the Company http://investor.mercurylabs.com/details-of-shares-to-iepf/

32. Familiarisation Program for Independent Directors

All Independent Directors are familiarised with the operations and functioning of the Company at the time of their appointment and on an ongoing basis. The details of the training and familiarisation program are provided in the Corporate Governance Report and is also available on the website of the Company at https://investor.mercurylabs.com/wp-content/uploads/2023/06/Director-Familirazation-Programme_05.05.2023.pdf

33. Prohibition of Insider Trading

In compliance with The SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”) as amended, the Company has framed a Code of Conduct to regulate, monitor and report trading by all the employees, directors, designated persons and their immediate relatives, connected persons and such employees of the Company who are expected to have access to the UPSI relating to the Company. The Code lays down guidelines, which advises them on procedure to be followed and disclosures to be made, while dealing in the shares of the Company. Company also maintains the structured digital database as mandated in the PIT Regulations.

34. Other Disclosures

i. During the year under review, there was no change in Company''s nature of business

ii. The Company has not failed to implement any corporate action during the year under review;

iii. The disclosure pertaining to explanation for any deviation or variation in connection with certain terms of public issue, rights issue, preferential issue, etc. is not applicable to the Company;

iv. Company does not have any subsidiary, associate or joint venture Companies within the meaning of the Companies Act, 2013.

v. No application was made nor is any proceeding pending under the Insolvency and Bankruptcy Code, 2016.

vi. The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

vii. No settlements have been done with banks or financial institutions.

viii. The Company doesn''t fulfill the criteria provided under Regulation 34(2)(f) of the SEBI Listing Regulations 2015, therefore Business Responsibility & Sustainability Report is not applicable to the Company

35. Acknowledgment

The Board of Directors wish to place on record their appreciation for the continued support extended by the Bankers,

Business Associates, clients, vendors and suppliers, Government Authorities, Employees at all levels and

Stakeholders, in furthering the interest of the Company.

Date: May 28, 2024 On behalf of the Board of Directors,

Mercury Laboratories Limited

Rajendra R. Shah Dilip R Shah

Managing Director Director

DIN: 00257253 DIN: 00257242

Place: Vadodara Place: USA

---

Mar 31, 2023

Your Directors have pleasure in presenting the 42^nd Annual Report of Mercury Laboratories Limited (the Company) on the business and operations of the Company together with the audited financial statements for the financial year ended on March 31,2023.

1. FINANCIAL SUMMARY/PERFORMANCE OF THE COMPANY

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

PARTICULARS	(INR in Lakhs)
	2022-23	2021-22
Revenue from Operations	7,533.37	5,792.38
Gross Profit before Depreciation Interest & Tax	1,028.98	780.61
Less: Interest	36.19	44.64
Less: Depreciation	248.33	245.28
Profit / (Loss) before Exceptional Items , Extra Ordinary Items & Tax	744.46	490.69
Exceptional Items	-	-
Extra-Ordinary Item	(4.83)	(12.75)
Profit / (Loss) before Tax	749.29	503.44
Less: Current Tax including Income Tax of Previous Year & Deferred Tax	191.41	147.25
Profit/(Loss) from Continuing Operations	557.88	356.19
Profit/(Loss) from discontinued operations	-	-
Tax expense of discontinued operations	-	-
Profit/(loss) from Discontinued operations (after tax)	-	-
Profit / (Loss) for the Period	557.88	356.19
Other Comprehensive Income
A (i) Items that will not be reclassified to profit or loss	21.82	12.43
( ii) Income tax relating to items that will not be reclassified to profit or loss	(5.49)	(3.46)
B (i) Items that will be reclassified to profit or loss	-
( ii) Income tax relating to items that will be reclassified to profit or loss	-	-
Total comprehensive income for the period	574.21	365.16
Opening balance in Retained Earnings	253.83	271.64
Profit available for appropriations	811.71	627.83
Dividend	42	24
Transfer to General Reserve	350	350
Surplus carried forward	419.71	253.83
*Earning Per Share
Basic	46.49	29.68
Diluted	46.49	29.68

*Equity Shares are at par value of INR 10 per share.

*From the current year, the company has presented actuarial gains / losses on Defined Benefit Plans as Other Comprehensive Income with tax effect thereon. Correspondingly the figures of previous year are recast to make them comparable.

2. Dividend:

The Board of Directors at their meeting held on May 05, 2023, recommended a final dividend of INR 3.50 per equity share of face value of INR 10 each, for the financial year ended 31^st March, 2023 absorbing INR 42.00 Lakhs, which will be, if approved by the members, paid to the Shareholders holding shares as on September 20, 2023 after business hours. The dividend, if declared, is subject to deduction of Tax at source in accordance with applicable provisions. The Dividend Distribution Policy of the Company is set out as Annexure-A. The Dividend Distribution Policy, in terms of Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (here in after referred to as ‘SEBI Listing Regulations’) is also available on the website of the Company at http://investor.mercurylabs.com/wp-content/uploads/2022/03/DIVIDEND-DISTRIBUTION-POICY-2.pdf

3. Transfer to Reserves:

Your Company transferred an amount of INR 350.00 Lakhs to the General Reserve during the Financial Year ended on March 31,2023.

4. Financial Performance and Operations Review:

During the year under review, the revenue from operations grew by 30.06% to INR 7,533 Lakhs (Rupees Seven Thousand Five Hundred Thirty-Three Lakhs only) from INR 5,792 Lakhs (Rupees Five Thousand Seven Hundred Ninety-Two Lakhs only) in 2021-2022. The Profit before Tax is increased by 48.83% to INR 749.29 Lakhs from INR 503.44 Lakhs. Net profit after tax (before OCI) increased by 56.62% as compared to previous year. The Company registered a net profit after tax (before OCI) of INR 557.88 Lakhs as compared to net profit of INR 356.19 Lakhs for the previous year ended 31^st March, 2022.

5. Future Prospects:

Goldman Sachs, leading global financial institution has published that Indian pharma industry to reach 57 billion dollars by 2025. The Indian pharmaceutical industry is expected to grow at 6-8% rate GDP in coming months. This growth will consist of engineering infrastructure, pharmaceutical, finance sectors.

We being Pharma sector, pharma industry is likely to reach 57 billion dollars by financial year 2025. Globally, the Indian pharma industry has a strong footprint in the generics segment and the pharma exports and domestic market contribute equally to the overall Indian pharma industry. This includes API formulations and others. Our pharmaceutical formulations and API will reach to each and every corner of the globe.

Our Management strongly believe that Pharmaceutical sectors will grow leaps and bounds in India as well as become Pharma HUB in the world. Management also see bright future for your company. We are also working very hard and ensure by managing quality products, engineering, new technology, cost effectiveness and focus on expenditure. This will help to competiveness in open market. Our priority of investment in capacity for new technology and build up new injectable plant to enhance good quality and quantitative more volume.

Our intention is to enter into regulatory market. To achieve this goal, we have taken systematically digitization across functions in respect of purchase, manufacturing, distribution, accounting. This will help to read the documents without error in the documentation process. We continue to build up right talented people to address the needs of our customers and realize our strategic priorities. The future belongs to organizations that are resilient and can quickly adjust to the reality of the market. Accordingly, Mercury Laboratories Limited will continue to stay focused on building on its agility to maximize value creation.

MANAGEMENT DISCUSSIONS AND ANALYSIS

As stipulated by regulation 34(3) read with Schedule V(B) of the SEBI Listing Regulations, Management Discussion and Analysis forms parts of this report.

a) Industry Structure and Development

Government of India aggressively work on ‘Make in India’, by effective implementation of Ayushman Bharat Scheme, Upgrading all ESIC hospitals, Primary Health Centers and others. Government of India also introduced Production Linked Incentive - PLI Scheme for the Pharma Industries for 2 years. This will upgrade Pharma Industry particularly API of Pharma Industry and cater Indian Market. This will also help to reduce the dependency of API from international market. To achieve this, government has set aside incentive of INR 15 Cr. Affordability and quality of medicines are very important for domestic as well International market and to ensure this to enhance improve the quality, the government has come forward for technical upgradation in respect of quality by providing subsidy of INR 3000 crores by department of Pharmaceuticals during this year. We, Mercury Laboratories Limited, take up this seriously government objective of affordable and quality products by number of action in our company. We have upgraded technologically and further improve infrastructure, machinery, plant as well as environment friendly, energy saving and others. We have taken steps by introducing training to new comers, reference training for understanding system implementation, product details and record keeping. We are making all our effort to digitalize our system, records to improve the system. Your company has started implementing state of art upgrade technological to manufacture Small Volume Parenteral. This will further enhance quality of our injectable products in domestic as well as International market.

The Union Budget 2022-23 enhanced for health sector to INR 130,000 crores for the Atmanirbhar Swasth Yojana for the development of Primary, Secondary and Tertiary healthcare system, investing heavily on availability of additional facilities in the existing hospitals. Government also creating number of AIMS in most of the states.

Government of India also supports as a hand holder for medical college, nursing college, Pharmacy College to fill shortage gap in health sectors. Looking to all development, your company has taken up aggressively investing in some of the upgradation, expansion like additional facility in the existing plant so that we meet requirement of the market

b) Outlook, Risks and Concerns

Government of India introduced Drugs, Medical Device and Cosmetics Bill 2023 in the parliament. This will replace 83 years old Drugs & Cosmetics Act, 1940. The main focus of this bill is for effective implementation of Regulation and good quality drugs. This should also help pharma sector to grow in near future. However, Ukraine war and climate changes creates lot of food shortages, heat waves, flood, etc from time to time in all part of the world. This factor will severely affect the public by undesired diseases across the globe.

(c) World economic overview

Global growth is projected to fall from an estimated 3.5 percent in 2022 to 3.0 percent in both 2023 and 024. The rise in central bank policy rates to fight inflation continues to weigh on economic activity. The globe economy will remain weak due to Central Bank Policy to fight inflation the war in Ukraine and extreme related events. This will restrict more restricting monetary policy with further tightening Central Bank. The Chinese Economy, particularly real estate problem, infrastructure project in different part of the world will give negative spill over. However, under turbulence inflation will fall faster than expected. The priority of achieving sustained disinflation by ensuring financial stability. During this period the improvement of supply side will have fiscal consolidated data.

Global Pharma Market

The global Pharmaceutical market size was 209.85 billion dollars in 2021 is poised to grow 222.4 billion dollars in 2022 and further grow 352.98 billion dollars by 2030 with the growth of CAGR 5.9%. The Indian pharma market is expected to reach 130 billion dollars by 2030 and will be a leading provider of medicines to the world as spoke by Mr. Sudharshan Jain - Secretary of IPA. The Indian pharmaceutical industry is ranked 3^rd largest in the world for producing medicines by volume. This growth will be in sectors like Cardiac, Diabetic, hypertensive. We see India will take lead in branded generic drugs in all part of the globe by 2030.

Financial Performance and Operation Review

During the year, your Company continued to make significant progress across its strategic priorities with the highest ever revenue and EBITDA. During Financial Year 2022-23, the Company reported immense revenue growth of 30.06% from the previous year. The gross revenue of the Company was INR 7533.37 Lakhs for the year under review as compared to INR 5792.38 Lakhs for the previous year ended 31^st March, 2022. The Company registered a net profit (before OCI) of INR 557.88 Lakhs as compared to net profit of INR 356.90 Lakhs for the previous year ended 31^st March, 2022. Return on Net Worth has been increased to 12.98% from 11.00 % mainly due to increase in sales resulted in to higher profit

Break-up of Sales	2022-23	2021-22	Growth / (Degrowth) In terms of %
Domestic	4,595.98	4,254.72	8.02%
Deemed Exports	1 ,029.72	584.69	76.11%
Direct Exports	1 ,907.67	952.97	100. 18%
Total	7,533.37	5,792.38

Details of significant changes in key Financial ratios given at Note No. 60 of the Notes to financial statements.

d) Internal Control System and its adequacy

The Company has adopted policies and procedures covering all financial, operating and compliance functions. Mercury Laboratories believes that internal control is a prerequisite for governance and that business plans should be exercised within a framework of checks and balances. The Company has adequate internal control system including suitable monitoring procedures commensurate with its size and the nature of the business. The internal control system provides for all documented policies, guidelines, authorization and approval procedures.

The Company has an internal audit department which carries out audits throughout the year. The statutory auditors while conducting the statutory audit, review and evaluate the internal controls and their observations are discussed with the Audit Committee of the Board. Further the Company has in place adequate Internal Financial Controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operations were observed.

d) Human Resources

At Mercury Laboratories, we recognize that our employees are the cornerstone of our success and integral to meeting our long-term business success goals. We are committed to investing in our people, providing them with the right set of skills, opportunities and an enabling environment to thrive. Company has maintained cordial and harmonious relations with employees across various locations. At the core of our success are our people and have been working towards keeping them engaged and inspired.

During the year under review, various trailing and development workshops were continued to be conducted to improve the competency level of employees with an objective to improve the operational performance of individuals. The company has built a competent team to handle challenging assignments. The Company strives to enhance the technical work, related and general skills of employees through dedicated training programs on a continuous basis. The Company has 537 employees as on March 31,2023.

e) Threats

Drug Price Control:

The Health Ministry keeps on revising the list of Drugs under price control. It is likely that the Government may bring more drugs and formulations under price control or change the mechanism of calculating the ceiling price of the drugs, which are under the ambit of the revised policy, which in turn will affect the net margins of the Company

Generics:

The Government of India is continuously bringing in policies to shift the market towards generic products. The implementation of this process requires action by all stakeholders. This may have impact on future business strategies of the Company.

Manufacturing & Supplying Risk:

Although a major portion of the Company''s finished formulations and injectable are being manufactured at inhouse facilities, the Company also depends on its suppliers for sourcing of its raw materials. Any significant disruption at in-house facilities or any of its suppliers'' locations due to economic, political & social factors or any other event may impair the Company''s ability to meet the markets demand on a timely basis. In addition, the Company''s manufacturing capabilities could be impacted by quality deficiencies in the products, which its suppliers provide, leading to impact on its financial performance.

Currency fluctuation risks:

Foreign currency risks arise out of overseas operations and financing activities. Exchange rate volatility significantly impacts earnings and net equity because of invoicing in foreign currencies, expenditure in foreign currencies, foreign currency borrowings and translation of financial statements of overseas subsidiaries into Indian rupees. The Company has a defined foreign exchange risk management framework to manage these risks excluding translation risks.

International Taxation:

As the Company has potential tax exposure resulting from application of varying laws and interpretations, which include intercompany transactions with related parties in relation to various aspects of business. Although the Company believes its cross border transactions between affiliates are based on internationally accepted practices, tax authorities in various jurisdictions may have different views or interpretations and subsequently challenge the amount of profits taxed in their jurisdiction resulting into increase in tax liability including interest and penalties causing the tax expenses to increase.

f) Formulation and Developments

Company always considering Formulation and Development as crucial for sustain growth of the Company. Company always try to introduce newer and newer delivery system for ensuring products available as regards to time and enhancing therapeutic value.

To achieve this objective, we have experienced and qualified pharmacists whose activity is to maintain and find out newer and newer delivery system as well as re-engineering innovative process. This will help the Company to maintain material Consumption ratio.

g) Cautionary Statement

Certain statement in the management discussion and analysis may be forward looking within the meaning of applicable securities law and regulations and actual results may differ materially from those expressed or implied. Factors that would make differences to company''s operations include competition, price realization, Drugs Price Controls, currency fluctuations, regulatory issues, changes in government policies and regulations tax regimes, economic development within India and the Countries in which the company conducts business and other incidental factors.

6. Directors'' Responsibility Statement

Your Directors state that:

a. In the preparation of annual accounts for the year ended March 31, 2023, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

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 at March 31, 2023 and of the Profit of the Company for the year ended on that date;

c. The Directors have 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 have prepared the annual accounts on a ''''going concern'''' basis;

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

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

7. Directors and Key Managerial Personnel

During the year under review, following changes occurred in the position of Directors / KMPs of the Company:

• At the 41^st Annual General Meeting of the Company held on September 27, 2022 the shareholders approved reappointment of Mr. Rajendra R Shah as a Managing Director of the Company for the period of three years w.e.f. April 01, 2023. In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Dilip R Shah, Director of the Company is liable to retire by rotation at the ensuing 42^nd Annual General Meeting and being eligible, offered himself for reappointment. The retirement of director by rotation at the ensuing Annual General Meeting is determined in accordance with the provisions of the Companies Act, 2013.

• There were no changes in Chief Financial Officer and Company Secretary of the Company during the year under review.

Necessary resolutions for re-appointment of the aforesaid directors and their detailed profiles have been included in the notice convening the ensuing AGM and details of proposal for appointment / reappointment are mentioned in the explanatory statement of the notice. Your directors commend their re-appointment.

During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company except Mr. Paresh J Mistry, Director of the Company who is being paid of holding position of Purchase Manager in the Company.

Key Managerial Personnel as at March 31,2023 are as under:

1. Mr. Rajendra R Shah, Managing Director

2. Mr. Ashish Vasavada, Chief Financial Officer

3. Ms. Krishna Shah, Company Secretary

8. Number of Meetings of the Board

Four Meetings of the Board were held during the year on May 26, 2022, August 09, 2022, November 11, 2022 & February 13, 2023. For details of the meetings of the Board, please refer to the Corporate Governance Report, which forms part of this report.

9. Nomination Remuneration Policy

The Policy on appointment and remuneration of directors, key managerial persons (KMP) and senior management including criteria for determining qualifications, positive attributes and director’s independence as required under Section 178(3) of the Act, and Regulation 19 read with Schedule II Part D of SEBI Listing Regulations has been formulated by the Company. Policy on Nomination and Remuneration of Directors, Key / Senior Managerial Personnel may be accessed on the Company’s website at: http://investor.mercurylabs.com/policies/

The remuneration paid to the Directors, Key Managerial Personnel and Senior Management is in accordance with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Act and Regulation 19 read with Schedule II of the SEBI Listing Regulations. Further details on the same are given in the Corporate Governance Report which forms part of this Annual Report.

10. Board Evaluation

Pursuant to SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the Director being evaluated.

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 (SEBI) under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The performance of the Board was evaluated by the Board 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 (NRC) 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 addition, the Chairman was also evaluated on the key aspects of his role.

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 in 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.

11. Internal Financial Control Systems and their adequacy

The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report.

12. Audit Committee

The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report.

13. Share Capital

The paid-up Equity Share Capital of the Company as at March 31,2023 is I NR 120 Lakhs. The Company currently has no outstanding shares issued with differential rights, sweat equity or ESOS.

14. Risk Management

Risks are events, situations or circumstances which may lead to negative consequences on the Company''s businesses. Risk management is a structured approach to manage uncertainty. A formal enterprise wide approach to Risk Management is being adopted by the Company and key risks is getting managed within a unitary framework.

Key business risks and their mitigation are considered in the annual/strategic business plans and in periodic management reviews. The Audit Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

15. Safety, Environment and Health

The Company considers safety, environment and health as the management responsibility. Regular employee training programs are carried out in the manufacturing facilities on safety, environment and health.

16. Particulars of Loans, Guarantees or Investments

The Company has not provided any loans and guarantees and no investments made pursuant to Section 186 of the Companies Act, 2013 during the year ended on March 31,2023. Details of loans, guarantees and investments covered under section 186 of the Act are given in the notes to the Financial Statements.

17. Particulars of contracts or arrangements with related parties:

There are no materially significant related party transactions made by the Company with related parties which may have potential conflict of interest with the Company at large. As a matter of policy, your Company carries out transactions with related parties on an arms'' length basis. Statement of these transactions is given at Note No. 48 of the Notes to financial statements.

Accordingly, particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act along with the justification for entering into such contract or arrangement in prescribed Form AOC-2 is furnished as ''Annexure-B'' to this report.

The Policy on Materiality of Related Party Transactions and on dealing with Related Party Transactions as approved by the Board is available on the Company’s website and can be accessed at http://investor.mercurylabs.com/wp-content/uploads/2023/02/Related-Party-Transaction-Policy.pdf

18. Corporate Social Responsibility (CSR)

As Per Amendment and Section 135 of Companies Act, 2013, the Company has formulated Corporate Social Responsibility (CSR) Policy in accordance with Section 135 of the Companies Act, 2013 and reconstituted CSR Committee on May 14, 2015 with Mr. D. R. Zaveri and Mr. Bharat Mehta, Two Independent directors and Mr. Rajendra R Shah, Managing Director and Dilip Shah, Director of the Company.

Sr. No.	Name of Director	Category
1	Mr. Rajendra R Shah	Chairman & Member
2	Mr. Divyakant Zaveri	Member
3	Mr. Bharat Mehta	Member
4	Mr. Dilip Shah	Member

Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company was adopted by the Board on the recommendation of the CSR Committee. The CSR policy of the Company is placed on the website of the Company at http://investor.mercurylabs.com/wp-content/uploads/2021/08/Corporate-Social-Responsibility-Policy.pdf

Report on Corporate Social Responsibility as per Rule 8 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is prepared and the same is enclosed as ''Annexure-C'' to this Report.

19. Policy on prevention, prohibition and Redressal of sexual harassment at workplace

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure

In compliance with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company had constituted an Internal Complaints Committee. The Committee has not received any complaint of sexual harassment during the financial year 2022-23. The policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at work place is placed on website of the Company http://investor.mercurylabs.com/wp-content/uploads/2019/11/Policy-on-Prevention-of-Sexual-Harassment-at-WorkPlace.pdf

20. Vigil Mechanism/Whistle Blower Policy

The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company''s Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. The Whistle Blower Policy is posted on the website of the Company http://investor.mercurylabs.com/wp-content/uploads/2022/03/Whistle_Blower_Policy_MLL-1.pdf

21. Significant and material orders passed by the regulators or courts.

No significant material orders have been passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.

22. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134 (3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed as Annexure-D’.

23. Particulars of Employees and Remuneration

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (‘Rules’) are annexed to this report as ‘Annexure-E’

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Rules, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said Rules forms part of this report and is provided in the ‘Annexure-E’.

24. Auditors & Their Reports

(1) Statutory Auditors:

The term of appointment of M/s. R J Shah & Associates, Chartered Accountants as a statutory auditor had ended at the conclusion of 41^st AGM. During the year, the Audit Committee and the Board of Directors recommended to the Members for the Appointment of M/s. Naresh & Co., Chartered Accountants, Vadodara as statutory auditors of the Company. M/s. Naresh & Co have consented to act as Statutory Auditor of the Company for term of five consecutive years from the conclusion of the 41^st AGM till the conclusion of the 46^th AGM and their appointment would be within the limits specified under Section 141(3)(g) of the Act. They have further confirmed that they are not disqualified to be appointed as statutory auditor in terms of the provisions of the Act, and the provisions of the Companies (Audit and Auditors) Rules, 2014, as amended from time to time. The shareholders of the Company approved their appointment at 41^st Annual General Meeting of the Company held on September 27, 2022.

The Auditor’s Report for the financial year 2022-23 does not contain any qualification, reservation or adverse remark which requires any clarification/ explanation. The Auditor’s Report is enclosed with the financial statement in this Annual Report. There was no instance of fraud during the year under review, which required the statutory auditors to report to the Audit Committee and/or Board under Section 143(12) of the Act, and the rules made thereunder. No fraud has been reported by the Auditors to the Audit Committee or the Board. The Notes on accounts, referred to in the Auditor’s Report, are self-explanatory and therefore do not call for any further comments.

(2) Secretarial Auditors:

Pursuant to the provisions of the Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014, the Board of Directors of the Company had appointed M/s. Mitesh Rana & Co. a firm of Company Secretaries to carry out Secretarial Audit for the year ended on March 31,2023. The Secretarial Audit Report is annexed as ‘Annexure-F’

The Auditors'' Report and the Secretarial Audit Report for the financial year ended March 31,2023 do not contain any qualification, reservation, adverse remark.

The Company has complied with the provisions of Secretarial Standards on Board Meetings and General Meetings issued by the Institute of Company Secretaries of India and approved by the Central Government.

The Board of Directors of your Company has appointed M/s. Mitesh Rana & Co., Company Secretaries, Vadodara to carry out Secretarial Audit of your Company for FY 2023-24.

(3) Cost Auditors:

Pursuant to the provisions of Section 148 read with Companies (Cost Records and Audit) Amendment Rules, 2014 and as recommended by the Audit Committee, the Board had appointed M/s. V.M. Patel & Associates, Practicing Cost Accountants, who have given their consent to act as Cost Auditors and laid on the table the consent letter received from them & confirmed that his appointment met the requirements of Section 141(3)(g) of the Act for the year 2023-24 and that he was free from disqualification as specified under section 141 read with Section 148 of the Act.

In terms of Rule 14 of the Companies (Audit and Auditors) Rule, 2014, remuneration payable to the cost auditors is required to be ratified by members. Accordingly, an ordinary resolution will be passed by members at the 42^nd Annual General Meeting approving the remuneration payable to M/s. V.M. Patel & Associates.

(4) Internal Auditors

The Board of Directors appointed M/s. K R & Associates, Chartered Accountant as Internal Auditors of the Company for financial year 2023-24.

25. Deposits:

The Company has no unpaid and / or unclaimed deposit. The Company has accepted deposit from Directors and the Shareholders and has complied with all applicable provisions of the Companies Act relating to acceptance and renewal of deposits.

The details relating to deposits, covered under Chapter V of the Act are as under:

Particulars	Amt. in INR (Lakhs)
Accepted during the year from the Directors and Members	None
Remained unpaid or unclaimed as at the end of the year	None
Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved (i) at the beginning of the year;(ii) maximum during the year; and (iii) at the end of the year;	None

26. Extract of Annual Return

A copy of Annual Return as required in accordance with Section 92(3) of the Act read with the Companies (Management and Administration) Rules, 2014, has been placed on Company’s website at http://investor.mercurylabs.com/miscellaneous-shareholder-details/

27. Material Change & Commitments, if any

There is no material changes and commitments, that would affect financial position of the company from the end of the financial year of the company to which the financial statements relate and the date of director’s report.

28. Corporate Governance Report

As stipulated by Regulation 34(3) read with Schedule V(C) of the Listing Regulations, Corporate Governance Report forms part of this Annual Report Annexed to the said report is the Auditor’s Certificate as prescribed under Schedule V(E) of the Listing Regulations certifying compliance with conditions of corporate governance.

29. Independent Directors

The Independent Directors of the Company have given the declaration and confirmation to the Company as required under Section 149(7) of the Companies Act, 2013 and Regulation 25(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 confirming that they meet the criteria of independence and that they are not aware of any circumstances or situation which exists or may be reasonably anticipated that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

The Board of Directors of your company confirms that the Independent Directors fulfill the conditions specified in Section 149 (6) of the Act and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and are independent of the management.

30. Unclaimed Dividend Amounts and Transfer to IEPF

The Company has transferred dividend amounts which remained unpaid or unclaimed for a period of seven years from the date of their transfer to unpaid dividend account, from time to time, on due dates to the Investor Education and Protection Fund (IEPF) administered by the Central Government.

The Company has uploaded the details of unpaid and unclaimed dividends lying with the Company as on March 31, 2023 on the website of the Company.

During the year under review, the Company has transferred 8700 equity shares of INR 10/- (Rupees Ten only) each of 14 members whose dividend has remained unclaimed / unpaid for a consecutive period of 7 (seven) years to the demat account of IEPF after giving notice to the members and advertisement in newspaper to claim their shares and the Company has credited unclaimed dividend of INR 1,45,967 to the Investor Education and Protection Fund (IEPF) pursuant to Section 125(1) of the Act, pertaining to FY 2014-15. Details of shares transferred to IEPF Authority during financial year 2022-23 are also available on the website of the Company http://investor.mercurylabs.com/details-of-shares-to-iepf/

31. Familiarisation Program for Independent Directors

All Independent Directors are familiarised with the operations and functioning of the Company at the time of their appointment and on an ongoing basis. The details of the training and familiarisation program are provided in the Corporate Governance Report and is also available on the website of the Company athttp://investor.mercurylabs. com/wp-content/uploads/2023/06/Director-Familirazation-Programme_05.05.2023.pdf

32. Prohibition of Insider Trading

In compliance with The SEBI (Prohibition of Insider Trading) Regulations, 2015 (“PIT Regulations”) as amended, the Company has framed a Code of Conduct to regulate, monitor and report trading by all the employees, directors, designated persons and their immediate relatives, connected persons and such employees of the Company who are expected to have access to the UPSI relating to the Company. The Code lays down guidelines, which advises them on procedure to be followed and disclosures to be made, while dealing in the shares of the Company. Company also maintains the structured digital database as mandated in the PIT Regulations.

33. Other Disclosures

i. During the year under review, there was no change in Company’s nature of business

ii. The Company has not failed to implement any corporate action during the year under review;

iii. The disclosure pertaining to explanation for any deviation or variation in connection with certain terms of public issue, rights issue, preferential issue, etc. is not applicable to the Company;

iv. Company does not have any subsidiary, associate or joint venture Companies within the meaning of the Companies Act, 2013.

v. No application was made nor is any proceeding pending under the Insolvency and Bankruptcy Code, 2016

vi. The Company does not have any scheme of provision of money for the purchase of its own shares by employees or by trustees for the benefit of employees.

vii. No settlements have been done with banks or financial institutions.

34. Acknowledgment

The Board of Directors wish to place on record their appreciation for the continued support extended by the Bankers, Business Associates, clients, vendors and suppliers, Government Authorities, Employees at all levels and Stakeholders, in furthering the interest of the Company.

On behalf of the Board of Directors of Mercury Laboratories Limited

Date: May 05, 2023

Rajendra R. Shah Dilip R Shah

Managing Director Director

DIN: 00257253 DIN: 00257242

Place: Vadodara Place: USA

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Mar 31, 2018

BOARD''S REPORT

To,

The Shareholders,

The Directors have pleasure in presenting the 37"’ Annual Report of Mercury Laboratories Limited (the Company) on the business and operations of the Company together with the audited financial statements for the financial year ended on March 31,2018.

1. FINANCIAL SUMMARY/PERFORMANCE OF THE COMPANY

The financial performance of the Company for the financial year ended March 31,2018 along with figures of previous financial year is summarized below:

PARTICULARS	(Rs. in Lacs)
	2017-18	2016-17
Revenue from Operations	5240.46	5012.45
Gross Profit before Depreciation Interest & Tax	483.73	707.49
Less: Interest	90.69	89.21
Less: Depreciation	147.45	128.85
Profit / (Loss) before Exceptional Items & Tax	245.59	489.43
Exceptional Items	-	-
Profit / (Loss) before Tax	245.59	489.43
Less: Current Tax including Income Tax of Previous Year & Deferred Tax	44.26	219.12
Profit/(Loss) from Continuing Operations	201.33	270.31
Profit/(Loss) from discontinued operations	-	-
Tax expense of discontinued operations	-	-
Profit/(loss) from Discontinued operations (after tax)	-	-
Profit / (Loss) for the Period	201.33	270.31
Other Comprehensive Income
A (i) Items that will not be reclassified to profit or loss	-	-
A (ii) Income tax relating to items that will not be reclassified to profit or loss	-	-
Total other comprehensive income (A (i - ii))	-	-
Total comprehensive income for the period	201.33	270.31
*Easing Per Share
Basic	16.78	22.53
Diluted	16.78	22.53

*Equity Shares are at par value of INR 10 per share.

2. First-time adoption of IND AS

The Company has adopted Indian Accounting Standards (Ind AS) as notified by the Ministry of Corporate Affairs with effect from April 01,2017 with transition date of April 01,2016. These financial statements for the year ended on March 31,2018 are the first financial statements the Company has prepared under Ind AS. For all periods up to and including the year ended March 31, 2017 the Company prepared its financial statements in accordance with the accounting standards notified under the Section 133 of the Companies Act, 2013 read together with paragraph 7 of the Companies (Accounts) Rules, 2014 (Previous GAAP).

The adoption of Ind AS has been carried out in accordance with Ind AS 101, First-time Adoption of Indian Accounting Standards. Ind AS requires that all Ind AS standards and interpretations that are issued and effective for the first Ind AS financial statements be applied retrospectively and consistently for all financial years presented. Accordingly, the Company has prepared financial statements which comply with Ind AS for year ended on March 31, 2018 together with the comparative information as at and for the year ended on March 31, 2017 and the opening Ind AS Balance Sheet as at April 01,2016 the date of transition to Ind AS.

3. Dividend:

Your Directors are pleased to recommend payment of dividend INR1.50 per equity share of face value of INR10 each for the year ended on March 31,2018 absorbing Rs. 21.70 Lacs including Tax on Dividend, which will be, if approved, paid to the Shareholders holding shares as on September 14, 2018 after business hours. The dividend declared/recommended is in accordance with the principles and criteria as set out in the Dividend Distribution Policy. The Dividend Distribution Policy of the Company is set out as Annexure A

4. Transfer to Reserves:

The Company proposes to transfer Rs. 148 lacs to the General Reserve out of the amount available for appropriation and an amount of Rs.37.39 lacs is proposed to be retained in the Statement of Profit and Loss Account.

5. Financial Performance and Operations Review:

During the year under review, the Company yielded Revenue from operations of INR 5240.46 lacs and earned Gross Profit before depreciation, interest and tax of INR 483.73 lacs with Net Profit of INR 201.33 Lacs as against Revenue from operations of INR 5012.45, Gross Profit before depreciation and Interest and tax of Rs. 707.49 lacs with Net Profit of INR 270.31 Lacs of previous year, respectively.

6. Future Prospects:

Our world class GMP facility having manufacturing of tablet and liquid started giving returns. We got the accreditation of WHO-GMP from CDSCO. Our plant also visited by number of foreign Ministry like Ministry of Ghana, Ministry of Sri Lanka, Ministry of Cambodia and Sierra Leone. We also started preparation for getting accreditation of this plant for E.U GMP Malta as well as EU GMP Hungary. This will help us to enter in Regulatory Market in Europe, America, Latin America, Australia, New Zealand, South Africa.

Our company is continuously focusing to built up desired ethical market and to create world class brands Gravidol, K-Win, K-Stat, T-Stat, Cliarway, Zidust, Promolact, Ovaryl. We strongly believe that all these brands molecules will have effective therapeutic treatment for next 20 years. These molecules are mainly used for Mother & Child Healthcare segment.

Our company also focuses on creating institutional business with government institutions, semi-government institutions, hospitals and clinics by getting registered with Kerala, Rajasthan, Haryana & Karnataka Health Ministry and ESIC - Government of India to ensure that we achieve more business from these institutes.

Our company strongly believe high growth rate by entering into export business and achieve desirable growth for the year 2018-19. Our company has taken number of actions like addition of new area such as Cambodia, Peru, and Uruguay. However, some of the area we have restricted our exports such as Nigeria, Ghana, DRC Congo, due to instability and financial weakness in their economy. Management teams were generally optimistic on outlook for domestic Indian Markets with sales growth expected to be in the low double digits rebounding from GST led disruption. Our company continuously plan their strategy by implementing strategy to get more and more mileage in domestic as well as export market.

A better part of the past financial year was spent by the Indian Industries in coping with issues related to Goods and Service Tax (GST). Company had prepared for effectively implementing of GST as per the Act, Rule and their notification provided by Government of India from time to time and have recovered to a large extent. We expect number of hurdles will be further removed and business transaction will be made easy by introduction and implementation of GST.

MANAGEMENT DISCUSSIONS ANDANALYSIS

As stipulated by regulation 34(3) read with Schedule V(B) of the Listing Regulations, Management Discussion and Analysis forms parts of this report.

a) Industry Structure and Development

Our nation made number of changes in last 2 years and expect to change by creating message to common people that they get quality product with reasonable price. Government of India also ensures that all Indians must get medical treatments. They come out with number of supportive scheme in the healthcare segment which ultimate lead to health for all. Government''s participation to more generate business in the pharmaceutical to the large extent and we being part of this activity. This will continue to give future scope of expansion.

Since last 2-3 decades, science and technology has given tremendous inputs to health systems and improve the life of common people and extended life span of Indian upto 74 years as average life span. This may be possible because Indian Pharma Companies take challenges of Science and Technologies and new methods, re-engineering techniques. Indian companies introduced new molecules which are less harmful. The Pharma companies made products available in the remote places of our country.

b) Outlook, Risks and Concerns

Though in the world pharmaceutical market, India is ranked 3^rd in volume, it has a negligible share by value and ranks 13^th. Branded generics constitute 70% of Indian Pharmaceutical Market. Indian pharmaceutical market is considered to be highly fragmented and consolidation has become an important feature of this industry. Indian pharmaceuticals exports have increased from US$ 2 billion in 2006 to about US$ 17 billion in 2018. India has a huge pool of scientists and engineers who have potential to take this industry to a very high level growth.

Indian Pharmaceutical Industry is estimated to grow at 12% to 14% in 2018 - 2019.. The Government of India had unveiled “Pharma Vision 2020” aiming at making India a global leader manufacturing. Many Indian companies are focusing on global generic and API emerging as preferred pharmaceuticals manufacturing location.

Several large selling drug going off patent over next few years and increasing use of generics over next few years. Increasing use of pharmaceutical generics in developed markets to reduce healthcare cost will provide attractive growth opportunities to generics manufacturers and thus Indian Pharmaceutical industry is poised for an accelerated growth in the coming years. However, poor public healthcare funding and infrastructure, low per capital consumption of medicines in developing and underdeveloped countries including India, currency fluctuations, regulatory issues, inflation and resultant all round increase in input costs are few causes of concern. Further the year witnessed huge volatility in global commodity market and foreign currencies. Disruption in domestics market continued in the form of GST implementation and price controls. Control measures undertaken by China, a key source raw material and intermediates for pharma industries have increased pressure on input cost. As an organization Company is continuously developing capabilities and competencies to cope with tough industry environment.

c) Financial Performance and Operation Review

During the year under review, the Company yielded Revenue from operations of INR 5240.46 lacs and earned Gross Profit before depreciation, interest and tax of INR 483.73 lacs with Net Profit of INR 201.33 Lacs as against Revenue from operations of INR 5012.45, Gross Profit before depreciation and Interest and tax of Rs. 707.49 lacs with Net Profit of INR 270.31 Lacs of previous year, respectively.

These regulatory issues continue to adversely impact the Company''s business. The Company''s business in the emerging markets also suffered due to significant currency fluctuations. The Company is implementing comprehensive remedial measures at all its manufacturing sites to ensure quality and regulatory compliances. These remedial measures included review of all processes and procedures revamping of training system, recruitment of senior quality personnel as well as automation of quality control laboratories. Your company is committed in resolving these issues at the earliest. The Company is also committed to its philosophy of highest quality in manufacturing, operations, system, integrity and GMP culture. Your management is confident that implementation of remedial measures will ensure that the company will regain all its regulatory approvals.

Rs. in Lacs

Break-up of Sales	2017-18	2016-17	Growth /	DE growth)
			In terms of Value	In terms of %
Domestic	3883.03	3597.07	285.96	7.95
Erga Sales	123.32	115.84	7.48	6.46
Deemed Exports	292.49	232.05	60.44	26.05
Direct Exports	941.62	1067.48	(125.86)	(11.79)
Total	5240.46	5012.44	228.02	4.55

During the financial year under report, the domestic sales of products of the Company amounted to INR 4298.84 lacs as against INR 3944.97 lacs in the previous year which reflect increase 8.97 % and in value INR 353.87 Lacs. Whereas the International Business (export) amounted to INR 941.62 Lacs as against INR 1067.48 lacs in the previous year which was decreased by 11.79% and in value INR 125.86 Lacs.

d) Internal Control System and its adequacy

The Company has adequate internal control system including suitable monitoring procedures commensurate with its size and the nature of the business. The internal control system provide for all documented policies, guidelines, authorization and approval procedures. The Company has an internal audit department which carries out audits throughout the year. The statutory auditors while conducting the statutory audit, review and evaluate the internal controls and their observations are discussed with the Audit Committee of the Board. Further the Company has in place adequate Internal Financial Controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operations were observed.

e) Human Resources

The human resources plays a vital role in the growth and success of an organization. The Company has maintained cordial and harmonious relations with employees across various locations. At the core of our success is our people and have been working towards keeping them engaged and inspired.

During the year under review, various trailing and development workshops were continued to be conducted to improve the competency level of employees with an objective to improve the operational performance of individuals. The company has built a competent team to handle challenging assignments. The Company strives to enhance the technical work, related and general skills of employees through dedicated training programs on a continuous basis.

The Company has 662 employees as on March 31,2018.

f) Formulation and Developments

Company always considering Formulation and Development as crucial for sustain growth of the company. Company always try to introduce newer and newer drugs delivery system for ensuring products available as regard to time and enhancing therapeutic value.

To achieve this objective we have experienced and qualified pharmacists whose activity is to maintain and find out newer and newer delivery system as well as re-engineering innovative process. This will help the company to maintain material consumption ratio.

g) Cautionary Statement

Certain statement in the management discussion and analysis may be forward looking within the meaning of applicable securities law and regulations and actual results may differ materially from those expressed or implied. Factors that would make differences to company''s operations include competition, price realization, Drugs Price Controls, FDC combinations, currency fluctuations, regulatory issues, changes in government policies and regulations tax regimes, economic development within India and the Countries in which the company conducts business and other incidental factors.

6. Directors" Responsibility Statement

Your Directors state that:

a. in the preparation of annual accounts for the year ended March 31, 2018, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

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 at March 31,2018 and of the Profit of the Company for the year ended on that date;

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

d. the Directors have prepared the annual accounts on a ’’going concern” basis;

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

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

7. Directors and Key Managerial Personnel

During the year under review, following changes occurred in the position of Directors / KMPs of the Company:

a. Mr. Dilip Shah, Director of the Company who retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. The retirement of director by rotation at the ensuing Annual General Meeting is determined in accordance with the provisions of the Companies Act, 2013. The Company made application to central government for appointment of Mr. Dilip Shah as Whole Time Dirctor of the Company for a period of five year with effect from September 26,2016. Pending approval, Company considered retires by rotation at ensuing annual general meeting. The Central Government approval as and when received shall prevail.

Further all the independent directors of the Company have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the act and there has been no change in the circumstances which may affects their status as independent directors during the year.

b. The term of appointment of Mr. Rajendra R Shah as Managing Director is valid upto March 31, 2017. Board at its meeting held on January 31, 2017 approved appointment of Mr. Rajendra R Shah as Managing Director of the Company with effect from April 1,2017 for further period of 3 years.

c. During the year under review, the board of directors, on the recommendations of the Nomination and Remuneration Committee had appointed Mr. Paresh J Mistry as an additional director of the Company with effect from OctoberOI, 2017 subject to approval of the members in the ensuing Annual General Meeting.

Necessary resolutions for appointment /reappointment of the aforesaid directors and their detailed profiles have been included in the notice convening the ensuing AGM and details of proposal for appointment / reappointment are mentioned in the explanatory statement of the notice. Your directors commend their appointment/ re-appointment.

During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company.

Key Managerial Personnel

1. Mr. Rajendra R Shah, Managing Director

2. Mr. Dilip R Shah, Whole Time Director (Approval is yet to receive from Central Government)

3. Ms. Payal Doshi, CFO (we.f. August 05,2016)

4. Mr. Mukesh Khanna, Company Secretary

8. Number of Meetings of the Board

Five Meetings of the Board were held during the year on May 19,2017, August 05,2017, August 18,2017, November 25, 2017 and January 27, 2018. For details of the meetings of the Board, please refer to the Corporate Governance Report, which forms part of this report.

9. Policy on Directors ‘Appointment and Remuneration and other details

The Company''s policy on directors'' appointment and remuneration and other matters provided in Section 178(3) of the Act, may be accessed on the Company''s website at the link: http://www.mercurylabs.com.

10. Board Evaluation

Pursuant to SEBI (Listing Obligations & Disclosures Requirements) Regulations, 2015 mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the Director being evaluated.

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 (SEBI) under SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015.

The performance of the Board was evaluated by the Board 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 (NRC) 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 addition, the Chairman was also evaluated on the key aspects of his role.

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 in 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.

11. Internal Financial Control Systems and their adequacy

The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report.

12. Audit Committee

The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report.

13. Share Capital

The paid-up Equity Share Capital of the Company as at March 31,2018 is INR 120 Lacs. The Company currently has no outstanding shares issued with differential rights, sweat equity or ESOS.

14. Risk Management

The Board of the Company has formed a Risk Management Policy to frame, implement and monitor the risk management plan for the Company. The Audit Committee is reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

15. Safety, Environment and Health

The Company considers safety, environment and health as the management responsibility. Regular employee training programs are earned out in the manufacturing facilities on safety, environment and health.

16. Particulars of Loens, Guarantees or Investments

The Company has not provided any loans and guarantees and no investments made pursuant to Section 186 of the Companies Act, 2013 during the year under review.

17. Particulars of contracts or arrangements with related parties:

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm’s length basis and in compliance of the provisions of Section 188 of the Companies Act, 2013 & rules made there under and Listing Agreement & SEBI (Listing Obligations and Disclosures Requirement) Regulation, 2015. The Company had not entered into any contract /arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company. The Policy dealing with related party transactions as approved by the Board may be accessed on the Company''s website at the link: http:AWw.rne rcuryiabs.com. All the related party transactions are placed before the Audit Committee as also Board for approval / ratification.

Prescribed form AOC - 2, pursuant to Section 134 (3) (h) of the Companies Act, 2013 & Rule 8(2) of the Companies (Accounts) Rules, 2014, is furnished as Annexure - B to this report.

18. Corporate Social Responsibility (CSR)

Though not mandatory in terms of Section 135 of Companies Act, 2013, the Company has formulated Corporate Social Responsibility (CSR) Policy in accordance with Section 135 of the Companies Act, 2013 and reconstituted CSR Committee with on Mey 14, 2015 with Mr. D. R. Zeveri and Ms. Poomima Karvat and Mr. Bharat Mehte, three independent directors and Mr. Rajendra R Shah, Managing Director and Dilip Shah, Director of the Company. However the Company has been pursuing CSR activities in the area of promotion of education in medical field by providing scholarship and other amenities to the medical students. The CSR policy of the Company is placed on the website of the Com pan v www.mercurvlabB.com.

19. Policy on prevention, prohibition and redressel of sexual harassment at work piece

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has also constituted an Internal Complaints Committee, known as the Prevention of Sexual Harassment (POSH) Committee, to inquire into complaints of sexual harassment and recommend appropriate action.

The Company has not received any complaint of sexual harassment during the financial year 2017-18. The policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at work place is placed on website of the Company www.mencufYlabs.con).

20. Vigil Mechanisms/Whistle Blower Policy

The Company has adopted a Whistle B lower Policy, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company’s Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. The Whistle Blower Policy is posted on the website of the Companywww.mercurylabs.com.

21. Slgnlflcantand material orders passed by the regulators or courts.

No significant material orders have been passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations. However during the year under review, inspection of books of accounts and other records was carried out by Office of Regional Director, Western Region, Ministry of Corporate Affairs.

22. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134 (3)(m) of the Act read with Rule8of the Companies (Accounts) Rules, 2014, is annexed as Annexure C.

23. Particulars of Employees and Remuneration

Pursuant to the Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, no employee of the Company was paid remuneration exceeding the prescribed limits, during the financial year 2017 -2018.

The information required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure-C forming part of the Report. None of the employees listed in the said Annexure is related to any Director of the Company.

24. Auditors & Their Reports

(1) Statutory Auditors:

Pursuant to the provisions of Section 139 of the Act and the rules framed there under, M/s. R J Shah & Associates, Chartered Accountants, were appointed as statutory auditors of the Company from the conclusion of the 36^th Annual General Meeting (AGM) of the Company held on September 29,2017 till the conclusion of the 37^th AGM to be held in the year 2018. M/s. R J Shah & Associates, Chartered Accountants is retiring at ensuing annual general meeting. The Board recommended for appointment of M/s. R J Shah & Associates as Chartered Accountant of the Company to hold office from conclusion of this ZT'' annual general meeting till conclusion of 40^th annual general meeting to be held in the year 2022. The Company has received letter from them to the effect that their appointment, if made, would be within the prescribed limits under Section 141 (3)(g) of the Companies Act, 2013 and that they are not disqualified from appointment.

There are no qualifications or adverse remarks in the Auditors'' Report, which require any clarification/ explanation. The Notes on financial statements are self-explanatory, and needs no further explanation.

The Notes on accounts, referred to in the Auditor''s Report, are self-explanatory and therefore do not call for any further comments.

(2) Secretarial Auditors:

Pursuant to the provisions of the Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014, the Board of Directors of the Company had appointed M/s. Mitesh Rana & Co. a firm of Company Secretaries to carry out Secretarial Audit for the year ended on March 31,2018. The Secretarial Audit Report is annexed as Annexure-E.

The Auditors” Report and the Secretarial Audit Report for the financial year ended March 31,2018 do not contain any qualification, reservation, adverse remark or disclaimer.

The Company has complied with the provisions of Secretarial Standards on Board Meetings and General Meetings issued by the Institute of Company Secretaries of India and approved by the Central Government.

(3) Cost Auditors:

Pursuant to the provisions of Section 148 read with Companies (Cost Records and Audit) Amendment Rules, 2014 and as recommended by the Audit Committee, the Board had appointed M/s. Jeegar Patel & Co., (FRN 103686), Cost Accountants to conduct the audit of cost records of the Company for the Financial Year 2018-19. Mr. Jeegar Patel had confirmed that his appointment met the requirements of Section 141 (3)(g) of the Act and that he was free from disqualification as specified under section 141 read with Section 148oftheAct.

In terms of Rule 14 of the Companies (Audit and Auditors) Rule, 2014, remuneration payable to the cost auditors is required to be ratified by members. Accordingly an ordinary resolution will be passed by members at the 37* Annual General Meeting approving the remuneration payable to Mr. Jeegar Patel & Co.

25. Deposits

The Company has no unpaid and/or unclaimed deposit. The Company has accepted deposit from Directors and their relatives, the Shareholders and has complied with all applicable provisions of the Companies Act relating to acceptance and renewal of deposits.

Particulars	Amt. in Rs.
Accepted during the year from the Directors and members*	139.65
Remained unpaid or unclaimed as at the end of the year	None
Whether there has been any default in repayment of deposits or payment of interest there on during the year and if so, number of such cases and the total amount involved (i) at the beginning of the year;(ii) maximum during the year; and (iii) at the end of the year	None

-Deposit accepted during the year are from directors of the company.

26. Extract of Annual Return

As provided under Section 92(3) of Ihe Act, the extract of annual return is given in Annexure-F in the prescribed Form MGT-9, which forms part of this report.

27. Material Change & Commitments, if any

There is no material changes and commitments, that would affect financial position of the company from the end of the financial year of the company to which the financial statements relate and the date of director''s report.

28. Corporate Governance Report

As stipulated by Regulation 34(3) read with Schedule V(C) of the Listing Regulations, Corporate Governance Report forms part of this Annual Report Annexed to the said report is the Auditor''s Certificate as prescribed under Schedule V(E)of the Listing Regulations certifying compliance with conditions of corporate governance.

29. Acknowledgment

The Board of Directors wish to place on record their appreciation for the continued support extended by the Bankers, Business Associates, clients, vendors and suppliers, Government Authorities, Employees at all levels and Stakeholders, in furthering the interest of the Company.

Place: Vadodara On behalf of the Board of Directors,

Date: May28,2018 Rajendra R. Shah

Chairman & Managing Director

DIN:00257253

---

Mar 31, 2016

6. Directors" Responsibility Statement

The Directors state that:

a. in the preparation of annual accounts for the year ended March 31, 2016, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

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 at March 31,2016 and of the Profit of the Company for the year ended on that date;

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

d. the Directors have prepared the annual accounts on a "going concern" basis;

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

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

7. Directors and Key Managerial Personnel

During the year under review, following changes occurred in the position of Directors / KMPs of the Company:

a. Dr Dinesh S Shah and Dr. Tushar P Shah resigned as Directors of the Company on May 14,2015 due to their pre-occupations.

b. Mr Bharat Dhirajlal Mehta was appointed as an Independent Director in casual vacancy caused on resignation of Dr. Dinesh Shah with effect from May 14,2015.

c. Ms. PoornimaDhirendraKarvatwas confirmed as an Independent Woman Director of the Company at the Annual General Meeting of the Company held on September 25, 2015, The terms and conditions of her appointment as an Independent Woman Director is as per schedule IV of the Companies Act, 2013.

d. Mr. Dilip Shah, Director of the Company who retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for reappointment. The retirement of director by rotation at the ensuing Annual General Meeting is determined in accordance with the provisions of the Companies Act, 2013.

Further all the independent directors of the Company have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the act and there has been no change in the circumstances which may affects their status as independent directors during the year.

e. Ms, Priyanka Doshi, CFO of the Company, has resigned from the Company with effect from June 23,2016.

f. Ms. Payal Doshi is appointed as Chief Finance Officer of the Company with effect from August 05,2016.

During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company.

8. Number of Meetings of the Board

Four Meetings of the Board were held during the year on May 14, 2015, July 31, 2015, November 02, 2015 and February 09,2016. For details of the meetings of the Board, please refer to the Corporate Governance Report, which forms part of this report.

9. Policy on Directors ‘Appointment and Remuneration and other details

The Company''s policy on directors'' appointment and remuneration and other matters provided in Section 178(3) of the Act, may be accessed on the Company''s website at the link: http://www.mercurylabs.cam.

10. Board Evaluation

Pursuant to SEBI (Listing Obligations & Disclosures Requirements) Regulations, 2015 mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the Director being evaluated.

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 (SEBI) under SEBI (Listing Obligations and Disclosures Requirements) Regulations, 2015.

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition & structure, effectiveness of board processes, Information and fu motioning 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 (NRC) 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 addition, the Chairman was also evaluated on the key aspects of his role.

In 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 in 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.

11. Internal Financial Control Systems and their adequacy

The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report.

12. Audit Committee

The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report.

13. Share Capital

The paid-up Equity Share Capital of the Company as at March 31, 2016 is Rs. 120 Lacs. The Company currently has no outstanding shares issued with differential rights, sweat equity or ESOS

14. Risk Management

The Board of the Company has formed a Risk Management Policy to frame, implement and monitor the risk management plan for the Company. The Audit Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

15. Safety, Environment and Health

The Company considers safety, environment and health as the management responsibility. Regular employee training programs, are carried out in the manufacture facilities on safety, environment and health.

16. Particulars of Loans, Guarantees or investments

The Company has not provided any loans and guarantees and no investments made pursuant to Section 186 of the Companies Act, 2013.

17. Particulars of contracts or arrangements with related parties:

All contracts /arrangements /transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis and in compliance of the provisions of Section 186 of the Companies Act, 2013 & rules made there under and Listing Agreement & SEBI (Listing Obligations and Disclosures Requirement) Regulation, 2015. The Company had not entered into any contract /arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company. The Policy dealing with related party transactions as approved by the Board may be accessed on the Company''s website at the link: http://www.mercurylabs.com. All the related party transactions are placed before the Audit Committee as also Board for approval.

Prescribed form AOC - 2, pursuant to Section 134 (3) (h) of the Companies Act, 2013 & Rule 8(2) of the Companies (Accounts) Rules, 2014, is famished as Annexure-A to this report

18. Corporate Social Responsibility (CSR)

Though not mandatory in terms of Section 135 of Companies Act, 2013, the Company has formulated Corporate Social Responsibility (CSR) Policy in accordance with Section 135 of the Companies Act, 2013 and reconstituted CSR Committee with on May 14, 2015 with Mr. D. R. Zaveri and Ms. Poomima Karvat and Mr. Bharat Mehta, three independent directors and Mr. Rajendra R Shah, Managing Director and Dilip Shah, Director of the Company. However the Company has been pursuing CSR activities in the area of promotion of education in medical field by providing scholarship and other amenities to the medical students. The CSR policy of the Company is placed on the website of the Companywww.mercurylabs.com.

19. Policy on prevention, prohibition and redressal of sexual harassment at workplace

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has also constituted an internal Complaints Committee, known as the Prevention of Sexual Harassment (POSH) Committee, to inquire into complaints of sexual harassment and recommend appropriate action.

The Company has not received any complaint of sexual harassment during the financial year 2015-16. The policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at work place is placed on website of the Companywww.mercuryiabs.com.

20. Vigil Mechanism/Whistle Blower Policy

The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company''s Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. The Whistle Blower Policy is posted on the website of the Companywww.mercurylabs.com.

21. Significant and material orders passed by the regulators or courts.

No significant material orders have been passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.

22. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134 (3)(m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed as Annexure B.

23. Particulars of Employees and Remuneration

Pursuant to the Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, no employee of the Company was paid remuneration exceeding the prescribed limits, during the financial year 2015 -2016.

The information required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure-C forming part of the Report. None of the employees listed in the said Annexure is related to any Director of the Company.

24. Auditors & Their Reports

(1) Statutory Auditors:

Pursuant to the provisions of Section 139 of the Act and the rules framed there under, M/s. Naresh & Co, Chartered Accountants, were appointed as statutory auditors of the Company from the conclusion of the 33™ Annual General Meeting (AGM) of the Company held on September 30, 2014 till the conclusion of the Sfi AGM to be held in the year 2017, subject to ratification of their appointment at every AGM. The Company has received letter from them to the effect that their appointment, if made, would be within the prescribed limits under Section 141 (3)(g) of the Companies Act, 2013 and that they are not disqualified from appointment.

There are no qualifications or adverse remarks in the Auditors'' Report, which require any clarification/ explanation. The Notes on financial statements are self-explanatory, and needs no further explanation.

The Notes on accounts, referred to in the Auditor’s Report, are self explanatory and therefore do not call for any further comments.

(2) Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company had appointed M/s. Mitesh Rana & Co, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the year ended March 31,2016. The Secretarial Audit Report is annexed as Annexure-D.

Pursuant to the provisions of the Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014, the Board of Directors of the Company had appointed M/s. Mitesh Rana & Co. a firm of Company Secretaries to carryout Secretarial Audit for the year to be ended on March 31,2017.

The Auditors" Report and the Secretarial Audit Report for the financial year ended March 31,2016 do not contain any qualification, reservation, adverse remark or disclaimer.

25. Deposits:

The Company has no unpaid and I or unclaimed deposit. The Company has accepted deposit from Directors and their relatives, the Shareholders and has complied with all applicable provisions of the Companies Act relating to acceptance and renewal of deposits.

The details relating to deposits, covered under Chapter V of the Act are as under:

Particulars	Amt. in Rs.
Accepted during the year from the Directors and members	174.32
Remained unpaid or unclaimed as at the end of the year	None
Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved (i) at the beginning of the year;(ii) maximum during the year; and (iii) at the end of the year;	None

26- Extract of Annual Return

As provided under Section 92(3) of the Act, the extract of annual return is given in Annexure-E in the prescribed Form MGT-9, which forms part of this report.

27. Material Change & Commitments, If any

There is no material changes and commitments, that would affect financial position of the company from the end of the financial year of the company to which the financial statements relate and the date of director''s report.

28. Acknowledgment

The Board of Directors wish to place on record their appreciation for the continued support extended by the Bankers, Business Associates, clients, vendors and suppliers, Government Authorities, Employees at all levels and Stakeholders, in furthering the interest of the Company.

Place: Vadodara, On behalf of the Board of Directors,

Date: August 05,2016 Rajendra R. Shah

Chalrman&Managing Director

---

Mar 31, 2015

Dear Members,

The Directors are pleased to present the 34th Annual Report and the Company's audited financial statement for the financial year ended March 31,2015.

(Rs. in Lacs)

1. Financial Results: 2014-15 2013-14

Gross Income 4231.20 4208.56

Gross Profit before Depreciation Interest & 690.15 715.40 Tax

Less: Interest 111.60 146.82

Less: Depreciation 118.06 89.27

Add/(Less) :

Prior period Adjustment - Net - 15.00

Less: Current Tax & Deferred Tax 129.15 157.15

Net Profit 331.34 322.16

Balance as per last P&L A/c. 1.53 1.29

Profit available for appropriation 332.87 323.45

This profit has been appropriated as under

(i) Proposed Dividend 18.00 18.00

(ii) Income Tax on proposed dividend 3.05 2.92

(iii) Transfer to General Reserve 309.00 301.00

(iv) Balance carried to next year 2.82 1.53

Total 332.87 323.45

2. Dividend:

Your Directors are pleased to recommend payment of dividend @ 15% (Rs. 1.50 per Share) on the Equity Share Capital of Rs. 1,20,00,000 for the year 2014-2015 absorbing Rs. 21.05 Lacs including Tax on Dividend, which will be, if approved, paid to the Shareholders holding shares as on 25th September, 2015, after business hours.

3. Transfer to Reserves:

The Company proposes to transfer Rs. 309 lacs to the General Reserve out of the amount available for appropriation and an amount of Rs.2.82 lacs is proposed to be retained in the statement of Profit and Loss account.

4. Financial Performance and Operations Review:

During the year under review, the Company yielded Gross Income of Rs. 4231.20 lacs and earned Gross Profit before depreciation, interest and tax of Rs. 690.15 lacs with Net Profit of Rs. 331.34 Lacs as against Gross Income of Rs. 4208.56 lacs, Gross Profit before depreciation and Interest and tax of Rs. 715.40 lacs with Net Profit of Rs. 322.16 Lacs of previous year, respectively, registering modest growth in Gross income and in Net Profit, as compared to previous year.

5. Future Prospects:

Your company has created new world class GMP facility for all its liquids and tablets confirming requirement of WHO. The Company has increased its manufacturing capacity for tablets and liquids by four folds keeping in view the projected growth plans.

The Company has been now focusing more on strategy implementation and follow up action to achieve the desired growth plan in ethical Marketing. The Company is ensuring its products availability in all comer of country by increasing C&F agents. With a view to create more ethical market, the Company has introduced various new drugs such as Teclobet, Tanolite, Clinzit, Clinzita- A, Levotryl Tablet, Levotryl-M Tablet, Levotryl Syrup, THA-4, THA-8, Pyloryl, Pangs At, Feveryl Drops, Feveryl Suspension in its Mother Child Care specialized Segment. On other side, your Company has established Institutional Business with Government institutions, Semi Government and Hospitals & Clinics. This division of the Company, is also focusing more on strategy implementation and achieving higher growth.

The Company has been putting its major thrust on Export and has set higher objective of achieving 20% growth during the financial year 2015-16 with addition of new, more clients and cover new countries such as Latin America, Philippines, South Sudan, Tanzania, Zimbabwe, Zambia to name a few in addition to existing client countries such as Nigeria, Congo, Ghana, Burma, Sri Lanka, Gautmala, Costa-de rica, etc.

The Company has been following its well planned strategy of deriving maximum mileage on domestic market, more particularly on ethical business, effectively and aggressively penetrating the domestic and export market, exercising regular and strong follow up over Marketing distribution net work and channels, strengthening its new institutional business of supplying products to government / semi- government institutions in the Country, with an objective to continue to excel well. With these, the Board is confident that this would result into substantial growth in the business revenue, barring unforseen circumstances.

6. Directors' Responsibility Statement

Your Directors state that:

a. in the preparation of annual accounts for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

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 at March 31, 2015 and of the Profit of the Company for the year ended on that date;

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

d. the Directors have prepared the annual accounts on a 'going concern' basis;

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

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

7. Directors and Key Managerial Personnel

During the year under review, following changes occurred in the position of Directors / KMPs of the Company:

a. Pursuant to the provisions of Section 149 of the Act, Dr. Dinesh S. Shah, Dr. Tushar P. Shah, Mr. Divyakant R. Zaveri were appointed as Independent Directors at the Annual General Meeting of the Company held on 30th September, 2014. The terms and conditions of appointment of independent directors are as per Schedule IV of the Act. They have submitted a declaration that each of them meets the criteria of independence as provided in Section 149(6) of the Act and there has been no change in the circumstances which may affect their status as independent directors during the year.

b. Mr. Mukesh M. Khanna has been appointed as the Company Secretory & Compliance Office of the Company effective from 26th July, 2014.

c. Mrs. Poornima Dhirendra Karvat was appointed as a Woman Independent Director with effect from 30th March, 2015 in the nature of additional Director and pursuant to the provisions of Section 161 of the Companies Act, 2013, she holds office upto the ensuing Annual General Meeting. Being eligible, she has offered herself for appointment as an Independent Director of the Company.

d. Ms. Priyanka Doshi, has been appointed as Chief Financial Officer (CFO) of the Company in place of Mr. Haresh G. Shah who resigned as the CFO of the Company, effective from 31st March, 2015.

During the year, the non-executive directors of the Company had no pecuniary relationship or transactions with the Company.

Events occurring after balance sheet date - change in directorate / KMP

e. Dr. Dinesh S. Shah and Dr. Tushar P. Shah resigned as Directors of the Company on 14th May, 2015 due to their other pre-occupations.

f. Mr. Bharat Dhirajlal Mehta, was appointed as an Independent Director in casual vacancy caused on resignation of Dr. Dinesh S. Shah, with effect from 14th May, 2015.

8. Number of Meetings of the Board

Eight Meetings of the Board were held during the year on 3rd April, 2014, 26th April, 2014,15th May, 2014,26th July, 2014, October, 2014, 27th January, 2015, 11th February, 2015 and 30th March, 2015. For details of the meetings of the Board, please refer to the Corporate Governance Report, which forms part of this report.

9. Policy on Directors'Appointment and Remuneration and other details

The Company's policy on directors' appointment and remuneration and other matters provided in Section 178(3) of the Act, may be accessed on the Company's website at the link: http://www.mercurylabs.com.

10. Board Evaluation

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 ("SEBI") under Clause 49 of the Listing Agreements ("Clause 49").

The performance of the Board was evaluated by the Board 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 ("NRC") 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 addition, the Chairman was also evaluated on the key aspects of his role.

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 in 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.

11. Internal Financial Control Systems and their adequacy

The details in respect of internal financial control and their adequacy are included in the Management Discussion & Analysis, which forms part of this report.

12. Audit Committee

The details pertaining to composition of audit committee are included in the Corporate Governance Report, which forms part of this report.

13. Share Capital

The paid-up Equity Share Capital of the Company as at 31st March, 2015 is Rs. 120 Lacs. The Company currently has no outstanding shares issued with differential rights, sweat equity or ESOS.

14. Risk Management

The Board of the Company has formed a Risk Management Policy to frame, implement and monitor the risk management plan for the Company. The Audit Committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis.

15. Safety, Environment and Health

The Company considers safety, environment and health as the management responsibility. Regular employee training programs, are carried out in the manufacturing facilities on safety, environment and health.

16. Particulars of Loans, Guarantees or Investments

The Company has not provided any loans and guarantees and no investments made pursuant to Section 186 of the Companies Act, 2013.

17. Particulars of contracts or arrangements with related parties :

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had entered into contract with Mercury Antibiotics Pvt. Ltd., for availing the building and plant and machinery on lease for a period of 3 years on lease rent of Rs.54 Lacs per annum. The Company has also entered in to contract with Mercury Marketing & Consultancy Services (MMCS) for availing services of the professionals retained by MMCS, for a period of 3 years on fees of Rs.24 Lacs per annum. The Company had not entered into any contract /arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company. The Policy dealing with related party transactions as approved by the Board may be accessed on the Company's website at the link: http://www.mercurylabs.com.

Prescribed form AOC - 2, pursuant to Section 134 (3) (h) of the Companies Act, 2013 & Rule 8(2) of the Companies (Accounts) Rules, 2014, is furnished as Annexure - A to this report.

18. Corporate Social Responsibility (CSR)

Though not mandatory in terms of Section 135 of Companies Act, 2013, the Company has formulated Corporate Social Responsibility (CSR) Policy in accordance with Section 135 of the Companies Act, 2013 and constituted CSR Committee with Dr. Tushar Shah, Dr. Dinesh Shah and Mr. D.R. Zaveri, three Independent Directors with Mr. Rajendra R. Shah, Managing Director of the Company. Dr. Tushar Shah was the Chairman of the CSR Committee.

The CSR Committee was re-constituted by the Board of Directors of the Company on 14th May, 2015 with Ms. Poornima Karvat and Mr. Bharat Mehta as members in place of Dr. Tushar Shah, Dr. Dinesh Shah.

However the Company has been pursuing CSR activities in the area of promotion of education in medical field by providing scholarship and other amenities to the medical students.

The CSR policy of the Company is placed on the website of the Company www.mercurvlabs.com.

19. Policy on prevention, prohibition and redressal of sexual harassment at workplace.

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. The Company has also constituted an Internal Complaints Committee, known as the Prevention of Sexual Harassment (POSH) Committee, to inquire into complaints of sexual harassment and recommend appropriate action.

The Company has not received any complaint of sexual harassment during the financial year 2014- 15. The policy on Prevention, Prohibition and Redressal of Sexual Harassment of Women at work place, is placed on website of the Company www.mercurylabs.com.

20. Vigil Mechanism/Whistle Blower Policy

The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors and employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides for direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. The Whistle Blower Policy is posted on the website of the Companywww.mercurylabs.com.

21. Significant and material orders passed by the regulators or courts.

No significant material orders have been passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations.

22. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The information on Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo stipulated under Section 134 (3) (m) of the Act read with Rule 8 of The Companies (Accounts) Rules, 2014, is annexed as Annexure B.

23. Particulars of Employees and Remuneration

Pursuant to the Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, no employee of the Company was paid remuneration exceeding the prescribed limits, during the financial year 2014 - 2015.

The information required under Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure-C forming part of the Report. None of the employees listed in the said Annexure is related to any Director of the Company.

24. Reply to Remark made by the Auditors:

With reference to remark made by of the Auditors in their Report under "Other Matter", as briefed in Note-19, Rs. 53,17,983/-, the amount of Debtors outstanding for more than One year, is not considered doubtful by the Management, in view of part of them is already received and as per the assurance given, balance is likely to be received by the Company, in phased manner.

25. Auditors

(1) Statutory Auditors:

Pursuant to the provisions of Section 139 of the Act and the rules framed thereunder, M/s. Naresh & Co, Chartered Accountants, were appointed as statutory auditors of the Company from the conclusion of the 33rd Annual General Meeting (AGM) of the Company held on September 30,2014 till the conclusion of the 36th AGM to be held in the year 2017, subject to ratification of their appointment at every AGM. The Company has received letter from them to the effect that their appointment, if made, would be within the prescribed limits under Section 141 (3)(g) of the Companies Act, 2013 and that they are not disqualified from appointment.

(2) Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Act and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors of the Company had appointed M/s. Jayesh Vyas & Associates, a firm of Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the year ended March 31,2015. The Secretarial Audit Report is annexed as Annexure-D.

The Auditors' Report and the Secretarial Audit Report for the financial year ended March 31,2015 do not contain any qualification, reservation, adverse remark or disclaimer.

26. Deposits:

The Company has no unpaid and / or unclaimed deposit. The Company has accepted deposit from Directors and their relatives, the Shareholders and has complied with all applicable provisions of the Companies Act relating to acceptance and renewal of deposits.

The details relating to deposits, covered under Chapter V of the Act are as under:

Particulars Amt. in Rs.

Accepted during the year from the Directors and members 192.64

Remained unpaid or unclaimed as at the end of the year None

Whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved (i) at the beginning of the year;(ii) maximum during the year; and (iii) at the end of the year; None

27. Extract of Annual Return

As provided under Section 92(3) of the Act, the extract of annual return is given in Annexure-E in the prescribed Form MGT-9, which forms part of this report.

28. Material Change & Commitments, if any

There is no material changes and commitments, that would affect financial position of the company from the end of the financial year of the company to which the financial statements relate and the date of the directors report.

29. Acknowledgment

The Board of Directors wish to place on record their appreciation for the continued support extended by the Bankers, Business Associates, clients, vendors and suppliers, Government Authorities, Employees at all levels and Stakeholders, in furthering the interest of the Company.

Place: Vadodara, On behalf of the Board of Directors, Date: 31st July, 2015 Rajendra R. Shah Chairman& Managing Director

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Mar 31, 2014

Dear Members,

Outlook of Pharmaceutical Industry:

The year 2013-14 has been a dynamic year for Pharmaceutical Industry due to lot of changes that took place in Drugs & Cosmetics Act, DPCO, Companies Act.

The Indian Pharmaceutical Industry, being sunrise industry since liberalization of 1992, witnessed CAGR Growth of 9% from theyear2000 to 2005 and subsequently 13% growth from the year 2005 to 2013. Itis projected that this growth will prolong continuously with same speed with CAGR 13% to 14% from the year 2015 to 2020.

Today, the Pharma Industry is doing business of 12,000 billion USD in domestic market, which is expected to be increased to 35 billion to 55 billion USD in coming period of five years from the year 2020.

The urban market share is 80%-85% while rural market share is 15%-20%. There is a upward trend and is potential to increase in rural market due to :

(a) Government has allocated 29000 crores for the healthcare plan during this financial year

(b) Gross income increase of middle and lower class

(c) Due to introduction of DPCO 2013, some of the products-life saving drugs reduced and assessable for poor people.

(d) The government policy to encourage domestic as well as export of the pharmaceutical products, this support will definitely help pharmaceutical industries to grow faster and newer heights.

The developed country provide healthcare at optimum and the market for further growth are limited while developing countries such as China, India, Brazil, Russia, South Africa have potentials growth path due to driven by rapid urbanization, greater economical development. Rural markets will grow the fastest driven by step-up from current poor level of penetration and healthcare infrastructure will also increase. This will lead Indian Pharmaceutical Industry to No. 2 Position in volume in production by 2020.

In the backdrop of such congenial environment, Your company has been growing fast, too with its strategic planning and proper penetration in both domestic and export markets as evidenced from the financial performance achieved during the financial year 2013-14.

The following figures summaries the financial performance of the Company during the year under review.

1. Financial Results: (Rs. in Lacs) (Rs. in Lacs) 2013-14 2012-13

Gross Income 4208.56 3418.03

Gross Profit before Dep. Int.&Tax 700.40 446.30

Less: Interest 146.82 41.15

Less: Depreciation 89.27 32.16

Add/(Less) : — —

Prior period Adjustment- Net 15.00 (9.30)

Less: Current Tax & Deferred Tax 157.15 128.31

Net Profit 322.16 253.98

Balance as per last P&LA/c. 1.29 1.23

Profit available for appropriation 323.45 255.21

This profit has been appropriated — — as under

(I) Proposed Dividend 18.00 18.00

(ii) Income Tax on proposed dividend 2.92 2.92

(iii) Transfer to General Reserve 301.00 233.00

(iv) Balance carried to next year 1.53 1.29

Total 323.45 255.21

2. Dividend:

Your Directors are pleased to recommend payment of dividend @ 15% (Rs. 1.50 per Share) on the Equity Share Capital of Rs. 1,20,00,000 for the year 2013-2014 absorbing Rs.20.92 lacs including Tax on Dividend, which will be, if approved, paid to the Shareholders holding shares as on 30th September, 2014, after business hours.

3. Operations In Retrospect:

During the year under review, the Company yielded Gross Income of Rs. 4208.56 lacs and earned Gross Profit before depreciation, interest and tax of Rs. 700.40 lacs with Net Profit of s. 322.16 Lacs as against Gross Income of Rs. 3418.03 lacs, Gross Profit before depreciation and Interest and tax of Rs. 446.30 lacs with Net Profit of Rs. 253.98 Lacs of previous year, respectively, registering phenomenal growth of 23.12 % in Gross income and a modest growth of 26.84% in Net Profit, as compared to previous year.

4. Future Prospects:

Your company has created new world class manufacturing facility for liquids and tablets and confirming requirement of USFDA which are in operation since September 2013 onwards. The Company has increased its manufacturing capacity for tablets and liquids by four folds keeping in view the projected growth plans.

The Company has been now focusing more on strategy implementation and follow up action to achieve the desired growth plan in ethical Marketing. The Company is ensuring its products availability in all corner of country by increasing C&F agents, as recently it has appointed one more C&F agent at Vijayawada. With a view to create more ethical market, The Company has introduced various new drugs such as Ovaryl Tablet, K-Win 10 Injection, K-Win injection with syringe to cover more Gynaec and Paed Doctors in line of Central Government policy of "Health for all " by allocation of Rs. 29,000 crores. On other side, your Company has established Institutional Business with Government institutions, Semi-Government and Brand ''A'' Hospitals & Clinics. The Erga division of the Company, is also focusing more on strategy implementation and achieving higher growth. Two new products have been introduced in their portfolio.

The Company has been putting its major thrust on Export and has set higher objective of achieving 100% growth during the financial year 2014-15 with addition of new, more clients and cover new countries in Central America such as Costa Rica, Guatemala, El- Salvador , to name a few.

The Company has been following its well planned strategy of deriving maximum mileage on domestic market, more particularly on ethical business, effectively and aggressively penetrating the domestic and export market, exercising regular and strong follow up over Marketing distribution net work and channels, strengthening its new institutional business of supplying products to government / semi- government institutions in the Country, with an objective to continue to excel well. With these, the Board is confident that this would result into substantial growth in the business revenue.

5. Amalgamation with Mercury Antibiotics Private Limited (MAPL):

As the members are aware, in order to have synergy of operations between MAPL, the associate Company and the Company, with the approval of the Members, a scheme of Amalgamation of the Company with MAPL was proposed and pursued at High Court of Mumbai. On account of various regulatory and technical issues, the Amalgamation Application filed by the Company had to be withdrawn by the Board and it again resolved to proceed with the said amalgamation afresh, with the same Scheme as was earlier sanctioned. However, since the time when the Board resolved to proceed with the merger, the Company went into significant expansion and acquired and installed modern plant for liquid oral with latest technology and high in speed which could produce finest and latest medicines to compete in the national and international markets due to which various advantages which were hitherto accruing upon merger with MAPL, lost its importance and significance to the Company and as it has not brought any synergic gains, the Board therefore decided to rescind the proposal of merger of MAPL with the Company.

6. Management Discussion & Analysis:

a. Industry Structure and Developments:

As explained in the inception, the Indian pharmaceutical industry as a whole, on positive, progressive sea change and is expected to tremendous with the encouraging support of the Government .

b. Opportunities and Threats:

Your Company operates in such a area where a large market exists and offers ample opportunities for growth. Your Company''s products are well-received in the market. However, the Company faces tremendous competitions from the organized and also unorganized sectors.

c. Outlook:

Your Directors are well aware of the competition by organized and unorganized manufacturers and prevailing scenario such as Companies Act, DPCO and create a strategy to overcome this difficulties.

In view of inflationary trend and keen competitions prevailing in the market, your Directors feel the performance of the Company has been reasonably good. Your Directors are also aware of the fact that Indian Pharmaceutical industry is highly potential to growth but competitive and fragmented.

The management is conscious about the changing scenario in pharmaceutical industry and review take place regularly.

d. Risks and concerns:

The external factors such as Competition, DPCO norms, Natural Calamities etc. are sincerely and strategically addressed. Your company''s management focus in taking care of internal issues.

The external factors such as inflationary trend prevailing in the market, natural calamities, and competition are common to all the industrial sectors. It is therefore necessary to address sincerely and systematically, to the effect of those risks on the business of the Company. Risks which are internal on which the directors and management would have control, are being taken care of. Diversified portfolio of products, focus on financial disbursement, introduction of new products, achieving optimum usage of available infrastructure and deriving maximum possible returns, cost reduction in its operations etc. are some of the inbuilt strategies which are implemented by the Company to manage business risk.

e. Internal Control System and their Adequacy:

The internal control systems are continuously being fine tuned in line with the changing requirements in the industry. The management regularly reviews the internal control systems in the areas of finance procurement, sales and distribution and marketing and new product launches. Thus emphasis on internal control system is spread over across all major functions and processes.

f. Financial Performance:

Financial performance of the Company has been indicated here in above.

g. Human Resources/lndustrial Relations:

Yours Directors believe that employees are the most valued assets of the organization. Thus, all the human resources practices are directed towards enhancing the value of these assets. The focus of the management is on the organizational development and to imbibe new organization values entrepreneurship, team work achievement and commitment.

7. Directors'' Responsibility Statement:

In terms of Section 217(2AA) of the Companies Act,1956, the Directors would like to state that :-

i) in the preparation of the annual accounts, the applicable accounting standards have been followed.

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit of the Company for the year under review.

iii) the Directors have 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.

iv) the Directors have prepared the Annual Accounts on a going concern basis.

8. Directorate:

Pursuant to Section 149 of the Companies Act, 2013, the Board at its meeting held on 26th July, 2014 recommended appointment of Dr. Dinesh Shantilal Shah, Dr. Tushar Pravinchandra Shah and Mr. Divyakant R. Zaveri as Independent Directors of the Company, not liable to retire by rotation during their tenure of five years till the date of its 38th Annual General Meeting, subject to approval of the Members of the Company. These Directors have given consent and provided declarations to the Board that they meet the criteria of independence as provided under Section 149(6) of the said Act and also confirmed that they will abide by the provisions as mentioned in Schedule IV of the Companies Act, 2013.

In view of their vast and varied experience and useful contributions given by each of them , the Board recommends their appointment as the Independent Directors of the Company.

Mr. Janak J. Katakia ceased to be the Independent Director effective form 26th July, 2014 on resignation. The Board places on record his sincere appreciation for the contribution received from him during the tenureship as a Director of the Company.

9. Statutory Disclosures:

I. Information pursuanttoSection217(1)(e)oftheCompanies Act, 1956 read with Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988 are given as Annexure ''A'' to this report.

II. As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 information is not furnished as no employee is covered there under.

III. In compliance of Section 383A(1) of the Companies Act, 1956 Compliance Certificate as issued by Mr. Jayesh Vyas of M/s. Jayesh Vyas and Associates, the Practicing Company Secretary, is annexed as Annexure "B" to this report.

10. Corporate Governance:

Pursuant to Clause 49 of the Listing Agreements with the Over the Counter Exchange of India (OTCEI), Corporate Governance Report and Auditors'' Certificate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report as Annexure "C", whereas the Management Discussion and Analysis is given hereinabove.

11. Secretarial Audit Report:

In compliance of directives of the Central Government and to complu listing requirement, a Secretarial Audit Report issued by Mr. Jayesh Vyas, the Practicing Company Secretary, is attached as Annexcure- D to this report.

12. Dematerialisation of Shares:

Shares of the Company bear ISIN No. INE947GO1011 as allotted by the National Securities Depository Ltd. (NSDL) & Central Depository Services Ltd. (CDSL), for dematerialization and as of the date, 9,57,600 Equity shares (79.80%) have been dematerialized. Shareholders are recommended to demat their Shares for their better custody and convenience.

13. Auditors:

M/s. Naresh & Co., Chartered Accountants, Vadodara, (Firm Registration No. 106928W), the Auditors of the Company retire at the ensuing Annual General Meeting, being eligible, offer themselves for reappointment at the Annual General Meeting.

The Members are requested to consider their re-appoint as the Statutory Auditors for a period of three years commencing from the conclusion of this Annual General Meeting upto the conclusion of the 36th Annual General Meeting, subject to ratification of the Members at every meeting and authorise the Board of Directors to fix their remuneration.

Members are requested to consider their re-appointment and fix their remuneration.

14. Cost Auditors:

Pursuant to the provisions of Section 233B of the Companies Act, 1956, Ms. Shilpa Parikh, Cost Accountants, (ICWA Registration No. 31441) was appointed as the Cost Auditors to conduct audit of cost records for Formulations drugs of the Company for the Financial Year2014-15.

15. Deposits:

The Company has no unpaid and / or unclaimed deposit. The Company has not accepted any deposit from Public except from Directors and their relatives and has complied with all applicable provisions of the Companies Act relating to acceptance and renewal of deposits.

16. Insurance:

All the properties and insurable interests of the Company including buildings, plants & machineries and stocks, have been adequately insured.

17. Appreciation:

Your Directors have pleasure to place on record their appreciation of the service rendered by the Workmen and Staff of the Company and thank State Bank of India, Government of Gujarat and Central Government for their valuable cooperation in furthering interest of the Company.

Date : 26-07-2014 For and on behalf of the Board, Place : Vadodara.

Dinesh S.Shah Chairman

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Mar 31, 2013

Dear Members,

The Directors have pleasure in presenting the 32nd Annual Report together with Audited Statements of Accounts for the Year ended 31st March, 2013.

The following figures summaries the financial performance of the Company during the year under review.

1. Financial Results : (Rs. in Lacs)

2012-13 2011-12

Gross Income 3418.03 2736.03

Gross Profit before Depreciation, Interest & Tax 446.30 365.28

Less: Depreciation 32.16 29.62

Less: Interest 41.15 24.36

Less: Current Tax & Deferred Tax 128.31 102.41

Add /(Less) : Prior period Adjustment - Net (9.30) 11.52

Provision for Tax — 10.30

Net Profit 253.98 230.71

Balance as per last P&L A/c. 1.23 0.44

Profit available for appropriation 255.21 231.15

This profit has been appropriated as under

(i) Proposed Dividend 18.00 18.00

(ii) Income Tax on proposed dividend. 2.92 2.92

(iii) Transfer to General Reserve 233.00 209.00

(iv) Balance carried to next year 1.29 1.23

Total 255.21 231.15

2. Dividend :

Your Directors are pleased to recommend payment of dividend @ 15% (Rs. 1.50 per Share) on the Equity Share Capital of Rs. 1,20,00,000 for the year 2012-2013 absorbing Rs.20.92 lacs including Tax on Dividend, which will be, if approved, paid to the Shareholders holding shares as on 13th December, 2013, after business hours.

3. Operations In Retrospect:

During the year under review, the Company earned Gross Income of Rs. 3418.03 lacs and generated Gross Profit before Depreciation, Interest and Tax of Rs. 446.30 lacs with Net Profit of Rs. 253.98 lacs as against Gross Income of Rs. 2736.03 lacs, Gross Profit before Depreciation, Interest and Tax of Rs. 365.28 lacs with Net Profit of Rs. 230.71 lacs of previous year, registering phenomenal growth of 24.92% in Gross income and a modest growth of 10% in Net Profit, as compared to previous year. The Company has been continuing putting its thrust on its well devised action plan of focusing on deriving maximum mileage on domestic market, more particularly on ethical business, effectively and aggressively penetrating the market, exercising regular and strong follow up over Marketing distribution net work and channels, focusing on new Institutional Business of supplying products to Government / Semi-Government Institutions in the Country, so as to continue to achieve targeted growth.

In a drive to expand business, two new products have been introduced in Ergacap division and systematic efforts are being made to promote them. On Export front, the Company has been putting its thrust on development of newer market in different countries such as Sri lanka and Benin to increase clientele in existing exporting countries. During the year, the Company added Eight new customers in exporting countries. The Company is vigilant on cost control and hence putting its best possible efforts continuously, to avoid wasteful expenses and minimise operational expenses to the extent possible. With these, the Board is confident that this would result into substantial growth in the business revenue.

Expansion plan of the Company has been on advance stage of completion and with establishing new manufacturing facilities at Jarod, the Company could enter in to regulated market and bring better result in coming years. Barring unforeseen circumstances, the Company hopes to pose better and improved results, in coming period,

4. Management Discussion & Analysis :

a. Industry Structure and Developments:

The Company was like other Indian pharmaceutical Companies, had reasonably good year, in terms of the profit and growth for the year ended 31st March, 2013. Sincere efforts are continued to introduce necessary changes in the various areas of operations, on continual basis, so as to optimize the operating results.

b. Opportunities and Threats :

Your Company operates in an area where a large market exists and offers ample opportunities for growth. Your Company''s products are well received in the market. However, the Company faces tremendous competitions from the organized and also unorganized sectors.

c. Outlook :

In view of inflationary trend and keen competitions prevailing in the market, your Directors feel the performance of the Company has been reasonably good. Your Directors are also aware of the fact that Indian Pharmaceutical industry is highly potential to growth but competitive and fragmented.

The management is conscious about the changing scenario in pharmaceutical industry and review take place regularly.

d. Risks and concerns:

The external factors such as inflationary trend prevailing in the market, natural calamities, and competition, are common to all the Industrial Sectors. It is therefore necessary to address sincerely and systematically, to the effect of those risks on the business of the Company. Risks which are internal on which the directors and management would have control, are being taken care of Diversified portfolio of products, focus on financial disbursement, introduction of new products, achieving optimum usage of available infrastructure and deriving maximum possible returns, cost reduction in its operations etc. are some of the inbuilt strategies which are implemented by the Company to manage business risk.

e. Internal Control System and their Adequacy:

The internal control systems are continuously being fine tuned in line with the changing requirements in the industry. The management regularly reviews the internal control systems in the areas of finance procurement, sales and distribution and marketing and new product launches. Thus emphasis on internal control system is spread over across all major functions and processes.

f. Financial Performance:

Financial performance of the Company has been indicated hereinabove.

g. Human Resources/Industrial Relations:

Yours Directors believe that employees are the most valued assets of the organization. Thus, all the human resources practices are directed towards enhancing the value of these assets. The focus of the management is on the organizational development and to imbibe new organization values- entrepreneurship, team work achievement and commitment.

5. Directors'' Responsibility Statement:

In terms of Section 217(2AA) of the Companies Act,1956, the Directors would like to state that:-

i) in the preparation of the annual accounts, the applicable accounting standards have been followed.

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit of the Company for the year under review.

iii) the Directors have 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.

iv) the Directors have prepared the Annual Accounts on a going concern basis.

6. Director:

Dr. Dinesh Shah who retires by rotation and being eligible, offers himself for reappointment. Members are requested to consider his re-appointment.

7. Extension of time for holding Annual General Meeting :

In order to facilitate the Company to place before the Shareholder its post Merger Statement of Accounts with Mercury Antibiotics Private Limited, the Company has availed extension of time of three months for holding Annual General Meeting for the financial year 2012-13, from the Registrar of Companies, Maharashtra vide their letter dated 30-08-2013. However, the Company still awaits to receive approval of Honourable High Court of Mumbai.

8. Statutory Disclosures:

I. Information pursuant to Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988 are given as Annexure ''A'' to this report.

II. As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules,1975 information is not furnished as no employee is covered there under.

III. In compliance of Section 383A(1) of the Companies Act, 1956 Compliance Certificate as issued by Mr. Jayesh Vyas of M/s. Jayesh Vyas and Associates, the Practicing Company Secretary, is annexed as Annexure "B" to this report.

9. Corporate Governance :

Pursuant to Clause 49 of the Listing Agreements with the Over the Counter Exchange of India (OTCEI), Corporate Governance Report and Auditors'' Certificate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report as Annexure "C", whereas the Management Discussion and Analysis is given hereinabove.

10. Dematerialisation of Shares:

Shares of the Company bear ISIN No. INE947GO1011 as allotted by the National Securities Depository Ltd. (NSDL) & Central Depository Services Ltd. (CDSL), for dematerialization and as of the date, 9,55,600 Equity shares (79.63%) have been dematerialized. Shareholders are recommended to demat their Shares for their better custody and convenience.

11. Auditors:

M/s. Naresh & Co., Chartered Accountants, Vadodara, the Auditors of the Company retire at the ensuing Annual General Meeting, being eligible, offer themselves for reappointment.

Members are requested to consider their re-appointment for the current year and fix their remuneration.

12. Cost Auditors :

The Company has appointed Messrs. Y. S. Thakar & Co., Cost Accountants, Vadodara as Cost Auditors of our Company for conducting Cost Audit in respect of Formulations drugs of your Company for the year ended March 31,2013.

13. Deposits :

The Company has no unpaid and / or unclaimed deposit. The Company has complied with all requisite applicable provisions of the Companies Act relating to acceptance of deposit from public.

14. Insurance :

All the properties and insurable interests of the Company including buildings, plants & machineries and stocks, have been adequately insured.

15. Appreciation :

Your Directors have pleasure to place on record their appreciation of the service rendered by the Workmen and Staff of the Company and thank State Bank of India, Government of Gujarat and Central Government for their valuable cooperation in furthering interest of the Company.

For and on behalf of the Board,

Date: 13/11/2013 Rajendra R. Shah Place: Vadodara Chairman & Managing Director

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Mar 31, 2012

Dear Members,

The Directors have pleasure in presenting the 31st Annual Report together with Audited Statements of Accounts for the Year ended 31st March, 2012.

The following figures summaries the financial performance of the Company during the year under review.

1. Financial Results : (Rs. in Lacs)

2011-12 2010-11

Gross Income 2736.03 2827.73

Gross Profit before Dep. Int. & Tax 365.28 361.25

Less: Interest 24.36 26.45

Less: Depreciation 29.62 27.92

Add : Prior period Adjustment (Net) 11.52 3.29

Less: Provision for Tax 10.30 —

Less: Prior years'' tax adjustment — 1.60

Less: Provision for Tax 102.41 103.18

Net Profit 230.71 205.39

Balance as per last P&L A/c. 0.44 0.97

Profit available for appropriation 231.15 206.36

This profit has been appropriated as under

(i) Proposed Dividend 18.00 18.00

(ii) Income Tax on proposed dividend 2.92 2.92

(iii) Transfer to General Reserve 209.00 185.00

(iv) Balance carried to next Year 1.23 0.44

Total 231.15 206.36

2. Dividend :

Your Directors are pleased to recommend payment of dividend @ 15% (Rs. 1.50 per Share) on the Equity Share Capital of Rs. 1,20,00,000 for the year 2011-2012 absorbing Rs.20.92 lacs including Tax on Dividend, which will be, if approved, paid to the Shareholders holding shares as on 29th September, 2012, after business hours.

3. Operations In Retrospect :

During the year under review, the Company yielded Gross Income of Rs. 2736.03 Lacs and earned Gross Profit before depreciation, interest and tax of Rs. 365.28 Lacs with Net Profit of Rs. 230.71 Lacs as against Gross Income of Rs. 2827.73 lacs, Gross Profit before depreciation and Interest and tax of Rs. 361.25 lacs with Net Profit of Rs. 205.39 Lacs of previous year, registering decline of 3.24 % in Gross income and registering a modest growth of 12.33% in Net Profit as compared to previous year.

The Company has been pursuing its thrust on its well devised action plan of focusing on deriving maximum mileage on domestic market, more particularly on ethical business, effectively and aggressively penetrating the market, exercising regular and strong follow up over Marketing distribution net work and channels, focusing on new institutional business of supplying products to government / semi-government institutions in the Country, so as to achieving of targeted growth. In a drive to expand business, more than six new products have been introduced in Ergacap division and systematic efforts are being made to promote them. On export front, the Company has been putting its thrust on development of newer market in different countries and increase clientele in existing exporting countries.

During the year the Company added 12 new customers in exporting countries. The Company is vigilant on cost control and hence putting its best possible efforts continuously, to avoid wasteful expenses and minimise operational expenses to the extent possible. With these, the Board is confident that this would result into substantial growth in the business revenue.

The Company has expansion plan on anvil and in process of establishing new manufacturing facilities at Jarod which will help the Company to enter in to regulated market and bring better result. The Company hopes to pose better and improved results, in coming period, barring unforeseen circumstances.

5. Directors'' Responsibility Statement :

In terms of Section 217(2AA) of the Companies Act,1956, the Directors would like to state that:-

i) in the preparation of the annual accounts, the applicable accounting standards have been followed.

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit of the Company for the year under review.

iii) the Directors have 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.

iv) the Directors have prepared the Annual Accounts on a going concern basis.

6. Directors :

Dr. Tushar Shah who retires by rotation and being eligible, offers himself for reappointment. Members are requested to consider his re-appointment.

Mr. Suryakant B. Parikh, ceased to be the director due to sudden death. The Board places on record its sincere appreciation in respect of valuable contributions received by the Company from him, during his tenure as the Director of the Company.

Mr. Janak Katakia, who was appointed as an Additional Director with effect from 5th January, 2012 holds office of the Director till the conclusion of the ensuing Annual General Meeting. Being eligible, he has consented to act as Directors of the Company. The Company has received notices under Section 257 of the Companies Act, 1956 proposing his candidature for directorship. The Board hopes that the Company would be immensely benefited by the contributions of the newly inducted Director. A brief note on Directors, being appointed/reappointed is furnished in the accompanying notice calling the Annual General Meeting.

Subject to the approval of the Shareholders, the Board of Directors, at their meeting held on 5th January, 2012, on the recommendation of the Remuneration Committee, have re-appointed Mr. Rajendra Ramanlal Shah as the Managing Director for a period of 5 years from 1st April, 2012 on the main terms and conditions mentioned in the explanatory statement attached to the notice.

The Shareholders are requested to consider their appointments.

7. Statutory Disclosures :

I. Information pursuant to Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988 are given as Annexure ''A'' to this report.

II. As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules,1975 information is not furnished as no employee is covered there under.

III. In compliance of Section 383A(1) of the Companies Act, 1956 Compliance Certificate as issued by Mr. Jayesh Vyas of M/s. Jayesh Vyas and Associates, the Practicing Company Secretary, is annexed as Annexure "B" to this report.

8. Corporate Governance :

Pursuant to Clause 49 of the Listing Agreements with the Over the Counter Exchange of India (OTCEI), Corporate Governance Report and Auditors'' Certificate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report as Annexure "C", whereas the Management Discussion and Analysis is given hereinabove.

9. Dematerialisation of Shares:

Shares of the Company bear ISIN No. INE947GO1011 as allotted by the National Securities Depository Ltd. (NSDL) & Central Depository Services Ltd. (CDSL), for dematerialization and as of the date, 9,53,000 Equity shares (79.42%) have been dematerialized. Shareholders are recommended to demat their Shares for their better custody and convenience.

10. Auditors:

M/s. Naresh & Co., Chartered Accountants, Vadodara, the Auditors of the Company retire at the ensuing Annual General Meeting, being eligible, offer themselves for reappointment.

Members are requested to consider their re-appointment for the current year and fix their remuneration.

11. Deposits :

The Company has no unpaid and / or unclaimed deposit. The Company has complied with all requisite applicable provisions of the Companies Act relating to acceptance of deposit from public.

12. Insurance :

All the properties and insurable interests of the Company including buildings, plants & machineries and stocks, have been adequately insured.

13 Appreciation :

Your Directors have pleasure to place on record their appreciation of the service rendered by the Workmen and Staff of the Company and thank State Bank of India, Government of Gujarat and Central Government for their valuable cooperation in furthering interest of the Company.

For and on behalf of the Board,

Date: 11/08/2012 Rajendra R. Shah Place: Vadodara Chairman & Managing Director

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Mar 31, 2011

Dear Members,

The Directors have pleasure in presenting the 30th Annual Report together with Audited Statements of Accounts for the Year ended 31st March, 2011.

The following figures summarise the financial performance of the Company during the year under review.

1. FINANCIAL RESULTS : (Rs. in Lacs)

2010-11 2009-10

Gross Income 2827.73 2659.18

Gross Profit before Dep. Int. & Tax 361.25 337.26

Less: Interest 26.45 22.88

Less: Depreciation 27.92 26.07

Add : Prior period Adjustment (Net) 1.70 (26.81)

Less: Provision for Tax 103.19 93.86

Net Profit 205.39 167.64

Balance as per last P&L A/c. 0.97 0.38

Profit available for appropriation 206.36 168.02

This profit has been appropriated as under

(i) Proposed Dividend 18.00 18.00

(ii) Income Tax on proposed dividend. 2.92 3.06

(iii) Transfer to General Reserve 185.00 146.00

(iv) Balance carried to next Year 0.44 0.96

TOTAL 206.36 168.02

2. Dividend :

Your Directors are pleased to recommend payment of dividend @ 15% (Rs. 1.50 per Share) on the Equity Share Capital of Rs. 1,20,00,000 for the year 2010-2011 absorbing Rs.20.92 lacs including Tax on Dividend, which will be, if approved, paid to the Shareholders holding shares as on 22nd September, 2011, after business hours.

3. Operations In Retrospect:

During the year under review, the Company yielded Gross Income of Rs. 2827.73 Lacs and earned Gross Profit before depreciation, interest and tax of Rs. 361.25 Lacs with Net Profit of Rs. 205.39 Lacs as against Gross Income of Rs. 2659.18 lacs, Gross Profit before depreciation and Interest and tax of Rs. 337.26 lacs with Net Profit of Rs. 167.64 Lacs of previous year, registering modest growth of 6.33 % Gross income and 22.51% in Net Profit as well, compared to previous year.

The Company has been pursuing its thrust on its well devised action plan of focusing on deriving maximum mileage on domestic market, more particularly on ethical business, effectively and aggressively penotrating the market, exercising regular and strong follow up over Marketing distribution net work and channels, focusing on new institutional business of supplying products to government / semi-government institutions in the Country, so as to achieving of targeted growth. In a drive to expand business, more than six new products have been introduced in Ergacap division and systematic efforts are being made to promote them.

On export front, the Company has been putting its thrust on development of newer market in different countries and increase clientele in existing exporting countries. During the year the Company added 12 new customers in exporting countries. The Company is vigilant on cost control and hence putting its best possible efforts continuously, to avoid wasteful expenses and minimise operational expenses to the extent possible. With these, the Board is confident that this would result into substantial growth in the business revenue.

The Company has expansion plan on anvil and in process of establishing new manufacturing facilities at Jarod which will help the Company to enter in to regulated market and bring better result. The Company hopes to pose better and improved results, in coming period, barring unforeseen circumstances.

5. Directors'' Responsibility Statement.:

In terms of Section 217(2AA) of the Companies Act,1956, the Directors would like to state that:-

i) in the preparation of the annual accounts, the applicable accounting standards have been followed.

ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give true and fair view of the state of affairs of the Company at the end of the financial year and of the Profit of the Company for the year under review.

iii) the Directors have 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.

iv) the Directors have prepared the Annual Accounts on a going concern basis.

6. Directorate :

Dr. Dinesh Shah who retires by rotation and being eligible, offers himself for reappointment. Members are requested to consider his re-appointment.

7. Statutory Disclosures :

I. Information pursuant to Section 217(1)(e) of the Companies Act, 1956 read with Companies (Disclosures of particulars in the Report of Board of Directors) Rules, 1988 are given as Annexure ''A'' to this report.

II. As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules,1975 information is not furnished as no employee is covered there under.

III. In compliance of Section 383A(1) of the Companies Act, 1956 Compliance Certificate as issued by Mr. Jayesh Vyas of M/s. Jayesh Vyas and Associates, the Practicing Company Secretary, is annexed as Annexure "B" to this report.

8. Corporate Governance :

Pursuant to Clause 49 of the Listing Agreement with the Over the Counter Exchange of India (OTCEI), Corporate Governance Report and Auditors'' Certificate regarding compliance of conditions of Corporate Governance are made a part of the Annual Report as Annexure "C", whereas the Management Discussion and Analysis is given hereinabove.

9. Dematerialisation of Shares :

Shares of the Company bears ISIN No. INE947GO1011 as allotted by the National Securities Depository Ltd. (NSDL) & Central Depository Services Ltd. (CDSL), for dematerialization and as of the date, 9,65,800 Equity shares ( 80.48%) have been dematerialized. Shareholders are recommended to demat their Shares for their better custody and convenience.

10. Auditors :

M/s. Naresh & Co., Chartered Accountants, Vadodara, the Auditors of the Company retire at the ensuing Annual General Meeting, being eligible, offer themselves for reappointment.

Members are requested to consider their re-appointment for the current year and fix their remuneration.

11. Deposits :

The Company has no unpaid and / or unclaimed deposit. The Company has complied with all requisite applicable provisions of the Companies Act relating to acceptance of deposit from public.

12. Insurance :

All the properties and insurable interests of the Company including buildings, plants & machineries and stocks, have been adequately insured.

13. Appreciation :

Your Directors have pleasure to place on record their appreciation of the service rendered by the Workmen and Staff of the Company and thank State Bank of India, Government of Gujarat and Central Government for their valuable cooperation in furthering interest of the Company.

For and on behalf of the Board,

Date : 2.08.2011 Rajendra R. Shah Place: Vadodara Chairman & Managing Director