Indoco Remedies Ltd.

Chairman's Message at the 73rd AGM

September 24, 2020

Dear Fellow Shareholders,

Good Morning everyone!

On behalf of the Board of Directors, it gives me pleasure to welcome you all to the 73rd Annual General Meeting of Indoco Remedies Ltd.

I hope you and your family members are safe and in the best of health. I appreciate your efforts for joining us today and for your continued faith in the Company. I would have very much liked to personally meet you, but due to the Covid-19 pandemic, we are holding the AGM over a virtual platform.

With a heavy heart, I would like to inform you that, one of our Independent Directors, Dr. Anil M Naik passed away on 29th July2020 after a brief illness. Dr. Naik a Management Graduate from IIM (Kolkatta), Doctorate from Mumbai University, had worked with prestigious organisations like Tata Oil Mills Ltd, TELCO, Tata Exports, Shapoorji Pallonji Group etc. It is indeed a great loss for Indoco. We put on record our sincere appreciation for his contribution to Indoco.

Mr. Sharad Upasani, Independent Director of the Company retires on 30th September 2020. On behalf of the Board and the Company, I wish to put on record our appreciation for his contribution to Indoco on various important areas like Corporate Governance, Compliance, Cost & Management Information. Mr. Sharad Upasani joined the Board in February 2008 and has served as an Independent Director for the last 12 years.

I also welcome Dr. Vasudha V Kamat on Board as an Independent Director. She was appointed to the Board on 27th March, 2020. Dr Kamat was the Former Vice-Chancellor of SNDT Women’s University. She has a varied experience in the education sector and is associated with various foreign universities for the fellowship programmes in the capacity of visiting scholar. She is one of the leading member of the committee and responsible for the preparation of the draft National Education Policy. She has made an immense contribution in the field of Indian education sector.

Now, speaking on the financials, Indoco has grown by 14.7 % with revenues of Rs. 1079 crore. The EBIDTA to net sales is 11.4 % at Rs.123.3 crore, compared to 8.1 % last year. PAT is at Rs. 24.2 crore, as against loss of Rs. 2.8 crore, last year.

Now, let me give a brief on the segment wise performance.

The Domestic formulation business witnessed a double digit growth of 13.2 % at Rs.686 crore. On the Secondary Sales front, Indoco is ranked 29th in the Indian Pharma Market as per AWACS as on March 2020, and 23rd in terms of prescription generation, as per February 2020 SMSRC report.

The Company launched eight new products, five in Cardiology, two in Diabetology and one in Dermatology segment, including two new promising products, Alogliptin with brand Aloja, and Apixaban with brand Apixabid. Aloja was launched for the first time in India and offers once a day dosage, which facilitates better compliance for Diabetic patients with high pill burden.

Apixabid launched in December 2019 is one of the safe and highly effective Novel Oral Anti-Coagulants. Currently, the launch activities for Apixabid are on hold in India, as Indoco is contesting a patent infringement case filed against it in the Delhi High Court by the innovator. Although, the outcome of the patent infringement case cannot be ascertained, Indoco is strongly defending the case and expecting vacation of the stay.

On the Regulatory front, the Company has done considerable work and has developed capabilities to address the evolving regulatory guidelines. You will be glad to know that the Company has addressed most of the regulatory issues at the manufacturing sites. The Company has submitted compliance updates to the USFDA with respect to Goa Plant I and an inspection (virtually or on-site), is expected.

In FY20, International business registered a growth of 26.9 % with revenues at Rs. 296 crore. As a consequence of withdrawal of warning letter issued to Goa Plant II and III, the Company has started receiving approvals against its ANDAs and Dossiers, which will boost the sales for International business in the coming years.

The net revenue from API business was at Rs. 86.0 crore. The expanded capacity at the new plant will cater mainly for the internal consumption and will also help in growth of external API business.

As on date, the Company has filed 90 process patent applications for API intermediates & Finished Dosages, out of which 34 have been granted. In January 2020, the Company was honoured with the IDMA Margi Memorial Best Patent Awards for 2 of its Formulation Patents.

While we were moving well on the growth trajectory, the Covid-19 pandemic struck all of us unexpectedly. The lockdown coincided with the closing of FY20, which impacted the performance of our Domestic sales to some extent, as supply chain was interrupted. The International sales also had an impact as the government banned Paracetamol exports in the month of March 2020. However, the Company took up the matter with respective authorities and Indoco became a part of the initiative by the Indian and British Government to resume the supply of Paracetamol tablets to United Kingdom. The first shipment after the ban of Paracetamol tablets to the UK was airlifted on 12th April, 2020 from our Goa manufacturing site. The restriction was subsequently withdrawn completely.

In its fight against Covid-19, the Company took immediate actions to comply with the Government directives and took special care in protecting its employees. Indocoites across India, rose to the occasion and braved the risk and hardships in reporting on duty to keep the continuity in production and distribution.

Our Sales and Marketing Teams were equally active through various methods to create multiple touch points with stakeholders like Customers, Doctors, Stockists, as well as, Retail Chemists through Digital Platforms. The objective was to build engaging virtual interaction models, like, care-delivery adaptation, patient-support enhancement and supply-inventory management. These new measures will pave the way for a better communication in future as well.

As a small token of our contribution in the fight against the Corona Virus outbreak, the Company & the Staff donated Rupees One Crore to the Hon’ble Prime Minister’s ‘Citizen Assistance and Relief in Emergency Situations Fund’ (PM-CARES Fund).

On the Corporate Social Responsibility (CSR) front, your Company keeps alive its CSR mission by reaching out to the needy with focus on the welfare of women, the aged and children. The Company is striving hard to make a positive impact on the society’s welfare, thereby creating better lives for a brighter future.

The coming months will be challenging, however, your Company has complete confidence in its employees, partners and stakeholders for their support and trust.

I, sincerely, express our gratitude to all our Stakeholders, including, shareholders, customers, bankers, vendors and the medical fraternity for their continued support. I also thank all the Indocoites for their valuable contribution and Shareholders for their continued support, which we value the most.

Thank You All. Stay Healthy, Stay Safe.

Suresh G. Kare