Directors Report of Kwality Pharmaceuticals Ltd.

Mar 31, 2025

Your Directors have pleasure in presenting the 42^nd Annual Report of KWALITY PHARMACEUTICALS
LIMITED along with the Audited Financial Statements for the year ended 31^st March 2025.

1) FINANCIAL HIGHLIGHTS

The Company''s financial performance for the year under review has been encouraging and is summarized
below

	STANDALONE		CONSOLIDATED
Particulars	2024-25	2023-24	2024-25	2023-24
Revenue from operations	37019.70	30717.18	37019.70	30717.18
Other Income	192.01	183.03	192.01	183.03
Total Income	37211.71	30900.21	37211.71	30900.21
Less:- Depreciation and amortisation expenses	1825.84	1951.07	1828.96	1955.88
Less:- Finance cost	987.79	1038.67	987.79	1038.67
Less:- Other Expenses	28975.38	24053.85	28980.97	24085.84
Profit before exceptional items and tax	5422.70	3856.62	5413.99	3819.82
Exceptional items	0.00	709.93	0.00	709.93
Profit before tax	5422.70	3146.69	5413.99	3109.89
Less: Provision for Taxation
Current Tax	1469.47	791.96	1469.47	791.96
Deferred Tax	-158.94	-43.66	-158.94	-43.66
Tax for earlier Years	123.19	0.00	123.19	0.00
Profit/(Loss) After Tax For The Year	3988.97	2398.39	3980.27	2361.59
Other Comprehensive Income/(expense) for the year (net of tax)	-0.97	-6.40	-1.78	-10.13
Total Comprehensive Income for the year	3988.01	2391.99	3978.49	2351.46
Earnings per equity share [Nominal value of share Rs.10.00 each]
Basic	38.44	23.11	38.36	22.76
Diluted	38.44	23.11	38.36	22.76

2) PERFORMANCE REVIEW

Your Company has prepared the Financial Statements for the financial year ended March 31, 2025, in
terms of Sections 129, 133 and other applicable provisions, if any, of the Companies Act, 2013 (as
amended) (the "Act") and Schedule III thereto read with the Rules framed thereunder.

During the year under review, on standalone basis, revenue of the company was Rs. 37211.71 Lakhs as
compared to Rs. 30900.21 Lakhs in the corresponding previous year. The Company earned a profit after
tax of Rs. 3988.97 Lakhs as compared to Rs. 2398.39 Lakhs in the previous year.

On consolidated basis, revenue of the company was Rs. 37211.71 Lakhs as compared to Rs. 30900.21
Lakhs in the corresponding previous year. The Company earned a profit after tax of Rs. 3980.27 Lakhs as
compared to Rs. 2361.59 Lakhs in the previous year.

3) CHANGES IN NATURE OF BUSINESS

The Company is engaged in the business of manufacturing & trading in Pharmaceuticals & allied products
and there was no change in the nature of the business of the Company during the year under review.

4) DIVIDEND

In order to conserve the resources, the Board of Directors does not recommend any dividend for the
financial year 2024-25.

5) RESERVES

During the financial year under review, there are no transfers to any specific reserves.

6) ANNUAL RETURN

The Annual Return of the Company as on March 31, 2025 is available on the Company''s website and can
be accessed at https://www.kwalitypharma.com/annual returns.php

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

The details pursuant to Section 134(3) of the Companies Act, 2013 read with Rule 8, sub-rule (3) of
Companies (Accounts) Rules, 2014 relating to Conservation of Energy, Technology absorption, Foreign
Exchange earnings and outgo is given in Annexure ''A.''

8) PARTICULARS OF EMPLOYEES REMUNERATION

The information pertaining to Section 197(12) read with Rule 5 (1) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as ''Annexure B''. There is no
employee drawing a salary exceeding the limit prescribed under Section 197(12) read with Rule 5 (2) of
The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

9) ADOPTION OF INDIAN ACCOUNTING STANDARDS (IND AS)

The Audited Financial Statements for the financial year ended March 31, 2025 have been prepared in
accordance with the Companies (Indian Accounting Standards) Rules, 2015 (Ind-AS) prescribed under
Section 133 of the Companies Act, 2013 and other recognized accounting practices and policies to the
extent applicable.

10) DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board received a declaration from all the directors under section 164 and other applicable provisions,
if any, of the Companies Act, 2013 that none of the directors of the company is disqualified under the
provisions of the Companies Act, 2013 (''Act'') or under the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015.

i) Changes in Directors

(a) Based on the recommendation of the Nomination and Remuneration Committee, Mr. Vinod Kumar
Sharma (DIN:08502519) was appointed as an Additional Director (under Independent Director category)
of the Company by the Board at its meeting held on July 26, 2025, under the provisions of section 161(1)
and other applicable provisions, if any, of the Companies Act, 2013 and is entitled to hold office upto the
date of 42^nd Annual General Meeting of the Company.

Mr. Vinod Kumar Sharma has passed online proficiency test pursuant to the provisions of Rule 6 of the
Companies (Appointment and Qualification of Directors) Rules, 2014. The Company has also received
requisite disclosures/ declarations from Mr. Vinod Kumar Sharma under Section 149(6) of the Companies
Act, 2013 and Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 and its amendments thereunder. Mr. Vinod Kumar Sharma is not disqualified from
being appointed as Director in terms of Section 164 of the Companies Act, 2013. In opinion of the Board,
he fulfills the conditions specified in the Companies Act, 2013 & Listing Regulations and is independent of
the management. The Board recommends the Special Resolution for his appointment as Independent
director of the company for approval by the Members at the ensuing AGM.

The aforesaid appointment with brief profile and other related information of Mr. Vinod Kumar Sharma
forms part of the Notice convening the ensuing AGM.

(b) Mr. Kiran Kumar Verma (DIN: 07415375) ceased to be Director of the Company and also from
Chairperson of Nomination & Remuneration Committee and Member of Audit Committee of the Company
with effect from 26^th July, 2025 due to other professional commitments .

The Board of Directors places on record its sincere appreciation for the valuable guidance and
contributions made by Mr. Kiran Kumar Verma during his association with the Company.

(c) The first term of Mr. Kartik Kapur (DIN: 08966816), Non-Executive Independent Director of the

Company is due to expire on 15^th January, 2026. Accordingly, on the recommendation of the Nomination
& Remuneration Committee, the Board of Directors made the re-appointment of Mr. Kartik Kapur for a
second term of five consecutive years commencing from 16^th January, 2026 upto 15^th January, 2031 in the
board meeting held on 16^th August, 2025 subject to the approval of shareholders in forthcoming Annual
General Meeting of the Company. The Board of Directors recommends his re-appointment as

Independent Director of the Company for a further period of five consecutive years with effect from 16^th
January, 2026.

(d) The current term of Executive Directors i.e. Mr. Ramesh Arora (DIN: 00462656) Managing Director,
Mr. Ajay Kumar Arora (DIN: 00462664) Whole Time Director, Mrs. Geeta Arora (DIN: 03155615) Whole
Time Director and Mrs. Anju Arora (DIN: 03155641) Whole Time Director is due to expire on 15^th
January, 2026. Accordingly, on the recommendation of the Nomination & Remuneration Committee, the
Board at its meeting held on 16^th August, 2025 has, subject to the approval of the shareholders in the
ensuing Annual General Meeting, approved their re-appointment for further period of 5 years. i.e. with
effect from 16^th January, 2026 to 15^th January, 2031.

The Board recommends the above re-appointments for the consideration of Members of the Company at
the ensuing Annual General Meeting.

(e) During the f.y. 2024-25, the continuation of appointment of Mr. Ramesh Arora (DIN: 00462656), as
Managing Director of the company beyond the age of 70 years was approved by the shareholders through
a Special Resolution passed at the Annual General Meeting held on September 24, 2024. Accordingly, Mr.
Ramesh Arora continues to serve as the Managing Director of the Company.

ii. ) RETIREMENT BY ROTATION

In accordance with the provisions of section 152 of the Companies Act, 2013 and the Articles of
Association of the Company, Mr. Ajay Kumar Arora and Mrs. Geeta Arora, directors retire by rotation at
the ensuing Annual General Meeting and offer themselves for reappointment.

iii. ) Key Managerial Personnel: The following are the Key Managerial Personnel of the Company for the
year:

Sr. No.	Name of Person	Designation
1.	Sh. Ramesh Arora	Managing Director
2.	Sh. Ajay Kumar Arora	Whole Time Director
3.	Sh. Aditya Arora	Whole Time Director
4.	Smt. Anju Arora	Whole Time Director
5.	Smt. Geeta Arora	Whole Time Director
6.	Ms. Gurpreet Kaur	Company Secretary

11) NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the Financial Year 2024-25, 11 meetings of the Board of Directors of the company were held and
the details of which are given in the Corporate Governance Report which is enclosed with director''s report
as "Annexure E". The intervening gap between the Meetings was within the period prescribed under the
Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

12) COMMITTEES OF THE BOARD

The Board has constituted various committees to support the Board in discharging its responsibilities. The
following four committees are constituted by the Board:

AUDIT COMMITTEE

The Audit Committee comprises of Sh. Pankaj Takkar as Chairman and Sh. Vinod Kumar Sharma and Sh.
Aditya Arora as members. Sh. Kiran Kumar Verma ceased to be member of the Audit Committee w.e.f.
26-07-2025 due to his resignation from the board and Sh. Vinod Kumar Sharma (newly appointed
additional independent director w.e.f. 26-07-2025) was appointed as a member of committee w.e.f. 26¬
07-2025. The details of term of reference of the Audit Committee members, dates of meetings held and
attendance of the Directors are given separately in the Corporate Governance Report.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee comprises of Sh. Vinod Kumar Sharma (newly appointed
additional independent director w.e.f. 26-07-2025) as Chairman and Sh. Pankaj Takkar and Sh. Ravi
Shanker Singh as members. Sh. Kiran Kumar Verma ceased to be Chairman of the Nomination and
Remuneration Committee w.e.f. 26-07-2025 due to his resignation from the board and Sh. Vinod Kumar
Sharma was appointed as a Chairman w.e.f. 26-07-2025. The details of term of reference of the
Committee members, dates of meetings held and attendance of the Directors are given in the Corporate
Governance Report.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The Stakeholders Relationship Committee comprises of Sh. Ravi Shanker Singh as Chairman and Smt.
Geeta Arora and Smt. Anju Arora as members. The details of term of reference of the Committee
members, dates of meetings held and attendance of the Directors are given separately in the Corporate
Governance Report.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Corporate Social Responsibility Committee is duly constituted in terms of the requirement of
Companies Act, 2013. During the financial year 2024-25, two meetings of CSR committee were held on
23-05-2024 and 31-03-2025. The composition of Committee and attendance of members is as follows:

Name	Category	Meetings held during 2024-25	No. of Meetings Attended
Geeta Arora	Chairperson	2	2
Aditya Arora	Member	2	2
Pankaj Takkar	Member	2	2

13) MEETINGS OF INDEPENDENT DIRECTORS

The Independent Directors met on 31^st March 2025 inter alia, to

a) review the performance of the Non-Independent Directors and the Board of Directors as a whole;

b) review the performance of the Managing Director of the Company, taking into account the views of
Executive Directors and Non-Executive Directors;

c) assess the quality, content and timeliness of the flow of information between the Company
Management and the Board that is necessary for the Board to effectively and reasonably perform its
duties.

14) DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES

The Company has one subsidiary company Kwality Pharmaceuticals Africa, Limitada'' at Maputo
Province, Mozambique which is mainly engaged in the Pharmaceuticals business. The Board reviewed the
affairs of the Company''s subsidiary during the year at regular intervals. In accordance with section 129(3)
of the Companies Act, 2013, the Company has prepared Consolidated Financial Statements of the
Company and its subsidiary, which forms part of this Annual Report. Further a statement containing
Salient features of the Financial Statements of its subsidiary in Form AOC-1 as given in the annual report
forms part of the Financial Statements. During the year, no company became or ceased to be Subsidiary,
Joint Venture or Associate Company.

15) MECHANISM FOR EVALUATING BOARD MEMBERS:

Pursuant to the section 134 (p) of Companies Act, 2013 read with Rule 8 (4) of Companies Accounts Rules,
2014 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried
out an annual performance evaluation of its own performance, the Directors individually, as well as the
Board Committees. A structured questionnaire was prepared after taking into consideration inputs
received from the Directors, covering various aspects of the Board''s functioning such as adequacy of the
composition of the Board and its Committees, Board culture, execution and performance of specific
duties, obligations and governance.

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, frequency of committee
meetings, their functioning etc.

The evaluation of the Directors were based on their attendance and participation, acting in good faith and
in the interests of the company as a whole, exercising duties with due diligence and reasonable care,
complying with legislations and regulations in letter and spirit and such other factors.

In addition, the managing director 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 managing director was evaluated, taking into account the views of
executive directors and non-executive directors.

16) FAMILIARISATION PROGRAMME FOR BOARD MEMBERS

The Familiarization Program seeks to update the Independent Directors on various matters covering
Company''s strategy, business model, operations, organization structure, finance, risk management etc. It
also seeks to update the Independent Directors with their roles, rights, responsibilities, duties under the

Companies Act, 2013 and other statutes. The policy and details of familiarization program imparted to the
Independent Directors of the Company is available at

https://www.kwalitvpharma.com/assets/Disclosure%20under%20Regulation%2046/Familiarization%20
Programmes%20imparted%20to%20Independent%20Directors.pdf

17) STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS

The Company had received declarations from all the Independent Directors of the Company confirming
that they meet criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013
and under Regulation 16 (1)(b) of Listing Regulations. There has been no change in the circumstances
affecting their status as Independent Directors of the Company and in the opinion of the Board, the
Independent Directors fulfil the conditions specified under the Act and the Listing Regulations and are
Independent of the management.

18) POLICY ON DIRECTOR APPOINTMENT AND REMUNERATION

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy
for selection and appointment of the Directors, the senior management and their remuneration. The
remuneration policy is stated in the Corporate Governance Report.

19) WHISTLE BLOWER POLICY

Pursuant to the Section 177(9) and (10) of the Companies Act, 2013 and Securities and Exchange Board of
India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated
Whistle Blower Policy for vigil mechanism for Directors and Employees to report the management about
the unethical behavior, fraud, improper practice or violation of the Company''s Code of Conduct or
complaints regarding accounting, auditing, internal controls or disclosure practices of the Company. It
gives a platform to the whistle blower to report any unethical or improper practice (not necessarily
violation of law) and to define processes for receiving and investigating complaints. The mechanism
provides adequate safeguards against victimization of employees and directors who use such mechanism
and makes provision for direct access to the Chairman of the Audit Committee in exceptional cases. The
Whistle Blower Policy is available on the website of the Company at
https://www.kwalitypharma.com/assets/CORPORATE%20POLICIES /Whistle-Blower-Policy.pdf

20) VIGIL MECHANISM

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for
directors and employees to report genuine concerns has been established and Chairman of the Audit
Committee is responsible for issue pertaining to same.

21) RISK MANAGEMENT

The Company recognizes that risk is an integral part of business and is committed to managing the risks
in a proactive and efficient manner. Efficient risk management is the key to achieving short term goals
and sustained value creation over the long term. A well-defined risk management mechanism covering

the risk mapping and trend analysis, risk exposures, potential impact and risk mitigation process is in place.
The objective of the mechanism is to minimize the impact of risks identified and taking advance actions
to mitigate it. The mechanism works on the principles of probability of occurrence and impact, if triggered.
A detailed exercise is being carried out to identify, evaluate, monitor and manage both business and non¬
business risks.

22) STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the rules framed
thereunder, the Company in its 41^st Annual General Meeting held on 24^th day of September, 2024
had appointed M/s VIJAY MEHRA & CO., Chartered Accountants, Amritsar (FRN: 001051N) as the
Statutory Auditors of the Company for a period of Five consecutive years from the conclusion of the
41^st Annual General Meeting, till the conclusion of the 46^th Annual General Meeting of the Company.
The Companies Amendment Act, 2017 has dispensed the ratification of auditors appointment at every
Annual General Meeting. Accordingly the Ordinary Business Agenda item relating to the ratification
of the statutory Auditors appointment is not placed in the AGM notice.

23) AUDITORS'' REPORT

M/s VIJAY MEHRA & CO., Chartered Accountants, have submitted their Report on the Financial
Statements of the Company for the F.Y 2024-25, which forms part of the Annual Report. The Statutory
Auditors'' Report on the Financial Statements of the Company for FY 2024-25 does not contain any
qualifications, reservations, adverse remarks or disclaimer.

The Statutory Auditors of the Company have not reported any fraud as specified under section 143(12) of
the Act, in the year under review.

24) COST AUDITOR

Pursuant to Section 148(3) of the Companies Act, 2013, M/s Verma Khushwinder & Co., Cost
Accountants, Jalandhar, were appointed as the Cost Auditors of the Company for the financial year 2024¬
25 by the Board of Directors and their remuneration was ratified by members at the 41^st Annual General
Meeting of the Company.

Further, the Board of Directors has appointed M/s Verma Khushwinder & Co. as the Cost Auditors of the
Company for the financial year 2025-26 and has also fixed their remuneration. The Board has
recommended the remuneration approved in its meeting, for ratification by the shareholders in the
ensuing AGM of the Company.

The Company has maintained the Cost Records as specified by the Central Government under Section
148(1) of the Act.

25) SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014, the Company has appointed M/s Rishi Mittal & Associates, ,
Practicing Company Secretaries, Amritsar to undertake the Secretarial Audit of the Company for the
Financial Year 2024-25.

The Secretarial Audit Report for Financial Year 2024-25 forms part of the Annual report as "Annexure C"
to the Board''s report. The Secretarial Audit Report does not contain any qualification, reservation or
adverse remark except the following :-

i.) As per Regulation 24A(2) of SEBI (LODR) Regulations, 2015, every listed entity shall submit a secretarial
compliance report in such form as specified, to stock exchanges, within sixty days from end of each
financial year but the company had made delay of 1 day in submission of XBRL format of report for year
ended 31-03-2024 with BSE for which penalty of Rs.2360 was imposed by BSE on company;

Explanation: The Company had filed the PDF report within the due date on 30th May, 2024 but due to
some technical problem in login, XBRL could not be uploaded on same day at BSE portal So, there was
delay of 1 day in submission of XBRL with BSE for which penalty of Rs. 2360 was imposed on company
which was duly paid by the company to BSE.

ii) Pursuant to the provisions of Regulation 30 read with sub-para 20, Para A, Part A of Schedule III of the
SEBI (LODR) Regulations, 2015, the company has not intimated to stock exchange (BSE) regarding various
demand orders passed under the Central Goods and Services Tax Act, 2017, imposing penalties on
company;

Explanation: The management acknowledges the observation and is in the process of submitting the
required disclosures to BSE.

iii) The company has not intimated to stock exchange (BSE) the details regarding ''Pendency of any
litigation(s) or dispute(s) or the outcome thereof which may have an impact on the listed entity'' i.e.
updates on ongoing tax litigations or disputes pursuant to the provisions of Regulation 30 read with sub¬
para 8, Para B, Part A of Schedule III of the SEBI (LODR) Regulations, 2015.

Explanation: The management acknowledges the observation and is in the process of submitting the
required disclosures to BSE.

Further, pursuant to the provisions of Section 204 of the Act and the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014 and Regulation 24A of the Listing Regulations and
based on the recommendation of Audit Committee, the Board of Directors have recommended
appointment of M/s Rishi Mittal & Associates, Peer-reviewed Practicing Company Secretaries firm (Peer
Review Number 2486/2022), to undertake the Secretarial Audit of the Company for a period of five years
from the conclusion of this 42^nd AGM till the 47^th AGM of the company. The proposed Secretarial Auditors
have confirmed that they are not disqualified from being appointed as Secretarial Auditors of the
Company. Necessary Resolution for approval of Shareholders has been set out at Item No. 10 in the Notice
convening 42^nd AGM and the Board recommends the said Resolution.

26) DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE
SOCIAL RESPONSIBILITY INITIATIVES

In view of the profits and turnover of the Company, your Company was required to undertake CSR projects
during the year 2024-25 under the provisions of section 135 of the Companies Act, 2013 and the rules

made thereunder. As part of its initiatives under Corporate Social Responsibility (CSR)", the Company has
undertaken various activities, which are in accordance with CSR Policy of the Company and Schedule VII
of the Companies Act, 2013.The Board has approved a CSR policy on the recommendations of the CSR
Committee. The Annual Report on CSR activities as required under Companies (Corporate Social
Responsibility) Rules, 2014 is set out at Annexure-D forming part of this Board Report.

27) REPORT ON CORPORATE GOVERNANCE:

The Company is committed to maintain the highest standards of the Corporate Governance aligned with
the best practices. In compliance with the provisions of SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, a separate report on corporate governance along with a certificate from
practicing company secretary on its compliance forms an integral part of this Board''s Report.

A report on Corporate Governance as stipulated in Part C of Schedule V of the Listing Regulations is
provided in a separate section and is annexed to this Report and marked as "Annexure E".

28) MANAGEMENT DISCUSSION AND ANALYSIS:

A detailed review of the operations and performance of the Company is set out in the Management
Discussion and Analysis Report pursuant to Regulation 34 Part-B of Schedule V of the (Listing Obligations
and Disclosure Requirements)Regulations, 2015 which forms part of the Annual Report for the year under
review as "Annexure F".

29) PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

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

30) PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All Related Party Transactions that were entered into during the financial year were on an arm''s length
basis, in the ordinary course of business and were in compliance with the applicable provisions of the
Companies Act, 2013 (''the Act'') and SEBI (Listing Obligations and Disclosures Requirements) Regulations
2015 and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no related
party transactions made by the Company with the Promoters, Directors and Key Managerial Personnel
which may have a potential conflict with the interest of the Company at large.

The Board of Directors of the Company has approved the criteria for giving the omnibus approval by the
Audit Committee within the overall framework of the Policy on Related Party Transactions. Omnibus
approval was obtained for related party transactions which are of repetitive nature and entered in the
ordinary course of business and at arm''s length basis.

The transactions with the related parties have been disclosed in the financial statements. During the year
the company has not entered into any contracts / arrangements / transactions with related parties which
could be considered material in accordance with policy of the Company on material related party
transactions or under section 188 (1) of the Act. Thus disclosure in Form AOC-2 is not required.

31) COMPLIANCE OF APPLICABLE SECRETARIAL STANDARDS

Your Directors state that they have devised proper systems to ensure compliance with the Secretarial
Standards and that such system are adequate and operating effectively. During the year under review,
the Company has complied with the provisions of all the Secretarial Standards issued by the Institute of
Company Secretaries of India and approved by the Central Government under section 118 of the
Companies Act, 2013.

32) MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE
COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO
WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

No material changes and commitments affecting the financial position of the Company have occurred
between the end of the financial year of the Company to which the Financial Statements relate and the
date of this Report.

33) DEPOSITS

Your Company has not accepted any deposits from the public during the year under review, within the
meaning of Section 73 of the Companies Act, 2013 (''the Act) read with the Companies (Acceptance of
Deposits) Rules, 2014, and no amount of principle or interest on deposits from the public is outstanding
as on the date of Balance Sheet.

34) SHARE CAPITAL

During the year under review, there was no change in the paid-up equity share capital of the Company
which is as on 31^st March, 2025 was Rs. 1037.62 Lakhs.

35) PROVISION OF MONEY BY COMPANY FOR PURCHASE OF ITS OWN SHARES BY EMPLOYEES OR BY
TRUSTEES FOR THE BENEFIT OF EMPLOYEES

The company has not made any provision of money for purchase of its own shares by employees or by
trustees for the benefit of employees as per Rule 16(4) of Companies (share capital and debentures) Rules,
2014.

36) ISSUE OF SWEAT EQUITY SHARES

The Company has not issued any sweat equity share during the financial year in accordance with the
provisions of Section 54 of Companies Act, 2013 read with Rule 8 of the Companies (Share Capital and
Debentures) Rules, 2014.

37) ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS

The Company has not issued any equity shares with differential voting rights during the financial year as
per Rule 4(4) of Companies (Share capital and debentures) Rules, 2014.

38) ISSUE OF EMPLOYEE STOCK OPTION

The company has not issued any employee stock option during the financial year as per Rule 12 of
Companies (share capital and debentures) Rules, 2014.

39) INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has comprehensive and adequate internal financial controls system for all major processes
including financial statements to ensure reliability of reporting. The system also helps management to
have timely data/feedback on various operational parameters for effective review. It also ensures proper
safeguarding of assets across the Company and its economical use. The internal financial controls system
of the Company is commensurate with the size, scale and complexity of its operations. The systems and
controls are periodically reviewed and modified based on the requirement.

The Company has an internal audit function which is empowered to examine the adequacy and
compliance with policies, plans and statutory requirements. It is also responsible for assessing and
improving the effectiveness of risk management, control and governance process. The scope of Internal
Audit is well defined and documented and the audit committee reviews the observations of the Internal
Audit critically. The composition and working of the audit committee forms part of the Corporate
Governance Report.

Internal audits are undertaken on a quarterly basis by Internal Auditors covering all units and business
operations to independently validate the existing controls. Reports of the Internal Auditors are
regularly reviewed by the management and corrective action is initiated to strengthen the controls
and enhance the effectiveness of the existing systems. There were no observations or remarks reported
by the said auditors of the Company during the year under review.

40) COMPANY SECRETARY AND COMPLIANCE OFFICER

Ms. Gurpreet Kaur (M.No. 52091) is Company Secretary, KMP and Compliance Officer of the Company.

41) DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION,

PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place a policy on Prevention, Prohibition and Redressal of Sexual Harassment at
workplace in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention,
Prohibition and Redressal) Act, 2013. The policy has set guidelines on the redressal and enquiry process
that is to be followed by complainants, whilst dealing with issues related to sexual harassment at the work
place. All women employees (permanent, temporary, contractual and trainees) are covered under this
policy. An Internal Complaints Committee has been set up to redress the complaints received regarding
sexual harassment. Your Company did not receive any complaints during the period under review.

42) PROHIBITION OF INSIDER TRADING

The Board of Directors has adopted the Insider Trading Policy in accordance with requirements of SEBI
(Prohibition of Insider Trading) Regulations, 2015. The Insider Trading Policy of the Company lays down
guidelines and procedures to be followed and disclosures to be made while dealing with shares of the

Company, as well as the consequences of violation. The Policy has been formulated to regulate, monitor
and ensure reporting of deals by employees and to maintain the highest ethical standards of dealing in
Company Securities. The Insider Trading Policy of the Company covering code of practices and procedures
for fair disclosure of unpublished price sensitive information and code of conduct for the prevention of
insider trading is available on the Company''s website at
https://www.kwalitypharma.com/assets/CORPORATE%20POLICIES /Code%20of%20Practice%20and%2
0Procedure%20for%20fair%20disclosure%20of%20UPSI.pdf

43) SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators / Courts which would impact the going
concern status of the Company and its future operations.

44) TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO INVESTOR EDUCATION AND PROTECTION

FUND (IEPF)

Your Company did not have any funds lying unpaid or unclaimed for a period of seven years. Therefore
there were no funds which were required to be transferred to Investor Education and Protection Fund
(IEPF).

45) DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134 (5) of the Companies Act, 2013 Your Directors'' confirm that:

i. in the preparation of the annual accounts for the financial year ended March 31, 2025, the applicable
accounting standards have been followed along with proper explanation relating to material departures;

ii. The Directors had selected such accounting policies and applied them consistently and made judgments
and estimates that are 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 ended 31^st March, 2025 and of the profit of the Company for
that period;

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

iv. The Directors had prepared the annual accounts on a ''going concern'' basis;

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

vi. The Directors had devised proper systems to ensure compliance with the provisions of all applicable
laws and that such systems were adequate and operating effectively.

46) POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION

Based on the recommendation of Nomination & Remuneration Committee, the Board of Directors
approved and adopted a Policy for selection, appointment and remuneration of Directors, Key Managerial
Personnel and other employees of the Company as required under Section 178(3) of the Act. The
Remuneration Policy on the appointment and remuneration of Directors and Key Managerial Personnel
provides a framework based on which our human resources management aligns their recruitment plans
for the strategic growth of the Company. The policy may be accessed under the ''Investor Relations'' section
on the website of the Company at the web link

https://www.kwalitvpharma.com/assets/CORPORATE%20PQLICIES /Nomination%20 %20Remuneratio
n%20Policy.pdf

47) POSTAL BALLOT

During the year under review, no postal ballot resolutions were passed.

48) CASH FLOW STATEMENT

In due compliance of the listing agreement and in accordance with the requirements prescribed by SEBI,
the cash flow statement is prepared and is appended to this Annual Report.

49) HUMAN RESOURCES

The Company continues to recognize its employees as one of its most valuable assets. During the year
under review, the Company maintained cordial and harmonious relations with all employees across all
levels and locations. Various initiatives were undertaken to enhance employee engagement, skill
development, and performance management, aligning individual goals with the Company''s strategic
objectives. The focus remained on building a culture of accountability, innovation, and continuous
learning.

50) OTHER DISCLOSURES

The Company does not have any Employees Stock Option Scheme in force and hence particulars are not
furnished, as the same are not applicable. No proceedings against the Company is initiated or pending
under the Insolvency and Bankruptcy Code, 2016. The details of difference between amount of the
valuation done at the time of one-time settlement and the valuation done while taking loan from the
Banks or Financial Institutions along with the reasons thereof - Not Applicable. During the year under
review, the Statutory Auditor, Cost Auditor and Secretarial Auditor have not reported any instances of
frauds committed in the Company by its Officers or Employees to the Audit Committee and / or Board
under section 143(12) of the Act.

51) EXPLANATION REGARDING PENDING TAX LITIGATIONS

During the financial year 2024-25, the Company received certain orders and show cause notices from the
Goods and Services Tax (GST) Department pertaining to earlier financial years. These matters relate to
alleged erroneous refunds, wrongful availment of Input Tax Credit (ITC), and related penalties.

Based on legal advice and our internal assessment, we believe these demands are not legally sustainable.
The Company has taken appropriate legal action in each case and is actively contesting the matters before
the respective appellate authorities and courts. A summary of the ongoing proceedings is given below:

(a) Show Cause Notice Alleging Wrongful Availment of ITC (FY 2017-18 to 2022-23)

A Show Cause Notice bearing No. AE/51/2024-25 was received under Sections 74 and 122 of the CGST
Act, 2017, alleging wrongful ITC availment of ^15,13,03,420/-, with an equivalent proposed penalty,
totaling ^30,26,06,840/-.

The Company has filed a Civil Writ Petition before the Hon''ble Punjab and Haryana High Court (CWP-
34165-2024). The Court has stayed the adjudication proceedings, and the matter is currently under
litigation.

(b) Erroneous Refund of IGST (FY 2017-18 to 2022-23)

An order bearing No. 14/GST/ADC/JAL/2024-2025 was received under Section 74(9) of the CGST Act, 2017
read with Section 20 of the IGST Act, 2017, raising a demand of ^3,15,02,758/- and an equivalent penalty
of ^3,15,02,758/-. Interest has also been levied, though not quantified.

The Company has filed an appeal against the order before the appropriate appellate authority. The total
disputed amount of ^6,30,05,516/- is currently under litigation.

(c) Orders in Form DRC-07 for ITC Disputes

The Company received orders dated 30/12/2024 from the GST Department under Section 74 of the CGST
Act, 2017, for the following:

o FY 2017-18: Penalty of ^2,80,695/- (no tax).

o FY 2019-20: Tax and penalty of ^6,74,856/- each.

o FY 2020-21: Tax of ^12,62,160/- and penalty of ^12,70,485/-.

The Company has filed appeals before the concerned GST appellate authority, and the matters are
currently pending.

We reaffirm that, based on legal advice and a thorough internal review, the Company believes these
matters are defensible. The management is pursuing them diligently and is confident of receiving
favourable outcomes. The Company remains committed to full legal compliance and protection of
stakeholder interests.

52) INDUSTRIAL RELATIONS

During the year under review, your Company enjoyed cordial relationship with workers and employees
at all levels.

53) ENVIRONMENT, HEALTH AND SAFETY

The Company remains committed to conducting its operations in an environmentally sustainable and
socially responsible manner. During the year under review, all applicable environmental and safety
regulations were complied with. Regular safety audits, training sessions, and medical check-ups were
conducted to ensure workplace safety and employee well-being. Waste disposal, emissions, and effluent
treatment were managed as per statutory norms, and energy conservation measures were implemented
across operations.

54) APPRECIATION

Your Company has been able to perform better with the continuous improvement in all functions and
areas which coupled with an efficient utilization of the Company''s resources led to sustainable and
profitable growth of the Organization. Your Directors express their deep sense of appreciation and extend
their sincere thanks to every employee and associates for their dedicated and sustained contribution and
they look forward the continuance of the same in future.

55) ACKNOWLEDGMENTS:

Your Directors would like to express their gratitude for the valuable assistance and cooperation received
from shareholders, lenders, government authorities, customers and vendors. Your Directors also wish to
place on record their appreciation for the committed services of all the employees of the Company.

For and on Behalf of the Board

Sd/- Sd/-

(RAMESH ARORA) (AJAY KUMAR ARORA)

Place: Amritsar Managing Director Whole Time Director

Date: 16^th August 2025 DIN: 00462656 DIN: 00462664

---

Mar 31, 2024

Your Directors have pleasure in presenting the 41^st Annual Report of KWALITY PHARMACEUTICALS LIMITED along with the Audited Financial Statements for the year ended 31^st March 2024.

1) FINANCIAL HIGHLIGHTS

The Company''s financial performance for the year under review has been encouraging and is summarized below

(Rupees in Lacs)
	STANDALONE		CONSOLIDATED
Particulars	2023-24	2022-23	2023-24	2022-23
Revenue from operations	30717.18	25099.47	30717.18	25103.01
Other Income	183.03	294.13	183.03	294.12
Total Income	30900.21	25393.60	30900.21	25397.13
Less:- Depreciation and amortisation expenses	1951.07	1491.88	1955.88	1495.84
Less:- Finance cost	1038.67	602.04	1038.67	602.04
Less:- Other Expenses	24053.85	19070.61	24085.84	19089.07
Profit before exceptional items and tax	3856.62	4229.07	3819.82	4210.18
Exceptional items	709.93	1652.94	709.93	1652.94
Profit before tax	3146.69	2576.13	3109.89	2557.24
Less: Provision for Taxation
Current Tax	791.96	648.36	791.96	648.36
Deferred Tax	-43.66	13.66	-43.66	13.66
Tax for earlier Years	0.00	-32.77	0.00	-32.77
Profit/(Loss) After Tax For The Year	2398.39	1946.88	2361.59	1927.99
Other Comprehensive Income/(expense) for the year (net of tax)	-6.40	-32.57	-10.13	-43.93
Total Comprehensive Income for the year	2391.99	1914.31	2351.46	1884.06
Earnings per equity share [Nominal value of share Rs.10.00 each]
Basic	23.11	18.45	22.76	18.16

Diluted

23.11

18.45

22.76

18.16

2) PERFORMANCE REVIEW

Your Company has prepared the Financial Statements for the financial year ended March 31, 2024, in terms of Sections 129, 133 and other applicable provisions, if any, of the Companies Act, 2013 (as amended) (the "Act") and Schedule III thereto read with the Rules framed thereunder.

During the year under review, on standalone basis, revenue of the company was Rs. 30900.21 Lakhs as compared to Rs. 25393.60 Lakhs in the corresponding previous year. The Company earned a profit after tax of Rs. 2398.39 Lakhs as compared to Rs. 1946.88 Lakhs in the previous year.

On consolidated basis, revenue of the company was Rs. 30900.21 Lakhs as compared to Rs. 25397.13 Lakhs in the corresponding previous year. The Company earned a profit after tax of Rs. 2361.59 Lakhs as compared to Rs. 1927.99 Lakhs in the previous year.

3) CHANGES IN NATURE OF BUSINESS

The Company is engaged in the business of manufacturing & trading in Pharmaceuticals & allied products and there was no change in the nature of the business of the Company during the year under review.

4) DIVIDEND

In order to conserve the resources, the Board of Directors does not recommend any dividend for the financial year 2023-24.

5) RESERVES

During the financial year under review, there are no transfers to any specific reserves.

6) ANNUAL RETURN

The Annual Return of the Company as on March 31, 2024 is available on the Company''s website and can be accessed at https://www.kwalitypharma.com/investor relations.php

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

The details pursuant to Section 134(3) of the Companies Act, 2013 read with Rule 8, sub-rule (3) of Companies (Accounts) Rules, 2014 relating to Conservation of Energy, Technology absorption, Foreign Exchange earnings and outgo is given in Annexure ''A.''

8) PARTICULARS OF EMPLOYEES REMUNERATION

The information pertaining to Section 197(12) read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as ''Annexure B''. There is no employee drawing a salary exceeding the limit prescribed under Section 197(12) read with Rule 5 (2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

9) ADOPTION OF INDIAN ACCOUNTING STANDARDS (IND AS)

The Audited Financial Statements for the financial year ended March 31, 2024 have been prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (Ind-AS) prescribed under Section 133 of the Companies Act, 2013 and other recognized accounting practices and policies to the extent applicable.

10) DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board received a declaration from all the directors under section 164 and other applicable provisions, if any, of the Companies Act, 2013 that none of the directors of the company is disqualified under the provisions of the Companies Act, 2013 (''Act'') or under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

i) Changes in Directors

Based on the recommendation of Nomination and Remuneration Committee, the board had appointed Mr. Prashanth Vellanki (DIN: 05182633) as Additional Director (Non-Executive and Independent) with effect from March 16, 2023. In terms of Regulation 17(1C) of Listing Regulations, the said appointment has been duly approved by the shareholders of the Company by way of special resolution passed through postal ballot on June 14, 2023. Further, the Board is of the opinion that Mr. Prashanth Vellanki possesses requisite qualifications, experience (including the proficiency) and expertise in his respective fields and that he holds highest standards of integrity.

Pursuant to Section 196 read with relevant rules of Companies Act, 2013, no company shall continue the employment of any person as managing director if he has attained the age of seventy years. However, the appointment of a person who has attained the age of seventy years may be continued by passing a special resolution. As Mr. Ramesh Arora (DIN: 00462656), Managing Director of the Company has attained the age of 70 (Seventy) years, the board on the recommendation of the Nomination & Remuneration Committee recommends the continuation with the appointment of Mr. Ramesh Arora as Managing director of the company and proposes special resolution for approval by the members at the ensuing AGM.

ii. ) RETIREMENT BY ROTATION

In accordance with the provisions of section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Ramesh Arora and Mrs. Anju Arora, directors retire by rotation at the ensuing Annual General Meeting and offer themselves for reappointment.

iii. ) Key Managerial Personnel: The following are the Key Managerial Personnel of the Company for the year:

	Sr. No.	Name of Person	Designation
	1.	Sh. Ramesh Arora	Managing Director
	2.	Sh. Ajay Kumar Arora	Whole Time Director
	3.	Sh. Aditya Arora	Whole Time Director
	4.	Smt. Anju Arora	Whole Time Director

5.	Smt. Geeta Arora	Whole Time Director
6.	Ms. Gurpreet Kaur	Company Secretary

11) NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the Financial Year 2023-24, 12 meetings of the Board of Directors of the company were held and the details of which are given in the Corporate Governance Report which is enclosed with director''s report as "Annexure E". The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

12) COMMITTEES OF THE BOARD

The Board has constituted various committees to support the Board in discharging its responsibilities. The following four committees are constituted by the Board:

AUDIT COMMITTEE

The Audit Committee comprises of Sh. Pankaj Takkar as Chairman and Sh. Kiran Kumar Verma and Sh. Aditya Arora as members. The details of term of reference of the Audit Committee members, dates of meetings held and attendance of the Directors are given separately in the Corporate Governance Report.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee comprises of Sh. Kiran Kumar Verma as Chairman and Sh. Pankaj Takkar and Sh. Ravi Shanker Singh as members. The details of term of reference of the Committee members, dates of meetings held and attendance of the Directors are given in the Corporate Governance Report.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The Stakeholders Relationship Committee comprises of Sh. Ravi Shanker Singh as Chairman and Smt. Geeta Arora and Smt. Anju Arora as members. The details of term of reference of the Committee members, dates of meetings held and attendance of the Directors are given separately in the Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Corporate Social Responsibility Committee is duly constituted in terms of the requirement of Companies Act, 2013. During the financial year 2023-24, two meetings of CSR committee were held on 03-04-2023 and 29-03-2024. The composition of Committee and attendance of members is as follows:

		Meetings	No. of
Name	Category	held during	Meetings
		2023-24	Attended

Geeta Arora	Chairperson	2	2
Aditya Arora	Member	2	2
Pankaj Takkar	Member	2	2

13) MEETINGS OF INDEPENDENT DIRECTORS

The Independent Directors met on 29^th March 2024 inter alia, to

a) review the performance of the Non-Independent Directors and the Board of Directors as a whole;

b) review the performance of the Managing Director of the Company, taking into account the views of Executive Directors and Non-Executive Directors;

c) assess the quality, content and timeliness of the flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.

14) DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES

The Company has one subsidiary company Kwality Pharmaceuticals Africa, Limitada'' at Maputo Province, Mozambique which is mainly engaged in the Pharmaceuticals business. The Board reviewed the affairs of the Company''s subsidiary during the year at regular intervals. In accordance with section 129(3) of the Companies Act, 2013, the Company has prepared Consolidated Financial Statements of the Company and its subsidiary, which forms part of this Annual Report. Further a statement containing Salient features of the Financial Statements of its subsidiary in Form AOC-1 as given in the annual report forms part of the Financial Statements.

15) MECHANISM FOR EVALUATING BOARD MEMBERS:

Pursuant to the section 134 (p) of Companies Act, 2013 read with Rule 8 (4) of Companies Accounts Rules, 2014 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the Directors individually, as well as the Board Committees. A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board''s functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.

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, frequency of committee meetings, their functioning etc.

The evaluation of the Directors were based on their attendance and participation, acting in good faith and in the interests of the company as a whole, exercising duties with due diligence and reasonable care, complying with legislations and regulations in letter and spirit and such other factors.

In addition, the managing director 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 managing director was evaluated, taking into account the views of executive directors and non-executive directors.

16) FAMILIARISATION PROGRAMME FOR BOARD MEMBERS

The Familiarization Program seeks to update the Independent Directors on various matters covering Company''s strategy, business model, operations, organization structure, finance, risk management etc. It also seeks to update the Independent Directors with their roles, rights, responsibilities, duties under the Companies Act, 2013 and other statutes. The policy and details of familiarization program imparted to the Independent Directors of the Company is available at https://www.kwalitypharma.com/investor relations.php

17) STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS

The Company had received declarations from all the Independent Directors of the Company confirming that they meet criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and under Regulation 16 (1)(b) of Listing Regulations. There has been no change in the circumstances affecting their status as Independent Directors of the Company and in the opinion of the Board, the Independent Directors fulfil the conditions specified under the Act and the Listing Regulations and are Independent of the management.

18) POLICY ON DIRECTOR APPOINTMENT AND REMUNERATION

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of the Directors, the senior management and their remuneration. The remuneration policy is stated in the Corporate Governance Report.

19) WHISTLE BLOWER POLICY

Pursuant to the Section 177(9) and (10) of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated Whistle Blower Policy for vigil mechanism for Directors and Employees to report the management about the unethical behavior, fraud, improper practice or violation of the Company''s Code of Conduct or complaints regarding accounting, auditing, internal controls or disclosure practices of the Company. It gives a platform to the whistle blower to report any unethical or improper practice (not necessarily violation of law) and to define processes for receiving and investigating complaints. The mechanism provides adequate safeguards against victimization of employees and directors who use such mechanism and makes provision for direct access to the Chairman of the Audit Committee in exceptional cases. The Whistle Blower Policy is available on the website of the Company at https://www.kwalitypharma.com/investor relations.php

20) VIGIL MECHANISM

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established and Chairman of the Audit Committee is responsible for issue pertaining to same.

21) RISK MANAGEMENT

The Company recognizes that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner. Efficient risk management is the key to achieving short term goals and sustained value creation over the long term. A well-defined risk management mechanism covering the risk mapping and trend analysis, risk exposures, potential impact and risk mitigation process is in place. The objective of the mechanism is to minimize the impact of risks identified and taking advance actions to mitigate it. The mechanism works on the principles of probability of occurrence and impact, if triggered. A detailed exercise is being carried out to identify, evaluate, monitor and manage both business and non-business risks.

22) STATUTORY AUDITORS

The Company had appointed M/s ARORA AGGARWAL & CO., Chartered Accountants (FRN: 021086N) as the Statutory Auditors of the Company at the 36^th Annual General Meeting ("AGM") held on September 30, 2019 for a period of 5 (five) consecutive years, to hold office from the conclusion of the 36^th AGM till the conclusion of 41^st AGM of the Company.

The current tenure of M/s ARORA AGGARWAL & CO., Chartered Accountants, will expire at the conclusion of the ensuing 41^st Annual General Meeting. But M/s ARORA AGGARWAL & CO., Chartered Accountants, have shown showed their unwillingness for being appointed as Statutory Auditor for the second consecutive term of 5 years. Accordingly, the Company has approached M/s Vijay Mehra & Co., Chartered Accountants, Amritsar (FRN: 001051N), for their appointment as Statutory Auditors of the Company for a period of 5 (Five) years, so as to hold office from the conclusion of this 41^st AGM till the conclusion of 46^th AGM of the Company. M/s Vijay Mehra & Co., Chartered Accountants, have submitted their consent for appointment and also a requisite certificate, pursuant to the provisions of Section 139 & 141 of the Companies Act, 2013, confirming eligibility & satisfaction of criteria for their appointment as Statutory Auditors of the Company.

Upon the recommendation of Audit Committee, the Board recommends the appointment of M/s Vijay Mehra & Co., Chartered Accountants, as statutory auditors of the company at the ensuing 41^st Annual General Meeting for the approval of the Members of the Company. The necessary resolution seeking the approval for their appointment as the Statutory Auditors has duly been included in the notice of the ensuing 41^st Annual General Meeting along with brief credentials and other necessary disclosures required under the Act and the Regulations.

23) AUDITORS'' REPORT

M/s ARORA AGGARWAL & CO., Chartered Accountants, have submitted their Report on the Financial Statements of the Company for the F.Y 2023-24, which forms part of the Annual Report. The Statutory Auditors'' Report on the Financial Statements of the Company for FY 2023-24 does not contain any qualifications, reservations, adverse remarks or disclaimer.

The Statutory Auditors of the Company have not reported any fraud as specified under section 143(12) of the Act, in the year under review.

24) COST AUDITOR

Pursuant to Section 148(3) of the Companies Act, 2013, M/s Verma Khushwinder & Co., Cost Accountants, Jalandhar, were appointed as the Cost Auditors of the Company for the financial year 2023-24 by the Board of Directors and their remuneration was ratified by members at the 40^th Annual General Meeting of the Company.

Further, the Board of Directors has appointed M/s Verma Khushwinder & Co. as the Cost Auditors of the Company for the financial year 2024-25 and has also fixed their remuneration. The Board has recommended the remuneration approved in its meeting, for ratification by the shareholders in the ensuing AGM of the Company.

The Company has maintained the Cost Records as specified by the Central Government under Section 148(1) of the Act.

25) SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the boards of directors have appointed M/s Rishi Mittal & Associates, Company Secretaries, Amritsar as the Secretarial Auditors of the Company.

The Secretarial Audit Report for Financial Year 2023-24 forms part of the Annual report as "Annexure C" to the Board''s report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark except the following:-

i. ) As per Regulation 34 of SEBI (LODR) Regulations, 2015, the company had to submit to the stock exchange and publish on its website a copy of the annual report sent to the shareholders along with the notice of the annual general meeting not later than the day of commencement of dispatch to its shareholders. But there was delay of 2 days in submission of annual report with BSE for which penalty of Rs.4720 was imposed on company for delay in filing of annual report;

Explanation: The Company had to upload some documents at the BSE portal on September 06, 2023 viz. Notice of AGM, outcome of board meeting and intimation of BC etc. and also had to upload a copy of Annual Report along with aforesaid documents but due to some misapprehension, Annual Report could not be uploaded at BSE portal. The company secretary remained under the impression that it was duly uploaded at the BSE portal but later it was realized the mistake and uploaded the same at the BSE portal. But there was delay of 2 days in submission of annual report with BSE for which penalty of Rs.4720 was imposed on company which was duly paid by the company to BSE.

ii. ) The proceedings of Annual General Meeting of the company held on 30-09-2023 as required under Regulation 30(6) of SEBI (LODR) required to be submitted to stock exchange not later than 12 hours of occurrence of event and if disclosure made after 12 hours, the company along with disclosure required to provide explanation for such delay. The company has made delay in submission of proceedings to stock exchange and received letter from BSE for clarification;

Explanation: The company resubmitted the proceedings along with clarification regarding delay in submission to BSE.

iii. ) Under Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 , the company was required to inform the shareholder(s) concerned stating that the dividend on their shares has not been claimed for 7 consecutive years and if not claimed within the given period the said shares will be transferred to IEPF authority and the company also simultaneously had to publish a notice in the leading newspaper in English and regional language informing the concerned that the names of such shareholders and their folio number or DP ID - Client ID are available on their website duly mentioning the website address. The company had to complete both these assignments by 27-10-2023 but it could send notices to shareholders by 13-11-2023 and gave newspaper advertisements on 11-11-2023. So there was delay of around 17 days.

Explanation:- The delay was due to technical reasons and unintentional.

26) DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

In view of the profits and turnover of the Company, your Company was required to undertake CSR projects during the year 2023-24 under the provisions of section 135 of the Companies Act, 2013 and the rules made thereunder. As part of its initiatives under Corporate Social Responsibility (CSR)", the Company has undertaken various activities, which are in accordance with CSR Policy of the Company and Schedule VII of the Companies Act, 2013.The Board has approved a CSR policy on the recommendations of the CSR Committee. The Annual Report on CSR activities as required under Companies (Corporate Social Responsibility) Rules, 2014 is set out at Annexure-D forming part of this Board Report.

27) REPORT ON CORPORATE GOVERNANCE:

The Company is committed to maintain the highest standards of the Corporate Governance aligned with the best practices. In compliance with the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate report on corporate governance along with a certificate from practicing company secretary on its compliance forms an integral part of this Board''s Report.

A report on Corporate Governance as stipulated in Part C of Schedule V of the Listing Regulations is provided in a separate section and is annexed to this Report and marked as "Annexure E".

28) MANAGEMENT DISCUSSION AND ANALYSIS:

A detailed review of the operations and performance of the Company is set out in the Management Discussion and Analysis Report pursuant to Regulation 34 Part-B of Schedule V of the (Listing Obligations and Disclosure Requirements)Regulations, 2015 which forms part of the Annual Report for the year under review as "Annexure F".

29) PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

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

30) PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All Related Party Transactions that were entered into during the financial year were on an arm''s length basis, in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act, 2013 (''the Act'') and SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no related party transactions made by the Company with the Promoters, Directors and Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.

The Board of Directors of the Company has approved the criteria for giving the omnibus approval by the Audit Committee within the overall framework of the Policy on Related Party Transactions. Omnibus approval was obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at arm''s length basis.

The transactions with the related parties have been disclosed in the financial statements. During the year the company has not entered into any contracts / arrangements / transactions with related parties which could be considered material in accordance with policy of the Company on material related party transactions or under section 188 (1) of the Act. Thus disclosure in Form AOC-2 is not required.

31) COMPLIANCE OF APPLICABLE SECRETARIAL STANDARDS

Your Directors state that they have devised proper systems to ensure compliance with the Secretarial Standards and that such system are adequate and operating effectively. During the year under review, the Company has complied with the provisions of all the Secretarial Standards issued by the Institute of Company Secretaries of India and approved by the Central Government under section 118 of the Companies Act, 2013.

32) MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There are no material changes and commitments, affecting the financial performance of the Company that occurred during the Financial Year of the Company to which the Financial Statements relate and the date of this Report.

33) DEPOSITS

Your Company has not accepted any deposits from the public during the year under review, within the meaning of Section 73 of the Companies Act, 2013 (''the Act) read with the Companies (Acceptance of Deposits) Rules, 2014, and no amount of principle or interest on deposits from the public is outstanding as on the date of Balance Sheet.

34) SHARE CAPITAL

During the year under review, there was no change in the paid-up equity share capital of the Company which is as on 31^st March, 2024 was Rs. 1037.62 Lakhs.

35) PROVISION OF MONEY BY COMPANY FOR PURCHASE OF ITS OWN SHARES BY EMPLOYEES OR BY TRUSTEES FOR THE BENEFIT OF EMPLOYEES

The company has not made any provision of money for purchase of its own shares by employees or by trustees for the benefit of employees as per Rule 16(4) of Companies (share capital and debentures) Rules, 2014.

36) ISSUE OF SWEAT EQUITY SHARES

The Company has not issued any sweat equity share during the financial year in accordance with the provisions of Section 54 of Companies Act, 2013 read with Rule 8 of the Companies (Share Capital and Debentures) Rules, 2014.

37) ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS

The Company has not issued any equity shares with differential voting rights during the financial year as per Rule 4(4) of Companies (Share capital and debentures) Rules, 2014.

38) ISSUE OF EMPLOYEE STOCK OPTION

The company has not issued any employee stock option during the financial year as per Rule 12 of Companies (share capital and debentures) Rules, 2014.

39) INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has comprehensive and adequate internal financial controls system for all major processes including financial statements to ensure reliability of reporting. The system also helps management to have timely data/feedback on various operational parameters for effective review. It also ensures proper safeguarding of assets across the Company and its economical use. The internal financial controls system of the Company is commensurate with the size, scale and complexity of its operations. The systems and controls are periodically reviewed and modified based on the requirement.

The Company has an internal audit function which is empowered to examine the adequacy and compliance with policies, plans and statutory requirements. It is also responsible for assessing and improving the effectiveness of risk management, control and governance process. The scope of Internal Audit is well defined and documented and the audit committee reviews the observations of the Internal Audit critically. The composition and working of the audit committee forms part of the Corporate Governance Report.

Internal audits are undertaken on a quarterly basis by Internal Auditors covering all units and business operations to independently validate the existing controls. Reports of the Internal Auditors are regularly reviewed by the management and corrective action is initiated to strengthen the controls and enhance the effectiveness of the existing systems. There were no observations or remarks reported by the said auditors of the Company during the year under review.

40) COMPANY SECRETARY AND COMPLIANCE OFFICER

Ms. Gurpreet Kaur (M.No. 52091) is Company Secretary, KMP and Compliance Officer of the Company.

41) DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION,

PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place a policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The policy has set guidelines on the redressal and enquiry process that is to be followed by complainants, whilst dealing with issues related to sexual harassment at the work place. All women employees (permanent, temporary, contractual and trainees) are covered under this policy. An Internal Complaints Committee has been set up to redress the complaints received regarding sexual harassment. Your Company did not receive any complaints during the period under review.

42) PROHIBITION OF INSIDER TRADING

The Board of Directors has adopted the Insider Trading Policy in accordance with requirements of SEBI (Prohibition of Insider Trading) Regulations, 2015. The Insider Trading Policy of the Company lays down guidelines and procedures to be followed and disclosures to be made while dealing with shares of the Company, as well as the consequences of violation. The Policy has been formulated to regulate, monitor and ensure reporting of deals by employees and to maintain the highest ethical standards of dealing in Company Securities. The Insider Trading Policy of the Company covering code of practices and procedures for fair disclosure of unpublished price sensitive information and code of conduct for the prevention of insider trading is available on the Company''s website at https://www.kwalitypharma.com/investor relations.php

43) SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

44) TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO INVESTOR EDUCATION AND PROTECTION

FUND (IEPF)

Pursuant to the provisions of Section 124(5) of the Companies Act, 2013, read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, all dividends which remains unpaid or unclaimed for a period of 7 (seven) years from the date of their transfer to the unpaid dividend account are required to be transferred by the Company to the Investor Education and Protection Fund (''IEPF''), established by the Central Government. Further, as per IEPF Rules, the shares on which dividend has not been paid or claimed by the members for 7 (seven) consecutive years or more shall also be transferred to the demat account of the IEPF Authority. Further, as per Rule 6(8) of IEPF Rules, all benefits such as bonus shares, split, consolidation except rights issue, accruing on shares which are transferred to IEPF, shall also be credited to the demat account of the IEPF authority.

During the year, the Company has transferred unclaimed and unpaid dividends of Rs.31962 to IEPF pursuant to the provisions of the Companies Act, 2013. Further in accordance with the provisions of the Companies Act, 2013, the Company has transferred 1,00,540 equity shares of Rs.10/- each, to the credit of IEPF Authority, during the FY 2023-24, in respect of which dividend had not been paid or claimed by the members for seven consecutive years or more. Details of shares transferred to IEPF Authority during FY 2023-24 are also available on the website of the Company. The Company has also uploaded these details on the website of the IEPF Authority (www.iepf.gov.in). Ms. Gurpreet Kaur Company Secretary cum compliance officer of Company has been appointed as nodal officer of Company and an investor can contact her at [email protected].

45) DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134 (5) of the Companies Act, 2013 Your Directors'' confirm that:

i. in the preparation of the annual accounts for the financial year ended March 31, 2024, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are 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 ended 31^st March, 2024 and of the profit of the Company for that period;

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

iv. The Directors had prepared the annual accounts on a ''going concern'' basis;

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

vi. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

46) POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION

Based on the recommendation of Nomination & Remuneration Committee, the Board of Directors approved and adopted a Policy for selection, appointment and remuneration of Directors, Key Managerial Personnel and other employees of the Company as required under Section 178(3) of the Act. The Remuneration Policy on the appointment and remuneration of Directors and Key Managerial Personnel provides a framework based on which our human resources management aligns their recruitment plans for the strategic growth of the Company. The policy may be accessed under the ''Investor Relations'' section on the website of the Company at the web link https://www.kwalitypharma.com/investor relations.php

47) POSTAL BALLOT

During the year under review, the company had passed a Special Resolution through Postal Ballot for the appointment of Mr. Prashanth Vellanki, as an Independent Director of the Company.

48) CASH FLOW STATEMENT

In due compliance of the listing agreement and in accordance with the requirements prescribed by SEBI, the cash flow statement is prepared and is appended to this Annual Report.

49.) Human Resources

Throughout the year, several initiatives were implemented to enhance the human resource capabilities of the Company. The Company has invested heavily in the development of its employees across all levels. They underwent an intensive and structured induction program, which will help in succession planning process at various levels. These initiatives are expected to ensure that the Company is well-prepared for future in terms of talent readiness. The priority for the Human Resource function continued to provide a work environment which is safe, diverse, inclusive and full of growth opportunities.

50.) Other disclosures

The Company does not have any Employees Stock Option Scheme in force and hence particulars are not furnished, as the same are not applicable. No proceedings against the Company is initiated or pending under the Insolvency and Bankruptcy Code, 2016. The details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof - Not Applicable. During the year under review, the Statutory Auditor, Cost Auditor and Secretarial Auditor have not reported any instances of frauds committed in the Company by its Officers or Employees to the Audit Committee and / or Board under section 143(12) of the Act.

51) INDUSTRIAL RELATIONS

During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels.

52) ENVIRONMENT, HEALTH AND SAFETY

The Company is conscious of the importance of environmentally clean and safe operations. The Company''s policy requires conduct of operations in such a manner so as to ensure safety of all concerned, compliances of environmental regulations and preservation of natural resources.

53) APPRECIATION

Your Company has been able to perform better with the continuous improvement in all functions and areas which coupled with an efficient utilization of the Company''s resources led to sustainable and profitable growth of the Organization. Your Directors express their deep sense of appreciation and extend their sincere thanks to every employee and associates for their dedicated and sustained contribution and they look forward the continuance of the same in future.

54) ACKNOWLEDGMENTS:

Your Directors would like to express their gratitude for the valuable assistance and cooperation received from shareholders, lenders, government authorities, customers and vendors. Your Directors also wish to place on record their appreciation for the committed services of all the employees of the Company.

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Mar 31, 2023

The Directors have pleasure in presenting the 40^th Annual Report of KWALITY PHARMACEUTICALS LIMITED along with the Audited Financial Statements for the year ended 31^st March 2023.

1) FINANCIAL HIGHLIGHTS

Our Company''s financial performance for the year under review has been encouraging and is summarized below

(Rupees in Lacs)
	STANDALONE		CONSOLIDATED
Particulars	2022-23	2021-22	2022-23	2021-22
Revenue from operations	25099.47	45613.16	25103.01	45618.52
Other Income	294.13	351.19	294.12	351.19
Total Income	25393.60	45964.35	25397.13	45969.71
Less:- Depreciation and amortisation expenses	1491.88	1064.41	1495.84	1069.07
Less:- Finance cost	602.04	291.73	602.04	291.73
Less:- Other Expenses	19070.61	28440.72	19089.07	28452.22
Profit before exceptional items and tax	4229.07	16167.49	4210.18	16156.69
Exceptional items	1652.94	0.00	1652.94	0.00
Profit before tax	2576.13	16167.49	2557.24	16156.69
Less: Provision for Taxation
Current Tax	648.36	4100.00	648.36	4100.00
Deferred Tax	13.66	27.46	13.66	27.46
Tax for earlier Years	-32.77	35.37	-32.77	35.37
Profit/(Loss) After Tax For The Year	1946.88	12004.66	1927.99	11993.85
Other Comprehensive Income/(expense) for the year (net of tax)	-32.57	-35.32	-43.93	-49.24
Total Comprehensive Income for the year	1914.31	11969.34	1884.06	11944.62
Earnings per equity share [Nominal value of share Rs.10.00 each]
Basic	18.45	115.36	18.16	115.12
Diluted	18.45	115.36	18.16	115.12

Note: The Company has first time adopted Indian Accounting Standards (Ind AS) owing to migration to Main Board of BSE Limited w.e.f. 13^th June, 2022 and the figures mentioned are as per the Financials prepared on the basis of Ind AS.

2) PERFORMANCE REVIEW

During the year under review, on standalone basis, revenue of the company was Rs. 25393.60 Lakhs as compared to Rs. 45964.35 Lakhs in the corresponding previous year. The Company earned a profit after tax of Rs. 1946.88 Lakhs as compared to Rs. 12004.66 Lakhs in the previous year.

On consolidated basis, revenue of the company was Rs.25397.13 Lakhs as compared to Rs. 45969.71 Lakhs in the corresponding previous year. The Company earned a profit after tax of Rs.1927.99 Lakhs as compared to Rs. 11993.85 Lakhs in the previous year.

3) CHANGES IN NATURE OF BUSINESS

The Company is engaged in the business of manufacturing & trading in Pharmaceuticals & allied products and there was no change in the nature of the business of the Company during the year under review.

4) DIVIDEND

In order to conserve the resources, the Board of Directors does not recommend any dividend for the financial year 2022-23.

5) RESERVES

During the financial year under review, there are no transfers to any specific reserves.

6) ANNUAL RETURN

The Annual Return of the Company as on March 31, 2023 is available on the Company''s website and can be accessed at https://www.kwalitypharma.com/investor relations.php

7) PARTICULARS OF EMPLOYEES REMUNERATION

The information pertaining to Section 197(12) read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as ''Annexure A''. There is no employee drawing a salary exceeding the limit prescribed under Section 197(12) read with Rule 5 (2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

8) ADOPTION OF INDIAN ACCOUNTING STANDARDS (IND AS)

The Audited Financial Statements for the financial year ended March 31, 2023 have been prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (Ind-AS) prescribed under

Section 133 of the Companies Act, 2013 (hereinafter referred to as "Act") and other recognized accounting practices and policies to the extent applicable. The Company has adopted Indian Accounting Standards (Ind AS) with effect from 01^st April, 2022.

9) DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board received a declaration from all the directors under section 164 and other applicable provisions, if any, of the Companies Act, 2013 that none of the directors of the company is disqualified under the provisions of the Companies Act, 2013 (''Act'') or under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

i) Changes in Directors

During the year under review, based on recommendation of Nomination and Remuneration Committee, the Board had appointed Mr. Sachin Seth (DIN: 00466950) as Non- Executive and Non- Independent Director of the Company with effect from August 04, 2022 and his appointment was approved by the Shareholders of the Company in subsequent annual general meeting held on September 30, 2022.

Mr. Sachin Seth (DIN: 00466950) resigned from the position of Non-Executive Director with effect from November 18, 2022 due to some other professional commitments and pre-occupation.

Based on the recommendation of Nomination and Remuneration Committee, the board had appointed Mr. Neelmani Khemka (DIN: 09787109) as Additional Director (Non-Executive and Independent) with effect from November 22, 2022 but Mr. Neelmani Khemka resigned from the position of Director of the Company w.e.f. March 18, 2023 due to sudden health problems.

Based on the recommendation of Nomination and Remuneration Committee, the board had appointed Mr. Prashanth Vellanki (DIN: 05182633) as Additional Director (Non-Executive and Independent) with effect from March 16, 2023. In terms of Regulation 17(1C) of Listing Regulations, the said appointment has been duly approved by the shareholders of the Company by way of special resolution passed through postal ballot on June 14, 2023. Further, the Board is of the opinion that Mr. Prashanth Vellanki possesses requisite qualifications, experience (including the proficiency) and expertise in his respective fields and that he holds highest standards of integrity.

ii. RETIREMENT BY ROTATION

In accordance with the provisions of section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Ajay Kumar Arora and Mr. Aditya Arora, directors retire by rotation at the ensuing Annual General Meeting and offer themselves for reappointment.

iii. Key Managerial Personnel: The following are the Key Managerial Personnel of the Company for the year:

Sr. No.	Name of Person	Designation
1.	Sh. Ramesh Arora	Managing Director
2.	Sh. Ajay Kumar Arora	Whole Time Director
3.	Sh. Aditya Arora	Whole Time Director

4.	Smt. Anju Arora	Whole Time Director
5.	Smt. Geeta Arora	Whole Time Director
6.	Ms. Gurpreet Kaur	Company Secretary

10) NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the Financial Year 2022-23, 25 meetings of the Board of Directors of the company were held and the details of which are given in the Corporate Governance Report which is enclosed with director''s report as "Annexure D". The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

11) COMMITTEES OF THE BOARD

The Board has constituted various committees to support the Board in discharging its responsibilities. The following four committees are constituted by the Board:

AUDIT COMMITTEE

The Audit Committee comprises of Sh. Pankaj Takkar as Chairman and Sh. Kiran Kumar Verma and Sh. Aditya Arora as members. The details of term of reference of the Audit Committee members, dates of meetings held and attendance of the Directors are given separately in the Corporate Governance Report.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee comprises of Sh. Kiran Kumar Verma as Chairman and Sh. Pankaj Takkar and Sh. Ravi Shanker Singh as members. The details of term of reference of the Committee members, dates of meetings held and attendance of the Directors are given in the Corporate Governance Report.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The Stakeholders Relationship Committee comprises of Sh. Ravi Shanker Singh as Chairman and Smt. Geeta Arora and Smt. Anju Arora as members. The details of term of reference of the Committee members, dates of meetings held and attendance of the Directors are given separately in the Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Corporate Social Responsibility Committee is duly constituted in terms of the requirement of Companies Act, 2013. During the financial year 2022-23, two meetings were held on 16-06-2022 and 2402-2023. The composition of Committee and attendance of members is as follows:

		Meetings	No. of
Name	Category	held during	Meetings
		2022-23	Attended

Geeta Arora	Chairperson	2	2
Aditya Arora	Member	2	2
Pankaj Takkar	Member	2	2

12) DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

In view of the profits and turnover of the Company, your Company was required to undertake CSR projects during the year 2022-23 under the provisions of section 135 of the Companies Act, 2013 and the rules made thereunder. As part of its initiatives under Corporate Social Responsibility (CSR)", the Company has undertaken various activities, which are in accordance with CSR Policy of the Company and Schedule VII of the Companies Act, 2013.The Board has approved a CSR policy on the recommendations of the CSR Committee. The Annual Report on CSR activities as required under Companies (Corporate Social Responsibility) Rules, 2014 is set out at Annexure-C forming part of this Board Report.

13) MEETINGS OF INDEPENDENT DIRECTORS:

The Independent Directors met on 31^st March 2023 inter alia, to

a) review the performance of the Non-Independent Directors and the Board of Directors as a whole;

b) review the performance of the managing director of the Company, taking into account the views of Executive Directors and Non-Executive Directors;

c) assess the quality, content and timeliness of the flow of information between the Company Management and the Board that is necessary for the Board to effectively and reasonably perform its duties.

14) DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES

The Company has one subsidiary company ''Kwality Pharmaceuticals Africa, Limitada'' at Maputo Province, Mozambique which is mainly engaged in the Pharmaceuticals business. The Board reviewed the affairs of the Company''s subsidiary during the year at regular intervals. In accordance with section 129(3) of the Companies Act, 2013, the Company has prepared Consolidated Financial Statements of the Company and its subsidiary, which forms part of this Annual Report. Further a statement containing Salient features of the Financial Statements of its subsidiary in Form AOC-1 as given in the annual report forms part of the Financial Statements.

15) MECHANISM FOR EVALUATING BOARD MEMBERS:

Pursuant to the section 134 (p) of Companies Act, 2013 read with Rule 8 (4) of Companies Accounts Rules, 2014 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the Directors individually, as well as the Board Committees. A structured questionnaire was prepared after taking into consideration inputs received from the Directors, covering various aspects of the Board''s functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.

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, frequency of committee meetings, their functioning etc.

The evaluation of the Directors were based on their attendance and participation, acting in good faith and in the interests of the company as a whole, exercising duties with due diligence and reasonable care, complying with legislations and regulations in letter and spirit and such other factors.

In addition, the managing director 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 managing director was evaluated, taking into account the views of executive directors and non-executive directors.

Further, The Securities and Exchange Board of India (''SEBI'') vide circular no. SEBI /HO /CFD / CMD/

CIR / P /2017 /004 dated January 05, 2017 had come up with a "Guidance Note on Board Evaluation". The Board Evaluation framework of the Company is aligning with this Guidance Note.

16) FAMILIARISATION PROGRAMME FOR BOARD MEMBERS:

The Familiarization Program seeks to update the Independent Directors on various matters covering Company''s strategy, business model, operations, organization structure, finance, risk management etc. It also seeks to update the Independent Directors with their roles, rights, responsibilities, duties under the Companies Act, 2013 and other statutes.

The policy and details of familiarization program imparted to the Independent Directors of the Company is available at www.kwalitypharma.com .

17) STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS

The Company had received declarations from all the Independent Directors of the Company confirming that they meet criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and under Regulation 16 (1)(b) of Listing Regulations. In the opinion of the Board, they fulfill the conditions of independence as specified in the Act and the Listing Regulations and are independent of the management.

18) POLICY ON DIRECTOR APPOINTMENT AND REMUNERATION

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of the Directors, the senior management and their remuneration. The remuneration policy is stated in the Corporate Governance Report.

19) WHISTLE BLOWER POLICY

Pursuant to the Section 177(9) and (10) of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated Whistle Blower Policy for vigil mechanism for Directors and Employees to report the management about the unethical behavior, fraud, improper practice or violation of the Company''s Code of Conduct or complaints regarding accounting, auditing, internal controls or disclosure practices of the Company. It gives a platform to the whistle blower to report any unethical or improper practice (not necessarily violation of law) and to define processes for receiving and investigating complaints. The mechanism provides adequate safeguards against victimization of employees and directors who use such mechanism and makes provision for direct access to the Chairman of the Audit Committee in exceptional cases. The Whistle Blower Policy is available on the website of the Company www.kwalitypharma.com

20) VIGIL MECHANISM

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established and Chairman of the Audit Committee is responsible for issue pertaining to same.

21) RISK MANAGEMENT

The Company recognizes that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner. Efficient risk management is the key to achieving short term goals and sustained value creation over the long term. A well-defined risk management mechanism covering the risk mapping and trend analysis, risk exposures, potential impact and risk mitigation process is in place. The objective of the mechanism is to minimize the impact of risks identified and taking advance actions to mitigate it. The mechanism works on the principles of probability of occurrence and impact, if triggered. A detailed exercise is being carried out to identify, evaluate, monitor and manage both business and non-business risks.

22) STATUTORY AUDITORS

Pursuant to the provisions of Section 139 of the Companies Act, 2013 and the rules framed thereunder, the Company in its Annual General Meeting held on 30^th day of September, 2019 had appointed M/s ARORA AGGARWAL & CO, Chartered Accountants, Amritsar (FRN:021086N) as the Statutory Auditors of the Company for a period of Five Consecutive years from the conclusion of the 36^th Annual general Meeting, till the conclusion of the 41^st Annual General Meeting of the Company to be held in the year 2024. The Companies Amendment Act, 2017 has dispensed the ratification of auditors appointment at every Annual General Meeting. Accordingly the Ordinary Business Agenda item relating to the ratification of the statutory Auditors appointment is not placed in the AGM notice.

23) AUDITORS'' REPORT

M/s ARORA AGGARWAL & CO., Chartered Accountants, have submitted their Report on the Financial Statements of the Company for the F.Y 2022-23, which forms part of the Annual Report. There were no instances of frauds reported by the auditors under section 143(12) of the Companies Act, 2013. The Audit Report does not contain any qualification, reservation or adverse remark except the following:-

Qualification :- The company has transferred unspent CSR amount of Rs. 46,36,838 to a special account, within a period of 31 days from the end of the financial year under section 135(6) of the Companies Act, 2013.

Explanation:- The company has to transfer the Unspent CSR amount to a special account within a period of 30 days from the end of the financial year 2022-23 under section 135(6) of the Companies Act, 2013. But there was delay of one day in transfer of this amount to aforesaid special account. The company has given all the documents for account opening to Bank well in time but due to technical reasons on the part of Bank, account was opened on 01-05-2023 instead of 30-04-2023. Bank has also accepted its mistake and issued a letter to company that delay was only due to technical reasons at its end.

24) COST AUDITOR

Pursuant to Section 148(3) of the Companies Act, 2013, M/s Verma Khushwinder & Co., Cost Accountants, Jalandhar, were appointed as the Cost Auditors of the Company for the financial year 2022-23 by the Board of Directors and their remuneration was ratified by members at the 39^th Annual General Meeting of the Company.

Further, the Board of Directors has appointed M/s Verma Khushwinder & Co. as the Cost Auditors of the Company for the financial year 2023-24 and has also fixed their remuneration. The Board has recommended the remuneration approved in its meeting, for ratification by the shareholders in the ensuing AGM of the Company.

25) SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the boards of directors have appointed M/s Rishi Mittal & Associates, Company Secretaries, Amritsar as the Secretarial Auditors of the Company.

The Secretarial Audit Report for Financial Year 2022-23 forms part of the Annual report as "Annexure B" to the Board''s report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark except the following:-

i. ) There were certain instances of slight delay in filing requisite information with BSE for which the BSE has pointed out the company during the financial year.

Explanation: The slight delay of some minutes was due to technical reasons only i.e. internet server problem, portal login problem and the company has replied suitably in this regard to the satisfaction of BSE.

ii. ) The company had purchased the Structured Digital Database (SDD) software in October 2022 and it could not capture all the UPSI disseminated in the year under review through SDD software.

Explanation: The Company was earlier maintaining the required data manually and after purchase of SDD software, it started making compliance of the provisions of regulation 3(5) and 3(6) of SEBI (Prohibition of Insider Trading) Regulations, 2015 through SDD software only.

iii. ) The company had received notice(s) from BSE regarding Non Compliance of Regulation 17(1) of SEBI LODR Regulations, 2015 pertaining to the composition of the Board during the year under review.

Explanation: The company has replied suitably in this regard to the satisfaction of BSE.

26) REPORT ON CORPORATE GOVERNANCE:

The Company is committed to maintain the highest standards of the Corporate Governance aligned with the best practices. In compliance with the provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate report on corporate governance along with a certificate from practicing company secretary on its compliance forms an integral part of this Board''s Report.

A report on Corporate Governance as stipulated in Part C of Schedule V of the Listing Regulations is provided in a separate section and is annexed to this Report and marked as "Annexure D".

27) MANAGEMENT DISCUSSION AND ANALYSIS:

A detailed review of the operations and performance of the Company is set out in the Management Discussion and Analysis Report pursuant to Regulation 34 Part-B of Schedule V of the (Listing Obligations and Disclosure Requirements)Regulations, 2015 which forms part of the Annual Report for the year under review as "Annexure E".

28) PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

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

29) PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All Related Party Transactions that were entered into during the financial year were on an arm''s length basis, in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act, 2013 (''the Act'') and SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 and do not attract the provisions of Section 188 of the Companies Act, 2013. There were no related party transactions made by the Company with the Promoters, Directors and Key Managerial Personnel which may have a potential conflict with the interest of the Company at large.

The Board of Directors of the Company has approved the criteria for giving the omnibus approval by the Audit Committee within the overall framework of the Policy on Related Party Transactions. Omnibus approval was obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at arm''s length basis.

The transactions with the related parties have been disclosed in the financial statements. During the year the company has not entered into any contracts / arrangements / transactions with related parties which could be considered material in accordance with policy of the Company on material related party transactions or under section 188 (1) of the Act. Thus disclosure in Form AOC-2 is not required.

30) COMPLIANCE OF APPLICABLE SECRETARIAL STANDARDS

Your Directors state that they have devised proper systems to ensure compliance with the Secretarial Standards and that such system are adequate and operating effectively. During the year under review, the Company has complied with the provisions of all the Secretarial Standards issued by the Institute of Company Secretaries of India and approved by the Central Government under section 118 of the Companies Act, 2013.

31) MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

There are no material changes and commitments, affecting the financial performance of the Company that occurred during the Financial Year of the Company to which the Financial Statements relate and the date of this Report.

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

The details pursuant to Section 134(3) of the Companies Act, 2013 read with Rule 8, sub-rule (3) of Companies (Accounts) Rules, 2014 relating to Conservation of Energy, Technology absorption, Foreign Exchange earnings and outgo is provided as under :

A) Conservation of energy:

	Steps taken for conservation of	The company is committed to continuously improve
	energy	energy performance and conserve energy in its various operations. Dedicated team is continuously working to ensure efficient use of energy. To achieve above objectives the following steps are taken by the Company:-
		• Energy efficient chiller installed • Installation of energy efficient blower for HVAC system • Installation of Vapor Absorption Machine for chilled water for Air Conditioning. • Condensate recovery improved, resulting in Fuel and water reduction. • Utilisation of heat pump for hot water generator and reducing steam consumption. • Old energy inefficient motors are replaced with energy efficient motors. • Demand side air management for reducing power consumption in air compressor. • Replacement of old energy inefficient pump with energy efficient pump in cooling towers. • AHU automation for power reduction. • Energy efficient new compressed air dryer installed • Flash steam recovery system installed to recover waste heat. • Cooling tower online Chemical dosing and blow down system installed to improve chiller

	approach.
Steps taken for utilizing alternate sources of energy	Boiler fuel is shifted from conventional fuel like furnace oil / high speed diesel with waste wood and pet coke for Steam generation.
Capital investment on energy conservation equipment	NIL

(B) Technology absorption:

In the pursuit of innovation and sustainability, we focus on initiatives to drive process developments and efficiency. Through robust management practices, we ensure the optimisation of resources, reduction of costs and adherence to environmentally conscious methodologies.

The Company constantly reviews, optimizes and improves its processes for its product range. These efforts have resulted in lower cost of production, achieve consistent exports and be competitive in the global market.

(C) Foreign exchange earnings and Outgo:(in Rupees Lacs)

Particulars	Year ended 31st March 2023 ( Rs. In Lakhs)	Year Ended 31st March 2022 ( Rs. In Lakhs)
Earnings
Export Sales	11976.85	29972.32
Outgo
Capital Goods	991.62	716.88
Raw Materials	1877.94	6510.55

33) DEPOSITS

Your Company has not accepted any deposits from the public during the year under review, within the meaning of Section 73 of the Companies Act, 2013 (''the Act) read with the Companies (Acceptance of Deposits) Rules, 2014, and no amount of principle or interest on deposits from the public is outstanding as on the date of Balance Sheet.

34) SHARE CAPITAL

During the year under review, there was no change in the paid-up equity share capital of the Company which is as on 31^st March, 2023, was Rs. 1037.62 Lakhs.

35) PROVISION OF MONEY BY COMPANY FOR PURCHASE OF ITS OWN SHARES BY EMPLOYEES OR BY TRUSTEES FOR THE BENEFIT OF EMPLOYEES

The company has not made any provision of money for purchase of its own shares by employees or by trustees for the benefit of employees as per Rule 16(4) of Companies (share capital and debentures) Rules, 2014.

36) ISSUE OF SWEAT EQUITY SHARES

The Company has not issued any sweat equity share during the financial year in accordance with the provisions of Section 54 of Companies Act, 2013 read with Rule 8 of the Companies (Share Capital and Debentures) Rules, 2014.

37) ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS

The Company has not issued any equity shares with differential voting rights during the financial year as per Rule 4(4) of Companies (Share capital and debentures) Rules, 2014.

38) ISSUE OF EMPLOYEE STOCK OPTION

The company has not issued any employee stock option during the financial year as per Rule 12 of Companies (share capital and debentures) Rules, 2014.

39) INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has comprehensive and adequate internal financial controls system for all major processes including financial statements to ensure reliability of reporting. The system also helps management to have timely data/feedback on various operational parameters for effective review. It also ensures proper safeguarding of assets across the Company and its economical use. The internal financial controls system of the Company is commensurate with the size, scale and complexity of its operations. The systems and controls are periodically reviewed and modified based on the requirement.

The Company has an internal audit function which is empowered to examine the adequacy and compliance with policies, plans and statutory requirements. It is also responsible for assessing and improving the effectiveness of risk management, control and governance process. The scope of Internal Audit is well defined and documented and the audit committee reviews the observations of the Internal Audit critically. The composition and working of the audit committee forms part of the Corporate Governance Report.

Internal audits are undertaken on a quarterly basis by Internal Auditors covering all units and business operations to independently validate the existing controls. Reports of the Internal Auditors are regularly reviewed by the management and corrective action is initiated to strengthen the controls and enhance the effectiveness of the existing systems. There were no observations or remarks reported by the said auditors of the Company during the year under review.

40) COMPANY SECRETARY AND COMPLIANCE OFFICER

Ms. Gurpreet Kaur (M.No. 52091) is Company Secretary, KMP and Compliance Officer of the Company.

41) DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION-PROHIBITION AND REDRESSAL) ACT, 2013

The Company has in place a policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The policy has set guidelines on the redressal and enquiry process that is to be followed by complainants, whilst dealing with issues related to sexual harassment at the work place. All women employees (permanent, temporary, contractual and trainees) are covered under this policy. An Internal Complaints Committee has been set up to redress the complaints received regarding sexual harassment. Your Company did not receive any complaints during the period under review.

42) PROHIBITION OF INSIDER TRADING

The Board of Directors has adopted the Insider Trading Policy in accordance with requirements of SEBI (Prohibition of Insider Trading) Regulations, 2015. The Insider Trading Policy of the Company lays down guidelines and procedures to be followed and disclosures to be made while dealing with shares of the Company, as well as the consequences of violation. The Policy has been formulated to regulate, monitor and ensure reporting of deals by employees and to maintain the highest ethical standards of dealing in Company Securities. The Insider Trading Policy of the Company covering code of practices and procedures for fair disclosure of unpublished price sensitive information and code of conduct for the prevention of insider trading is available on the Company''s website www.kwalitypharma.com

43) SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

44) TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO INVESTOR EDUCATION AND PROTECTIONFUND (IEPF)

Members may please note that as per the provisions of Section 124 & 125 of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, dividends that remain unclaimed for a period of seven years from the date of transfer to the Unpaid Dividend Account shall be transferred to the Investor Education & Protection Fund.

Details of Unclaimed dividend as on 31st March, 2023 and due date of transfer is as follows:

Type of Dividend	Financial year ended	No. of Shareholders who have not claimed	Unclaimed Amount (Rs.)	Date of Declaration	Due date of transfer to IEPF
Interim	2016-17	3	31962	22.12.2016	28.01.2024

Mandatory Transfer of Shares to Demat Account of Investors Education and Protection Fund Authority (IEPFA) in case of unpaid/ unclaimed dividend on shares for a consecutive period of seven years.

In terms of Section 124(6) of the Act, read with Rule 6 of the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016, (as amended from time to time) (IEPFA Rules) shares on which dividend has not been encashed or claimed by the shareholder for a period of

seven consecutive years or more shall be credited to the Demat Account of Investor Education and Protection Fund Authority (IEPFA) within a period of thirty days of such shares becoming due to be so transferred. Upon transfer of such shares, all benefits (like Dividend, bonus, etc.), if any, accruing on such shares shall also be credited to such Demat Account and the voting rights on such shares shall remain frozen till the rightful owner claims the shares. The members who have a claim on Unclaimed Dividend / Shares may claim the same from IEPFA by submitting an online application in the prescribed Form No. IEPF-5 available on the website www.iepf.gov.in and sending a physical copy of the same, duly signed to the Company, along with requisite documents enumerated in Form No. IEPF-5. No claims shall lie against the Company in respect of the Unclaimed Dividend / Shares so transferred.

45) DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to Section 134 (5) of the Companies Act, 2013 Your Directors'' confirm that:

i. in the preparation of the annual accounts for the financial year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures;

ii. The Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are 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 ended 31^st March, 2023 and of the profit of the Company for that period;

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

iv. The Directors had prepared the annual accounts on a ''going concern'' basis;

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

vi. The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

46) POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION

Based on the recommendation of Nomination & Remuneration Committee, the Board of Directors approved and adopted a Policy for selection, appointment and remuneration of Directors, Key Managerial Personnel and other employees of the Company as required under Section 178(3) of the Act. The Remuneration Policy on the appointment and remuneration of Directors and Key Managerial Personnel provides a framework based on which our human resources management aligns their recruitment plans for the strategic growth of the Company. The policy may be accessed under the ''Investor Relations'' section on the website of the Company at the web link :-https://www.kwalitypharma.com/assets/CORPORATE%20POLICIES /Nomination%20 %20Remuneratio n%20Policy.pdf

47) POSTAL BALLOT

During the year under review, no postal ballot resolutions were passed.

48) CASH FLOW STATEMENT

In due compliance of the listing agreement and in accordance with the requirements prescribed by SEBI, the cash flow statement is prepared and is appended to this Annual Report.

49.) Other disclosures

The Company does not have any Employees Stock Option Scheme in force and hence particulars are not furnished, as the same are not applicable. No proceedings against the Company is initiated or pending under the Insolvency and Bankruptcy Code, 2016. The details of difference between amount of the valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof - Not Applicable.

50) INDUSTRIAL RELATIONS

During the year under review, your Company enjoyed cordial relationship with workers and employees at all levels.

51) ENVIRONMENT, HEALTH AND SAFETY

The Company is conscious of the importance of environmentally clean and safe operations. The Company''s policy requires conduct of operations in such a manner so as to ensure safety of all concerned, compliances of environmental regulations and preservation of natural resources.

52) APPRECIATION

Your Company has been able to perform better with the continuous improvement in all functions and areas which coupled with an efficient utilization of the Company''s resources led to sustainable and profitable growth of the Organization. Your Directors express their deep sense of appreciation and extend their sincere thanks to every employee and associates for their dedicated and sustained contribution and they look forward the continuance of the same in future.

53) ACKNOWLEDGMENTS:

Your Board takes this opportunity to thank our, clients, business partners, shareholders and bankers for the faith reposed in the Company and also thank the Government of India, various regulatory authorities and agencies for their support and looks forward to their continued encouragement. Your Directors are deeply touched by the efforts, sincerity and loyalty displayed by the employees without whom the growth was unattainable. Your Directors wish to thank the investors and shareholders for placing immense faith in them and the plans designed for growth of your Company. Your Directors seek and look forward to the same support in future and hope that they can continue to satisfy you in the years to come.

---

Mar 31, 2018

The Directors have pleasure in presenting the 35^th Annual Report of KWALITY PHARMACEUTICALS LIMITED along with the Audited Financial Statements for the year ended 31^st March 2018.

FINANCIAL HIGHLIGHTS

Our Company’s financial performance for the year under review has been encouraging and is summarized below:

(Rupees In Lacs)

	STANDALONE		CONSOLIDATED
Particulars	2017-18	2016-17	2017-18	2016-17
Total Income	13792.82	9683.83	13829.65	9952.41
Less: Expenditure & Depreciation	13037.81	9102.94	13100.08	9387.54
Profit before Tax (PBT)	755.01	580.89	729.57	564.87
Less: Tax (including deferred tax)	287.42	236.99	287.42	236.98
Profit After Tax (PAT)	467.59	343.90	442.15	327.89

PERFORMANCE REVIEW

During the year under review, on standalone basis, revenue of the company was Rs. 13792.82 Lakhs as compared to Rs. 9683.83 Lakhs in the corresponding previous year. The Company earned a profit after tax of Rs. 467.59 Lakhs as compared to Rs. 343.90 Lakhs in the previous year.

On consolidated basis, revenue of the company was Rs. 13829.65 Lakhs as compared to Rs. 9952.41 Lakhs in the corresponding previous year. The Company earned a profit after tax of Rs. 442.15 Lakhs as compared to Rs. 327.89 Lakhs in the previous year.

CHANGES IN NATURE OF BUSINESS

There is no change made in the nature of the business of company during the financial year.

DIVIDEND

Your directors have decided to deployed back the profits earned during the year and therefore not recommended any dividend for the current financial year. However, the Company has issued bonus shares in the ratio of 1:1 during October, 2017.

RESERVES

The Company does not transfer any amount to general reserves during F.Y. 2017-2018.

STATEMENT PURSUANT TO LISTING AGREEMENT

The Company’s equity shares are listed at Bombay Stock Exchange Limited (SME Segment). The Annual Listing Fee for the year 2018-19 has been paid.

EXTRACT OF THE ANNUAL RETURN

The extract of the annual return in Form No. MGT - 9 is attached in ‘Annexure A’.

PARTICULARS OF EMPLOYEES REMUNERATION

The information pertaining to Section 197(12) read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as ‘Annexure B’. There is no employee drawing a salary exceeding the limit prescribed under Section 197(12) read with Rule 5 (2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

NON APPLICABILITY OF THE INDIAN ACCOUNTING STANDARDS (IND-AS)

As per proviso to regulation Rule 4(1) of the Companies (Indian Accounting Standards) Rules, 2015 notified vide Notification No.G.S.R.111(E) on 16th Feb., 2015, Companies whose shares are listed on SME exchange as referred to in Chapter XB of SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2009, are exempted from the compulsory requirement of adoption of IND-AS w.e.f. 1^st April, 2017. As your Company is also listed on SME Platform of BSE Limited, is covered under the exempted category and is not required to comply with IND-AS for preparation of financial statements beginning with period on or after 1st April 2017.

CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Janibhasha Shaik (DIN: 06738842) was appointed as Professional Director of the company in the annual general meeting of the company held on 30-09-2017.

Ms. Pallavi Aggarwal (M. No. 23138) Company Secretary, KMP and compliance officer of the company has resigned from the company with effect from 31^st July, 2017 and Mr. Gaurav Bajaj (M. No. 49505) was appointed as Company Secretary, KMP and compliance officer of the company with effect from 10^th August, 2017.

RETIREMENT BY ROTATION

In accordance with the provisions of section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Aditya Arora & Mr. Ajay Arora, directors retire by rotation at the ensuing Annual General Meeting and offer themselves for reappointment.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the Financial Year 2017-18, 7 meetings of the Board of Directors of the company were held and the details of which are given in the Corporate Governance Report which is enclosed with directors report as “Annexure E”. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

COMMITTEES OF THE BOARD

The Board has constituted various committees to support the Board in discharging its responsibilities. The following three committees are constituted by the Board:

AUDIT COMMITTEE

The Audit Committee comprises of Sh. Pankaj Takkar as Chairman and Sh. Kiran Kumar Verma and Sh. Aditya Arora as members. The details of term of reference of the Audit Committee member, dates of meeting held and attendance of the Directors are given separately in the Corporate Governance Report.

NOMINATION AND REMUNERATION COMMITTEE

The Nomination and Remuneration Committee comprises of Sh. Kiran Kumar Verma as Chairman and Sh. Pankaj Takkar and Sh. Ravi Shanker Singh as members. The details of term of reference of the Committee member, dates of meeting held and attendance of the Directors are given in the Corporate Governance Report.

STAKEHOLDERS RELATIONSHIP COMMITTEE

The Stakeholders Relationship Committee comprises of Sh. Ravi Shanker Singh as Chairman and Smt. Geeta Arora and Smt. Anju Arora as members. The details of term of reference of the Committee member, dates of meeting held and attendance of the Directors are given separately in the Corporate Governance Report.

CORPORATE SOCIAL RESPONSIBILITY COMMITTEE

The Corporate Social Responsibility Committee is duly constituted in terms of the requirement of Companies Act, 2013. During the financial year 2017-18, one Meeting was held on 03-04-2017. The composition of Committee and attendance of members is as follows:

Name	Category	Meeting held during 2017-18	No. of Meeting Attended
Geeta Arora	Chairperson	1	1
Aditya Arora	Member	1	1
Pankaj Takkar	Member	1	1

DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

In view of the profits and turnover of the company, your Company was required to undertake CSR projects during the year 2017-18 under the provisions of section 135 of the Companies Act, 2013 and the rules made thereunder. As part of its initiatives under Corporate Social Responsibility (CSR)”, the Company has undertaken various activities, which are in accordance with CSR Policy of the Company and Schedule VII of the Companies Act, 2013. The Board has approved a CSR policy on the recommendations of the CSR Committee. The Report on CSR activities as required under Companies (Corporate Social Responsibility) Rules, 2014, including a brief outline of the Company’s CSR Policy, total amount to be spent under CSR for the financial year, amount unspent if any and the reason for the unspent amount, is set out at Annexure-D forming part of this Report.

MEETINGS OF INDEPENDENT DIRECTORS:

The Company’s Independent Directors meet at least once in every financial year without the presence of Executive Directors or management personnel. Such meetings are conducted informally to enable Independent Directors to discuss matters pertaining to (i) review the performance of Non Independent Directors and the Board as a whole, (ii) review the performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors; and (iii) to assess the quality, quantity and timeliness of flow of information between the Company Management and the Board.

One meeting of the Independent Directors was held during the Financial Year on 27/02/2018.

DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES

The Company has one subsidiary company ‘Kwality Pharmaceuticals Africa, Limitada’ at Maputo Province, Mozambique which is mainly engaged in the Pharmaceuticals business. The Board reviewed the affairs of the Company’s subsidiary during the year at regular intervals. In accordance with section 129(3) of the Companies Act, 2013, the Company has prepared Consolidated Financial Statements of the Company and its subsidiary, which forms part of this Annual Report. Further a statement containing salient features of the Financial Statements of its subsidiary in Form AOC-1 as given in the annual report forms part of the Financial Statements.

MECHANISM FOR EVALUATING BOARD MEMBERS:

Pursuant to the section 134 (p) of Companies Act, 2013 read with Rule 8 (4) of Companies Accounts Rules, 2014 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the Directors individually, as well as the Board Committees. 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, frequency of committee meetings, their functioning etc.

The evaluation of the Directors were based on their attendance and participation, acting in good faith and in the interests of the company as a whole, exercising duties with due diligence and reasonable care, complying with legislations and regulations in letter and spirit and such other factors.

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.

FAMILIARISATION PROGRAMMES FOR BOARD MEMBERS:

The Board members are provided with necessary documents/brochures, reports and internal policies to enable them to familiarize with the Company’s procedures and practices. The Chairman & Managing Director had one to one discussions with newly appointed Directors to familiarize them with the Company’s operations. Periodic presentations are made at the Board and Board Committee Meetings, on business and performance updates of the Company, global business environment, business strategy and risks involved. Quarterly updates on relevant statutory and regulatory changes are circulated to the Directors. Site visits to various plant locations are organized for the Directors to enable them to understand the operations of the Company.

STATEMENT ON DECLARATION BY INDEPENDENT DIRECTORS

All independent Directors have given declarations that they meet the criteria of Independence as laid down under the provisions of the Companies Act and the SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015.

REMUNERATION POLICY

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of the Directors, the senior management and their remuneration. The remuneration policy is stated in the Corporate Governance Report.

WHISTLE BLOWER POLICY

Pursuant to the Section 177(9) and (10) of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated Whistle Blower Policy for vigil mechanism for Directors and Employees to report the management about the unethical behavior, fraud, improper practice or violation of the Company’s Code of Conduct or complaints regarding accounting, auditing, internal controls or disclosure practices of the Company. It gives a platform to the whistle blower to report any unethical or improper practice (not necessarily violation of law) and to define processes for receiving and investigating complaints. The mechanism provides adequate safeguards against victimization of employees and directors who use such mechanism and makes provision for direct access to the Chairman of the Audit Committee in exceptional cases.

VIGIL MECHANISM

In pursuant to the provisions of section 177(9) & (10) of the Companies Act, 2013, a Vigil Mechanism for directors and employees to report genuine concerns has been established and Chairman of the Audit Committee is responsible for issue pertaining to same.

RISK MANAGEMENT POLICY

The Management has devised a Risk Management Policy considering the nature of industry and associated risks pertaining to the industry. The Management is overseeing the implementation of the Policy on regular basis. Though the various risks associated with the business cannot be eliminated completely, all efforts are made to minimize the impact of such risks on the operations of the Company.

STATUTORY AUDITORS

The Statutory Auditors, M/s Vijay Mehra & Co., Chartered Accountants (ICAI Firm Regn. No. FRN 001051N) were appointed as statutory auditors in the 31^st AGM of the company to hold office until the conclusion of the 36^th Annual General Meeting of the company. Their continuation with the Company is to be ratified in the ensuing Annual General Meeting of the Company and the Company has received a certificate from the auditors to the effect that they are eligible to be reappointed and not disqualified in accordance with the provisions of the Companies Act, 2013.

AUDITORS'' REPORT

The observations made in the Auditors'' Report read together with relevant notes thereon are self explanatory and hence, do not call for any further comments under Section 134 of the Companies Act, 2013.

COST AUDITOR

Pursuant to Section 148(3) of the Companies Act, 2013, M/s Verma Khushwinder & Co., Cost Accountants, Jalandhar, were appointed as the Cost Auditors of the Company for the financial year 2017-18 by the Board of Directors and their remuneration was ratified by members at the 34^th Annual General Meeting of the Company.

Further, the Board of Directors has, appointed M/s Verma Khushwinder & Co. as the Cost Auditors of the Company for the financial year 2018-19 and has also fixed their remuneration. The Board has recommended the remuneration approved in its meeting, for ratification by the shareholders in the ensuing AGM of the Company.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the board of directors have appointed M/s Rishi Mittal & Associates, Company Secretaries, Amritsar as the Secretarial Auditors of the Company. The Secretarial Audit Report for Financial Year 2017-18 forms part of the Annual report as “Annexure C” to the Board''s report.

REPORT ON CORPORATE GOVERNANCE:

Corporate Governance Report of the Company regarding Compliance of the Conditions of Corporate Governance pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is annexed herewith as “Annexure E”.

MANAGEMENT DISCUSSION AND ANALYSIS:

As required by Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 a Management Discussion & Analysis Report forms part of the Annual Report and annexed herewith as “Annexure F”.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

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

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All Related Party Transactions that were entered into during the financial year were on an arm’s length basis, in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act, 2013 (‘the Act’) and SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 and the provisions of Section 188 of the Companies Act, 2013 are not attracted. The transactions with the related parties have been disclosed in the financial statements. Thus disclosure in Form AOC-2 is not required.

MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

No significant material changes and commitments have occurred between the date of the balance sheet and the date of the audit report.

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

The details pursuant to Section 134(3) of the Companies Act, 2013 read with Rule 8, sub-rule (3) of Companies (Accounts) Rules, 2014 relating to Conservation of Energy, Technology absorption, Foreign Exchange earnings and outgo is provided as under :

A) Conservation of energy:

Energy conservation continues to be the key focus area of your Company. The Company is making continuous effort for energy conservation. Effective measures have been taken to monitor consumption of energy during the process of manufacture. Continuous monitoring and awareness amongst employees has helped to avoid wastage of energy. Continuously we take necessary activities to educate and encourage employees to establish energy efficient practices, equipments etc.;

(B) Technology absorption:

The company always remains aggressive for improvement of quality of product, efficient manufacturing process, search of new products or modification in the existing products, introducing new products by continuously studying the market. Company takes help of outside agencies, whenever required, to improve manufacturing process or method which ultimately benefit to the quality and cost of product.

(C) Foreign exchange earnings and Outgo: (in Rupees Lacs)

Particulars	Year ended 31st March 2018 ( Rs. In Lakhs)	Year Ended 31st March 2017 ( Rs. In Lakhs)
Earnings
Export Sales	5616.81	3565.00
Outgo
Capital Goods	18.58	91.52
Raw Materials	449.09	217.60

DEPOSITS

The company has not accepted any deposits falling within the meaning of Section 73 to 76 of the Companies Act, 2013 and rules made there under.

SHARE CAPITAL CHANGES IN SHARE CAPITAL

The Authorised Share Capital of the Company on 31^st March 2018 was Rs 16,00,00,0000/- (Rupees Sixteen Crore) divided into 1,60,00,000 (One Crore Sixty Lacs) Equity shares of Rs 10/- each and the paid up Equity Share Capital of the Company as on March 31, 2018 was Rs. 10,37,61,980. During the year under review, the company has issued 51,88,099 bonus equity shares in the ratio of 1:1 i.e. for every one equity shares held in the Company, one bonus equity share was issued.

PROVISION OF MONEY BY COMPANY FOR PURCHASE OF ITS OWN SHARES BY EMPLOYEES OR BY TRUSTEES FOR THE BENEFIT OF EMPLOYEES

The company has not made any provision of money for purchase of its own shares by employees or by trustees for the benefit of employees as per Rule 16(4) of Companies (share capital and debentures) Rules, 2014.

ISSUE OF SWEAT EQUITY SHARES

The Company has not issued any sweat equity share during the financial year in accordance with the provisions of Section 54 of Companies Act, 2013 read with Rule 8 of the Companies (Share Capital and Debentures) Rules, 2014.

ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS

The Company has not issued any equity shares with differential voting rights during the financial year as per Rule 4(4) of Companies (Share capital and debentures) Rules, 2014.

ISSUE OF EMPLOYEE STOCK OPTION

The company has not issued any employee stock option during the financial year as per Rule 12 of Companies (share capital and debentures) Rules, 2014.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has comprehensive and adequate internal financial controls system for all major processes including financial statements to ensure reliability of reporting. The system also helps management to have timely data/feedback on various operational parameters for effective review. It also ensures proper safeguarding of assets across the Company and its economical use. The internal financial controls system of the Company is commensurate with the size, scale and complexity of its operations. The systems and controls are periodically reviewed and modified based on the requirement.

The Company has an internal audit function which is empowered to examine the adequacy and compliance with policies, plans and statutory requirements. It is also responsible for assessing and improving the effectiveness of risk management, control and governance process. The scope of Internal Audit is well defined and documented and the audit committee reviews the observations of the Internal Audit critically. The composition and working of the audit committee forms part of the Corporate Governance Report.

COMPANY SECRETARY AND COMPLIANCE OFFICER

Mr. Gaurav Bajaj (M. No. 49505) is Company Secretary, KMP and compliance officer of the company.

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

The Company has in place a policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The policy has set guidelines on the redressal and enquiry process that is to be followed by complainants, whilst dealing with issues related to sexual harassment at the work place. All women employees (permanent, temporary, contractual and trainees) are covered under this policy. The Company has not received any complaints during the year.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 134(5) of the Companies Act, 2013, with respect to the Director’s Responsibilities Statement, the Directors state and hereby confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had 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 the end of the financial year and of the profit and loss of the company for that period;

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

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

(e) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

INDUSTRIAL RELATIONS

During the year under review your Company enjoyed cordial relationship with workers and employees at all levels.

ACKNOWLEDGMENTS:

The Board of Directors wish to place on record its appreciation for the commitment, dedication and hard work done by the employees of the Company and the cooperation extended by Banks, Government Authorities, Customers, Shareholders and looks forward to a continued mutual support and co-operation.

For and on Behalf of the Board

Sd/- Sd/-

(RAMESH ARORA) (AJAY ARORA)

Place: Amritsar Managing Director Whole Time Director

Date:04-09-2018 DIN: 00462656 DIN: 00462664

---

Mar 31, 2016

The Directors have pleasure in presenting the 33^rd Annual Report of KWALITY PHARMACEUTICALS LIMITED along with the Audited Financial Statements for the year ended 31^st March 2016.

FINANCIAL HIGHLIGHTS

Our Company''s financial performance for the year under review has been encouraging and is summarized below:

Rupees in Lacs

	Standalone		Consolidated
Particulars	2015-16	2014-15	2015-16	2014-15
Total Income	7642.25	5295.99	7453.90	5279.79
Less Expenditure & Depreciation	7334.36	5108.92	7206.33	5145.02
Profit Before Tax (PBT)	307.89	187.07	247.57	134.77
Less: Tax (including deferred tax)	119.37	54.62	119.38	54.61
Profit After Tax (PAT)	188.52	132.45	128.19	80.16

PERFORMANCE REVIEW

During the year under review, on standalone basis, revenue of the company was Rs. 7642.25 Lakhs as compared to Rs.5295.99 Lakhs in the corresponding previous year. The Company earned a profit after tax of Rs.188.52 Lakhs as compared to Rs.132.45 Lakhs in the previous year. During the period under review the company''s reserves and surplus increased from Rs.1528.69 Lacs to Rs.1755.65 Lakhs.

On consolidated basis, revenue of the company was Rs.7453.90 Lakhs as compared to Rs.5279.79 Lakhs in the corresponding previous year. The Company earned a profit after tax of Rs.128.19 Lakhs as compared to Rs.80.16 Lakhs in the previous year.

CONVERSION TO A PUBLIC LIMITED COMPANY

Your Company was converted from a Private Limited Company to a Public Limited Company during the year under review. The Company had received a fresh certificate of Incorporation on December 28, 2015 consequent upon conversion to a Public Limited Company from Registrar of Companies, Chandigarh.

DIVIDEND

To conserve resources, the Directors do not recommend any dividend for the year ended March 31, 2016.

RESERVES

The Company does not transfer any amount to reserves during F.Y. 2015-2016.

STATE OF COMPANY''S AFFAIR

The company has recently obtained listing status on the SME platform of Bombay Stock Exchange by making the Initial Public Offer of 13,80,000 equity shares. With this new success the company is planning and making arrangement to expand its business not only in the domestic market but also trying to create a niche in the international market. Expansion is being implemented at various phases by which the benefits will accrue to the shareholders in the coming financial year.

Listing on SME Platform

Your directors are pleased to inform you that the securities of the company have been listed on the SME platform of BSE on 18^th of July, 2016 and the company has paid listing fees for the financial year 2016 - 17.

EXTRACT OF THE ANNUAL RETURN

The extract of the annual return in Form No. MGT - 9 is attached in ''Annexure A''.

CHANGES IN DIRECTORS AND KEY MANAGERIAL PERSONNEL

Pursuant to the provisions of Section 161(1) of the Companies Act, 2013, Mr. Kiran Kumar Verma, Mr. Pankaj Takkar and Mr. Ravi Shanker Singh were appointed as Additional Directors designated as Independent Director w.e.f. February 1, 2016. They shall hold office up to the date of the ensuing Annual General Meeting. However as per provisions of the Companies Act, 2013, the Independent Directors are required to be appointed by shareholders and they shall not be liable to retire by rotation. The Company has received requisite notices in writing from members proposing their appointment as Independent Directors. The Company has also received declaration from such Independent Directors that they meet the criteria of Independence as prescribed under section 149(6) of the Companies Act, 2013. Accordingly it is proposed to appoint them for a term of five consecutive years effective from the conclusion of this Annual General Meeting.

Mr. Aditya Arora (DIN: 07320410) was appointed as an Additional Director by the Board of Directors w.e.f. 22^nd October 2015 and who shall hold office upto the date of ensuing Annual General Meeting. The company has received a notice from a member signifying his intention to propose his candidature for the office of a Director and accordingly it is proposed to appoint him as Director of the Company. Further pursuant to the provisions of the Companies Act, 2013, the Board approves of the appointment and terms of remuneration of Mr. Aditya Arora as a Whole - Time Director designated as an Executive Director of the Company. Accordingly members approval is recommended for appointment of Mr. Aditya Arora as a Whole - Time Director.

During the year under review, Mr. Ramesh Arora - Managing Director, Mr. Aditya Arora - Chief Financial Officer; Mr. Ajay Arora, Mrs. Anju Arora & Mrs. Geeta Arora -Whole time Directors and Ms. Pallavi Agarwal-Company Secretary were designated as Key Managerial Personnel pursuant to the requirements of the applicable provisions of the Companies Act, 2013 read with rules made there under.

During the year, none of the directors have resigned from the board.

RETIREMENT BY ROTATION

In accordance with the provisions of section 152 of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Ramesh Arora & Mr. Ajay Arora, directors retire by rotation at the ensuing Annual General Meeting and offer themselves for reappointment.

NUMBER OF MEETINGS OF THE BOARD OF DIRECTORS

During the Financial Year 2014-15, 52 meetings of the Board of Directors of the company were held.

The dates on which the said meetings were held: 01-04-2015, 27-05-2015, 05-06-2015, 11-06-2015, 19-06-2015, 21-07-2015, 04-08-2015, 22-08-2015, 24-08-2015, 26-08-2015, 01-09-2015, 06-09-2015, 07-09-2015, 17-09-2015, 25-09-2015, 26-09-2015, 28-09-2015, 09-10-2015, 16-10-2015, 21-10-2015, 22-10-2015, 23-10-2015, 26-10-2015, 01-11-2015, 03-11-2015, 18-11-2015, 23-11-2015, 08-12-2015,10-12-2015, 16-12-2015, 20-12-2015, 23-12-2015, 28-12-2015, 04-01-2016, 07-01-2016, 08-01-2016,11-01-2016, 16-01-2016, 19-01-2016, 22-01-2016, 28-01-2016, 01-02-2016, 03-02-2016, 04-02-2016, 10-02-2016, 01-03-2016, 09-03-2016, 14-03-2016, 17-03-2016, 21-03-2016, 23-03-2016 and 30-03-2016. The intervening gap between the meetings was within the period prescribed under the Companies Act, 2013.

The details of attendance of directors at the meetings of board held during the financial year 2015-16 are:-

Name ofthe Director	No. of Board Meetings attended during the f.y. 2015-16
Mr. Ramesh Arora	52
Mr. Ajay Arora	52
Ms. Geeta Arora	52
Ms.Anju Arora	52
Mr.Aditva Arora	30
Mr.Kiran Kumar Verma	3
Mr. Pankaj Takkar	3
Mr.Ravi Shanker Singh	3

As required by Regulation 34 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 a Management Discussion & Analysis Report forms part of the Annual Report.

COMMITTEES OF THE BOARD

The Board has constituted various committees to support the Board in discharging its responsibilities. The following three committees are constituted by the Board:

- Audit Committee

- Stakeholders Relationship Committee

- Nomination and Remuneration Committee

REPORT ON CORPORATE GOVERNANCE:

No Report on Corporate Governance pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is given as the same is not applicable to company for the financial year ending March31, 2016.

MECHANISM FOR EVALUATING BOARD MEMBERS:

Pursuant to the section 134 (p) of Companies Act, 2013 read with Rule 8 (4) of Companies Accounts Rules, 2014 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the Directors individually, as well as the Board Committees. 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, frequency of committee meetings, their functioning etc.

The evaluation of the Directors were based on their attendance and participation, acting in good faith and in the interests of the company as a whole, Exercising duties with due diligence and reasonable care, Complying with legislations and regulations in letter and spirit and such other factors.

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.

FAMILIARISATION PROGRAMMES FOR BOARD MEMBERS:

The Board members are provided with necessary documents/brochures, reports and internal policies to enable them to familiarize with the Company''s procedures and practices. The Chairman and Managing Director had one to one discussions with newly appointed Directors to familiarize them with the Company''s operations. Periodic presentations are made at the Board and Board Committee Meetings, on business and performance updates of the Company, global business environment, business strategy and risks involved. Quarterly updates on relevant statutory and regulatory changes are circulated to the Directors. Site visits to various plant locations are organized for the Directors to enable them to understand the operations of the Company.

MEETINGS OF INDEPENDENT DIRECTORS

The Company''s Independent Directors meet at least once in every financial year without the presence of Executive Directors or management personnel. Such meetings are conducted informally to enable Independent Directors to discuss matters pertaining to (i) review the performance of Non Independent Directors and the Board as a whole, (ii) review the performance of the Chairperson of the Company, taking into account the views of Executive Directors and Non-Executive Directors; and (Hi) to assess the quality, quantity and timeliness of flow of information between the Company Management and the Board.

One meeting of the Independent Directors was held during the Financial Year on 16/03/2016.

NOMINATION & REMUNERATION POLICY OF THE COMPANY:

The Nomination & Remuneration Policy of the Company is given in ''Annexure B''.

WHISTLE BLOWER POLICY:

Pursuant to the Section 177(9) and (10) of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 , the Company has formulated Whistle Blower Policy for vigil mechanism for Directors and Employees to report the management about the unethical behavior, fraud, improper practice or violation of the Company''s Code of Conduct or complaints regarding accounting, auditing, internal controls or disclosure practices of the Company. It gives a platform to the whistle blower to report any unethical or improper practice (not necessarily violation of law) and to define processes for receiving and investigating complaints.

The mechanism provides adequate safeguards against victimization of employees and directors who use such mechanism and makes provision for direct access to the Chairman of the Audit Committee in exceptional cases.

STATUTORY AUDITORS

The Statutory Auditors, M/s Vijay Mehra & Co., Chartered Accountants (ICAI Firm Regn. No. FRN 001051N) were appointed as statutory auditors in the 31^st AGM of the company to hold office until the conclusion of the 36^th Annual General Meeting of the company. Their continuation with the Company is to be ratified in the ensuing Annual General Meeting of the Company and the Company has received a certificate from the auditors to the effect that they are eligible to be reappointed and not disqualified in accordance with the provisions of the Companies Act, 2013.

AUDITORS'' REPORT

The observation made in the Auditors'' Report read together with relevant notes thereon are self explanatory and hence, do not call for any further comments under Section 134 of the Companies Act, 2013.

COST AUDITOR

Pursuant to Section 148(3) of the Companies Act, 2013, M/s Verma Khushwinder & Company, Cost Accountants, Jalandhar, have been appointed as the Cost Auditors of the Company for the financial year 2015-16 by the Board of Directors and their remuneration has been ratified by members at the 32^nd Annual General Meeting of the Company.

SECRETARIAL AUDITORS

The company listed its equity shares on July 18, 2016 on SME Segment of the Bombay Stock Exchange Limited. The turnover and the paid up capital of the company as on March 31, 2016 were below the applicability criteria for secretarial audit as prescribed under the Companies Act, 2013 and rules made there under. In view of the same no secretarial audit were performed by the directors of the company.

DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES

The Company has one subsidiary company ''Kwality Pharmaceuticals Africa, Limitada'' at Maputo Province, Mozambique which is mainly engaged in the Pharmaceuticals business. The Board reviewed the affairs of the Company''s subsidiary during the year at regular intervals. In accordance with section 129(3) of the Companies Act, 2013, the Company has prepared Consolidated Financial Statements of the Company and its subsidiary, which forms part of this Annual Report. Further a statement containing salient features of the Financial Statements of its subsidiary in Form AOC-1 as given in ''Annexure C'' forms part of the Financial Statements.

CORPORATE SOCIAL RESPONSIBILITY(CSR)

The CSR provisions were not applicable on the company during the year under review.

PARTICULARS OF LOANS. GUARANTEES OR INVESTMENTS UNDER SECTION 186

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

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

The Company has a Board approved policy on Related Party Transactions. All Related Party Transactions that were entered into during the financial year were on an arm''s length basis, in the ordinary course of business and were in compliance with the applicable provisions of the Companies Act, 2013 (''the Act'') and SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 and the provisions of Section 188 of the Companies Act, 2013 are not attracted. The transactions with the related parties have been disclosed in the financial statements. Thus disclosure in Form AOC-2 is not required.

MATERIAL CHANGES AND COMMITMENTS. IF ANY. AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

The company has recently obtained listing status on the SME platform of Bombay Stock Exchange by making the Initial Public Offer of 13,80,000 equity shares. No other material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which these financial statements relate and the date of this report.

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

The details pursuant to Section 134(3) of the Companies Act, 2013 read with Rule 8, sub-rule (3) of Companies (Accounts) Rules, 2014 relating to Conservation of Energy, Technology absorption, Foreign Exchange earnings and outgo is provided as under:

A) Conservation of energy:

Energy conservation continues to be the key focus area of your Company. The Company is making continuous effort for energy conservation. Effective measures have been taken to monitor consumption of energy during the process of manufacture. Continuous monitoring and awareness amongst employees has helped to avoid wastage of energy. Continuously we take necessary activities to educate and encourage employees to establish energy efficient practices, equipments;

(B) Technology absorption:

The company always remains aggressive for improvement of quality of product, efficient manufacturing process, search of new products or modification in the existing products, introducing new products by continuously studying the market. Company takes help of outside agencies, whenever required, to improve manufacturing process or method which ultimately benefit to the quality and cost of product.

(C) Foreign exchange earnings and Outgo: (in Rupees Lacs)

Particulars	Year ended 31st March 2016 (Rs. In Lakhs)	Year ended 31st March 2015 (Rs. In Lakhs)
Earnings
Export Sales	3476.99	3266.84
Outgo
Capital Goods	33.73	Nil
Raw Materials	295.93	178.82

DEPOSITS

The company has not accepted any deposits falling within the meaning of Section 73 of the Companies Act, 2013 and rules made there under.

PARTICULARS OF EMPLOYEES REMUNERATION

The information pertaining to Section 197(12) read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as ''Annexure D''. There is no employee drawing a salary exceeding the limit prescribed under Section 197(12) read with Rule 5 (2) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.

SHARE CAPITAL

CHANGES IN SHARE CAPITAL

During the Financial Year 2015-16, the Company has received an unpaid call of Rs. 5 per share on 12,00,000 equity shares amounting to Rs. 60 Lakhs. The share premium at the rate of Rs. 12 per share was received on the aforementioned shares, amounting to Rs. 144.00 Lakhs.

PROVISION OF MONEY BY COMPANY FOR PURCHASE OF ITS OWN SHARES BY EMPLOYEES OR BY TRUSTEES FOR THE BENEFIT OF EMPLOYEES

The company has not made any provision of money for purchase of its own shares by employees or by trustees for the benefit of employees as per Rule 16(4) of Companies (share capital and debentures) Rules, 2014.

ISSUE OF SWEAT EQUITY SHARES

The Company has not issued any sweat equity share during the financial year in accordance with the provisions of Section 54 of Companies Act, 2013 read with Rule 8 of the Companies (Share Capital and Debentures) Rules, 2014.

ISSUE OF EQUITY SHARES WITH DIFFERENTIAL RIGHTS

The Company has not issued any equity shares with differential voting rights during the financial year as per Rule 4(4) of Companies (Share capital and debentures) Rules, 2014.

ISSUE OF EMPLOYEE STOCK OPTION

The company has not issued any employee stock option during the financial year as per Rule 12 of Companies (share capital and debentures) Rules, 2014.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has proper and adequate system of internal control to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and that transaction are authorized, recorded and reported correctly. The Company has effective system in place for achieving efficiency in operations, optimum and effective utilization of resources, monitoring thereof and compliance with applicable laws.

DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION. PROHIBITION AND REDRESSAL) ACT . 2013:

The Company has in place a policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace inline with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The policy has set guidelines on the redressal and enquiry process that is to be followed by complainants, whilst dealing with issues related to sexual harassment at the work place. All women employees (permanent, temporary, contractual and trainees) are covered under this policy. The Company has not received any complaints during the year.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the requirements under Section 134(5) of the Companies Act, 2013, with respect to the Director''s Responsibilities Statement, the Directors state and hereby confirm that:

(a) In the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b) the directors had 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 the end of the financial year and of the profit and loss of the company for that period;

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

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

(e) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

ACKNOWLEDGMENTS:

The Board of Directors wish to place on record its appreciation for the commitment, dedication and hard work done by the employees of the Company and the cooperation extended by Banks, Government Authorities, Customers, Shareholders and looks forward to a continued mutual support and co-operation.

For and on Behalf of the Board

Sd/- Sd/-

(RAMESH ARORA) (AJAY ARORA)

Place: Amritsar Managing Director Whole Time Director

Date:05-09-2016 DIN: 00462656 DIN: 00462664