Sotac Pharmaceuticals Ltd

Dear Shareholders,

The Board of Directors hereby submits the 9^th Annual report of the business and operations of your Company ("the Company"), along with the Standalone & Consolidated Audited Financial Statements, for the Financial Year ended on March 31, 2024 ("FY 2023-24/ FY24").

FINANCIAL HIGHLIGHTS:

The Audited Financial Statements of your Company as on March 31, 2024, are prepared in accordance with the relevant applicable Accounting Standards ("AS") and Regulation 33 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("SEBI Listing Regulations") and the provisions of the Companies Act, 2013 ("Act").

The summarized financial highlight is depicted below:

(Rs. in Lakh)

Financial Performance on Standalone Basis:

The total income of your Company for the year ended March 31, 2024 was Rs. 6,842.37 Lakh as against the total income of Rs. 5822.59 Lakh for the previous year ended March 31, 2023. The Total Income of your company was increased by 17.51% over previous financial year.

The major increase in total income of your Company was due to increase in the sales of your company. In the Financial year 2023-24, the Revenue from Operation increased about 15.73% as compared to previous Financial Year 2022-23.

During the year under review, your Company has earned a Net Profit after Tax of Rs. 574.88 Lakh as compared to Net Profit after Tax of Rs. 449.55 Lakh in the previous financial year. The profit of your Company increased about 21.80% as compared to previous financial year. The increase in profit is due to increase in total income of your company.

Financial Performance on Consolidate Basis:

The Consolidated Financial Statements presented by your Company include the financial results of following Subsidiary Companies:

(a) Sotac Healthcare Private limited;

(b) Sotac Research Private limited; and

(c) Sotac Lifesciences Private limited

Consolidated Financial Statements:

The Consolidated financial statements of your Company for the financial year 2023-24 are prepared in compliance with applicable provisions of the Companies Act, 2013, Accounting Standards ("AS") and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the "SEBI (LODR) Regulations, 2015") which form part of this Annual Report.

During the year under review, The Consolidated Revenue from Operation of your Company was Rs. 10,383.05 Lakh as against Rs. 7,748.32 Lakh in the previous financial year.

The consolidated total income of your Company was Rs. 10,431.67 Lakh as against Rs. 7783.28 Lakhs in the previous financial year. The Consolidated total income of your company was increased by 34.03% over previous financial year.

Your Company has earned a Consolidated Net Profit after Tax of Rs. 357.93 Lakh for the year ended March 31, 2024 as compared to Rs. 228.61 Lakhs during the previous financial year ended March 31, 2023. The profit of your Company increased about 56.57% as compared to previous financial year. The Increased in net profit is due to increase in revenue from operation.

Transfer to General Reserve:

During the year, your Company has not apportioned any amount to other reserve. Total amount of net profit is carried to the Reserves & Surplus as shown in the Balance Sheet of the Company.

Dividend:

With a view to conserve and save the resources for future prospects of your Company, the Directors have not declared any dividend for the Financial Year 2023-24.

Pursuant to the provisions of Sections 124 and 125 of the Act, there is no amount of Dividend remaining unclaimed / unpaid for a period of 7 (seven) years and/or unclaimed Equity Shares which are required to be transferred to the Investor Education and Protection Fund (IEPF).

Company Background:

Your Company was originally formed and registered as a Partnership Firm under the Partnership Act, 1932 ("Partnership Act") in the name and style of "M/s Sotac Pharmaceuticals", pursuant to a deed of partnership dated October 28, 2015. Subsequently the Partnership Firm was converted to a Private Limited Company under Part I (Chapter XXI) of the Companies Act, 2013 in the name and style of "Sotac Pharmaceuticals Private Limited" and received a certificate of incorporation dated December 18, 2015 from the Registrar of Companies, Ahmedabad. Later on your Company was converted into a Public Limited Company pursuant to shareholders resolution passed at the Extra-ordinary General Meeting of our Company held on November 12, 2022 and the name was changed to "Sotac Pharmaceuticals Limited". A fresh Certificate of Incorporation consequent upon Conversion from Private Limited Company to Public Limited Company dated November 22, 2022 was issued by the Registrar of Companies, Ahmedabad.

CHANGE IN NATURE OF BUSINESS:

During the year under review, your Company has not changed its business or object and continues to be in the same line of business as per the main object of the Company.

Authorized Capital

During the year under review, there was no change in the Authorized share capital of your Company.

The Authorized Share Capital of your Company as on March 31, 2024, is Rs. 11,50,00,000/- (Rupees Eleven Crore Fifty Lakh Only) divided into 11500000 (One Crore Fifteen Lakh) Equity Shares of Rs.10.00/- (Rupees Ten Only) each.

Issued, Subscribed & Paid-Up Capital

During the year under review, the following changes took place in the Issued, Subscribed & Paid-Up Share Capital of the Company:

• Pursuant to the Initial Public Offer of Equity Shares by the Company, the Board of Directors, in their meeting held on April 10, 2023, has allotted total 3000000 (Thirty Lakh) Equity Shares Rs. 10/- (Rupees Ten Only) each at price of Rs. 111/- (Rupees One Hundred Eleven Only) per Equity Share [Including a share premium of Rs. 101/- (Rupees One Hundred One Only) Per Equity Share] to the successful allottees, whose list have been finalized by the Company, the Registrar to the issue and merchant banker in consultation with National Stock Exchange of India Limited.

The Issued, Subscribed & Paid-up Capital of your Company as on March 31, 2024, is Rs. 11,05,00,000/- (Rupees Eleven Crore Five Lakh Only) divided into 1,10,50,000 (One Crore Ten Lakh Fifty Thousand) Equity Shares of Rs.10.00/- (Rupees Ten Only) each.

UTILISATION OF IPO PROCEEDS:

Your Company raised funds of Rs. 3,330.00 Lakhs through Initial Public Offering (IPO). The gross proceeds of IPO have been utilized in the manner as proposed in the Offer Document, the details of which are hereunder: (Rs.in Lakhs)

Further, there is no deviation/variation in the utilization of the gross proceeds raised through IPO.

Constitution of Board:

As on the date of this report, the Board comprises of the following Directors;

# Appointed w.e.f. August 28, 2024 or the date of obtaining valid Director Identification Number (DIN) from Ministry of Corporate Affairs, whichever is later.

The composition of Board complies with the requirements of the Companies Act, 2013 ("Act"). Further, in pursuance of Regulation 15(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), the

Company is exempted from the requirement of having composition of Board as per Regulation 17 of Listing Regulations.

None of the Director of the Company is serving as a Whole-Time Director in any other Listed Company and the number of their directorship is within the limits laid down under section 165 of the Companies Act, 2013.

INFORMATION ON DIRECTORATE:

During the year under review, there was no change in constitution of the Board of Directors of your Company. However, there were Changes in Board Composition after the closure of the financial year and up to the date of this report as furnished below:

a) Cessation:

• After closure of financial year 2023-24, Ms. Hetal Umangbhai Shah (DIN: 09829110) tendered her resignation vide letter dated August 8, 2024 from the post of Non-Executive Independent Director of the Company w.e.f. August 8, 2024, due to personal reasons andpersonal commitment. Further, she informed that there was no other material reason for her resignation.

• Further, after closure of financial year 2023-24, Ms. Nidhiben Patel (DIN: 09820927) also tendered her resignation vide letter dated August 8, 2024 from the post of Non-Executive Independent Director of the Company w.e.f. August 8, 2024, due to personal reasons and personal commitment. Further, she informed that there was no other material reason for her resignation.

The Board places on record the appreciation for valuable services and guidance provided by the outgoing Director, during their tenure of Directorship.

b) Appointment

• After closure of financial year 2023-24, Mr. Ketankumar Arvindbhai Modi has been appointed as an Additional Director (Non-Executive Independent) w.e.f. August 28, 2024 or the date of obtaining valid Director Identification Number (DIN) from Ministry of Corporate Affairs whichever is later, for a term of 5 years not liable to retire by rotation.

• Further, after closure of financial year 2023-24, Mr. Bhavinkumar Prafulbhai Joshi (DIN: 10236029) has been appointed as an Additional Director (Non-Executive Independent) w.e.f. August 28, 2024, for a term of 5 years not liable to retire by rotation.

c) Retirement by rotation and subsequent re-appointment:

• Mr. Chetankumar Bachubhai Patel (DIN: 07252116), Executive Director, is liable to retire by rotation at the ensuing Annual General Meeting, pursuant to Section 152 and other applicable provisions, if any, of the Companies Act, 2013, read with the Companies (Appointment and Qualification of Directors) Rules, 2014 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force), and being eligible have offered himself for reappointment.

Appropriate business for his re-appointment is being placed for the approval of the shareholders of the Company at the ensuing AGM. The brief resume of the Director and other related information has been detailed in the Notice convening the ensuing AGM of the Company.

KEY MANAGERIAL PERSONNEL:

As on the date of this report, the following are Key Managerial Personnel ("KMPs") of the Company as per Sections 2(51) and 203 of the Act:

• Mr. Sharadkumar Dashrathbhai Patel Chairman & Managing Director of the Company w.e.f. December 12, 2022. • Mr. Dineshkumar Babulal Gelot Whole time Director of the Company w.e.f. December 12, 2022.

• Mr. Brijeshkumar Ranchhodbhai Patel Chief Financial Officer of the Company w.e.f. December 30, 2022.

• Ms. Niyati Dipesh Parikh Company Secretary & Compliance Officer of the Company w.e.f. August 11, 2023.

During the financial year 2023-24, there were no changes took place in KMP except Ms. Pooja Bagrecha tendered her resignation from the post of Company Secretary of the Company w.e.f. August 5, 2023 and Ms. Niyati Dipesh Parikh was appointed as Company Secretary & Compliance Officer of the Company w.e.f. August 11, 2023.

BOARD MEETING:

The Board of your Company regularly meets to discuss various Business opportunities. Additional Board meetings are convened, as and when required to discuss and decide on various business policies, strategies and other businesses.

During the year under review, Board of Directors of your Company met 08 (Eight) times as on April 10, 2023; May 29, 2023; August 11, 2023; October 03, 2023; November 06, 2023; November 21, 2023; December 13, 2023 and February 05, 2024.

The details of attendance of each Director at the Board Meetings are given below:

The gap between two consecutive meetings was not more than one hundred and twenty days as provided in section 173 of the Act.

GENERAL MEETINGS:

During the year under review, the following General Meetings were held, the details of which are given as under:

DISCLOSURE BY DIRECTORS:

The Directors on the Board have submitted notice of interest under Section 184(1) of the Companies Act, 2013 i.e. in Form MBP-1, intimation under Section 164(2) of the Companies Act, 2013 i.e. in Form DIR- 8 and declaration as to compliance with the Code of Conduct of the Company.

INDEPENDENT DIRECTORS:

In terms of Section 149 of the Companies Act, 2013 and rules made there under, as on March 31, 2024 your Company has three Non-Promoter Non-Executive Independent Directors in line with the act. Your Company has received necessary declaration from each Independent Director under Section 149 (7) of the Companies Act, 2013 that they meet the criteria of independence laid down in Section 149 (6) of the Act. Further, all the Independent Directors of the Company have registered themselves in the Independent Director Data Bank.

A separate meeting of Independent Directors was held on February 05, 2024 to review the performance of Non-Independent Directors and Board as whole and performance of Chairperson of the Company including assessment of quality, quantity and timeliness of flow of information between Company management and Board.

CHANGE IN REGISTERED OFFICE:

During the year, there was no change in Registered Office of your Company.

PERFORMANCE EVALUATION:

The Board of Directors has carried out an annual evaluation of its own performance, board committees and individual directors pursuant to the provisions of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 in the following manners;

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

• The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc.

• The board and the nomination and remuneration committee reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc.

• In addition, the chairman was also evaluated on the key aspects of his role.

Separate meeting of independent directors was held to evaluate the performance of non-independent directors, performance of the board as a whole and performance of the chairman, taking into account the views of executive directors and non-executive directors. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.

DIRECTORS' RESPONSIBILITY STATEMENT:

Pursuant to section 134(5) of the Companies Act, 2013, the board of directors, to the best of their knowledge and ability, confirm that:

a) In preparation of Annual accounts for the year ended March 31, 2024, the applicable accounting standards have been followed and that no material departures have been made from the same;

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 or loss of the Company for that year;

c) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) The Directors had prepared the annual accounts for the year ended March 31, 2024 on going concern basis.

e) The Directors had laid down the internal financial controls to be followed by the Company and that such Internal Financial Controls are adequate and were operating effectively; and

f) 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.

COMMITTEES OF BOARD:

The Board of Directors, in line with the requirement of the act, has formed various committees, details of which are given hereunder.

A. Audit Committee:

Your Company has formed audit committee in line with the provisions Section 177 of the Companies Act, 2013. Audit Committee meeting is generally held for the purpose of recommending the quarterly, half yearly and yearly financial result. Additional meeting is held for the purpose of reviewing the specific item included in terms of reference of the Committee.

During the year under review, Audit Committee met 4 (Four) times viz on May 29, 2023; August 11, 2023; November 06, 2023 and February 05, 2024.

The composition & attendance of the Audit Committee are as given below:

The Statutory Auditors of the Company are invited in the meeting of the Committee wherever requires. Company Secretary and Chief Financial Officer of the Company are the regular invitee at the Meeting.

Recommendations of Audit Committee, wherever/whenever given, have been accepted by the Board of Directors.

Further, After the closure of Financial year 2023-24, Ms. Nidhiben Patel and Ms. Hetal Umangbhai Shah has tendered their resignation from the post of Non-Executive Independent Director of the company w.e.f. August 08, 2024 due to personal reasons and personal commitment. Subsequently, Board of Directors in their meeting held on August 28, 2024 appointed Mr. Bhavinkumar Prafulbhai Joshi and Mr. Ketankumar Arvindbhai Modi as Additional (Non-Executive Independent) Directors of the Company.

Pursuant to which board of directors in the said meeting reconstituted Audit Committee of the company. After this changes, the new composition of the Audit Committee is as given below;

Vigil Mechanism:

Your Company has established a vigil mechanism and accordingly framed a Whistle Blower Policy. The policy enables the employees to report to the management instances of unethical behavior actual or suspected fraud or violation of Company's Code of Conduct.

Further the mechanism adopted by your Company encourages the Whistle Blower to report genuine concerns or grievances and provide for adequate safe guards against victimization of the Whistle Blower who avails of such mechanism and also provides for direct access to the Chairman of the Audit Committee in exceptional cases.

The functioning of vigil mechanism is reviewed by the Audit Committee from time to time. None of the Whistle blowers has been denied access to the Audit Committee of the Board. The Whistle Blower Policy of the Company is available on the website of your Company https://sotacpharma.com/wp-content/uploads/2023/08/Vigil-Mechanisam-Whistle-Blower-Policy.pdf

B. Stakeholder's Relationship Committee:

Your Company has constituted Stakeholder's Relationship Committee mainly to focus on the redressal of Shareholders' / Investors' Grievances, if any, like Transfer / Transmission / Demat of Shares; Loss of Share Certificates; Non-receipt of Annual Report; Dividend Warrants; etc. The Stakeholders Relationship Committee shall report to the Board on a quarterly basis regarding the status of redressal of complaints received from the shareholders of the Company.

During the year under review, Stakeholder's Relationship Committee met 4 (Four) time viz on May 29, 2023, August 11, 2023, November 06, 2023, February 05, 2024.

The composition & attendance of the Stakeholder's Relationship Committee are as given below:

Also, during the year, your Company had not received any complaints from the Shareholders. There was no complaint pending as on March 31, 2024.

Further, After the closure of Financial year 2023-24, Ms. Nidhiben Patel and Ms. Hetal Umangbhai Shah has tendered their resignation from the post of Non-Executive Independent Director of the company w.e.f. August 08, 2024 due to personal reasons and personal commitment. Subsequently, Board of Directors in their meeting held August 28, 2024 appointed Mr. Bhavinkumar Prafulbhai Joshi and Mr. Ketankumar Arvindbhai Modi as Additional (Non-Executive Independent) Directors of the Company.

Pursuant to which board of directors in the said meeting reconstituted Stakeholder's Relationship Committee of the company. After this change, the new composition of the Stakeholder's Relationship Committee is as given below;

C. Nomination and Remuneration Committee:

Your Company has formed Nomination and Remuneration committee in line with the provisions of Section 178 of the Companies Act, 2013.

Nomination and Remuneration Committee meetings are generally held for identifying the persons who are qualified to become Directors and may be appointed in senior management and recommending their appointments and removal. During the year under review, Nomination and Remuneration Committee met 2 (two) times, viz on August 11, 2023 and February 05, 2024.

The composition & attendance of the Nomination and Remuneration Committee are given as below:

Further, After the closure of Financial year 2023-24, Ms. Nidhiben Patel and Ms. Hetal Umangbhai Shah has tendered their resignation from the post of Non-Executive Independent Director of the company w.e.f. August 08, 2024 due to personal reasons and personal commitment. Subsequently, Board of Directors in their meeting held on August 28, 2024 appointed Mr. Bhavinkumar Prafulbhai Joshi and Mr. Ketankumar Arvindbhai Modi as Additional (Non-Executive Independent) Directors of the Company.

Pursuant to which board of directors in the said meeting reconstituted Nomination and Remuneration Committee of the company. After this change, the new composition of the Nomination and Remuneration Committee is as given below;

Nomination and Remuneration Policy:

Nomination and Remuneration Policy in the Company is designed to create a high performance culture. It enables the Company to attract motivated and retained manpower in competitive market, and to harmonize the aspirations of human resources consistent with the goals of the Company. Your Company pays remuneration by way of salary, benefits, perquisites and allowances to its Executive Directors and Key Managerial Personnel. Annual increments are decided by the Nomination and Remuneration Committee within the salary scale approved by the members and are effective from April 1, of each year.

The Nomination and Remuneration Policy, as adopted by the Board of Directors, is placed on the website of the Company at https://sotacpharma.com/wp-content/uploads/2023/08/Nomination-and-Remuneration-Policy.pdf

REMUNERATION OF DIRECTOR:

The details of remuneration paid during the financial year 2023-24 to directors of the Company is provided in Form MGT-7 available at website of the Company, i.e. https://sotacpharma.com/annual-reports/

PUBLIC DEPOSIT:

Your company has not accepted any deposits from the public. Hence, the directives issued by the Reserve Bank of India & the Provision of Section 73 to 76 of the Company Act, 2013 or any other relevant provisions of the Act and the Rules there under are not applicable.

PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS & SECURITY:

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

ANNUAL RETURN:

Pursuant to Section 92(3) read with Section 134(3) (a) of the Act, the Annual Return as on March 31, 2024 is available on the Company's website on https://sotacpharma.com/annual-reports/

MATERIAL CHANGES AND COMMITMENT:

There are no material changes and commitments, affecting the financial position of the Company, have occurred between the ends of financial year of the Company i.e. March 31, 2024 to the date of this Report.

PARTICULAR OF EMPLOYEES:

The ratio of the remuneration of each director to the median of employees' remuneration as per Section 197(12) of the Companies Act, 2013, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed to this Report as Annexure-A.

Further, in terms of Section 136 of the Act, the said annexure is open for inspection in electronic mode for Members. Any shareholder interested in obtaining a copy of the same may write to Company Secretary.

INFORMATION ON SUBSIDIARY, ASSOCIATE AND JOINT VENTURE COMPANIES:

Your company having following mentioned Subsidiary companies as on the closure of financial year 2023-24.

In accordance with Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the subsidiary companies in Form AOC-1 is annexed to this Report as Annexure B.

During the year, the Board of Directors reviewed the affairs of the subsidiaries. In accordance with Section 129(3) of Companies Act, 2013, Consolidated Financial Statements of your Company and all its subsidiaries in accordance with the relevant accounting standards have been prepared which forms part of the Annual Report.

Further, Your Company does not have any Associate Companies and Joint Ventures as on March 31, 2024.

TRANSACTIONS WITH RELATED PARTIES:

All the Related Party Transactions entered into during the financial year were on an Arm's Length basis and in the Ordinary

Course of Business. No material significant Related Party Transactions (i.e. exceeding 10% of the annual consolidated turnover as per the last audited financial statement) with Promoters, Directors, Key Managerial Personnel (KMP) and other related parties which may have a potential conflict with the interest of the Company at large, were entered during the year by your Company. Accordingly, the disclosure of Related Party Transactions as required under Section 134(3) (h) of the Companies Act, 2013, in Form AOC-2 is not applicable.

Further, prior omnibus approval of the Audit Committee is obtained on yearly basis for the transactions which are of a foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval so granted were placed before the Audit Committee and the Board of Directors for their review and approval.

The details of the related party transactions for the financial year 2023-24 is given in notes of the financial statements which is part of Annual Report. The Policy on Related Party Transactions as approved by the Board of Directors is available on the website of the Company at https://sotacpharma.com/wp-content/uploads/2023/08/Related-Party-Transaction-Policy.pdf

SEXUAL HARASSMENT OF WOMEN AT WORKPLACE:

To foster a positive workplace environment, free from harassment of any nature, we have institutionalized the Anti-Sexual Harassment Initiative (ASHI) framework, through which we address complaints of sexual harassment at the all workplaces of the Company. Our policy assures discretion and guarantees non-retaliation to complainants. We follow a gender-neutral approach in handling complaints of sexual harassment and we are compliant with the law of the land where we operate. The Company has setup an Internal Complaints Committee (ICC) for redressal of Complaints.

During the financial year 2023-24, your Company has received nil complaints on sexual harassment as of March 31, 2024. The Policy on Anti Sexual Harassment as approved by the Board of Directors is available on the website of the Company at https://sotacpharma.com/wp-content/uploads/2023/08/Anti-Sexual-Harassment-Policy.pdf

RISK MANAGEMENT:

A well-defined risk management mechanism covering the risk mapping and trend analysis, risk exposure, 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.

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

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Act read with rule 8 of the Companies (Accounts) Rules, 2014, as amended is provided as Annexure-C of this report.

COMPLIANCE WITH THE PROVISIONS OF SECRETARIAL STANDARDS OF ICSI:

The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively. During the year under review, the Company has complied with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India, New Delhi.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY:

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. Necessary internal control systems are also put in place by the Company on various activities across the board to ensure that business operations are directed towards attaining the stated organizational objectives with optimum utilization of the resources. Apart from these internal control procedures, a well-defined and established system of internal audit is in operation to independently review and strengthen these control measures, which is carried out by a reputed firm of Chartered Accountants. The audit is based on an internal audit plan, which is reviewed each year in consultation with the statutory auditor of the Company and the audit committee. The conduct of internal audit is oriented towards the review of internal controls and risks in its operations.

M/s. Keyur Shah & Co., Chartered Accountants (FRN: 141173W), the statutory auditors of the Company have audited the financial statements included in this annual report and has issued a report annexed as an Annexure-B to the Audit Report of the Company on our internal control over financial reporting as defined in section 143 of Companies Act, 2013.

The audit committee reviews reports submitted by the management and audit reports submitted by internal auditors and statutory auditor. Suggestions for improvement are considered and the audit committee follows up on corrective action. The audit committee also meets the statutory auditors of the Company to ascertain, inter alia, their views on the adequacy of Internal control systems and keeps the board of directors informed of its major- observations periodically. Based on its evaluation (as defined in section 177 of Companies Act 2013), our audit committee has concluded that, as of March 31, 2024, our internal financial controls were adequate and operating effectively.

CORPORATE GOVERNANCE:

Integrity and transparency are key factors to our corporate governance practices to ensure that we achieve and will retain the trust of our stakeholders at all times. Corporate governance is about maximizing shareholder value legally, ethically and sustainably. Our Board exercises its fiduciary responsibilities in the widest sense of the term. Our disclosures seek to attain the best practices in international corporate governance. We also endeavor to enhance long-term shareholder value and respect minority rights in all our business decisions.

As your company has been listed on Emerge Platform of National Stock Exchange Limited, by virtue of Regulation 15 of the SEBI (Listing Obligation and Disclosure Requirements) Regulations, 2015 the compliance with the corporate Governance provisions as specified in regulation 17 to 27 and Clause (b) to (i) of sub regulation (2) of Regulation 46 and Para C D and E of Schedule V are not applicable to the company. Hence Corporate Governance Report does not form a part of this Board Report, though we are committed for the best corporate governance practices.

CORPORATE SOCIAL RESPONSIBILITY (CSR):

As per the audited financial statements as on March 31, 2023, the net profit of your Company (profit as per Section 198 of Companies Act, 2013) is exceeding Rs. 5.00 Crore. As per Section 135(9) of the Companies Act, 2013, where the amount to be spent by a company under sub-section (5) does not exceed fifty lakh rupees, the requirement under sub-section (1) for constitution of the Corporate Social Responsibility Committee shall not be applicable and the functions of such Committee provided under this section shall, in such cases, be discharged by the Board of Directors of such company. Therefore, company doesn't require constituting Corporate Social Responsibility Committee. The CSR Policy is available on the website of the company at https://sotacpharma.com/wp-content/uploads/2023/08/Corporate-Social-Responsibility-Policy.pdf

CSR initiatives and activities are aligned to the requirements of Section 135 of the Act. During the Financial year 2023-24, our company has incurred CSR expenditure of Rs. 9,31,417/- (Rupees Nine Lakh Thirty-One Thousand Four Hundred Seventeen Only) which is equivalent to 2% of the average net profit over the last three financial years in compliance of provisions of the Companies Act, 2013.

Main focus of our Company with respect to CSR endeavours was in the areas of School Education, Nutrition and Healthcare and contribution towards the availability/up-gradation of basic school and college infrastructure/medical care. Our Company has contributed its CSR expenditure to "Shree Shraddha Education and Charitable Trust" for their Promotion of Education project of "Vocational training for reaching to unreached" Rural Development, Community Mobilization and Livelihood Promotion Activities wherein they basically implement and provide vocational training and self-employment training in the rural poor areas of Gujarat without distinction in caste or creed.

Our Company's CSR Policy Statement and Annual Report on CSR activities undertaken during the Financial Year 2023-24, in accordance with Section 135 of the Act and Companies (Corporate Social Responsibility Policy) Rules, 2014 as per the prescribed format is annexed as an Annexure-D to this report.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT:

In terms of Regulation 34 and Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 a review of the performance of the Company for the year under review Management Discussion and Analysis Report is presented in a separate section which is annexed to this Report as Annexure-E.

STATUTORY AUDITOR AND THEIR REPORT:

Pursuant to the provisions of Section 139 of the Companies Act, 2013 read with rules made thereunder, M/s. Keyur Shah & Co., Chartered Accountants (FRN: 141173W), were appointed as Statutory Auditors of the Company in the Annual General Meeting ("AGM") of the members of company held on September 11, 2023 to hold office from the conclusion of this 8^th Annual General Meeting till conclusion of the 12^th Annual General Meeting to be held in the calendar year 2027.

The Notes to the financial statements referred in the Auditors Report are self-explanatory and therefore do not call for any comments under Section 134 of the Companies Act, 2013.

The Auditors' Report is enclosed with the financial statements in this Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.

REPORTING OF FRAUD:

The Auditors of the Company have not reported any fraud as specified under Section 143(12) of the Companies Act, 2013.

INTERNAL AUDITOR:

Pursuant to Section 138 of Companies Act 2013, your Company had appointed M/s. Amit G Patel & Associates Chartered Accountant (FRN: 152837W), Ahmedabad, as an Internal Auditor of the Company for the Financial year 2023-24.

SECRETARIAL AUDITOR AND THEIR REPORT:

Pursuant to the provisions of Section 204 of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, your Company has appointed M/s. SCS and Co. LLP, Practicing Company Secretary, Ahmedabad, as Secretarial Auditor to conduct the Secretarial Audit of the Company for the Financial Year 2023-24. The Secretarial Audit Report is annexed herewith as Annexure F to this Report.

There have been few common annotations reported by the above Secretarial Auditors in their Report with respect to:

1. Regulation 3(5) & 3(6) SEBI of Prohibition of Insider Trading Regulations, 2015.

Company got listed on April 13, 2023 Company purchased Software on May 23, 2023. Company maintained SDD software in Excel for 42 days. We cannot comment on SDD entry made for UPSI dated April 29, 2023 for new Purchase order of Approx. Rs. 4.24 Crores received by Subsidiary Company and May 11, 2023 for Additional investment in Subsidiary Company by way of subscription towards Rights Issue, as data maintained in excel does not have Audit Trails such as Time Stamping.

Management Reply: Company was finalizing software with various Vendors. As SDD Software are not that user Friendly, we took 42 days to finalize software and therefore we maintained SDD Entries in excel format during these days. We have ensured that no Trade was executed by any of the Designated Persons who were in Possession of any UPSI. Further there is no change in Holding of Promoter and Promoter Group since Listing of Company.

MAINTENANCE OF COST RECORD:

Pursuant to the provisions of the Companies Act, 2013 and rules thereof, the Board of Directors of your Company, have appointed M/s. Suthar Haresh & Associates, Cost Accountants, Ahmedabad (Firm Registration No.: 002124) as the Cost Auditor of the Company to audit the cost records of the Company for the financial year 2023-24.

Pursuant to the provisions of the Companies Act, 2013 and rules thereof, the Board of Directors of your Company, in their meeting held on August 28, 2024, on the recommendation of the Audit Committee, have appointed M/s. Suthar Haresh & Associates, Cost Accountants, Ahmedabad (Firm Registration No.: 002124) as the Cost Auditor of the Company to audit the cost records of the Company for the financial year 2024-25. M/s. Suthar Haresh & Associates, have confirmed that they are free from disqualification specified under Section 141(3) and proviso to Section 148(3) read with Section 141(4) of the Act and that their appointment meets the requirements of Section 141(3) (g) of the Act. They have further confirmed their independent status and an arm's length relationship with the Company. Further, as per Section 148 of the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be ratified at the ensuing Annual General Meeting.

Your Company has maintained cost accounts and records in accordance with provisions of Section 148 of the Companies Act, 2013 and rules thereof.

SIGNIFICANT/MATERIAL ORDERS PASSED BY THE REGULATORS:

There are no other significant/material orders passed by the Regulators, Courts, Tribunals, Statutory and quasi-judicial body impacting the going concern status of the Company and its operations in future.

The details of litigation on tax and other relevant matters are disclosed in the Auditors' Report and Financial Statements which forms part of this Annual Report.

THE DETAILS OF APPLICATION MADE OR ANY PROCEEDING PENDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016 DURING THE YEAR ALONG WITH THEIR STATUS AS AT THE END OF THE FINANCIAL YEAR:

During the Financial Year 2023-24, there was no application made and proceeding initiated /pending under the Insolvency and Bankruptcy Code, 2016, by any Financial and/or Operational Creditors against your Company. As on the date of this report, there is no application or proceeding pending against your company under the Insolvency and Bankruptcy Code, 2016

WEBSITE:

Your Company has its fully functional website www.sotacpharma.com which has been designed to exhibit all the relevant details about the Company. The site carries a comprehensive database of information of the Company including the Financial Results of your Company, Shareholding Pattern, details of Board Committees, Corporate Policies/ Codes, business activities and current affairs of your Company. All the mandatory information and disclosures as per the requirements of the Companies Act, 2013, Companies Rules, 2014 and as per Regulation 46 of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 and also the non-mandatory information of Investors' interest / knowledge has been duly presented on the website of the Company.

GENERAL DISCLOSURE:

Your Directors state that the Company has made disclosures in this report for the items prescribed in section 134 (3) of the Act and Rule 8 of The Companies (Accounts) Rules, 2014 and other applicable provisions of the act and listing regulations, to the extent the transactions took place on those items during the year. Your Directors further state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review;

(i) Issue of Equity Shares with differential rights as to dividend, voting or otherwise;

(ii) Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and ESOS;

(iii) There is no revision in the Board Report or Financial Statement;

(iv) No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future;

APPRECIATIONS AND ACKNOWLEDGEMENT:

Your Directors wish to place on record their sincere appreciation for significant contributions made by the employees at all levels through their dedication, hard work and commitment during the year under review.

The Board places on record its appreciation for the support and co-operation your Company has been receiving from its suppliers, distributors, retailers, business partners and others associated with it as its trading partners. Your Company looks upon them as partners in its progress and has shared with them the rewards of growth. It will be your Company's endeavour to build and nurture strong links with the trade based on mutuality of benefits, respect for and co-operation with each other, consistent with consumer interests.

Your Directors also take this opportunity to thank all Shareholders, Clients, Vendors, Banks, Government and Regulatory Authorities and Stock Exchanges, for their continued support.