Divis Laboratories Ltd

• To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage.

Policy on Nomination and Remuneration of Directors, Key / Senior Managerial Personnel may be accessed on the Company's website at:

https://www.divislabs.com/NominationRemunerationPolicy.

pdf.

We affirm that the remuneration paid to the Directors is as per the terms laid out in the Nomination and Remuneration Policy of the Company.

Remuneration details of directors & KMP and particulars of employees

Pursuant to Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (Rules), the prescribed particulars pertaining to remuneration and other details are given in Annexure - II to this Report.

The non-executive directors of the Company had no pecuniary relationship or transactions with the Company, other than sitting fees, annual remuneration and reimbursement of expenses for attending meetings, if any.

In terms of the provisions of Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Rules, a statement showing the names and other particulars of employees drawing remuneration in excess of the limits set out in the said Rules forms part of this report. Further, the report and the annual accounts are being sent to the Members excluding the aforesaid statement. In terms of Section 136 of the Act, the said statement will be open for inspection upon request by the Members. Any Member interested in obtaining such particulars may write to the Company Secretary at cs@divislabs.com.

Number of meetings of the Board

The Board met four times during the financial year. The meeting details are provided in the Corporate Governance Report that forms part of this Report. The intervening gap between the meetings was within the period prescribed under the Act and the SEBI Listing Regulations.

Performance evaluation

The Board of Directors carried out an annual evaluation of its own performance, of the Committees of the Board and of the individual directors including independent directors, pursuant to the provisions of the Act and SEBI Listing Regulations.

Performance evaluation was carried out based on criteria evolved, as provided by the guidance note on board evaluation issued by Securities and Exchange Board of India, seeking inputs from the Directors individually and the Committees through a structured questionnaire which provides valuable feedback for contribution to the Board, improving Board effectiveness, maximizing strengths and highlighting areas for further improvement, etc.

In a separate meeting of the Independent Directors, performance of the Chairman, non-independent directors and the Board was evaluated taking into account the views of the non-independent directors and the same was discussed in the Board meeting. Performance evaluation of independent directors is done by the entire Board of Directors (excluding the Directors being evaluated).

The meeting details of the independent directors are provided in the Corporate Governance Report that forms part of this Report

Committees of the Board

As on March 31,2025, the Board has five Committees - Audit Committee, Nomination and Remuneration Committee,

Stakeholders Relationship Committee, Corporate Social Responsibility Committee and Risk Management and Sustainability Committee.

On May 25, 2024, the Board delegated sustainability related references to the Risk Management Committee and renamed the Committee as Risk Management and Sustainability Committee.

During the year, all recommendations made by the Committees were approved by the Board. A detailed note on the composition of the Board and its Committees is provided in the Corporate Governance Report, which forms part of this Report.

Public deposit

The Company has not accepted any deposits from the public covered by provisions of Section 73 of the Act, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

Loans, guarantees or investments

The Company has not given any loans or guarantees to persons covered under the provisions of Section 186 of the Act. The details of investments made by the Company are given in the notes to the financial statements forming part of this Annual Report.

Related party transactions

In line with the requirements of the Act and the SEBI Listing Regulations, the Policy on Materiality of Related Party Transactions and dealing with Related Party Transactions, as approved by the Board is available on the Company's website at https://www.divislabs.com/wp-content/uploads/7075/04/ RPT Policy V4.pdf.

The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and related parties. All related party transactions and subsequent modifications are placed before the Audit Committee for review and approval. Prior omnibus approval is obtained for related party transactions on a quarterly basis for transactions which are of repetitive nature and/ or entered in the ordinary course of business and are at arm's length. All contracts and arrangements with related parties were at arm's length and in the ordinary course of business of the Company. There are no materially significant related party transactions entered into by the Company with related parties which may have potential conflict of interest with the Company at large. Statement of transactions with related parties during the year is given at Note No. 31 of the Notes to standalone financial statements.

In accordance with Section 134(3)(h) of the Act, and Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of the contracts or arrangements with related parties referred to in Section 188(1) of the Act, in Form AOC-2 is attached as Annexure - III to this Report.

Internal financial controls

The Company has in place adequate internal financial controls with reference to its financial statements. These controls ensure the accuracy and completeness of the accounting records and the preparation of reliable financial statements. Details in respect of internal financial controls and their adequacy is included in the Management Discussion and Analysis Report, which forms part of this Annual report.

Risk management

The Board of Directors ofthe Company has a Risk Management and Sustainability Committee to frame, implement and monitor the risk management plan for the Company. The Committee is responsible for monitoring and reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has an additional oversight in the area of financial risks and controls. The brief of terms of reference, composition and names of members and chairperson are set out in the Corporate Governance Report forming part of this Annual Report.

The Company has an enterprise-wide approach to risk management, which lays emphasis on identifying and managing key operational and strategic risks. The Risk Management and Sustainability Committee constantly evaluates various risks related to business, customer concentration, supplier concentration, regulatory compliances, confidentiality of processes, consistency of cGMP practices, environment, employee health and safety, cyber security and data protection, business continuity, various ESG risks etc. The major risks identified are systematically addressed through mitigating actions on a continuing basis.

Further details on the risk management activities including key risks identified, and their mitigations are covered in Management Discussion and Analysis Report, forming part of this Annual Report.

Directors' Responsibility Statement

Pursuant to Section 134 (5) of the Act, the Board of Directors, to the best of its knowledge and ability, confirm that:

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

b) accounting policies selected were applied consistently and the judgements and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit of the Company for the period;

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

d) the annual accounts have been prepared on a going concern basis.

e) i nternal financial controls have been laid down and such controls are adequate and operating effectively;

f) proper systems have been laid down to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively.

Corporate Social Responsibility (CSR)

Divi's has been carrying out CSR activities for over the past 3 decades. The CSR initiatives of the Company during the year include promoting education, safe drinking water, preventive healthcare, village development, environmental sustainability, support to differently abled, Swatch Bharat, livelihood enhancement, promotion of rural sports, woman empowerment, etc.

Company's CSR Policy is available on our website at https:// www.divislabs.com/wp-content/uploads/2022/12/Divis-CSR- Policy-1.pdf.

The report on our CSR activities as well as summary of the impact assessment report are enclosed as Annexure - IV to this Report.

Conservation of energy, technology absorption and foreign exchange earnings & outgo

Particulars as prescribed under Section 134(3)(m) of the Act read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are enclosed as Annexure - V to this Report.

Vigil mechanism

The Company has a Whistle Blower Policy and has established the necessary vigil mechanism for directors and employees in conformation with Section 177(9) of the Act and Regulation 22 of SEBI Listing Regulations, to report concerns about unethical behaviour, actual or suspected fraud or violation of the Company's code of conduct or ethics policy.

Employees and other stakeholders are required to report actual or suspected violations of applicable laws and regulations and the Code of Conduct. Such genuine concerns can be raised by a Whistle-blower through an e-mail or dedicated telephone line or a letter to the Chairman of the Audit Committee or to the Vigilance Officer. The Company investigates such incidents, when reported, in an impartial manner and takes appropriate action to ensure that requisite standards of professional and ethical conduct are always upheld. This mechanism also provides for adequate safeguards against victimization of director(s)/ employee(s) who avail the mechanism and also provide for direct access to the Chairman of the Audit Committee in exceptional cases. The Whistle Blower Policy may be accessed on the Company's website at: https://www.divislabs.com/wp-

content/uploads/2020/06/Wh istleBlowerPolicy.pdf

Statutory auditors

M/s. Price Waterhouse Chartered Accountants LLP (Firm Registration No. 012754N/ N500016), Chartered Accountants, were re-appointed as Statutory Auditors of the Company at the 32^nd Annual General Meeting held on August 22, 2022, for a period of five years till the conclusion of the 37^th AGM to be held in the year 2027.

Secretarial audit and appointment of secretarial auditors

The Board has appointed M/s. V. Bhaskara Rao & Co., Company Secretaries, (CP No. 4182) as the secretarial auditors of the Company to conduct the secretarial audit for the FY 2024-25. The Secretarial Audit Report for the FY 2024-25 is annexed herewith as Annexure - VI.

Based on the recommendation of the Audit Committee, the Board at its meeting held on May 17, 2025 has recommended for appointment of M/s. V. Bhaskara Rao & Co., Practicing Company Secretaries, Hyderabad (Unique code number of firm: P2025TS104600 and having Peer Review No.6351 /2025), as Secretarial Auditors of the Company to hold office for a term of five consecutive years commencing from FY 2025-26 till FY 2029-30, subject to the approval of shareholders as per the SEBI Listing Regulations read with Section 204 of the Act and Rules thereunder.

Cost audit

Pursuant to Section 148 of the Act and Rule 3 of the Companies (Cost Records and Audit) Rules, 2014 as amended, the Company maintains cost records in its books of account. As per Rule 4 of the said rules, the requirement for cost audit is not applicable to a company which is covered under Rule 3, and whose revenue from exports, in foreign exchange, exceeds seventy-five per cent of its total revenue or which is operating from a special economic zone. Being satisfied with all these criteria, cost audit is not mandatory for the

Company. However, the Company is opting voluntarily for an audit of cost records and appointed M/s. E.V.S & Associates, Cost Accountants as Cost Auditors.

Auditor's report and Secretarial Audit report

The Statutory Auditor's Report and the Secretarial Auditor's Report do not contain any qualifications, reservations, or adverse remarks or disclaimer. During the FY 2024-25, the statutory auditor and the secretarial auditor have not reported any instance of fraud committed as prescribed under Section 143(12) of the Act in the Company by its officers or employees.

Annual return

The Annual return of the Company as on March 31,2025, in terms of Section 92(3) read with Section 134(3)(a) of the Act, is available on the Company's website at https://www.divislabs. com/investor-relations/reports-and-filings/annual-return/.

Other disclosures

• Information on unclaimed dividend and transfer to IEPF is provided in the Corporate Governance Report.

• No Company has become or ceased to be its subsidiary, joint venture or associate company during the year. ^•

• The Company has followed the applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to 'Meetings of the Board of Directors' and 'General Meetings' respectively.

• There was no application made or proceeding pending against the Company under the Insolvency and Bankruptcy Code, 2016 (31 of 2016) during the year under review.

• There was no instance of one-time settlement with any Bank or Financial Institution.

Acknowledgements

Your Directors take this opportunity to thank the customers, shareholders, suppliers, bankers, business associates, financial institutions and Central and State Governments for their consistent support and encouragement to the Company.

We are sure you will join our Directors in conveying our sincere appreciation to employees at all levels of the Company and its subsidiaries, for their hard work, dedication and commitment and for their participation in the growth of the Company.

For and on behalf of the Board

Dr. Ramesh B.V. Nimmagadda Dr. Murali K. Divi

Date: May 17, 2025 Chairman Managing Director

Place: Hyderabad DIN: 07854042 DIN: 00005040

Divi's Laboratories Limited

35^th Annual Report 2024-25

CORPORATE OVERVIEW

STATUTORY REPORTS

FINANCIAL STATEMENTS

Annexure - II

INFORMATION PURSUANT TO SECTION 197(12) OF THE ACT AND RULE 5 (1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014, AS AMENDED

(i) The ratio of the remuneration of each Director to the median remuneration of the employees of the Company for the financial year, the percentage increase in remuneration of each Director, Chief Financial Officer and Company Secretary for the year are given below:

Board's Report

(iii) As on March 31,2025, the Company has 9,109 permanent employees on the rolls of Company as defined under said Rule 5(1).

(iv) Average percentile increase already made in the salaries of employees other than the managerial personnel in the financial year was 16.98% whereas there was increase of 35.33% in the managerial remuneration.

(v) I t is hereby affirmed that the remuneration paid is as per the Remuneration Policy for Directors, Key Managerial Personnel, and other Employees.