Jubilant Pharmova : Annual General Meeting Transcript - September 26, 2022

"Jubilant Pharmova Limited 44th Annual General Meeting"

Monday, September 26, 2022

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Moderator: Good morning members. Welcome to the 44th Annual General Meeting of Jubilant Pharmova Limited being held through video conferencing. For the smooth conduct of this meeting, all members will be in mute mode. Please note that in terms of the statutory requirements, the proceedings of this Annual General Meeting are being recorded and the transcript of these proceedings shall be available on the company's website.

With this, I now hand over the proceedings to Mr. Shyam S. Bhartia, Chairman who has joined us from Singapore. Over to you, Sir.

Shyam S.Thank you. Good morning everyone.

Bhartia:

(Chairman) On behalf of the Board, I extend a warm welcome to all of you to the 44th Annual General Meeting of Jubilant Pharmova Limited. I trust and hope that you and your family and friends are safe and keeping well. I highly appreciate you all taking time out today to attend this Annual General Meeting that is being convened through videoconferencing in compliance with the provisions of the Companies Act 2013 and circulars issued by the Ministry of Corporate Affairs and SEBI. The company has made all necessary arrangements to enable the members to participate in the meeting to video conferencing facility and to vote electronically. As the requisite quorum is present, I call the meeting to order.

I would now introduce other Board members and KMPs who have joined this meeting through video conference.

• Mr. S. Sridhar - Independent Director and Chairman of Audit Committee and Stakeholders Relationship Committee, joining from Mumbai.
• Ms. Sudha Pillai - Independent Director and Chairperson of Nomination, Remuneration, and Compensation Committee, joining from Delhi.
• Dr. Ashok Misra - Independent Director and Chairman of the Sustainability and CSR Committee, joining from Bengaluru.
• Mr. Sushil Kumar Roongta - Independent Director and Chairman of the Risk Management Committee, joining from Gurugram.
• Mr. Vivek Mehra - Independent Director, joining from
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Chandigarh.

• Mr. Arun Seth - Independent Director, joining from Delhi.
• Mr. Priyavrat Bhartia - Non-Executive Director, joining from Delhi.
• Mr. Arvind Chokhany - Group Chief Financial Officer and Whole-Time Director, joining from Noida.
• Mr. R. Kumar - Whole Time Director, joining from Bengaluru.
• Mr. Arun Sharma - Chief Financial Officer, joining from Noida.
• Mr. Naresh Kapoor - Company Secretary, joining from Noida.

Mr. Hari S. Bhartia - Co-Chairman and Managing Director and Mr. Arjun Bhartia - Non-Executive Director are not able to attend this meeting due to unavoidable reasons.

The Statutory Auditors and Secretarial Auditors are also participating in the meeting.

Dear shareholders:

Your company, Jubilant Pharmova has an integrated pharmaceuticals business spanning the entire value chain. Customers from 85 countries rely on the products and solutions that come from the Company and for many large pharmaceutical companies of the world, your Company is

the 'partner of choice'. The business emphasizes upon a continuous improvement of the products and processes in order to enhance the quality and cost profile thereby delivering better value to its customers. Through my remarks today, I shall cover certain key aspects that impact and support the growth of your Company.

As per IMF's July 2022 World Economic Outlook report, global growth is projected to decline from an estimated 6.1% in 2021 to 2.9% in 2022. In FY22, the world's economic and social health infrastructures continued to be affected by steep rise in raw material prices, supply chain disruptions and spread of another wave of COVID-19 led by the Omicron variant at the start of 2022. The ongoing Russia-Ukraine war has significantly contributed to the slowdown in global economic growth in 2022 and the global inflationary trends.

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India has witnessed a spike in inflation and weakening in economic outlook for the year as rising inflation, supply chain disruptions and geopolitical tensions taper recovery. As per World Bank's June 2022 forecast, the Indian economy is expected to grow at 6.1% in FY 2023 down from the 8.7% expansion in the previous financial year.

Some of the key developments pertaining to the business are as follows:

Post issuance of import alert by USFDA in the month of July 2021, your company has been working on remediation plan guided by global consultants and internal audit team. The plant was inspected again by the USFDA in July 2022 and issued 6 observations post completion of the audit of our remediation works. We have submitted our response with an action plan on these observations and shall work with the USFDA towards the next steps.

Also in August 2022, the USFDA communicated that your company's radiopharmaceuticals facility at Montreal, Canada has been regulatory upgraded to Voluntary Action Indicated (VAI) status and it is to receive the Establishment Inspection Report (EIR) in due course. The development will immensely help to ensure new approvals now onwards as no regulatory obstacles remain with the USFDA.

We have completed demerger of the Active Pharmaceutical Ingredients (API) undertaking of Jubilant Generics Limited (JGL) and vesting of the same with your Company. The demerger became effective from April 1, 2022 and will make your Company presence visible across the value chain of CRO

• CDMO of Innovative and Generic APIs with synergy realization.

In May 2022, our Spokane, U.S. facility earned the distinction of entering into a cooperative agreement for USD 149.6 million with the Army Contracting Command of the US Govt. This agreement will support our efforts to double injectable filling production capacity at a total cost of around USD 285 million at the location.

In June 2022, our CMO manufacturing facility at Montreal, Canada announced a CAD 100 million expansion with the Government of Quebec meeting CAD 25 million through a loan. This investment aims to modernize and augment the drug production capacity by over 100%.

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Over the years, ESG excellence has been extensively promoted as a part of our culture. Our commitment to sustainability can be demonstrated by our achievement in our ESG ratings. In the S&P Global ESG Indices CSA 2021, we scored a percentile of 81%. We also climbed from 23rd to 6th position on Responsible Business Ranking by the joint ET-Futurescape 8th Sustainability Index Report.

For FY22 performance improvement in Specialty Pharma business and strong growth in the Contract Research business was offset by lower revenues in the CMO, API and Generics businesses. The Contract R&D Services continued to witness strong growth driven by robust demand from our customers. Allergy business in US also witnessed strong growth of 26% and expects to maintain similar trend.

In our Proprietary Novel Drugs business, our lead program - LSD1/HDAC6 inhibitor has successfully started Phase I/ II trials. Additional IND filings with FDA for pipeline programs are expected to follow in FY23.

Now, I would cover our Financial Performance on key parameters for the Continuing business.

Revenue from Operations in FY22 stood at Rs 61.3 billion vs. Rs 60.9 billion in FY21. Pharmaceuticals revenue for FY22 was Rs 56.5 billion vs. Rs 57.9 billion in FY21, Contract Research and Development Services segment's revenue improved to Rs

4.6 billion from Rs 3.1 billion in FY21. EBITDA was Rs. 11.7 billion vs. Rs. 14.1 billion, with a margin of 19.0% vs. 23.2% in FY21. PAT was Rs. 4.1 billion vs. Rs. 5.7 billion in FY21 with an EPS of Rs. 26.0.

The Board has proposed a dividend of Rs. 5 per equity share of Re. 1 for the year ended March 31, 2022.

I would like to briefly touch upon our performance for the first quarter of FY23 as well.

In the first quarter of FY23, your Company reported YoY improvement in sales in Specialty Pharmaceuticals and CRDMO, which was offset by CDMO Sterile Injectables and Generics segments. Allergy Business continues to perform strongly and witnessed healthy growth YoY.

Revenue from Operations in the first quarter of FY23 was at Rs

15.3 billion as compared with Rs 16.4 billion in the first quarter of FY22. Reported EBITDA in the first quarter of FY23 was at Rs 2.0 billion vs. Rs 3.8 billion in the first quarter of FY22 with

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