Unichem Laboratories : Unaudited Results (Consolidated and Standalone) Quarter year ended June 30, 2023

July 14, 2023
Department of Corporate Services	Mr. Hari K
Bombay Stock Exchange Ltd.	Asst. Vice President - Operations
Phiroze Jeejeebhoy Towers	National Stock Exchange of India Ltd
Dalal Street,	Exchange Plaza, Bandra - Kurla Complex
Mumbai- 400 001	Bandra (East), Mumbai - 400 051
Dear Sir,

Ref: BSE Scrip Code -506690: NSE Symbol - UNICHEMLAB

Sub: Outcome of Board Meeting

We would like to inform you that the Board of Directors at its Meeting held today, i.e. Friday, July 14, 2023, approved the Unaudited Financial Results (Standalone & Consolidated) for the first quarter ended June 30, 2023. Enclosed herewith please find the Unaudited Financial Results (Standalone & Consolidated) for the first quarter ended June 30, 2023, and the Auditors Reports thereon.

The Board Meeting commenced at 1:45 p.m. and concluded at 2:30 p.m.

Kindly take the same on your records.

Thanking you,

FOR UNICHEM LABORATORIES LIMITED

PRADEEP Digitally signed by

PRADEEP BHANDARI

BHANDARI Date: 2023.07.14 14:32:46 +05'30'

PRADEEP BHANDARI

Head- Legal & Company Secretary

Encl: a/a

Registered Office: Unichem Bhavan, Prabhat Estate, Off S. V. Road Jogeshwari (West), Mumbai - 400 102, Maharashtra, India.

UNICHEM LABORATORIES LIMITED

CIN: L99999MH1962PLC012451

Statement of Standalone Unaudited Results for the Quarter ended 30th June, 2023

					₹ Lakhs
		Quarter ended		Year ended
	Particulars	30.06.2023	31.03.2023	30.06.2022	31.03.2023
		Unaudited	Unaudited	Unaudited	Audited
I	Revenue from operations	34,666.70	31,006.43	24,478.13	1,07,243.22
II	Other income	582.62	378.84	1,184.53	4,184.75
III	Total income (I+II)	35,249.32	31,385.27	25,662.66	1,11,427.97
IV	EXPENSES
	Cost of materials consumed	17,198.16	15,573.40	12,058.23	50,033.50
	Purchase of stock-in-trade	24.38	48.89	44.95	152.65
	Changes in inventories of finished goods and work-in-progress	(444.16)	481.96	(1,783.41)	2,201.32
	Employee benefits expense	7,361.40	6,606.78	6,706.12	27,086.47
	Finance costs	247.53	293.18	166.66	938.02
	Impairment loss on financial assets	-	170.87	56.95	341.72
	Depreciation and amortization expenses	2,736.27	2,831.75	2,256.97	10,597.92
	Other expenses	9,696.04	8,997.65	8,484.10	36,718.90
	Total expenses (IV)	36,819.62	35,004.48	27,990.57	1,28,070.50
V	Profit / (Loss) before exceptional items and tax (III-IV)	(1,570.30)	(3,619.21)	(2,327.91)	(16,642.53)
VI	Exceptional items - expenses (Refer note 8)	-	10,764.20	-	11,266.44
VII	Profit / (Loss) before tax (V-VI)	(1,570.30)	(14,383.41)	(2,327.91)	(27,908.97)
VIII	Tax expense
	(1) Current tax	-	-	-	-
	(2) Deferred tax charge / (credit) (Refer note 4)	-	-	-	2,061.22
	(3) Short / (excess) provision for tax (earlier years)	-	-	-	-
		-	-	-	2,061.22
IX	Profit / (Loss) for the period after tax (VII-VIII)	(1,570.30)	(14,383.41)	(2,327.91)	(29,970.19)

1. Other Comprehensive Income / (Loss)

1. (i) Items that will not be reclassified subsequently to profit or loss

- Remeasurement of the net defined benefit plan	(17.87)	41.52	206.16	224.63
- Equity instruments through other comprehensive income	-	-	-	1,586.82

1. Income tax (expense) / credit relating to items that will not be reclassified to profit or loss

	- Remeasurement of the net defined benefit plan	-	-	-	-
	- Equity instruments through other comprehensive income (net)	-	-	-	2,061.22
	B. (i) Items that will be reclassified to profit or loss	-	-	-	-
	(ii) Income tax relating to items that will be reclassified to profit	-	-	-	-
	or loss
	Total of Other Comprehensive Income / (Loss)	(17.87)	41.52	206.16	3,872.67
XI	Total Comprehensive Income for the period (IX+X)	(1,588.17)	(14,341.89)	(2,121.75)	(26,097.52)
XII	Paid-up equity share capital (Face value of ₹ 2/- per share)	1,408.12	1,408.12	1,408.12	1,408.12
XIII	Other Equity (Reserves excluding revaluation reserve)				2,37,018.94
XIV	Earnings per equity share (Face value of ₹ 2/- per share)
	(not annualized)
	(1) Basic	(2.23)	(20.43)	(3.31)	(42.57)
	(2) Diluted	(2.23)	(20.43)	(3.31)	(42.57)

Notes:

1. The above unaudited standalone financial results ("the Statement") for the quarter ended 30th June, 2023 have been reviewed by the Audit Committee and approved by the Board of Directors of the Company at its meeting held on 14th July, 2023. The statutory auditors have expressed a qualified audit conclusion on these standalone financial results for the quarter ended 30th June, 2023, in regard to the matter given in note 5 below.
2. The above unaudited standalone financial results have been prepared in accordance with the guidelines issued by the Securities and Exchange Board of India ("SEBI") and the Indian Accounting Standards (Ind AS) prescribed under Section 133 of the Companies Act, 2013.
3. Operating Segment: The Company has a single reportable segment i.e. 'Pharmaceuticals'.
4. Deferred tax asset is recognised on the amount of tax loss, unabsorbed tax depreciation and other temporary differences to the extent of deferred tax liability.

1. On 9th July, 2014, the European Commission ("EU") decided to impose an unjustified fine of Euro 13.96 million, jointly and severally on the Company and its subsidiary Niche Generics Ltd. ("Niche") contending that they had acted in breach of EU competition law as Niche had, in early 2005 (when the Company was only a part owner and financial investor in Niche) agreed to settle a financially crippling patent litigation with Laboratories Servier. The Company vehemently denies any wrongdoing on the part of either itself or Niche. Both the Company and Niche had submitted appeals in September 2014 to the General Court of the EU seeking appropriate relief in the matter. The General Court of the EU has rejected the appeals vide Order dated 12th December, 2018 and confirmed the fine of Euro 13.96 million. The Company and its subsidiary based on legal advice and merits have filed appeals against the decision of General Court before the Court of Justice of the EU and outcome of the appeals are awaited.
   In this regard, the statutory auditors of Niche had given qualified audit opinion on the financial statements of Niche for the year ended 31st March, 2023 and continued the qualification in their limited review report for the quarter ended 30th June, 2023. They had stated that, "previously the outcome of the appeal was sufficiently uncertain that a contingent liability was deemed sufficient, however, following the hearing in October 2021 and their review of the available documentation, their opinion is that it is more likely than not that Niche will be liable for the fine of Euro 13.96 million (equivalent to ₹ 12,437.22 lakhs) and hence, they believe that this should be provided for in the financial statement of Niche. As per the Board of Directors of Niche, there remains an inherent uncertainty as to the outcome of the appeal and therefore, the Directors are of the opinion that no provision should be made at this point of time." The management had obtained the counsel view on this matter and they have stated that there has not been any formal change in position after the last hearing and the uncertainty as in the past continues. Considering the status quo, in view of the management, no provision for the aforesaid fine is considered necessary and the matter is continued to be disclosed under contingent liability.
   As at last audited balance sheet date, the Company had aggregate financial exposure of ₹ 12,837.13 lakhs in Niche comprising of investment, trade receivable and corporate guarantee given to bank for loan availed by Niche. Considering the impact of ongoing litigation as elaborated in the above para, loss for the year ended 31st March, 2023 and accumulated losses in Niche as at last audited balance sheet date, the statutory auditors of the Company are of the view that the Company would need to provide for impairment on the financial exposure of ₹ 12,837.13 lakhs.
   Considering the above uncertainty in regard to ongoing litigation related to EU matter and circumstances prevailing as at the last audited balance sheet date, such as past performance, results, accumulated losses, negative net worth, expected cash flows, the management of the Company on the basis of abundant precaution had made full provision in the quarter and year ended 31st March, 2023 towards impairment of long-term investment in Niche amounting to ₹ 6,909.36 lakhs, such provision is grouped under exceptional item in the Statement. Further, the management is of the view that no further provision is required for the balance financial exposure of ₹ 5,927.77 lakhs in view of the future business outlook, unless the outcome of EU matter is not in favour of the subsidiary.
   On the above matter, the auditors of the Company had given a qualified opinion in their audit report on the Statement for the year ended 31st March, 2023 and continued the qualification in their limited review report for the quarter ended 30th June, 2023.
2. During the quarter and year ended 31st March, 2023, the Company on the basis of abundant precaution had made a full provision towards impairment of long-term investment in its wholly owned subsidiary "Unichem Laboratories Ltd, Ireland" amounting to ₹ 2,104.84 lakhs which is grouped under exceptional item in the Statement. The management had made this provision after an internal assessment based on circumstances prevailing as at the last audited balance sheet date, such as past performance, results, accumulated losses, negative net worth and expected cash flows.
3. During the year ended 31st March, 2023, the Company had sold specified number of shares held in Optimus Drugs Private Limited ('Investee' or 'Optimus') to Sekhmet Pharmaventures Private Limited ('Purchaser') in terms of Share Purchase Agreement ('SPA') dated 10th May, 2022. Further, the number of shares sold included additional equity shares issued to Company pursuant to conversion of bonus Compulsory Convertible Preference Shares which were allotted to the Company during the year and the net gain on disposal of investments amounting to ₹ 1,084.58 lakhs was accounted / disclosed as follows:
   Exceptional item
   This represents gain / loss on disposal of 7,29,849 equity shares out of additional equity shares issued to the Company during the year ended 31st March, 2023 by Optimus pursuant to conversion of bonus Compulsory Convertible Preference Shares. The net loss of ₹ 502.24 lakhs was determined after reducing from sale proceeds fair value of bonus equity shares and related transaction cost incurred on such sale.
   Recognized in OCI
   The net gain of ₹ 1,586.82 lakhs (before related taxes thereon) on disposal of equity shares of Optimus which was accounted under 'Fair Value through Other Comprehensive Income' category.

The balance number of unsold equity shares with carrying value of ₹ 28.77 lakhs as at the last audited balance sheet date are classified as Fair Value through Profit and Loss. This is based on the fair valuation report obtained during the year ended 31st March, 2023. Considering audited accounts of Optimus for the year ended 31st March, 2023 are not received, fair value could not be determined as at last audited balance sheet date and quarter ended 30th June, 2023 and accordingly impact of change in fair value of such investments will be considered in the subsequent period when the audited financial statements of the Investee are made available to the Company. The balance number of unsold equity shares will be sold for a price to be determined based on the fulfillment of performance criteria of the Investee as per the SPA.

8 Exceptional Items comprise of the following:

					₹ Lakhs
Particulars		Quarter ended		Year ended
30.06.2023		31.03.2023	30.06.2022	31.03.2023
Impairment of investment in subsidiary "Niche Generics Limited,	-		6,909.36	-	6,909.36
United Kingdom" (refer note 5 above)
Impairment of investment in subsidiary "Unichem Laboratories	-		2,104.84	-	2,104.84
Limited, Ireland" (refer note 6 above)
(Gain) / Loss on disposal of investment (refer note 7 above)	-		-	-	502.24
Employee benefits expense (one-time discretionary loyalty	-		1,750.00	-	1,750.00
bonus)
Total Exceptional Item - expenses	-		10,764.20	-	11,266.44

9 The aggregate amount of revenue expenditure incurred on Research and Development as included in the relevant expense heads is as tabulated below:

• Lakhs

Particulars		Quarter ended		Year ended
	30.06.2023	31.03.2023	30.06.2022	31.03.2023
Total R&D expenditure	2,682.46	2,947.99	2,205.28	10,939.82

1. Subsequent to the quarter ended 30th June 2023, the Company has granted 5,00,000 stock options to the eligible employee of its subsidiary company.
2. The Board of Directors at its meeting held on 26th June, 2023, approved the re-appointment of Dr. Prakash A. Mody as the Chairman & Managing Director of the Company for a period of three years commencing from July 1, 2023, subject to the approval of Shareholders.
3. The Statement includes unaudited results for the quarter ended 31st March, 2023 being the derived figures between the audited annual figures in respect of the financial year ended 31st March, 2023 and the published unaudited figures for the nine months ended 31st December, 2022, which were subjected to a limited review.

	By Order of the Board
	For Unichem Laboratories Limited
	Prakash	Digitally signed by
	Prakash Amrut Mody
	Amrut Mody Date: 2023.07.14
		14:30:45 +05'30'
	Dr. Prakash A. Mody
Place: Mumbai	Chairman & Managing Director
Date: 14th July,2023	DIN: 00001285

UNICHEM LABORATORIES LIMITED

CIN: L99999MH1962PLC012451

Statement of Consolidated Unaudited Results for the Quarter ended 30th June, 2023

					₹ Lakhs
			Quarter ended		Year ended
	Particulars	30.06.2023	31.03.2023	30.06.2022	31.03.2023
		Unaudited	Unaudited	Unaudited	Audited
I	Revenue from operations	42,318.65	40,209.94	30,960.83	1,34,302.22
II	Other income	863.07	511.07	784.74	3,851.51
III	Total income (I+II)	43,181.72	40,721.01	31,745.57	1,38,153.73
IV	EXPENSES
	Cost of materials consumed	17,626.60	15,966.02	12,848.25	53,219.93
	Purchase of stock-in-trade	24.38	48.89	44.95	152.65
	Changes in inventories of finished goods and work-in-progress	(806.86)	1,319.53	(1,867.23)	1,720.09
	Employee benefits expense	9,880.83	8,872.65	8,776.75	35,641.05
	Finance costs	576.12	552.45	301.12	1,731.25
	Impairment loss on financial assets	-	170.87	56.95	341.72
	Depreciation and amortization expenses	2,877.12	2,968.30	2,454.54	11,344.37
	Other expenses	12,791.90	12,183.56	11,197.70	47,782.32
	Total expenses (IV)	42,970.09	42,082.27	33,813.03	1,51,933.38
V	Share of profit / (loss) in associate (net of tax)	-	-	-	-
VI	Profit / (Loss) before exceptional items and tax (III- IV+V)	211.63	(1,361.26)	(2,067.46)	(13,779.65)
VII	Exceptional items - expenses (Refer note 7)	-	3,354.40	-	3,856.64
VIII	Profit / (Loss) before tax (VI-VII)	211.63	(4,715.66)	(2,067.46)	(17,636.29)
IX	Tax expense
	(1) Current tax	82.90	290.47	300.22	1,105.63
	(2) Deferred tax charge / (credit) (Refer note 4)	195.56	(525.44)	(30.81)	1,534.98
	(3) Short / (excess) provision for tax (earlier years)	-	(54.14)	-	(54.14)
		278.46	(289.11)	269.41	2,586.47
X	Profit / (Loss) for the period after tax (VIII-IX)	(66.83)	(4,426.55)	(2,336.87)	(20,222.76)
XI	Other Comprehensive Income / (Loss)

1. (i) Items that will not be reclassified subsequently to profit or loss

- Remeasurement of the net defined benefit plan	(17.87)	41.52	206.16	224.63
- Equity instruments through other comprehensive income	-	-	-	1,586.82

1. Income tax (expense) / credit relating to items that will not be reclassified to profit or loss

	- Remeasurement of the net defined benefit plan	-	-	-	-
	- Equity instruments through other comprehensive income (net)	-	-	-	2,061.22
	B. (i) Items that will be reclassified to profit or loss (Foreign	(233.11)	(301.45)	479.24	719.82
	currency translation difference)
	(ii) Income tax relating to items that will be reclassified to profit	-	-	-	-
	or loss
	Total of Other Comprehensive Income / (Loss)	(250.98)	(259.93)	685.40	4,592.49
XII	Total Comprehensive Income for the period (X+XI)	(317.81)	(4,686.48)	(1,651.47)	(15,630.27)
XIII	Paid-up equity share capital (Face value of ₹ 2/- per share)	1,408.12	1,408.12	1,408.12	1,408.12
XIV	Other Equity (Reserves excluding revaluation reserve)				2,42,122.29
XV	Earnings per equity share (Face value of ₹ 2/- per share)
(not annualized)
	(1) Basic	(0.09)	(6.28)	(3.32)	(28.72)
	(2) Diluted	(0.09)	(6.28)	(3.32)	(28.72)

Notes:

1 The above unaudited consolidated financial results ("the Statement") for the quarter ended 30th June, 2023 have been reviewed by the Audit Committee and approved by the Board of Directors of the Company at its meeting held on 14th July, 2023. The statutory auditors have expressed a qualified audit conclusion on these consolidated financial results for the quarter ended 30th June, 2023, in regard to the matter given in note 5 below.