Divi’s Laboratories Limited

NOMINATION AND REMUNERATION POLICY

1. INTRODUCTION
The company would require the services of several staff, executives, managers and
directors for conducting its business. The company is into development and manufacture
of active pharma ingredients and Nutraceuticals. The company has several functional
areas such as Research & Development, QC/Analytical Labs, Manufacturing, Projects,
Maintenance, Sales, Marketing, Logistics, Procurement, Accounting, Finance, Taxation,
Secretarial, Personnel, Administration, Legal, Regulatory Compliances etc.

2. OBJECTIVE AND PURPOSE OF THE POLICY

In pursuance of the Company’s policy to consider human resources as its invaluable

assets, to pay equitable remuneration to all Directors, Key / Senior Management
Personnel, executives and staff of the Company, to harmonize the aspirations of human
resources consistent with the goals of the Company and in terms of the provisions of the
Companies Act, 2013 (“the Act”) and the listing agreement as amended from time to
time, this policy on nomination and remuneration of Directors, Key / Senior Managerial
Personnel has been formulated by the company:

• To identify persons who are qualified to become directors and who may be
appointed in senior management in accordance with the criteria laid down.
• To ensure a transparent board nomination process with the diversity of thought,
experience, knowledge, perspective and gender in the Board.
• To determine remuneration based on the Company’s size and financial position
and trends and practices on remuneration prevailing in peer companies, in the
Pharma industry besides qualifications, skills, capabilities etc.,
• To carry out evaluation of the performance of Directors, as well as Key
Managerial and Senior Management Personnel.
• To provide them rewards linked directly to their effort, performance, dedication
and achievement relating to the Company’s operations.
• To retain, motivate and promote talent and to ensure long term sustainability of
talented managerial persons and create competitive advantage.

Divi Towers, 1‐72/23(P)/DIVIS/303, Cyber Hills, Gachibowli, Hyderabad – 500 032, India
CIN: L24110TG1990PLC011854;Tel: 91‐40‐2378 6300, Fax : 91‐40‐2378 6460
E‐mail :[email protected], Website: www.divislabs.com
 Divi’s Laboratories Limited
3. CRITERIA FOR DETERMINING QUALIFICATIONS, POSITIVE
ATTRIUBUTES AND INDEPENDENCE OF DIRECTORS

The Nomination and Remuneration Committee (‘the Committee”), along with the Board,
reviews on an annual basis, appropriate skills, characteristics and experience required of
the Board as a whole and its individual members. The objective is to have a Board with
diverse background and experience in business, government, academics, technology and
in areas that are relevant for the Company's operations and to ensure a transparent board
nomination process with the diversity of thought, experience, knowledge, perspective and
gender in the Board.

In addition, Directors must be willing to devote sufficient time and energy in carrying out
their duties and responsibilities effectively. They must have the aptitude to critically
evaluate management's working as part of a team in an environment of collegiality and
trust.

• Should possess adequate qualification, knowledge, skills and experience for the
position he / she is considered for appointment.
• The Committee has discretion to decide whether qualification, expertise and
experience possessed by a person is sufficient / satisfactory for the concerned
position.
Positive attributes
 Possessing highest level of personal and professional ethics, integrity, values
 Willingness to learn and contribute
 Commitment and Compliances to various regulations
 Capability to make well informed and good decisions
 Ability to listen, to make critical assessment and judgement
 Having courage, openness, honesty and tact
Independence of Directors

Independence refers to the avoidance of being unduly influenced by a vested interest and
to being free from any constraints that would prevent a correct course of action being
taken. Members of the Board and key executives should be required to disclose to the
board whether they, directly, indirectly or on behalf of third parties, have a material
interest in any transaction or matter directly affecting the company.

Divi Towers, 1‐72/23(P)/DIVIS/303, Cyber Hills, Gachibowli, Hyderabad – 500 032, India
CIN: L24110TG1990PLC011854;Tel: 91‐40‐2378 6300, Fax : 91‐40‐2378 6460
E‐mail :[email protected], Website: www.divislabs.com
 Divi’s Laboratories Limited
The Board and top management should conduct themselves so as to meet the
expectations of operational transparency to stakeholders while at the same time
maintaining confidentiality of information in order to foster a culture for good decision-
making.

The Nomination and remuneration Committee shall assess the independence of

Directors at the time of appointment/ re-appointment. The Board shall assess the same
annually by taking appropriate disclosure from the Directors. Independent Directors
should satisfy the requirements of the Companies Act, 2013 and Clause 49 of the Listing
Agreement with respect to independence of directors. Independent Directors should be
capable of exercising independent judgement to tasks where there is a potential for
conflict of interest.

4. POLICY FOR APPOINTMENT AND REMOVAL OF DIRECTORS, KMP

AND SENIOR MANAGEMENT

4.1 Appointment criteria and qualifications

4.1.1) The Committee shall identify and ascertain the integrity, qualification, expertise
and experience of the person for appointment as Director, KMP or Senior
Management Personnel and recommend his / her appointment to the Board.

4.1.2) The Committee shall consider the expertise of the director in managing significant
risks that may directly or indirectly affect the organization. Examples include:

o Regulatory and legal requirements

o Concentrations (e.g., suppliers and customers)
o Market and competitive trends
o Financing and liquidity needs
o Financial exposures
o Business Continuity
o Organisation reputation
o Strategy execution
o Management capabilities
o Management override
o Fraud control
o Organisation pressures, including “tone at the top”

Divi Towers, 1‐72/23(P)/DIVIS/303, Cyber Hills, Gachibowli, Hyderabad – 500 032, India
CIN: L24110TG1990PLC011854;Tel: 91‐40‐2378 6300, Fax : 91‐40‐2378 6460
E‐mail :[email protected], Website: www.divislabs.com
 Divi’s Laboratories Limited
4.1.3) The Company shall not appoint or continue the employment of any person as
Whole-time Director who has attained the age of seventy years. Provided that the
term of the person holding this position may be extended beyond the age of
seventy years with the approval of shareholders by passing a special resolution
based on the explanatory statement annexed to the notice for such motion
indicating the justification for extension of appointment beyond seventy years.

4.1.4) The Company should ensure that the person so appointed as Director/ Independent
Director, KMP, Senior Management Personnel shall not be disqualified under the
Companies Act, 2013, rules made there under, Listing Agreement or any other
enactment for the time being in force.

4.1.5) The Director/ Independent Director/Senior Management Personnel/KMP shall be

appointed as per the procedure laid down under the provisions of the Companies
Act, 2013, rules made thereunder, Listing Agreement or any other enactment for
the time being in force.

4.2 Term/ Tenure

4.2.1) Managing Director/Whole-time Director:

The Company shall appoint or re-appoint any person as its Executive Chairman,
Managing Director or Whole-time Director for a term not exceeding five years at a
time. No re-appointment shall be made earlier than one year before the expiry of
term.

4.2.2) Independent Director:

An Independent Director shall hold office for a term up to five consecutive years
on the Board of the Company and will be eligible for re-appointment on passing of
a special resolution by the Company and disclosure of such appointment in the
Board's report.

No Independent Director shall hold office for more than two consecutive terms,
but such Independent Director shall be eligible for appointment after expiry of
three years of ceasing to become an Independent Director. Provided that an
Independent Director shall not, during the said period of three years, be appointed
in or be associated with the Company in any other capacity, either directly or
indirectly.

Divi Towers, 1‐72/23(P)/DIVIS/303, Cyber Hills, Gachibowli, Hyderabad – 500 032, India
CIN: L24110TG1990PLC011854;Tel: 91‐40‐2378 6300, Fax : 91‐40‐2378 6460
E‐mail :[email protected], Website: www.divislabs.com
 Divi’s Laboratories Limited

At the time of appointment of Independent Director, it should be ensured that

number of Boards on which such Independent Director serves is restricted to seven
listed companies as an Independent Director and three listed companies as an
Independent Director in case such person is serving as a Whole-time Director of a
listed company or such other number as may be prescribed under the Act.

The company shall familiarize the independent directors with the company,
including their roles, rights, responsibilities in the company, nature of the industry
in which the company operates, business model of the company, etc., through
various programs.

4.3 Evaluation

The Committee shall carry out evaluation of performance of every Director, KMP
and Senior Management Personnel at regular intervals (half-yearly/yearly).

4.4 Removal

Due to reasons for any disqualification mentioned in the Act or under any other
applicable Act, rules and regulations thereunder, the Committee may recommend,
to the Board with reasons recorded in writing, removal of a Director, KMP or
Senior Management Personnel subject to the provisions and compliance of the
said Act, rules and regulations.

4.5 Retirement

The Director, KMP and Senior Management Personnel shall retire as per the
applicable provisions of the Act and the prevailing policy of the Company.
However, the Board will have the discretion to retain the services of any Director,
KMP, Senior Management Personnel in any capacity even after attaining the
retirement age, for the benefit of the Company.

5. POLICY ON REMUNERATION OF DIRECTORS, KEY MANAGERIAL

PERSONNEL AND OTHER EMPLOYEES

5.1. APPLICABILITY

Divi Towers, 1‐72/23(P)/DIVIS/303, Cyber Hills, Gachibowli, Hyderabad – 500 032, India
CIN: L24110TG1990PLC011854;Tel: 91‐40‐2378 6300, Fax : 91‐40‐2378 6460
E‐mail :[email protected], Website: www.divislabs.com
 Divi’s Laboratories Limited
This Remuneration Policy shall continue to guide all future employment of Directors,
Company's Senior Management including Key Managerial Personnel and other
employees.
Any deviation from the policy can be undertaken only with the approval of the Board of
Directors, subject to the prior/post approval of the shareholders of the Company and the
Central Government, wherever required.

6. POLICY

6.1 General:

The remuneration policy provides a framework for remuneration paid to the members of
the Board of Directors (“Board”), Key Managerial Personnel (“KMP”) and the Senior
Management Personnel (“SMP”), executives and other employees of the Company.

6.1.1) The remuneration to the Whole-time Directors, KMPs and Senior Management
Personnel will be determined by the Nomination and Remuneration Committee
(“the committee”) and recommended to the Board for approval. The remuneration
shall be subject to approval of the shareholders of the Company and the Central
Government, wherever required.

6.1.2) The remuneration and commission to be paid to the Whole-time Director shall be
within the percentage/ slabs/ceiling/ conditions as laid down in the Articles of
Association of the Company and as per the provisions of the Act.

6.1.3) Increments and/or revision to the existing remuneration/ compensation structure

may be recommended by the Committee to the Board which should be within the
slabs/ ceiling/ approved by the Shareholders in the case of Whole-time Directors.

6.1.4) Where any insurance is taken by the Company on behalf of its Whole-time
Director, Chief Executive Officer, Chief Financial Officer, the Company Secretary
and any other employees for indemnifying them against any liability, the premium
paid on such insurance shall not be treated as part of the remuneration payable to
any such personnel. Provided that if such person is proved to be guilty, the
premium paid on such insurance shall be treated as part of the remuneration.

Divi Towers, 1‐72/23(P)/DIVIS/303, Cyber Hills, Gachibowli, Hyderabad – 500 032, India
CIN: L24110TG1990PLC011854;Tel: 91‐40‐2378 6300, Fax : 91‐40‐2378 6460
E‐mail :[email protected], Website: www.divislabs.com
 Divi’s Laboratories Limited
6.2 Remuneration to Whole-time / Executive / Managing Director:

The term of office and remuneration of Whole Time Directors are subject to the approval
of the Board of Directors, shareholders and the limits laid down under the Companies Act
from time to time.

a) Fixed pay:

The Whole-time Director/ KMP and Senior Management Personnel shall be eligible for a
monthly remuneration as may be approved by the Board on the recommendation of the
Committee.

b) Perquisites, Allowances and other benefits:

In addition to the fixed pay, they shall also be eligible for any perquisites and allowances
including company’s contribution to Provident Fund, pension scheme, superannuation
fund, rent free furnished accommodation or house rent allowance in lieu thereof, medical
expenses, mediclaim/personal accident insurance, club fees, ex-gratia, rewards,
incentives, gratuity and other retirement benefits etc., as may be decided and approved by
the Board/ the Person authorized by the Board on the recommendation of the Committee;
within the overall limits as approved by the shareholders and Central Government,
wherever required.

c) Minimum Remuneration:

If, in any financial year, the Company has no profits or its profits are inadequate, the
Company shall pay remuneration to its Whole-time Director in accordance with the
provisions of Schedule V of the Act and if it is not able to comply with such provisions,
with the previous approval of the Central Government.

d) Provisions for excess remuneration:

If any Whole-time Director draws or receives, directly or indirectly by way of

remuneration any such sums in excess of the limits prescribed under the Act or without
the prior sanction of the Central Government, where required, he / she shall refund such
sums to the Company and until such sum is refunded, hold it in trust for the Company.
The Company shall not waive recovery of such sum refundable to it unless permitted by
the Central Government.

Divi Towers, 1‐72/23(P)/DIVIS/303, Cyber Hills, Gachibowli, Hyderabad – 500 032, India
CIN: L24110TG1990PLC011854;Tel: 91‐40‐2378 6300, Fax : 91‐40‐2378 6460
E‐mail :[email protected], Website: www.divislabs.com
 Divi’s Laboratories Limited

6.3 Remuneration to Non- Executive / Independent Director:

a) Sitting Fees:

The Non- Executive / Independent Director may receive remuneration by way of fees for
attending meetings of Board or Committee thereof as approved by the Board. Provided
that the amount of such fees shall not exceed Rs. One Lakh per meeting of the Board or
Committee or such amount as may be prescribed by the Central Government from time to
time.

b) Remuneration:

Any remuneration to the non-executive / Independent directors shall be, as approved by

the Committees, the Board and members of the company; and subject to the slabs and
conditions mentioned in the Articles of Association of the Company and the Act.

c) Stock Options:

An Independent Director shall not be entitled to any stock option of the Company.

6.4 Remuneration to KMP and Senior Management Personnel:

Appointment of KMP & Senior Management Personnel (one level below the Board) and
cessation of their service are subject to the approval of the Nomination & Remuneration
Committee and the Board of Directors. Remuneration of KMP and other senior
management personnel is approved by the Chairman & Managing Director (CMD) on the
recommendation of the Management, and any Committee of the Board as may be
required, broadly based on the Remuneration Policy. Total remuneration broadly
comprises of:

a) Fixed pay:

The KMP and Senior Management Personnel shall be eligible for a monthly
remuneration as may be approved by the Board on the recommendation of the
Committee.

Divi Towers, 1‐72/23(P)/DIVIS/303, Cyber Hills, Gachibowli, Hyderabad – 500 032, India
CIN: L24110TG1990PLC011854;Tel: 91‐40‐2378 6300, Fax : 91‐40‐2378 6460
E‐mail :[email protected], Website: www.divislabs.com
 Divi’s Laboratories Limited
b) Perquisites, Allowances and other benefits:

Perquisites and allowances such as contribution to PF, pension, superannuation fund,

medical expenses, mediclaim/personal accident insurance, gratuity, etc., as per the rules
of the Company.

c) Motivation /Reward:

A performance appraisal is carried out periodically and promotion / revision / increment/

reward/ incentives / ex-gratia are approved by the Chairman and Managing Director,
based on the appraisal and recommendation of the Management as per the company’s
policies and practices.

d) Severance payments:

In accordance with terms of employment and applicable statutory requirements, if any.

6.5 Executives and other employees

The remuneration of Executives and other employees is fixed by the Management of the
company from time to time as per objectives of this policy and considering industry
standards, individual’s contribution and capabilities and cost of living etc. In addition to
basic salary and allowances, the employees may also be provided rewards/ incentives/
bonus / perquisites and retirement benefits as per schemes of the Company and statutory
requirements, where applicable.

7. DISCLOSURE

Information on the total remuneration of members of the Company's whole-time and

other Directors and key managerial personnel/senior management personnel may be
disclosed in the Company's annual financial statements as per statutory requirements.

**************

Divi Towers, 1‐72/23(P)/DIVIS/303, Cyber Hills, Gachibowli, Hyderabad – 500 032, India
CIN: L24110TG1990PLC011854;Tel: 91‐40‐2378 6300, Fax : 91‐40‐2378 6460
E‐mail :[email protected], Website: www.divislabs.com