lakshmi electrical control systems ltd Management discussions

As per the Asian Development Bank (ADB) forecasts, Indias economy will grow @ 6.5% in fiscal year (FY) 2023 and 6.7% in FY2024, supported by increased private consumption, private investment on the back of Government policies to improve transport infrastructure, logistics and business eco systems.

It factors in the impact of Russias invasion of Ukraine-primarily higher global oil and commodity prices that will contribute to rising inflation and a widening of the current account deficit.

Post COVID-19 era, India is seeing economic growth.

PHARMACEUTICAL SECTOR OVERVIEW

India is the largest provider of generic drugs globally. Indian pharmaceutical sector supplied over 50% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicines in the UK. Globally, India ranks 3rd in terms of pharmaceutical production by volume and 14th by value. India enjoys an important position in the global pharmaceuticals sector.

The Indian pharmaceuticals market is growing at 37 percent CAGR from 2020 to 2023, has reached US$ 50 billion. According to the Indian Economic Survey 2021, the house market is expected to grow in the next years. By 2024, the domestic pharmaceutical market in India is estimated to be valued US$ 65 billion, rising to US$ 130 billion by 2030.

The Indian Government has taken many steps to reduce costs and bring down healthcare expenses. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies.

The pharma sector contributes to around 1.72% of the Countrys GDP.

COMPANY OVERVIEW

Lyka Labs Limited is a pharmaceutical company engaged in the development, manufacture and marketing of quality finished dosages. The Company has a well-diversified business model in terms of markets, therapies and products. The Company believes in innovation. It provides state-of-the-art prepositions to advance the companys relevance and foster a spirit of experimentation. Pharmaceutical products of the Company are consistent in terms of quality and reliability.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE

The Company is engaged in only one segment viz. pharmaceuticals. The Company has presence in Domestic as well as International markets. The Company has commercial presence in various countries either on its own or through its subsidiary company.

OUTLOOK

The Company is focused towards expanding its geographical reach in Human & Veterinary Healthcare Business Segments. The Company re-entered into the business of animal healthcare in 2023 by acquiring animal healthcare business of Agilis Healthcare Private Limited.

During the financial year under report:

1. The Company has invested in building brands and distribution network in Human and Veterinary Heatlhcare segments, both in the domestic as well international markets.

2. The Company has continued to invest in the Research & Development for New Products and Novel Drug Delivery Systems. The R&D Department is focused on developing of New Formulations and has successfully developed several products in the following categories: a. Injectables: Lyophilised Injection, Liquid Injections & Dry Powder Injections b. Topical Preparation: Ointment, Creams and Lotions.

RISKS AND CONCERNS

Your Company does not perceive any risks or concerns other than those that are common to the industry such as regulatory risks, exchange risk, cyber risks and other commercial and business related risks.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2023.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the financial year, the total Income was Rs. 8404.42 Lakhs. The Company has reported net loss of Rs. 1334.94 Lakhs during the financial year 2022-23.

HUMAN RESOURCE

There has been no material development on human resources and industrial relations front. The relationship with employees and workers continued to be cordial at all levels. As on 31st March 2023, permanent employees inclusive of workers strength was 296.

KEY FINANCIAL RATIOS

The key financial ratio for the financial year 2022-23 and changes therein as compared to the immediately preceding financial year along with detailed explanation in cases where the change is 25% or more are as under:

a. Debtors Turnover ratio: Net credit sales/Average Account Receivable. The ratio for the year was 4.39 (times) as against 11.36 (times) in the previous financial year. This year this ratio is lower as compared to previous year due to delay in export realisation.

b. Interest Coverage ratio: EBIT / Interest Expense. The ratio for the year was (0.14) (times) as against 4.02 (times) in the previous year. This ratio has become negative in the current year due to reducing Profit before interest and tax.

c. Current Ratio: Current Assets/ Current Liabilities. This ratio for the current financial year was 1.41 (times) as compared to 0.50 (times) in the previous year. The ratio is higher as compare to the previous financial year due to repayment of loan.

d. Debt-Equity ratio: Total Debt/ Shareholders Equity. This ratio for the year was 0.98 (times) as against 2.89 (times) in the previous year. This ratio has decrease due to repayment of loans during the financial year and issue of equity shares and application money received against the convertible warrants.

e. Operating Profit Margin: EBIT/Sales operating profit margin for the year was (0.02) % as against 49% in the previous year. Decrease in Operating profit margin due to profit for the year is lower than previous year as previous year higher realization products are sold.

f. Net Profit Margin: Net Profit/Total Revenue from operations for the current financial year was (17. as against 25.78% in the previous financial year. due to lower profit in the current financial year, as in previous financial year higher realization products were sold due to increase in demand.

CHANGE IN RETURN ON NET WORTH

Return on Net Worth: This financial performance is calculated by dividing net income by shareholders equity. Return on net worth or return on equity during the year was (21.99)% as compared to 163.37% in the previous year. Return on equity is lower than previous year due to decrease in net profit for the current year.

For and on behalf of the Board

Lyka Labs Limited

Babulal Jain

Chairman DIN: 00016573

Mumbai; 23rd May 2023.