Aarti Pharmalabs Ltd Management Discussions

<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS</dhhead>

ECONOMIC REVIEW

Global Economy

The global economy demonstrated resilience in 2024, expanding by 3.3% despite ongoing geopolitical considerations. This growth, however, exhibited regional variations, with robust momentum observed in the United States contrasting with a more moderate performance in the Euro area.

Looking ahead, global growth is projected to adjust to 2.8% in 2025 and 3.0% in 2026. This projected moderation reflects evolving trade dynamics and a heightened degree of policy uncertainty. Recent shifts in U.S. tariff policies, impacting imports from Canada, Mexico, and China, alongside subsequent responses from these nations, introduce complexities for global trade flows, potentially influencing inflation and the pace of economic expansion. Additionally, the prevailing global policy environment presents a degree of uncertainty, which could influence investor sentiment and impact the accessibility of financing flows.

(Source: IMF – World Economic Outlook April 2025)

Indian Economy

India has been one of the fastest-growing major economies in the world driven by private consumption, structural reforms and strong policy support by the government. According to the Provisional Estimates of GDP, India’s GDP growth is expected at 6.5% in FY 2024-25, lower than 9.2% GDP growth in FY 2023-24. Manufacturing, services and infrastructure investment sectors witnessed good traction. Strong export growth was seen in pharmaceuticals, textiles and engineering goods.

The government’s strong commitment to fostering economic growth and emerge as Viksit Bharat, was reflected in the Union Budget 2025-26. Key focus areas were boosting private sector investments, empowering MSMEs, and advancing infrastructure development, transformative reforms across taxation, financial regulation, agriculture, exports, and urban development. The RBI has estimated the Indian economic growth rate of 6.5% in FY 2025-26 similar to that of FY 2024-25. Robust industrial production, prediction of normal monsoons, good agricultural produce and increased household consumption aided by tax reliefs in Union Budget 2025-26, is expected to support economic growth.

(Source: NSO, RBI) NAD_PR_30may2025.pdf

GLOBAL PHARMACEUTICAL INDUSTRY

The global pharmaceutical market is experiencing exponential growth led by fundamental growth drivers like global health issues, rise in ageing population, pandemics, an increase in chronic diseases, and technological advancements. Accelerate pace of drug discovery led by artificial intelligence (AI) and machine learning (ML), improvement in supply chain transparency by blockchain, several gene editing tools, biosimilars, digital therapies, and mobile/remote healthcare are contributing to the growth in the sector. In 2024, the global pharmaceutical market revenue grew to US$ 1,646 billion. While established developed markets continue to lead the growth in the pharmaceutical market, emerging regions present untapped opportunities due to their low access of medicines and technology. Major research and development in the pharma sector are supported by leading country hubs like the United States, India, Germany, the United Kingdom, and China.

The sector is continuously searching for more effective and efficient solutions for complex conditions such as cancer, autoimmune diseases, and genetic disorders which are increasingly becoming commonplace. Targeted therapies, biologics, and personalised medicine are emerging as great solutions for such complexities. The global pharmaceutical market is projected to reach US$ 2,350 billion by 2030, growing at a 6.1% CAGR (2025-2030). With loss of patent exclusivity of a number of top-selling biological drugs, biosimilars are witnessing increased traction owing to their similar efficiency at lower costs. While North America continues to dominate the global pharmaceutical landscape, the Asia-Pacific market is experiencing rapid growth. Driven by increasing healthcare awareness and access, rising chronic disease prevalence, government initiatives to improve healthcare infrastructure, and strong R&D and manufacturing capabilities, China, India, and Japan are leading the market growth.

The prominence of biologics is continuously on the rise. However, small molecules continue to form the bedrock of the pharmaceutical landscape, comprising a significant portion of approved drugs and overall sales. Their advantages, such as oral bioavailability, easier manufacturing, lower production costs, and predictable metabolism, ensure their enduring relevance. The global small molecule drug discovery market is also experiencing robust growth, fuelled by continuous innovation. Advances in AI and computational modelling are significantly accelerating the design and development of new small molecule drugs, enabling more precise targeting of biological pathways. New modalities within small molecule research, such as molecular glues and PROTACs (proteolysis-targeting chimeras), are further expanding their therapeutic potential, including addressing previously undruggable targets.

Source: Pharmaceutical Market Size & Share Industry Report, 2030

INDIAN PHARMACEUTICAL INDUSTRY

The Indian pharmaceutical industry plays a crucial role in manufacturing high-quality, cost-effective medicines for both domestic and global markets. Its dominance in branded generic medicines, competitive pricing, and a robust network of indigenous brand make it one of the most dynamic markets in the global pharmaceutical industry. India is the third-largest pharmaceutical market in the world in terms of volume and eleventh largest in terms of value. Globally, India is the largest supplier of generic drugs accounting for 20% of the global supply. India is also one of the biggest suppliers of low-cost vaccines in the world. India has been UNICEF’s largest vaccine supplier for the past six to seven years, contributing 55-60% of total volume procured contributing 99%, 52% and 45% of the WHO demand for Diphtheria, Tetanus and Pertussis (DPT), Bacillus Calmette–Gu?rin (BCG) and the measles vaccines, respectively.

India has a strong pharma network, with 10,000+ manufacturing facilities, 3,000+ pharma companies, and 650 USFDA-compliant plants, the largest outside the US. The pharmaceutical industry is currently the fifth-largest contributor to India’s manufacturing GVA, drives ~4% of foreign direct investment (FDI) inflows, sustains a US$ 19 billion trade surplus, and supports over 2.7 million livelihoods, either directly or indirectly. In FY 2023-24, the sector was valued at 4,17,345 Crs and has exhibited an annual growth rate of ~10% over the last 5 years. India’s pharma supplies reach approximately 200 countries and territories worldwide. In FY 2023-24, pharmaceutical exports stood at

2,19,439 Crs, signifying India’s contribution in the global market. India’s pharmaceutical exports are projected to grow 10-15x, reaching nearly US$ 350 billion by 2047 riding expanding exports of specialty generics, boosting API exports and CDMO services, leveraging the China+1 theme, expanding vaccine exports to high-income countries, capitalizing on the biosimilars and innovative products opportunity.

The Indian pharmaceutical market is expected to grow 2.2-2.4x by 2030, reaching US$ 120-130 billion and increasing India’s share from 3-3.5% currently to nearly 5% by 2030s. The Indian pharmaceutical sector stands as a testament to India’s growing capabilities in science, innovation, and manufacturing. Various government initiatives like the Production Linked Incentive (PLI) schemes, Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP), Make in India, etc. have played a vital role in bolstering domestic production and ensure equitable access to affordable healthcare solutions. India is poised to solidify its position as a global hub for high-quality, cost-effective medicines and medical technologies.

Source: Healing the World: A Roadmap for Making India a Global Pharma Exports Hub Bain & Company; Press Release:Press Information Bureau

KEY SEGMENTS AND GROWTH DRIVERS

Active Pharmaceutical Ingredients (APIs)

The Indian API market is a crucial part of the global pharmaceutical industry producing over 500+ types of APIs. Its unique features like diverse production capabilities, cost-effectiveness and innovation make it one of the world’s largest manufacturing hubs of generic drugs and the third-largest API producer globally holding an 8% share of the global API market. India plays a crucial role in the global pharmaceutical supply chain, especially in terms of the production and export of APIs. Majority of the APIs supplied by India are included in the WHO prequalified list.

The Indian API market was valued US$ 17.77 billion in 2024. Technological advancements in medicine, spike in public and private awareness-raising initiatives, strong domestic market demand and rise in government funding bode well for the growth prospects of the API market. The market is likely to reach US$ 38.60 billion by 2033 growing at 8.1% CAGR. The growth may be attributable to rising generic drug demand, government incentives, API self-reliance, patent expirations, increasing chronic diseases, biologics expansion, cost advantages, foreign investments, export growth, R&D advancements, regulatory support, contract manufacturing, biosimilars adoption, and pharma sector expansion.

Source: India Active Pharmaceutical Ingredients Market Size, 2033

Contract Development and Manufacturing Organization (CDMO/CMO)

India’s CRDMO industry, with a market share of 2–3% of a global market valued at over US$ 140 billion in 2024, is on the verge of a transformative shift, driven by rising demand for outsourcing of innovative pharmaceutical services & upcoming realignment in global supply chains. Over 2019-2024, India’s CRDMO segment grew at ~15%, double that of the global growth. Having built unique capacities and capabilities, Indian CRDMOs are at the forefront of driving innovation and become preferred partners for innovators across the world.

With global customers diversifying supply chains from China and increasing demand for cost-efficient drug manufacturing & research, geopolitics and geoeconomics provide strong tailwinds for India’s CRDMO industry. The sector is expected to reach US$ 25 billion by 2035, fuelled by competitive advantage in small molecule capabilities, faster startup time, focus on quality and cost advantage. With vital government support through critical reforms, the Indian CRDMOs can stay competitive, and position themselves as leaders in new modalities. Collaboration with academia to scale its scientific talent pool, building a self-reliant supplier ecosystem, establishment and implementation of a strict regulatory & economic ecosystem, and availability of capital remain key to this growth. Indian CRDMO segment has the potential to become a co-innovator on the world stage from being a preferred outsourcing destination currently.

Source: bcg-ipso-whitepaper-unleashing-the-tiger.pdf

Biosimilars

The biosimilar segment in India is faring better as compared with other countries, driven by a growing demand for safer biologics and effective biosimilars. This growth is supported by advancements in technology and manufacturing, rising deal activity and favourable government policies and support. In addition to being effective and safe, biosimilars, by targeting the prevalent chronic diseases that are increasing rapidly, play a crucial role. Biologics and biosimilars have also treated rare diseases and addressed unmet needs and conditions. Current treatments face challenges of safety, efficacy, convenience or other factors. Unlike generics with simpler manufacturing procedures, biosimilars are produced using living cells through intricate and multistep processes. This has driven significant advancements and innovations in biotechnology and chemical analytics. The revised Guidelines on Similar Biologics released by the Central Drugs Standard Control Organisation (CDSCO) and Department of Biotechnology (DBT) have provided a simplified, efficient and well-defined pathway for manufacturing processes assuring safety and efficacy. DBT, the Biotechnology Industry Research Assistance Council (BIRAC), and the Indian government are working to establish India as a leading hub for biotechnology innovation and research. This collaboration involves policy initiatives and investments, promoting industry-institute collaborations, creating entrepreneurship cells to support biotech start-ups and advancing skill development.

Of the global US$ 30 billion biosimilars market, Indian pharma firms currently hold less than 5%. But increasing investment in R&D, expansion of drug pipelines with over 40 new products and plans to add ~100 KL of capacity over the next three to four years could increase India’s share of global capacity. Over the next seven years, 130 drug patents valued at a total of $180 billion are expected to expire, creating a sizeable opportunity for Indian companies. Public initiatives like the National Biopharma Mission, PLI programmes, and BIRAC-led initiatives are positioning India well to capitalize on biopharma growth. The Indian Government also supports the development of in-house biological drugs through Make in India by providing skill development platforms and research grants. The rapid growth in the Indian biosimilar market is projected to sustain through 2030 with key players strengthening their market positions through strategic collaborations, while new entrants benefiting from strong government support to enhance healthcare affordability and accessibility.

Source: Positioning India as a Pharmaceutical Innovation Hub.pdf; Healing the World: A Roadmap for Making India a Global Pharma Exports Hub Bain & Company

Formulations

The global generic formulations market valued at US$ 460 billion is projected to grow at 8% CAGR to reach

US$ 790 billion by 2030. Indian formulations exports currently valued at US$ 19 billion, are striving to increase the volume of generic formulations and upgrade their value. Enhanced value can potentially come from providing high margin specialty generics in more complex forms like soft gel capsules, inhalants, injectables, and ophthalmics. Though specialty generics have a smaller market share, this segment is expected to grow faster than commodity generics driven by the increased demand for more cost-effective drugs for chronic diseases, and by efforts to increase patient adherence to prescription plans using novel drug delivery systems. Injectables and inhalants are expected to be the top two modalities (after orals) among the 1,000+ chemical patent expiries that are anticipated over the next seven to eight years. Specialty generics are difficult to manufacture, are subject to more stringent regulatory requirements, and often need clinical trials, and thus have a higher risk quotient. However, they command higher prices and they offer attractive margins to manufacturers, so many Indian companies have been pursuing this market to gain some pricing leverage. India is poised to double its generic exports to US$ 35-40 billion by 2030 led by expertise in research & development, availability of talent, cost-effective manufacturing and rising incidence of chronic diseases.

Source: Healing the World: A Roadmap for Making India a Global Pharma Exports Hub Bain & Company

COMPANY OVERVIEW

With two and a half decades of rich experience in the pharmaceutical sector, Aarti Pharmalabs Limited (APL), formerly known as Aarti Organics, is a globally recognized manufacturer of generic Active Pharmaceutical Ingredients (APIs), Xanthine derivatives (particularly for regulated markets) and a leading player in CDMO/CMO services. An integral part of the Aarti Group, a diversified chemical conglomerate, we have demonstrated strong expertise in development of robust & cost-effective processes for rapid scale-up and commercial production. We have emerged as a trusted partner for global pharmaceutical innovators and leading firms. We are strategically located in western India with proximity to ports facilitating exports.

We excel in the development and production of Regulatory Starting Materials (RSMs), intermediates, and drug substances for New Chemical Entities (NCEs), spanning phases from I to III, through launch and commercialization. We have received accreditation from several agencies, including USFDA, EU GMP, EDQM (European Pharmacopoeia), KFDA (Korea), and COFEPRIS (Mexico).

We have six manufacturing units, three of which are USFDA approved, and three state-of-the-art R&D facilities with an employee base of 2,100+. We boast of proficiency in research and development, capable of efficient scale-up and commercial production. Our portfolio of over 220 products, 58 patents, 50 US Drug Master Files (USDMF) and 31 Certificates of Suitability (CEP), is a testament of our strong brand equity across the globe. Our international revenue forms 52% of total sales with a significant portion derived from regulated markets. We export to over 500 clients in more than 50 countries globally, with primary markets being the USA, European Union, and Japan.

We pride in complying with exemplary standards in environmental health, safety, and quality across our facilities. We are the largest manufacturer of Xanthine derivatives and one of the leading small molecule CDMO/CMO in India. We continue to focus on backward integration of intermediates for the majority of APIs, we manufacture and invest in green energy to source our power requirements sustainably. With a view to maximize asset utilisation and ensure sustainable future growth we remain committed to integrating our expertise in process chemistry with scale-up engineering.

Products and Services

Active Pharmaceutical Ingredient (API) & Intermediates

We have established ourselves as a specialized player in the development and manufacturing of Highly Potent Active Pharmaceutical Ingredients (HPAPIs), catering to the demand for critical drugs used in oncology, corticosteroids, and cytotoxic medicines. These HPAPIs find therapeutic applications in the treatment of a variety of critical ailments including cancer, asthma, hypertensive etc. We stay ahead of competition led by our strict adherence to rigorous compliance and quality standards across our USFDA-approved manufacturing facilities and dedicated US, EU, Japan, Korea, Mexico, Brazil and China approvals. To ensure uninterrupted supply of high-quality materials and data control throughout the production chain we have worked on backward integration for most APIs. We also offer Intellectual Property Rights (IPR) support for global markets. We have 1,100+ kL multi-purpose reactor capacity and 14 API finished lines.

During the active patent period, we start the development of advanced intermediates for newly launched APIs well in advance leading to early generic API launches. Driven by robust regulatory documentation and IPR support we have become the preferred partner in regulated markets. This proactive approach supports our customers by facilitating effective validation of their APIs, ensuring a streamlined pathway to market entry.

We expect the business momentum to continue in the near future led by a strong pipeline of new products in API and intermediate business.

CDMO/CMO services

We are amongst the leading small molecules CDMO/ CMO players in India working with big global innovators, pharmaceuticals and biotech companies. We offer end-to-end services including process development and manufacturing of KSMs, RSMs, Intermediates & GMPAPIs for small molecule NCEs, from early clinical phase (Phase1,2,3), launch to commercial supplies. We have rich experience in complex chemistries like cyanation, flow chemistry, nucleotides, amongst others.

We have three dedicated R&D centres and pilot facilities focussing on CDMO. We are currently working with 21 customers on 60 active projects, of which 33 are in the commercial stage and 27 are under different stages of development, both at customer’s end. We have emerged as a reliable partner for global customers, contributing to repeat business driven by our strong manufacturing expertise with rapid scale-up.

We function like an extended laboratory for our customers providing scientific and project teams, rapid development, superior manufacturing capabilities and strong cultural ethos. We enable our customers to achieve a quick turnaround time bringing the molecules to market faster through comprehensive services like robust process development (DoE & QbD studies), process validation and analytical method development & validation. Our capabilities include strong CMC documentation expertise to ensure smooth regulatory approvals. We focus on the creation of customised processes, their scaling up, and efficient manufacturing of API intermediates. CRAMS activity is focussed on APIs and intermediates.

We exercise stringent intellectual property protection on the services offered by signing confidentiality agreements with our customers to provide a reliable platform for rapid API development projects. This aids us in expanding our business footprint.

Xanthine Derivatives & Allied

We are the largest Indian pharmaceutical manufacturer of Xanthine derivatives including caffeine, theophylline anhydrous, aminophylline, etophylline and theophylline. These substances find application in asthma and chronic obstructive pulmonary disease. Caffeine is used in beverages, nutraceuticals, and cosmetics. We boast of high-quality products, capacities and warehouses with a global supply chain. Being independent from Chinese influence and a fully backward integrated manufacturer of Xanthine derivatives, we offer strong geographical diversification amidst growing "China+1" shift, globally.

We have two dedicated manufacturing plants with star certifications, equipped with Star Kosher, Hazard Analysis Critical Control Point (HACCP), Sedex SMETA-4Pillar, FSSC-22000 (GFSI), and GMP. The combined installed capacity of these plants is 5,000+ Metric Tonnes Per Annum (MTPA). We are in the process of capacity expansion to take total capacity to 9,000+ MTPA which is expected to go live in a phased manner in the second half of FY 2025-26. Post increased capacity, we target to take our global market share from 15-20% currently to 20-25%.

We also produce a variety of compounds based on sulphur and sulphonation including sulphuric acid, sulphur trioxide (SO3), oil, dimethyl sulphate, diethyl sulphate, sodium vinyl sulfonate and dimethyl urea. Dimethyl urea & Dimethyl sulphate is a crucial basic ingredient for xanthine derivatives and Diethyl sulphate serves as alkylating agents in the production of dyes, medicines, and perfumes as well as a solvent for the extraction of aromatic hydrocarbons. Sodium vinyl sulfonate is used as a wetting agent, dispersion, and anti-static in polymerisation and surfactant. The production facility for these agents is ISO - 9901, 14001, and 45001 certified.

FINANCIAL PERFORMANCE

In lakhs	FY 2024-25	FY 2023-24	FY 2022-23
Total income	2,115.1	1,852.6	1,945.2
Total expenses	1,650.7	1,466.6	1,603.1
EBITDA	464.4	386.0	342.1
EBITDA margin	21.96%	20.84%	17.59%
Depreciation	86.9	73.2	62.5
Finance costs	26.9	17.2	21.1
PBT	360.7	300.5	260.8
Tax	88.3	83.6	67.3
PAT	272.4	216.9	193.5
PAT margin	12.88%	11.71%	9.95%

During FY 2024-25, the consolidated revenue increased 14.2% YoY to 2,115.1 lakhs from 1,852.6 lakhs in FY 2023-24. Decline in raw material prices & effective cost saving initiatives have led to strong EBITDA growth of 20.3% YoY to 464.4 lakhs from 386 lakhs in FY 2023-24. EBITDA margin expanded 112 basis points (bps) to 21.96% from 20.84% in FY 2023-24.

Profit after tax (PAT) grew 25.6% YoY to 272.4 lakhs in FY 2024-25 from 216.9 lakhs in FY 2023-24. PAT margin expanded 117 bps to 12.88% from 11.71% in FY 2023-24. Total equity as on March 31, 2025 stood at 1,989.9 Crs against 1,757 Crs as on March 31, 2024. Total net debt to equity stood at 0.19x.

We have maintained our credit rating, CRISIL A+/Stable, for our working capital limits from banks.

BUSINESS OUTLOOK

FY 2024-25 has been a record year of highest ever EBITDA and PAT for us with significant achievements across our business segments led by a motivated workforce, strategic focus and resilient business model. Going forward, we remain confident of building on this growth momentum. We continue to base our growth strategy on the three pillars of growth, backward integration and financial discipline. In future, we expect the following: EBITDA growth of approximately 12-15% in FY 2025-26 on a standalone basis supported by an increase in contribution from higher margin products, improved process efficiencies and volume growth With xanthine capacity of 9,000 MT likely to be fully operationalised by Q1 FY27, we expect capacity utilisation of 80-90% over the next three years with 50% sales targeted to beverages and regulated customers

For API and intermediate segment, we are continuously working towards product innovation and focussing on new molecules with patent expiry in the coming 3-5 years

The CDMO/CMO segment revenue is expected to grow 30-40% in FY 2025-26 on the back of strong manufacturing capabilities and sound R&D setup

KNOWLEDGE MANAGEMENT

We have a strong Intellectual Property (IP) framework which confers to ISO 27001:2013 standards. The IP framework elaborates rigorous terms for access control, information sharing and authorised disclosure, ensuring comprehensive confidentiality of our processes and knowledge.

To effectively undertake chemical searches in the perspective of Freedom-to-Operate/Non-Infringed Process development, we have an experienced Knowledge Management team which makes use of adequate databases. The team implements and monitors the accreditation requirements of integrity, confidentiality and availability.

RESEARCH AND DEVELOPMENT (R&D)

We have emerged as a preferred partner for most of our clientele led by our unwavering focus on research and development capabilities.

We have three technologically advanced R&D facilities located at Nerul and Dombivali in Maharashtra, and Vapi in Gujarat. The facilities conduct Route Scouting and Design, New Product/Process Development, Process Optimisation and Scale-up and Life Cycle Technology Management, on an on-going basis.

A strategic programme management system enables us to have an efficient work flow throughout the product lifecycle, from new enquiry to commercialisation, for every R&D project.

RISKS AND MITIGATION

To protect our business from various foreseeable potential internal and external risks, we have devised an extensive Risk Management framework to monitor, map and mitigate the various impending risks to business operations. The Board of Directors has constituted the Risk Management Committee for managing various organisational risks using adequate mitigation plans in response to any risks. The Committee closely monitors market and business developments to keep an eye on the emergence of a new threat /risk.

Risk	Mitigation measure
Regulatory Risk: Given the nature of the industry we operate in, it is imperative to ensure strict compliance with multiple rules and regulations governing different markets. Non- compliance/misinterpretation/delayed compliance of any new/existing regulation can lead to inadequate observance.	To ensure complete adherence to all applicable rules and regulations including new ones and any modifications in existing ones, we have a robust internal control system in place. Adequate policies and review mechanisms enable us to keep in check strict compliance.
R&D Risk: To remain relevant amidst evolving market conditions, we need to upgrade and invest in R&D and keep pace with the latest advancements in science and technology.	We have state-of-the-art R&D units handled by a competent team of scientists, tirelessly working on innovation and R&D. Our team is responsible and committed to remain relevant with technological advancements and we ensure adequate R&D investments for the same.
Competition Risk: Given the lucrative growth prospects of the pharmaceutical sector, we are exposed to heightened competitive pressure from domestic and/or international peers.	We have created a moat given our rich experience, diversified product and services portfolio, strong brand equity, relentless focus on R&D, superior quality and compliance standards and robust relationships with all stakeholders - employees, customers and vendors. To minimise costs and improve efficiency we are focussed on backward integration.
Risk		Mitigation measure
Raw Material Risk: We face the risk impact on profitability in the event of unavailability or limited availability of raw materials and/or price fluctuations of important raw materials.		Long-lasting relationships with our suppliers help us to ensure uninterrupted flow of inventory at competitive rates. We follow a RM-plus pricing mechanism to de-risk ourselves from price volatility.
Quality Risk: It is important for us and our vendors to adhere to GxP (Good Laboratory Practices, Good Manufacturing Practices, and similar standards) across the product value chain to maintain superior quality standards. Non- compliance not only attracts regulatory penalties and sanctions, but also impacts brand equity, thereby hindering business growth prospects.		At all manufacturing site, we have dedicated group of quality experts to ensure highest quality standards are met with. We strictly follow "RIGHT THE FIRST TIME" approach. All sites are audit-ready at all times. Latest information technology systems help streamline and optimise crucial procedures resulting in quality assurance and strengthening of quality control processes. To address historical quality concerns and prepare for prevention, we maintain a consistent quality improvement and training programme. In the event of non-conformity, adequate investigation is carried out, and Corrective and Preventive Action (CAPA) plans are immediately implemented to rectify the situation and prevent recurrence.
Health, Safety & Environment Risk: Operating in the healthcare space makes safety an integral part of business operations. Occurrence of any incident with respect to Health, Safety, and Environment (HSE) may pose substantial risk to regulatory compliance, reputation, and business continuity.		We remain committed to ensure the well-being of all our people across the supply chain. To ensure maintenance of standardised corporate Health, Safety and Environment (HSE) guidelines across manufacturing sites, we have an HSE team in place. The team closely monitors safety and operational exposures. Our robust HSE management system helps in timely risk identification and mitigation. We ensure strict adherence to industry-leading safety standards and applicable local regulations, and strive to minimise practices having a negative environmental impact. To encourage a safer working environment and spread awareness, monthly HSE campaigns are run focussing on different priority elements.
		Following ISO 14001 and ISO 45001 standards, periodic internal and external audits, and specialist external audits are conducted with strong focus on specific HSE aspects.
		Throughout product life cycle and operation, we conduct Hazard Study Checklist (design stage of product life cycle), Hazard Identification and Risk Assessment, and HAZOP Studies.

INFORMATION TECHNOLOGY

Information technology is an imperative pillar of organisational growth with advancements in technology. We remain committed to the highest level of data privacy, cybersecurity, and data security. Given the nature of our operations, it is mandatory to safeguard data privacy, confidentiality and integrity. Latest technology upgradation and adequate cybersecurity measures, enable us to address challenges and protect our business from malicious attacks and unauthorised access.

To ensure smooth handling of sensitive data, we have adopted stringent data security measures. With this we are able to handle critical data storage and transmission with ease, improve our decision-making capabilities and prevent the probability of incurring losses. Elaborate and well-defined procedures, controls and governance, coupled with appropriate responsibilities assigned to all stakeholders including our employees, contractors, customers, vendors, suppliers and visitors, allows strict adherence with the information security management system. We strive to protect the personal data of all our stakeholders. Our Business Continuity and Disaster Recovery plan is in place to minimise the impact of any negative event and ensure rapid recovery in restoration of operations.

QUALITY ASSURANCE

Aim

Enhance quality of its products and services

Exceed needs & expectations of relevant stakeholders especially customers Achieve and maintain quality leadership by incorporating best-in-class manufacturing technologies and quality standards Build trust with eco-friendly processes

Effort

Sound quality systems to manufacture and deliver superior quality products Strict compliance to high quality standards, both, national and international Global standards of safety, quality and efficacy maintained at all our facilities Life cycle approach enables strict adherence to "RIGHT THE FIRST TIME" approach in planning and execution of all the process, products and services Work on constantly improving product and process through customer feedback

Result

Highly motivated and competent team expert in their respective fields Superior quality products and services delivered to customers with Right Time First Surpass customer expectations Deep understanding of customer needs and market trends leading to competitive edge

INTERNAL CONTROLS, SYSTEMS AND ADEQUACY

We have a well-devised internal control framework in accordance with the size, nature and complexity of the industry we operate in. The control framework is capable of safeguarding our assets, preventing unauthorised use or disposition, guarantee complete and correct authorisation, record and report all business transactions and ensure strict compliance with all applicable rules and regulations. Our internal control system ensures optimum utilisation of resources, thus improving operational efficiency and productivity.

Our robust ‘Compliance Management System’ (CMS) is responsible for effective risk mitigation. CMS has a comprehensive list of applicable laws, readily available at any given point of time. CMS ensures good governance across all our business locations with its distinguished features like user-friendly alerts/escalations, customised reporting and mechanism to deal with timely regulatory updates.

CAUTIONARY STATEMENT

Aarti Pharmalabs may, from time to time, make additional written and oral forward-looking statements, including statements contained in our filings with Bombay Stock Exchange and National Stock Exchange, and the reports to our shareholders. Aarti Pharmalabs does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of us. All information contained in this report has been prepared solely by us. Aarti Pharmalabs does not accept any liability whatsoever for any loss, however, arising from any use or reliance on this Annual Report or its contents or otherwise arising in connection therewith.