Accretion Pharmaceuticals Ltd Management Discussions

GLOBAL ECONOMY

From 2023 to 2024, the global economy transitioned into a phase of moderating growth and easing inflation. According to IMF estimates, global GDP growth slowed to 3.3% during the year, while headline inflation eased to around 4.2%, supported by softer commodity and energy prices. Inflationary pressures have receded, with many economies experiencing more stable interest rates and improved financial conditions, as central banks have reduced interest rates. World trade in goods and commercial services, measured on a balance of payments basis, grew by 4% to reach US$32.2 trillion after a 2% decline in 2023. Trade in goods increased by 2%, while services continued their strong growth, rising by 10%, surpassing the growth seen in 2023. The proportion of services in global trade rose to 27.2%, the highest since 2005. Nonetheless, uncertainties around trade and tariffs remain significant.

Regional trends remain uneven, North America maintains moderate growth despite sticky inflation, while Asia-Pacific continues to outperform, driven by Indias sustained expansion and Chinas gradual stabilisation.

OUTLOOK

The global economy is forecasted to grow by 3.0% in 2025 and slightly, to 3.1%, in 2026, an upward revision from earlier projections in the IMF, April 2025 outlook. This positive revision is driven by pre-emptive actions taken before tariffs, reduced effective tariff rates, improved financial conditions, and fiscal stimulus in various key regions. Meanwhile, global inflation is anticipated to decline, although inflation in the United States is likely to remain above the target. However, risks are likely to remain high, including the possibility of increased tariffs, heightened uncertainty, and geopolitical conflicts.

Source: https://www.imf.org/en/Publications/WEO/

Issues/2025/07/29/world-economic-outlook-update-july-2025] https://www.wto.org/english/res_e/statisfie/worldfitrade_statistics_e. htm

INDIAN ECONOMY

India continues to stand out as the fastest-growing major economy, with real GDP expanding by 6.5% in FY 2024-25, underpinned by strong domestic demand, controlled inflation, robust trade performance, and healthy external balances. Inflation in India declined substantially, with annual Consumer Price Index (CPI) inflation dropping to a notable 4.6% in the fiscal year 2024–25, the lowest since 2018-19. By June 2025, CPI inflation decreased further to 2.10%, staying well below the Reserve Bank of Indias 4% midpoint target, while the Wholesale Price Index (WPI) entered deflation, signalling a widespread easing of price pressures. This prompted the RBI MPC to reduce the repo rate during the fiscal.

Indias agriculture sector benefited from easing food inflation, indicating improved output and moderated supply pressures, while manufacturing maintained strong momentum with robust output growth, higher gross fixed capital formation, and a surge in private capex. Services remained the largest GDP contributor, supported by rising domestic demand and services exports of about USD 387 billion, and infrastructure development stayed elevated, with continued investment in transportation, energy, and digital connectivity driving long-term productivity gains. Notably, in fiscal year 2024-25 (FY25), Indias Private Final Consumption Expenditure (PFCE) increased by 7.2%, up from 5.6% in FY24. On the fiscal front, the fiscal deficit widened to H 15.77 trillion in FY 2024–25, slightly higher than the estimated government target.

Indias external sector remained robust in FY 2024–25, with exports hitting a record USD 824.9 billion (6.1% more than the previous year) and services exports growing by 13.6%, bolstering overall trade performance. The current account deficit was contained at 0.6% of GDP, with Q4 recording a USD 13.5 billion surplus. Foreign exchange reserves reached USD 697.9 billion in June 2025, covering over 11 months of imports, while FDI inflows rose 14% year-on-year to USD 81.04 billion.

OUTLOOK

India is well-positioned for continued strength in FY 2025–26, with the growth rate likely to remain stable, primarily owing to macro stability, manageable inflation, and resilient consumption. Maintaining counter-cyclical fiscal discipline, accelerating infrastructure spending, boosting credit access for MSMEs, and continuing export competitiveness strategies will be key. Policymakers and businesses should capitalise on structural reforms, scale private investment, and fortify export underpinnings. However, regional conflicts, trade wars, and high internal tariffs may have a negative impact on the future growth of the economy.

GLOBAL PHARMA INDUSTRY OVERVIEW

Pharmaceutical companies have a crucial part to play in creating new medicines and vaccines that can prevent and treat diseases, ultimately improving the lives of patients globally. By investing billions of dollars and thousands of scientist-hours, they drive scientific innovation, advance medical progress, and contribute to the overall well-being of society.

Every countrys socio-economic development relies heavily on a robust healthcare system. Although health expenditure per capita differs across nations, the share of health expenditure spent on biopharmaceutical products remains relatively stable.

Major contributions to the world economy are made by the pharmaceutical industry. This robust sector has been a key pillar of industrialised economies and is gaining recognition as a vital industry in the developing world.

It is anticipated that countries in North America, Eastern and Western Europe, Latin America, and Africa & Middle East will experience a significant rise in spending growth, driven by population-driven volume growth and a shift towards more expensive products.

Pharmaceutical industry product-wise classification commonly includes the following categories:

1. Active Pharmaceutical Ingredients (API): The core chemical compounds responsible for the therapeutic effect in medicines.

2. Formulations (Drug Products): Finished dosage forms combining APIs with excipients, including tablets, capsules, injectables, ointments, and liquids.

3. Contract Development and Manufacturing Organisations (CDMOs): Service providers offering outsourced drug development, manufacturing, and sometimes regulatory support to pharma companies.

4. Biologics and Biosimilars: Complex products derived from living organisms, including vaccines, monoclonal antibodies, and gene therapies.

5. Over-the-Counter (OTC) Products: Medicines available without prescription for common ailments.

6. Medical Devices: Physical or mechanical products like syringes, catheters, or diagnostic kits, often regulated separately.

7. Nutraceuticals and Dietary Supplements: Products providing nutritional benefits but not classified strictly as drugs.

8. Herbal and Traditional Medicines: Derived from natural sources and used in alternative medicine systems.

This product-wise classification reflects different segments within the pharmaceutical ecosystem, each with distinct manufacturing, regulatory, and market dynamics.

Regional dynamics indicate stable growth in North America and Europe, with pricing pressures and regulatory scrutiny shaping outcomes, while Asia-Pacific continues to be the fastest-growing market due to rising access to healthcare, expanding medical insurance coverage, and manufacturing competitiveness.

PERFORMANCE IN 2024

In 2024, the global demand for medicine continued to rise steadily, driven by increasing incidences of chronic diseases, an expanding elderly population, and greater healthcare access in emerging markets. Demand surged particularly for specialty drugs, biologics, and treatments for oncology, diabetes, autoimmune disorders, and infectious diseases. The growing emphasis on personalised and precision medicine, coupled with advances in digital health, also contributed to heightened medicine consumption worldwide. Despite economic challenges and supply chain disruptions, healthcare systems globally prioritised pharmaceutical procurement, sustaining robust medicine demand.

However, the sector faced significant challenges, including escalating R&D costs, prolonged regulatory approvals, and intense pricing pressures from governments and payers. Supply chain disruptions and the impact of US tariffs on raw materials and medical devices further complicated operations, increasing costs and causing market access uncertainties. High US tariffs on pharmaceutical products have led to higher drug prices, supply shortages, and delays in patient access to essential medications. As a result, pharmaceutical companies are exploring diversification of suppliers and reshoring manufacturing, but these transitions take time and drive up R&D and operational costs.

GLOBAL CDMO INDUSTRY

Pharmaceutical companies face a myriad of challenges during the long and complex processes involved in developing and manufacturing new drug substances. A partnership with the right contract development and manufacturing organisation (CDMO) can help bring new pharmaceutical products to market by providing expertise and scalability, and reducing costs.

A full-service CDMOs provide pharma development services in addition to the manufacturing services.

Naturally, pharmaceutical companies outsource drug manufacturing to CDMOs (contract development and manufacturing organisations) because they need access to capacity or technological capabilities beyond what they have in-house, and mitigate risk by outsourcing to a secondary supplier.

CDMOs provide comprehensive services, from drug development to commercial production, enabling cost savings and access to specialised expertise and advanced technologies, especially for biologics and complex therapies. North America holds the largest market share (38.59% in 2024), fuelled by a robust CDMO network and high clinical trial activity, while Asia-Pacific, including India, is poised for rapid growth due to cost advantages and rising R&D investments. Key drivers include strategic partnerships, such as those between Lonza and Acumen Pharmaceuticals, and increasing outsourcing of clinical trials and manufacturing. However, stringent regulatory requirements, like FDA and EMA GMP standards, pose challenges, potentially delaying timelines and increasing costs. Emerging trends include digitalisation, sustainable manufacturing, and a shift toward end-to-end service providers. Despite a fragmented market with competition from small and mid-sized players, strategic mergers and acquisitions are enhancing service offerings and global reach.

The global Contract Development and Manufacturing Organisation (CDMO) market, valued at USD 238.92 billion in 2024, is projected to reach USD 465.24 billion by 2032, growing at a CAGR of 9.0%. This growth is driven by increasing demand for outsourced pharmaceutical services, particularly among small and mid-sized companies lacking in-house manufacturing capabilities.

INDUSTRY TRENDS

AI-enabled R&D and tech-driven operations:

Pharmaceutical companies are increasingly using Artificial Intelligence (AI) and Machine Learning (ML) to speed up drug discovery, design smarter clinical trials, improve manufacturing processes, and make supply chains more efficient. Companies that share data openly and use digital platforms are moving faster than others.

Patent expiries and rise of biosimilars/specialty drugs:

Many blockbuster medicines are losing their patent protection, which opens the door for affordable versions-biosimilars and branded generics. This shift is creating a bigger market for companies that can produce high-quality, affordable alternatives.

Trade risks and supply chain resilience:

Global trade tensions and tariffs are disrupting the flow of raw materials and active pharmaceutical ingredients (APIs). As a result, companies are looking for safer options like having multiple suppliers and shifting production closer to their main markets.

Shift toward self-care, OTC, and wellness products:

After the pandemic, people are more focused on preventive health and self-care. This has boosted demand for over-the-counter medicines, nutraceuticals, skincare, and medicated personal care products. The global wellness economy, worth USD 6.3 trillion, is driving this trend further.

Higher standards in manufacturing and quality:

Regulators and global buyers are raising the bar on quality. They prefer manufacturers who can prove product safety and consistency through digital records, data integrity, and continuous process improvement. The pharmaceutical manufacturing market itself is growing steadily at about 7–8% each year.

REGIONAL DYNAMICS

North America:

This is the biggest pharmaceutical market, with very high spending on biologics and specialty medicines. However, drug pricing is under constant government and public scrutiny. Some companies are also testing direct-to-consumer models for certain products.

Europe:

Economic growth is slower, and drug prices are tightly controlled by health authorities. There is strong demand for biosimilars and high-quality generics, with governments focusing on supply security.

Asia-Pacific:

This region is growing the fastest in terms of medicine use, supported by better insurance coverage and healthcare access. India is a strong manufacturing hub, while ASEAN countries offer expanding demand.

OUTLOOK

The global pharmaceutical industry is expected to maintain steady mid-single-digit growth over the next 3–5 years, supported by rising healthcare demand, ageing populations, and growing prevalence of chronic diseases. In 2025, global GDP is projected to expand by 3.0%, with inflation continuing to ease, creating a more stable environment for healthcare spending. Growth will be driven by biologics, biosimilars, complex generics, and consumer-led wellness products, while advances in AI-enabled R&D, digital health, and supply chain resilience will further shape the sector. Regional dynamics will differ, with North America and Europe focusing on pricing efficiency and biosimilar adoption, while Asia-Pacific leads in volume growth, supported by manufacturing competitiveness and rising healthcare access. Overall, the sector is positioned for sustained expansion, reaching an estimated USD 2.35 trillion by 2030, with opportunities concentrated in innovation, cost-competitive manufacturing, and evidence-based self-care solutions.

INDIAN PHARMA INDUSTRY OVERVIEW

India is a global leader in the pharmaceutical and vaccine industries, producing over 60% of the worlds vaccines and supplying 20% of global generic medicines. While it ranks 14th worldwide in production value, it stands 3rd in volume, reflecting its dominance in affordable and high-quality drug manufacturing. The country is especially recognised for providing low-cost HIV treatment and maintaining its role as the "Pharmacy of the World", particularly evident during the COVID-19 pandemic.

The industrys growth is driven by its strong position in branded generics, with India hosting the largest number of US FDA-approved plants outside the US. Domestic companies like Aurobindo, Cipla, Hetero Labs, and others have built expertise in formulations and patented medicines for developing countries.

India exports pharmaceutical products to 150+ countries, with the US as the largest market, and drug formulations and biologicals as key export categories. Pharma exports contribute about 6% of Indias total merchandise exports, making the sector a major economic driver. The industry continues to attract FDI and M&A investments, supported by government policies, positioning India as a cornerstone of global healthcare supply chains.

PERFORMANCE IN 2024

Indias pharmaceutical industry continued its global leadership, particularly in generics, supplying a significant portion of the worlds demand. Exports surged by 9.39%, reaching USD 27.85 billion, driven by demand in numerous countries, especially for biosimilars and vaccines. Domestic market growth was fuelled by rising chronic disease prevalence and government initiatives like Ayushman Bharat. Investments in R&D, digital transformation, and biologics, supported by the Production Linked Incentive scheme, enhanced innovation and reduced import reliance, reinforcing Indias role as a cost-effective healthcare supplier.

The industry faced significant hurdles. Complex regulatory frameworks, involving multiple agencies, created compliance challenges. Inadequate infrastructure, such as limited cold chain facilities, disrupted supply chains, particularly in rural areas. Geopolitical tensions and high tariffs increased export costs. Dependence on imported APIs, primarily from China, posed supply risks. Counterfeit drugs and quality control issues threatened global trust. Economic volatility and price controls under the Drug Price Control Order further strained profitability, necessitating strategic adaptations to maintain competitiveness.

INDIAN CDMO INDUSTRY

Indias Contract Development and Manufacturing Organization (CDMO) sector is on track for remarkable growth, projected to double from USD 7 billion to USD 14 billion by 2028, according to a BCG report cited by The Economic Times. This expansion is expected to capture 4-5% of the global CDMO market, positioning India as a key player in the pharmaceutical and biopharmaceutical industries.

Key Drivers of Growth

Indias CDMO market is fuelled by several competitive advantages: l Strong API and Generic Drug Manufacturing: Indias established expertise in Active Pharmaceutical Ingredients (API) and generic drug production provides a robust foundation for its CDMO growth. l Cost Competitiveness: Indian CDMO services are priced approximately 20% lower than those of Chinese counterparts, making India an attractive alternative for global pharmaceutical companies. l Supply Chain Diversification: Global pharma companies are increasingly diversifying their supply chains away from China, with Indian CDMOs seeing a 50% year-on-year increase in Requests for Proposals (RFPs) in 2024.

Broader APAC Healthcare Context

The growth of Indias CDMO sector is supported by the rapid expansion of the Asia-Pacific (APAC) healthcare market, projected to reach USD 5 trillion by 2030 and contribute 40% to global healthcare growth.

Conclusion

Indias CDMO sector is poised for exponential growth, driven by cost advantages, expertise in API and generic drug manufacturing, and alignment with global trends in innovative drug modalities. As part of the broader APAC healthcare boom, India is well-positioned to capture a significant share of the global CDMO market by 2028, offering scalable and cost-effective solutions to meet the evolving needs of the pharmaceutical industry.

PERKS OF OUTSOURCING DRUG PRODUCTION TO INDIA

Extensive government support for Local drug manufacturing

Second-Largest workforce, after china

Among the Lowest wages in the world

Up to 70% lower CAPEX than developed countries

Vast customer and raw material availability

KEY GOVERNMENT INITIATIVES

Initiative

Strengthening of Pharmaceutical Industry (SPI) Scheme

Production-Linked Incentive (PLI) Scheme

Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP)

FDI Liberalization

Budget Allocation (FY 2025–26)

Promotion of Research & Innovation (PRIP Scheme)

Focus Area

Infrastructure support & technology upgradation for pharma clusters and MSMEs Boost domestic pharma manufacturing & exports Affordable generic medicines via Jan Aushadhi Kendras

Attract foreign investment in pharma

Support for Department of Pharmaceuticals

Encourage pharma & MedTech R&D, innovation, and Centres of Excellence

Financial Outlay / Target

H500 Crores (FY 2022–26)

H15,000 Crores (FY 2020–29); H604 Crores disbursed in H1 FY 2025

10,500 centres by March 2025

100% FDI (greenfield); up to 74% FDI automatic (brownfield) H5,268.72 Crores (28.8% increase YoY)

H5,000 Crores (FY 2023–28)

KEY INDUSTRY TRENDS

Export momentum and biosimilars-led growth despite tariff noise :

Indian pharma exports continue to rise, with government and industry commentary pointing to a doubling trajectory by 2030, underpinned by complex generics and biosimilars. Even amid potential U.S. import tariffs, Indian firms are expected to retain a strong share due to competitiveness and breadth of supply to the U.S., Indias largest pharma export market.

Policy push — PLI for APIs/bulk drugs and expansion of affordable generics access:

Policy momentum remains strong. The PLI scheme for bulk drugs has surpassed initial investment commitments and delivered measurable import substitution. At the same time, the Jan Aushadhi network of low-cost generic pharmacies continues rapid expansion, both supporting domestic resilience and affordability.

Tech and investment acceleration — AI/drug discovery and global majors scaling India hubs:

India is seeing tangible upgrades in research infrastructure and digital/AI capabilities for drug discovery, alongside new FDI from global pharma. A national supercomputing facility at NIPER Guwahati targets computational chemistry/AI workloads, and Amgen is investing $200M in a Hyderabad technology center focused on AI/data science signals of a shift up the value chain.

OUTLOOK

Growth and Opportunities

The Indian pharmaceutical industry is poised to reach USD 65–70 billion by FY 2025-26, fueled by robust domestic demand, supportive government policies, and global trust in affordable medicines. Growth drivers include innovation in biosimilars, specialty drugs, and expansion into herbal and nutraceutical products. The UK Free Trade Agreement (FTA) enhances export opportunities by eliminating tariffs and easing regulatory barriers, fostering collaboration in life sciences. The sectors diverse portfolio—spanning generics, Ayurvedic, herbal, wellness, veterinary, diagnostics, and nutraceuticals-positions India as a global leader in varied healthcare manufacturing, with increased integration into international supply chains.

Challenges

Despite optimism, challenges loom. Regulatory tightening and pricing pressures in export markets strain profitability. Dependence on imported APIs, particularly from China, risks supply disruptions. High US tariffs threaten cost competitiveness, potentially increasing drug prices and limiting market access. These hurdles require strategic investments in domestic API production and diversified sourcing to maintain Indias competitive edge in generics and high-value segments, ensuring sustained growth and global leadership.

COMPANY OVERVIEW

Accretion Pharmaceuticals Limited, headquartered in Ahmedabad, Gujarat, has emerged as a dynamic player in Indias pharmaceutical landscape since its inception in 2012. As a contract development and manufacturing organisation (CDMO), it excels in producing diverse formulations, including tablets, capsules, oral liquids, and ointments, serving both domestic and international markets across over 30 countries. Its WHO-cGMP, GLP and ISO-certified facility ensures world-class quality, aligning with global standards. Accretions robust financial growth, strategic focus on direct exports, and diversified product portfolio across therapeutic areas like antibiotics, Antibacterial, Antifungal, Antihistamine, Antiallergics, Antitussives, Anticold, Antiulcer, Antacid, Vitamins and Supplement and cardiac treatments position it for sustained success. Leveraging Indias cost-effective manufacturing and skilled workforce, the Company navigates challenges like regulatory complexities and high debtor days with agility. By fostering strong client relationships and prioritising innovation through positioning in Indian Market

, Accretion is well-poised to capitalise on the AFRICA and Southest Asia, Latin America. and expand into high-growth markets, contributing significantly to Indias reputation as a global pharmaceutical leader while delivering affordable, high-quality healthcare solutions.

Position of Accretion in the Global Pharma landscape

l Leverages Indias cost-effective manufacturing to deliver high-quality generics globally.

l Exports to diverse markets spanning 30+, particularly Africa and Southeast Asia, expanding reach.

l Holds WHO-cGMP and ISO certifications, ensuring compliance with international standards.

l Focuses on niche contract manufacturing, carving a specialised global role.

l Utilises recent public offering proceeds to drive innovation and market expansion.

Position of Accretion in the Indian Pharma landscape

l Excels as a dynamic CDMO with a quality-certified Ahmedabad facility.

l Produces diverse formulations, strengthening competitive edge in generics.

l Builds strong client relationships, enabling tailored, customer-centric solutions.

l Employs a skilled workforce, enhancing operational efficiency and innovation.

l Benefits from government-backed initiatives, supporting growth and scalability.

FINANCIAL PERFORMANCE

In FY 2024-25, Accretion Pharmaceuticals Limited recorded a total revenue of H5737.62 Lakhs, reflecting substantial growth from the previous year. The operating profit stood at H1192.46 Lakhs with an operating profit margin of 20.72%. Profit before tax was H976.38 Lakhs, while the company reported a profit after tax of H679.35 Lakhs. The Company incurred interest expenses of H138.63 Lakhs and depreciation of H77.45 Lakhs. Earnings per share (EPS) were H8.48. The tax rate for the year was approximately 30.40%. The company maintained a strong return on capital employed (ROCE) at 46.35%, showcasing efficient utilisation of its capital resources. The financial performance marks an important milestone for the company, with improved profitability and operational efficiency.

FINANCIAL RATIOS

Particulars	FY25	FY24	% Change
Debtors Turnover	6.57	5.80	13.27
Inventory Turnover Ratio	2.78	0.92	201.82
Interest Coverage Ratio	7.80	5.99	30.22
Current Ratio	1.44	1.47	-1.52
Debt-Equity Ratio	0.92	2.45	-62.4
Operating Profit Margin	19.52	20.54	-4.96
Net Profit Ratio (%)	11.84	11.18	5.9
Return on Net Worth	44.44	72.47	-38.68

Reason for Change

The company is getting better at collecting money from customers who owe them. This is because theyve improved their credit terms and their sales have grown. Its a good sign because it shows theyre turning their sales into cash faster, which helps them have more money available to run the business smoothly.

Holding levels of inventories from Financial Year 2024 to Financial Year 2025 increased due to increase in turnover of the company from H3,366.52 Lakhs in FY2024 to H5737.62 Lakhs in FY2025 and due to increase in inventory days, hence the inventory level is also increased as on 31^st March, 2025 to feed the new increased demand of market in next coming period of time.

The company has become more capable of meeting its interest obligations because its operating profit has grown H691.55 Lakhs to H1120.08 Lakhs. And companys financial health and its ability to handle debt-related expenses improved

While the companys current assets have grown, especially in stock and receivables, its short-term borrowings and other liabilities have grown at a fast pace too. Since these liabilities need to be paid soon, and the increase in assets is tied up in less-liquid forms like inventory, the current ratio has slightly decreased.

The ratio decreased significantly due to an increase in shareholders funds, because company issued 38,70,000 bonus shares to existing shareholdres and also raised fresh capital by issuing 29,46,000 new equity shares through an IPO. These actions increased the total shareholders funds, which reduced the companys dependence on debt.

The decrease in the Operating Profit Margin is primarily due to a rise in operating costs, particularly in material costs and employee benefits. While the company saw an increase in revenue, these higher costs have slightly reduced the overall profitability margin.

The net profit ratio increased because the company earned more profit as against revenue. This was possible due to better cost management, lower interest payments (due to reduced debt), and improved operational performance.

The drop in Return on Net Worth from the previous year is mainly due to an increase in the companys equity base.

INTERNAL CONTROL AND ITS ADEQUACY

Accretion Pharmaceuticals Limited has established a robust internal control system commensurate with the scale and complexity of its operations. The internal control framework is designed to ensure: l Accuracy and reliability of financial reporting; l Compliance with applicable laws, regulations, and internal policies; l Efficiency of operations and safeguarding of assets; l Prevention and detection of frauds and errors.

The Company follows a structured process of internal audits conducted periodically by independent professionals. Audit findings and recommendations are reviewed by the management and the Audit Committee of the Board. Corrective actions are implemented promptly to strengthen controls and address identified gaps.

The Audit Committee provides strategic oversight and ensures that the internal control systems remain effective, risk-focused, and aligned with the Companys growth objectives. Management believes that the existing internal control system is adequate and operating effectively, providing reasonable assurance regarding the reliability of financial and operational information.

RISK MANAGEMENT

Operating in a dynamic and regulated industry, Accretion recognises the importance of a structured risk management framework to identify, assess, and mitigate business risks. The Companys risk management framework is integrated into strategic and operational decision-making and is overseen by the Board and its committees. Key risk categories include:

1. Regulatory Risk: Compliance with stringent domestic and international regulatory norms is critical. The Company mitigates this risk through continuous monitoring, training, and adoption of best practices.

2. Market Risk: Pricing pressures and competition may impact margins. The Company addresses this by diversifying product offerings and focusing on higher-margin segments.

3. Operational Risk: Dependence on an uninterrupted supply of raw materials and manufacturing efficiency is a key factor. Long-term supplier relationships and capacity expansion initiatives mitigate this risk.

4. Financial Risk: Exposure to interest rate changes, working capital pressures, and leverage. Post-IPO, repayment of borrowings and improved equity base will strengthen financial stability.

5. Reputational Risk: Any quality lapse can impact brand image. Stringent quality control systems and ISO-certified processes help maintain high standards.

By adopting a proactive approach, the Company ensures risks are identified early and managed effectively, thereby safeguarding shareholder value and enabling sustainable growth.

SWOT ANALYSIS

Strength

l Extensive expertise across various capabilities and technologies.

l A proven history of delivering projects on time and reliably.

l Established long-term relationships with Merchant Exporter. .

l A team of highly experienced, capable industry professionals.

l Infrastructure that complies with regulations, guaranteeing operational excellence.

l Innovative strategies by the management to propel the business ahead.

Weakness

l Supply Chain on imported Key Starting Materials (KSM) and Active Pharmaceutical Ingredients (APIs) affects delivery schedules.

l A significant portion of the Companys revenue depends on a small group of clients.

l foreign currency fluctuations

l Inventory build-ups

Opportunities l Global pharmaceutical companies are increasingly focusing on Asia, particularly India, to support their innovation objectives.

l The Company is investing in expanding its capacity to fulfil rising customer demand and to facilitate geographic growth.

l Rising demand for CDMO services in emerging markets offers avenues for partnerships and scaled production.

Threats

l Changes in regulatory policies might negatively affect business performance.

l Protectionist measures by governments could reduce project inflow to India.

l Pressure from larger Indian and global pharma giants in the generics and CDMO spaces may erode market share.

CAUTIONARY STATEMENT

THIS MANAGEMENT DISCUSSION AND ANALYSIS _MDA_ REPORT CONTAINS CERTAIN FORWARD_LOOKING STATEMENTS WITHIN THE MEANING OF APPLICABLE SECURITIES LAWS AND REGULATIONS. THESE STATEMENTS RELATE TO THE COMPANYS FUTURE BUSINESS OUTLOOK, GROWTH STRATEGIES, OPERATIONAL PLANS, FINANCIAL PROJECTIONS, AND ANTICIPATED DEVELOPMENTS IN THE PHARMACEUTICAL AND CONTRACT DEVELOPMENT & MANUFACTURING _CDMO_ SECTORS.

SUCH STATEMENTS ARE BASED ON CURRENT ASSUMPTIONS, EXPECTATIONS, AND PROJECTIONS, AND INVOLVE INHERENT RISKS AND UNCERTAINTIES. ACTUAL RESULTS MAY DIFFER MATERIALLY FROM THOSE EXPRESSED OR IMPLIED IN THE FORWARD_LOOKING STATEMENTS DUE TO FACTORS INCLUDING, BUT NOT LIMITED TO DEPENDENCY ON IMPORTED KEY STARTING MATERIALS _KSMS_ AND ACTIVE PHARMACEUTICAL INGREDIENTS _APIS_, REGULATORY CHANGES AND DELAYS IN DRUG APPROVALS ACROSS KEY MARKETS, SHIFTS IN GLOBAL PHARMACEUTICAL OUTSOURCING TRENDS, RISING RAW MATERIAL AND R&D COSTS, TECHNOLOGICAL DISRUPTIONS OR FAILURES IN MANUFACTURING SYSTEMS, GEOPOLITICAL TENSIONS, SUPPLY CHAIN DISRUPTIONS, AND MACROECONOMIC VOLATILITY.

THE COMPANY UNDERTAKES NO OBLIGATION TO UPDATE OR REVISE ANY FORWARD_LOOKING STATEMENTS, WHETHER AS A RESULT OF NEW INFORMATION, FUTURE EVENTS, OR OTHERWISE. INVESTORS AND STAKEHOLDERS ARE ADVISED TO EXERCISE DUE CAUTION AND NOT PLACE UNDUE RELIANCE ON THESE STATEMENTS WHILE MAKING INVESTMENT OR BUSINESS DECISIONS.