Alembic Ltd Management Discussions

Industry Perspective vis-a-vis Company

The Company operates primarily in the manufacture of Bulk Drugs and Real Estate Business.

(A) Segment-wise Performance, Industry structure and Developments, Outlook and Opportunities & Concerns, Risk and Threat:

a) Bulk Drugs Business:

The API manufacturing business continues to navigate significant challenges, including a limited product portfolio, declining selling prices of proprietary API molecules, reduced sales volumes in the low-margin job-work segment, and a constrained customer base.

During the year, operations were further impacted by an unforeseen complete breakdown of the gas engine, which is a critical component of the Companys utility infrastructure. While this disruption necessitated depending on higher-cost grid power, the situation was effectively mitigated through an insurance claim, enabling the procurement of a new gas engine.

Despite these limitations, the Companys focused efforts have enabled it to sustain operations. However, the long-term outlook for this segment remains uncertain, necessitating continuous strategic evaluation.

b) Real Estate Business:

The real estate industry in India experienced robust growth during the fiscal year 2024-25, with Tier II and III cities emerging as significant players in the real estate market, driven by affordability, infrastructure development and urbanization. These cities are increasingly serving as academic, logistics and industrial hubs, creating new housing demands. Enhanced urbanization, coupled with government initiatives around improved logistics is strengthening connectivity between satellite towns and major metropolitan centers, unlocking fresh growth opportunities.

As these cities become economic and industrial hubs, there is an increase in demand for not just affordable and mid-segment housing but premium housing as well. Rising disposable incomes and buyers lifestyle changes have led to a general shift in consumer preferences towards luxury amenities and lifestyle offerings.

The Company continues to focus on Vadodaras real estate market. Vadodara, the third largest city in Gujarat, has emerged as a prime real estate destination due to its thriving industrial hubs and affordable property rates. With major infrastructure projects like the Vadodara- Mumbai Expressway and the upcoming Delhi-Mumbai Industrial Corridor (DMIC), the city is attracting homebuyers and investors alike. The growing presence of IT companies and employment hubs further fuels real estate demand, making Vadodara a lucrative option for property buyers.

The commercial real estate market in Tier II and III cities, particularly Vadodara, is on an upward trajectory. Factors such as affordability, infrastructural improvements, and a burgeoning startup culture are driving this growth. As businesses continue to adapt to new work models and seek cost-effective solutions, the demand for office spaces in these regions will likely increase significantly over the next few years.

Your Company has made decent progress on its various projects. VEDA-II, one of the Companys gated community project achieved completion in the first quarter of FY 2025. The Companys upscale premium residential projects, Townhouse24 also achieved 100% sales during the year. Other premium projects like The Villas and The Gardens witnessed decent demand. The Company also launched another housing project with 3BHK and 4BHK configurations called The Park Crescent and is witnessing good interest from home buyers.

The Company remains steadfast in its commitment to further strengthen its commercial portfolio. During the year, the Company started work on a new commercial office building to cater to the leasing market. While the building is expected to achieve completion towards the second half of the next financial year, about more than 50% of the leasable area has been pre-leased to marquee clients. Your Company is also actively developing mixed-use projects that incorporate high street retail, food courts, restaurants and entertainment zones. The Companys growing leasing portfolio not only strengthens recurring revenue streams but also enhances asset utilization, ensuring sustainable growth in the years ahead.

The Alembic City campus and Alembic Art District continue to be prime attractions in the city, effectively engaging their target audience. During the year, the Company has actively organized events during festivals such as Diwali and New Year, along with distinctive initiatives like exhibitions for promotion of Arts curated by budding artists and the Organic & Sustainable Bazaar.

These initiatives have garnered significant interest and footfall, further enhancing the vibrancy of the campus while reinforcing the Companys market presence. This success reflects the Companys expertise in creating dynamic and aesthetically appealing spaces.

By maintaining an unwavering focus on delivering high-quality residential projects that cater to evolving consumer preferences, the Company has strengthened its position as a trusted developer. Additionally, it has built a well-diversified leasing portfolio and successfully developed mixed-use assets, further reinforcing its market standing. This unwavering commitment to excellence and strategic growth has not only bolstered its reputation as a niche developer but has also contributed to enhancing the legacy of the Alembic brand in the real estate sector. As urbanization trends continue to evolve, the Company is well-positioned to capitalize on emerging opportunities, reinforcing its market leadership and commitment to excellence.

(B) Finance:

The gross revenue of the Company was Rs. 21,435.79 Lakhs for the year under review as compared to Rs. 15,225.00 Lakhs for the previous year ended 31 * March, 2024. The Company registered a net profit of Rs. 14,194.71 Lakhs as compared to net profit of Rs. 9,288.80 Lakhs for the previous year ended 31^st March, 2024.

(C) Key Financial Ratios:

Key financial ratios are provided in the Notes to Standalone Financial Statements at Note no. 36(U), with the reasons for major variations, if any.

(D) Internal Control Systems and Adequacy:

The Company maintains a system of well-established policies and procedures for internal control of operations and activities.

The Company has appointed Internal Auditors for the Bulk Drugs division and Real Estate Division to ensure proper system of Internal Control and its adequacy. Further, the real estate business has concurrent auditors for joint measurement verifications and quality audit.

The reports of Internal Auditors are presented on regular basis before the Audit Committee and their recommendations are implemented.

(E) Human Resource Intervention:

The Company has optimized its workforce structure to achieve ideal operational efficiency. While we had introduced work from home options for eligible roles in the previous years, this year, we enhanced our approach by implementing new policies designed to increase employee flexibility and improve organizational agility. As a further commitment to measuring and improving our workplace culture, we participated in the internationally recognized Gallup Survey for the second year in a row. The assessments consistently show positive outcomes, demonstrating managements commitment to fostering engagement.

(F) Health, Safety, Security and Environment:

Health, Safety, Security and Environment is always looked at with its due seriousness along with our business activities and all employees are adequately trained for taking up their individual job accountability. Alembics operations are well- resourced & they comply with the stringent & new norms of Health, Safety, Security and Environment.

Safety audits are carried out regularly by independent government approved consultants for the regular operations and the newly introduced plastic, e-waste, bio wastes categories as well. Environmental audits and hazop-studies were also carried out and the statutory reports of our compliances are submitted to regulators periodically for their review and inputs. Efforts are made at all levels to conserve energy and resources.