Alembic Management Discussions


Industry Perspective vis-?-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 Company continues to do production of bulk drugs, mainly of generic APIs & their intermediates on job work basis.

The manufacturing business continues to remain under pressure due to its limited scale coupled with its low-margin job work business model. The business also faces stiff competition from small set-up players and cheaper imported alternatives. Despite the business necessitating a substantial capital investment for asset modernization, its prime city location and low profit margins render the capital commitment practically unviable. This business is barely sustainable & faces an uncertain future, despite our best efforts.

b) Real Estate Business:

At the macro level, there was notable growth in the real estate sector for the year, encompassing both residential and commercial development, as the demand for properties remained strong for most part of the year, albeit some sluggishness towards the last quarter. However, despite this overall success, the demand remained comparatively lower in Tier II & III towns as compared to the large metros.

During the year, the industry encountered several challenges that limited growth to some extent. The frequent upward rate revisions by the Reserve Bank of India, though necessarily to control inflation, created a challenging environment for the industry. While the interest rate for home-buyers on housing finance spiraled up very rapidly to the pre-COVID levels, the liquidity to the industry and the borrowing costs for developers both became unfavourable, making the sector less attractive. Another perennial issue that the industry faces is the heavy dependence on labour, a high proportion of which is migrant, leading to a mismatch in demand and constant supply.

With the impact of COVID gradually receding and a majority of employees returning to the office, the commercial real estate sector experienced a significant upswing, primarily driven by the heightened demand for office spaces. The commercial real estate sector also boomed due to increase in the demand of warehouses and the fast growing concept of flexible offices.

Despite these and various other challenges, the Company has made significant progress on its projects. VEDA-II, one of the Companys ongoing residential projects, which is also having the tallest residential tower in Vadodara, is expected to begin deliveries by the end of this financial year. The

Company has also seen reasonable demand for its luxurious premium residential projects such as Townhouse24 and The Villas, with deliveries for these projects expected to start this financial year, as well. Moreover, the Company has plans to launch another niche premium housing project with duplex flats called The Gardens, which is expected to add to the Companys success. The Company continues to focus on leasing commercial spaces and strengthening its rental leasing portfolio gradually.

Alembic City campus and Alembic Art Districts city centre destination remain popular with visitors and continue to impress their target audience, highlighting the Companys success in creating attractive and innovative spaces. The Art Districts city centre is positioned perfectly as a central landmark of Vadodara, with the city rising all around it. Within our campus, everything has been built on a human scale, making it connected and convenient to reach all places with commercial spaces, retail and living come together to produce a balanced existence.

The Companys ability to adapt to changing market conditions and focus on delivering high-quality projects has helped it to adapt to challenges faced by the industry and maintain its position as a niche real estate developer.

(B) Finance:

The gross revenue of the Company was 12,315.76 Lakhs for the year under review as compared to 7,597.28 Lakhs for the previous year ended 31st March, 2022. The Company registered a net profit of 7,927.03 Lakhs as compared to net profit of 8,571.47 Lakhs for the previous year ended 31st March, 2022.

(C) Key Financial Ratios:

Key financial ratios are provided in the Notes to Financial

Statements at Note no. 33(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 effectively streamlined its workforce to an optimal size. It has also devised a strategic plan for leadership development, collaborating with reputable agencies and implementing developmental programs in alignment with the plan. The annual internal employee comfort survey consistently yields reassuring results, reflecting the managements dedicated efforts towards enhancing employee engagement. Moreover, the Company has extended the option of remote work to those who can effectively carry out their responsibilities from home, striking a favorable balance between safety and productivity. As a result, teams are operating with elevated motivation and optimal efficiency.

(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.

For and on behalf of the Board of Directors,


Chirayu Amin

Chairman (DIN: 00242549)

Date: 12th May, 2023

Place: London