Alpa Laboratories Ltd Management Discussions.


A strong economic recovery depends on rapid and effective vaccination rollout with stronger policy support. The IMF has projected a global economic outlook of 6% for 2021, owing to additional policy support from a few large economies and the expected vaccine-powered recovery. The IMF recommends a tailored approach for each economy based on the pandemic scenario, recovery rate, along with social and economic capabilities

The overall outlook for the Indian economy is positive, continued pace of vaccination of larger segment of population and containment of further surge in infections would be critical for the economys growth. Encouragingly, the agricultural sector has been resilient throughout the crisis, and with normal monsoon predicted even in the current fiscal, the agriculture sector is poised to support the economy.

COVID-19 virus posed the most formidable economic challenge to India and to the world in a century. The imperative of flattening the disease curve was entwined with the livelihood cost of an imminent recession, which emanated from the restrictions in economic activities from the lockdown required to contain the pandemic. This inherent trade-off led to the policy dilemma of lives versus livelihoods.

Governments and central banks across the world deployed a range of policy tools to support their economies, such as lowering key policy rates, quantitative easing measures, loan guarantees, cash transfers and fiscal stimulus measures. India recognised the disruptive impact of the pandemic and charted its own unique path, amid dismal projections by several international institutions, with reference to the outbreak in the country given its huge population, high population density and an overburdened health infrastructure.

A favourable monetary policy ensured abundant liquidity and immediate relief to debtors via temporary moratoria, while unclogging monetary policy transmission. As anticipated, while the lockdown resulted in a 23.9% contraction in GDP in Q1 2020-21, the recovery has been a V-shaped one as seen in the 7.5% decline in Q2 and the recovery across all key economic indicators. Starting July, a resilient V-shaped recovery is underway, as demonstrated by the recovery in GDP growth in Q2 after the sharp decline in Q1, a sustained resurgence in high frequency indicators, such as power demand, E-way bills, GST collection, steel consumption, among others. The reignited inter- and intra-state movement and record-high monthly GST collections have marked the unlocking of industrial and commercial activity.


The Indian pharmaceutical industry is the worlds third largest by volume with an annual revenue of about USD41 billion (domestic formulations market and exports). It is the largest provider of generic medicines globally, occupying a 20% share in global supply by volume, and also supplies 62% of global demand for vaccines. The Indian pharma industry has been growing at a compounded annual growth rate (CAGR) of more than 15% over the past five years. India is often referred to as the "pharmacy to the world", ranking 3rd worldwide in total pharmaceutical production volume and 10th by value. As per National Indian Promotion Agency, it is the largest producer of generic medicines and vaccines, occupying 20% volume share in generics and 62% in vaccines.


COVID-19 pandemic and related lockdowns across different markets impacted pharma supply chains on intermittent basis. Alpa Laboratories Limited proactively took all the required measures to ensure continuity of supplies to its patients and safeguarding of health of its employees and their families.

Key Impacts of COVID 19 Pandemic:

• Contraction in economic activities and consequent slowdown in pharmaceuticals growth across different markets

• Slowdown in research and development activities

• Restriction on inter- region travel

• Disruption of flow of chain distribution

• Prices hike of raw materials



With declining fertility and increased longevity, the relative size of older age groups is increasing, Individuals are becoming increasingly health conscious and medical science continues to advance, number of older people is growing faster than the number of people in younger age groups. Older people (representing aged 65 and older) is projected to increase from 9% in 2019 to 16% by 2050. In Todays Modern era many youngsters are very health cautious and development in medical science also supports the human health.


In todays world, lifestyle of individuals is increasingly becoming hectic and stressful leading to unhealthy eating habits, lack of exercise, less sleep and other lifestyle choices. This change in lifestyle has resulted in higher obesity, hypertension, depression, diabetes, cardiovascular diseases and other physical problems. sedentary lifestyle, changing dietary habits, hectic and stressful life, less sleep and certain environmental factors causes higher incidence of chronic diseases. This include obesity, hypertension, depression, diabetes, cardiovascular diseases and other physical problems.


Disposable income, also known as disposable personal income (DPI), is the amount of money that households have available for spending and saving after Income Tax have been accounted for. Disposable personal income is often monitored as one of the many key economic indicators used to gauge the overall state of the economy. In emerging markets, long term economic growth will lead to rise in disposable incomes. Due to this, the demand for better healthcare solutions will gradually increase.


The middle-class population as well as per capital income continues to expand, driving demand for healthcare solutions. This expansion is likely to be more prominent in emerging markets.


Patients are better informed and aware of the healthcare choices available to them through technological advances such as mobile apps and healthcare devices. A new wave of innovation continues to replenish the product pipeline and will provide essential therapeutic advances for patients. In addition to novel medicines, there will be an ongoing flow of new mechanisms that will see their first human uses in areas such as genome-editing, micro biome as well as regenerative cell technologies that include stem cells harvested from one part of the body to use against a disease in another part.


Penetration of health insurance is expected to surge with the government sponsored initiatives and programs. Increase in private sector insurance will also play an important role in affordability for higher cost. Moreover, medical infrastructure due to setting up / renovation of hospitals and healthcare centers, procurement of medical equipment and devices and improvement in medical education is expected to give healthcare providers the tools and resources necessary to treat their patients.


Regulatory agencies have set a high priority to improve the drug review process to increase competition to reduce prices. Policies imposed by regulatory will be a significant growth driver to achieve success.


During the financial year under report, the Company registered a total income of 8893 Lacs as against 8305 Lacs in the previous financial year, a growth of 7.08% has been noticed. Since the company is moving on a strong path to achieve the highest milestone in the pharmaceutical industry for this company has started new market in overseas countries so that turnover can be maximized through supplies in overseas market.

As during the year company has also been noticed that order from government department has been significantly increased as compared to the previous year it may impact on the turnover also.


The Company operates in a single segment of Drugs and Chemicals, which is the primary reportable segment, and the same is given in the notes to the financial statements.


Alpa Laboratories Limited has built a strong culture of risk mitigation process which entails regular and stringent monitoring of its business activities to identify, evaluate and resolve risks. The top management of the Company and the Board are involved in monitoring of risk assessment and mitigation, thus ensuring a quick resolution mechanism.

However, some risk and concerns had been faced by the organization like:


The Company is producing various products and the risk of future litigation may exist due to very complex terms and conditions of the agreements, at present there are few litigations are pending which may do not have any impact on the company as the litigation is not much have such depth to effect the affairs of the company.


Indian Market is growing rapidly and the new players in the Pharma industry may create new challenges for existing Pharma companies . Competition is an integral part of all industries and pharmaceutical is no exception. Different markets / businesses have different intensities of competitions and Company has a robust framework to identify its competitive advantages like early-to-market, niche new product launches through identifying unmet medical needs etc.


Pharmaceutical is among one of the highly regulated industries across the world and rightly so as it deals with evolving human life. These regulation impact development, manufacturing, approval, marketing and distribution of products, while throwing new compliance challenges. A strong quality assurance mechanism and compliance monitoring network at Alpa ensures strict compliance at every level.


Due to the impact on COVID 19 Import/Export has effected very adversely on the industry and the company has witnessed the shortage of foreign currency due to lack of export sales during the March 20 to June 20. The Company earns a vital part of its revenue in foreign exchange, thus exposing it to the volatility in the exchange rates. The Company follows a conservative and disciplined hedging policy which ensures protecting the desired exchange rate for sustaining the profitability.


The business is exposed to potential claims for product liability. These risks are sought to be managed by appropriate laboratory and clinical studies for each new product, compliance with Good Manufacturing Practices and independent quality assurance system. The Company also has an adequate insurance cover for product liability.


Although a major portion of the Companys finished formulations are being manufactured at in-house facilities, the Company also depend on third party suppliers for sourcing for some of the markets. Any significant disruption at inhouse facilities or any third-party manufacturing locations due to economic, regulatory political & social factors or any other event may impair the Companys ability to produce, procure and/or ship products to the markets on a timely basis and could expose the Company to penalties and claims from customers.


The development of the business in overseas markets is a critical factor in determining future ability to sustain or increase global product revenues. This poses various challenges including volatile economic conditions, IP issues, developed market compliance standards, inadvertent breaches of local / international law and interventions by national governments or regulators restricting access to market and / or introducing adverse price controls. However, the Company carefully monitors the business scenarios of these markets, prepares the business plan and undertakes various researches to reduce the risk at the minimal level.


Currency risks mainly arise out of overseas operations and financing activities. Exchange rate fluctuations could significantly impact earnings and net equity because of invoicing in foreign currencies, expenditure in foreign currencies. The Company has a defined foreign exchange risk management framework to manage these risks excluding translation risks.


The Company is highly dependent on information technology systems and related infrastructure. Any breakdown, destruction or interruptions of this system could impact the day to day operations. There is also a risk of theft of information, reputational damage resulting from infiltration of a data center and data leakage of confidential information either internally or otherwise. The Company keeps on investing appropriately on the protection of data and information technology to reduce these risks


The Company has recently set up the new software system to enable to track the real time information at any time with the clear picture. We try every possible manner to protect the safeguards of assets of the members of the company. The Company is currently having strong system of internal controls in supervision, checks, policies and procedures, which are being tested on routine basis by the management and the internal auditors. The system is being reviewed and updated on an ongoing basis. Moreover, the company continuously upgrades these systems in line with the best accounting practices. The Audit Committee also reviews the adequacy of internal controls systems and the compliance thereof. Further, the annual financial statements of the company are reviewed and recommended by the audit committee for the consideration and approval of the board of directors. The committee also reviews internal controls systems, significant accounting policy, major accounting entries, related party transactions, etc.


The human resources are assets for the organization and plays a crucial role in the growth and success of an organization. Company has a policy to retain talent at its high priority to enable achievement of organizational goal and vision. The organization takes pride in its human capital, which comprises of people from diverse backgrounds and cultures. Guided by the core values which are deeply imbibed in each of the employees, the organizations achievements are an outcome of efforts, dedication and conviction demonstrated by its people.

The company has 391 permanent employees as on 31st March, 2020 against 405 employees as the end of March 2020, a decrease of 14 employees has been noticed.


PARTICULARS 2020-21 2019-2020

% Change

Rs. In Lacs Rs. In Lacs
Total Income 10196.48 8893.58 +15%
EBITDA 1206.73 631.77 +91%
Depreciation 122.87 114.20 +8%
Interest Charges 4.64 9.84 +53%
Profit Before Tax 1079.22 507.73 +113%
Exceptional Items - - -
Income Tax and Deferred Tax 124.41 99.92 + 25%
Profit After Tax 726.44 410.30 + 77%


- Total Income has risen from the 8893.58 levels to 10196.48 with 15% increased.

- PBT has also risen from the 507.73 levels to 1079.22 with 113% increased.

- Depreciation has slightly increased due to new addition in capex.

- Interest amount has significantly decline due to paying off all the debts on time.

- PAT has also risen from the levels of 410.30 Lacs to 726.44 Lacs with significant risen of 77% levels.


Certain statement in the management discussion and analysis may be forward looking within the meaning of applicable securities laws and regulations and actual results may differ materially from those expressed or implied. Factors that would make differences to companys operations include competition, currency fluctuations, regulatory issues, changes in government policies with in India and the countries in which the company conduct business and other incidental factors.