amrutanjan health care ltd share price Management discussions

Management Discussion and Analysis Report

Economic Overview

Global Economy

In 2022, the global economy underwent positive transformations, benefitting from alleviated inflationary pressures and reduced energy, commodities, and food prices. Private consumption and investment across the globe exceeded expectations due to pent-up demand and improved labor markets.

However, despite these encouraging developments, there were also indications of a more challenging macroeconomic landscape as anticipated risks materialized. The global output suffered a setback in the latter half of the year, primarily due to downturns in China and Russia. Additionally, US consumer spending fell short of expectations, exacerbating the pandemics impact on the world economy. The International Monetary Fund (IMF) foresees a 3.5% global economic growth in 2022, a decline from the remarkable 6.1% achieved in 2021 but still reflecting a healthy rebound compared to pre-pandemic levels.

Inflation became a significant global issue, affecting

US, major European economies, and China due to COVID-19 outbreaks and the Russia-Ukraine War. The IMF reported a high global headline inflation rate of 8.7% in 2022, the highest since 1982, driven by supply disruptions and expansive monetary policies. While some economies experienced higher domestic decrease as central banks work to achieve their targets. Persistent inflationary pressures remain a concern due to entrenched expectations and pricing behavior.

The resurgence of the Chinese economy has invigorated growth momentum on a global scale, alleviating pressures on the international supply chain and resulting in reduced shipping costs. As a consequence, there is a projected surge in consumer demand as people begin to spend their accumulated savings.

The COVID-19 pandemic global healthcare industry, sparking a transformation in 2022, as health providers and payers prioritized digital health, cybersecurity, patient data transparency, and customer-centric enhancements amid increased competition and regulations.

Amid all the simmering macro headwinds, the global GDP is projected to slow to 3% in 2023, due to higher central bank rates combating inflation, with advanced economies experiencing a slowdown while emerging markets, especially China, are expected to pick up. However, in 2024, there is hope for a gradual recovery from the impacts of recent conflicts and easing inflation in both groups of economies.

Indian Economy

Despite global challenges and economic headwinds, the

Indian economy exhibited resilience, growing by 7.2% in 2022, driven by increased private consumption and exports. Despite high oil prices leading to a wider trade deficit, easing concerns over the current account deficit and financing were observed as foreign exchange reserves remained comfortable, and external debt remained low. In FY23, Indias overall exports surged by 14% to reach $775.87 billion, but inflation surpassed the Reserve Bank of Indias (RBI) tolerance level due to rising food prices linked to increased crude oil prices. The central bank promptly responded with interest rate hikes to counter inflations impact on economic activity, maintaining stability in the Indian rupee against the US dollar. Indian capital markets performed well, with stocks outperforming both emerging markets and global peers.

The Indian Union Budget 2023-24 prioritized enhancing taxpayers disposable income to stimulate consumption through discretionary spending and focused on substantial capital expenditure growth to drive investments and job opportunities. International agencies, such as the IMF and

World Bank, consistently projected India as the fastest-growing major economy, affirming its preparedness to navigate potential global challenges in 2023.

(a) Industry Structure and Development

Industry Overview

In 2022, there was a 2.1% contraction in global volume sales for fast-moving consumer goods (FMCG) due to escalating costs and inflation. However, unit value sales experienced a significant increase of 8.4%, leading to an overall nominal growth of 6.3%, as NIQs Retail Measurement Services reported. Notably, Private Label emerged as the only manufacturer group to achieve impressive double-digit growth, recording a remarkable 10.5% increase (excluding China). Meanwhile in India, the FMCG industry faced a challenging challenges in the yet recovering trend. According to Nielsen IQs report for the first quarter of FY23, the sector experienced a promising

10.9% growth in value, driven by increased consumption. However, the non-food segments in rural markets remained sluggish, resulting in an annual decline of 0.7%. Moving to the second quarter, the industry continued to encounter difficulties, particularly in rural areas. Sales in rural markets declined for the fifth

3.6% drop in sales volume compared to the previous quarters 2.4%.

The third quarter presented similar challenges, with a 0.9% decline in volume growth, compounded by successive price hikes due to inflationary pressures. Rural demand remained weak, experiencing a higher 3.6% volume decline compared to the modest 1.2% growth in urban markets.

However, the tide turned in the fourth quarter, as the industry showed promising signs of recovery. A remarkable double-digit value growth of 10.2% was recorded in the quarter that ended in March 2023. The revival was fueled by increased consumption in rural markets and traditional trade, which had been under pressure for over a year. The easing of retail inflation to 6.9% from the previous quarters 7.9% further supported the consumption recovery.

Volume growth consistently improved, reaching a positive

3.1%, a significant rebound from the negative 4.1% in March

2022 when price growth had soared to 10.5%. Despite the challenges, non-food segments demonstrated positive consumption growth in the last quarter, driven primarily by home care categories.

Amidst global uncertainties, Nielsen IQ remains optimistic about Indias FMCG market, forecasting a growth rate of 7%-

9% for CY23. Nevertheless, potential headwinds, such as inflationary pressure on consumers, low confidence levels, and a high unemployment rate, could pose challenges. On the other hand, there are favorable factors like the Union

Budget 2023s announcements on agriculture and capex investments, revisions in the tax regime, a 6.4% GDP growth forecast by RBI for the next fiscal year, and predictions of normal rainfall, all of which could act as tailwinds.

Category Overview

In FY23, the Rubefacients category experienced a notable shift, with its overall value declining to 5,967 crore. This marked the first time in the past 5 years that the category has faced a decrease in value. The surge in demand during FY22, primarily driven by the second wave of COVID-19 contributed to its remarkable growth.

The Head category within Rubefacients mirrored this trendsignificance of closely. After achieving a significant value of 1,647 crore in FY22, the category saw a dip, settling at 1,564 crore in

FY23. Nevertheless, its worth noting that this value remains higher than the 1,330 crore recorded in FY21, indicating a gradual correction towards normalcy.

Due to the softening in offtake during FY23, secondary sales by outlets also experienced a decline, leading to an overall decline in primary sales.

These fluctuations highlight the categorys sensitivity to external factors such as the pandemic and underscore the importance of adaptability and market resilience. As the situation stabilizes, the Rubefacients category is expected to readjust and find its footing once again.

Company Overview

OTC Business

The Companys Over-the-Counter (OTC) segment achieved a remarkable gross sales figure of 385.72 crore. Among the various formats, General Trade (GT) stands out as the primary driver, accounting for an impressive 83% of the total turnover. Additionally, the modern trade (MT) and E-commerce sectors experienced substantial double-digit growth rates of 11% and 19%, respectively.

Notably, their contributions in FY23 have surpassed those of FY22, underscoring the ongoing expansion and importance of these channels in Amrutanjan Health Care Limiteds (AHCL) business landscape. This data indicates a promising trajectory for the Companys growth and emphasizes the diversifying sales channels.

AHCLs domestic sales show the Headache segment as the primary driver, making up 64.4% of the overall contribution. Additionally, other categories have displayed noteworthy growth, signifying an encouraging trend compared to the previous years figures.

One such category is Womens Hygiene, which saw a significant rise from 17% to 21% in its contribution. The sales for FY22 amounted to 69.50 crore, while for FY23, they reached 78.68 crore, reflecting an impressive growth rate of 13.22%.

Similarly, the Body segment also experienced growth, increasing its contribution from 8.2% to 9.1%. In concrete numbers, the sales for FY22 were 33.4 crore, which grew to 37.24 crore in FY23, indicating a commendable growth rate of 11.28%.

Pain Management

The Company embarked on a well-thought-out strategic initiative, driven by insightful consumer data, to revamp its balm portfolio. Instead of being content with offering headache relief alone, the Company proactively targeted specific requirements of its customers. This bold move was geared towards not only making its balms more potent but also ensuring they precisely met the varying health needs of its diverse consumer base. To magnify the effects of this repositioning endeavor, the Company skilfully utilized both Digital and point-of-sale strategies to create widespread awareness and cultivate stronger consumer interest.

In India, a considerable portion of the population lives in non-urban and rural areas. In an effort to expand the availability of its balms and reach out to these communities, the Company initiated an extensive awareness program. They accomplished this by commissioning 4,200 captivating wall paintings across three states and 920 towns with populations below 10,000. The primary objective of this campaign is to connect with a wider audience, generate awareness about the benefits of their balms, and ensure that these therapeutic products are easily accessible to people residing in these regions, providing effective relief from pain and discomfort.

Marketing Activities

The Company has maintained its unwavering dedication to bolstering its pain management portfolio by implementing an Integrated Marketing Communication (IMC) plan. This comprehensive and dynamic strategy employs a diverse range of channels, including TV, Print, Outdoor, Digital, and Sampling initiatives, with the goal of extending its influence and captivating a wider audience. Moreover, the primary focus of these efforts is to showcase the remarkable effectiveness of the Companys pain management solutions.

Electro+ ORS

Global warming is resulting in higher temperatures and more intense summers, leading to an elevated risk of dehydration. Dehydration, in turn, can cause fatigue, dizziness, headaches, and even heatstroke. As a result, the demand for rehydration beverages has been steadily rising as people seek effective ways to replenish lost fluids, electrolytes, and minerals, ensuring they remain hydrated and safeguard themselves against heat-related illnesses.

With a firm commitment to rehydration, our Company has made it a top priority to address this growing concern. Consumers are now more aware of the importance of preventing dehydration and its potential health consequences.

We introduced Electro+, a highly effective rehydration drink specially formulated to meet all essential requirements. It contains a perfect blend of Electrolytes, Glucose, and a substantial amount of Vitamin C, providing half of the Recommended Daily Allowance in each 200-ml bottle. Moreover, Electro+ boasts the goodness of real Fruit Juice, available in delicious Apple or Orange flavors.

Marketing Activities

The Company responded to rising consumer demand for rehydration products by launching a strategic marketing campaign to promote its product, Electro+. They focused on positioning Electro+ as the ultimate all-day rehydration solution through TV commercials, digital marketing, point-of-sale displays, and sampling initiatives. The campaign aimed to raise awareness, generate interest, and allow consumers to try Electro+. As a result, the Company successfully captured a strong market presence and catered to the needs of its target audience.

Electro+ places significant emphasis on the recognizing its importance as a crucial segment. This commitment is evidenced by their enduring partnership with PGTI (Professional Golf Tour of India) as the esteemed ‘Official Rehydration Partner, alongside their active participation in providing product samples during marathon events. Through these strategic endeavors, the company showcases its unwavering dedication to promoting rehydration in the realm of sports. Central to Electro+s mission is the ambition to furnish athletes with a trustworthy and effective solution for maintaining optimal hydration levels and enhancing their overall performance.

Womens Hygiene

In India, the adoption of napkins for menstrual hygiene can be observed in two distinct scenarios. In rural areas, the usage of sanitary napkins remains relatively low at 50%, and women still rely on cloth due to various obstacles, such as limited accessibility and the affordability of premium products. On the other hand, urban consumers in different regions of India show a greater interest in more advanced menstrual products.

Our brand is dedicated to addressing the diverse needs in the period care segment by providing top-notch products. The Comfy sanitary napkin, in particular, stands out due to its exceptional technology, making it both affordable and widely available across the nation. Surprisingly, almost 50%1 of our sales come from rural India2, indicating the brands success in reaching underserved areas.

Recognizingsector, the demand for innovative solutions, we have expanded the Comfy brand to include Tampons and Menstrual Cups, catering to consumers seeking more advanced and convenient options for menstrual hygiene.

Marketing Activities

The brand has consistently maintained its dedication to investing in brand-building initiatives, with a primary focus on driving awareness, consideration, and trials. As part of this commitment, they developed an exciting new TV commercial that prominently features the renowned actress Shraddha Kapoor. This commercial brilliantly brings the brands empowering message for women to life, encapsulating the essence of #ThePowerToBeYou in a fresh, modern, and vibrant manner.

To ensure effective audience engagement and outreach, the brands presence has been extended across multiple platforms, including TV, Digital platforms, Outdoor media, and sampling initiatives.

The Company remained dedicated to investing in Project Disha, a program aimed at educating and encouraging women to use sanitary napkins. Now in its third year, Project Disha was implemented in 10 states, covering 900 towns, 400 schools, 100 anganwadi centers, and reaching out to homes and high footfall areas. This initiative impacted approximately 4.5 lakh consumers residing in towns with populations less than 10,000 people, contributing to better menstrual health and hygiene.

Furthermore, alongside Project Disha, the Company successfully launched an additional and highly efficient rural marketing initiative aimed at creating awareness for the brand Comfy. This innovative program involved the execution of captivating wall paintings across four states, encompassing an impressive 817 towns and a total of

3,600 walls. The primary objective of this visually striking campaign was to connect with a broader rural audience and effectively endorse Comfys top-notch menstrual products, presenting them as a dependable and easily accessible solution for period care.

New Launch Electro+ 500ml

Dedicated to family well-being, we are delighted to introduce Electro+ 500ml, designed for family consumption. Available in two flavors, Orange and Apple, it is affordably priced at Rs. 80 and Rs. 70 respectively.

Comfy Period Pain Relief Roll-On

As pioneers in pain management, the Comfy brand expanded its product range to include the Period Pain

Relief Roll-On. This unique offering provides effective relief from period pains, specifically addressing the needs of consumers during menstruation. Available in a convenient

50ml roll-on format, it is priced at 135, providing a reliable solution for menstrual discomfort.

Key Benefits:

• Fast Relief from cramps

• Easy to use with roller ball technology

Safer than a tablet. 100% ayurvedic, with no side effects

• No stains

Comfy Menstrual Cups and Tampons

To meet the needs of consumers seeking more advanced menstrual solutions, we extended the Comfy brand to include Tampons and Menstrual Cups, providing them with pad-free period options.

Comfy Menstrual Cups are available in 3 sizes Small, Medium, and Large priced at Rs.400 per unit.

Comfy Menstrual Cups

Key Benefits:

• Reusable and Eco Friendly

• Pad Free Periods

• SGS tested

Latex and BPA free

• No Toxins

• FDA-approved and medical-grade silicon

Key Benefits:

• 360* Leak Lock

Protection+ (Upto 8 hours*)

• Chlorine-free, Dermatologically tested

Absorption channel: For rapid and even fluid distribution

Protective top sheet: Blocks transfer of fibers

• High absorption zone: Starts soaking instantly

• Secure string: For easy removal

Expands to fit your bodys unique shape

• Full protection in a compact size

Modern Trade

Building upon the previous years momentum, our

Company experienced a remarkable surge in the modern trade channel, achieving a noteworthy 41.78 crore in

FY23, signifying a substantial 12.2% increase. The modern trade channel has undergone tremendous growth over the past decade, expanding nearly sevenfold with an impressive Compound Annual Growth Rate (CAGR) of 23.9%. This exceptional accomplishment is a testament to our strategies effectiveness and the escalating demand for our products within the modern retail segment.

General Trade

In line with our unwavering dedication to broadening our distribution reach, we made strategic investments in this domain throughout FY23. As a direct outcome of these efforts, our range of pain management products is now readily accessible through an extensive network of 11,83,000 outlets nationwide as of Q4 FY23. This widespread availability not only ensures the penetration of our products into diverse markets but also enables us to cater to the needs of our esteemed customers across India.

* Source: IQVIA

Comfys distribution network has demonstrated remarkable and consistent growth, surging to approximately 3,70,000 outlets during FY23. This milestone represents the brands widest reach achieved thus far, showcasing an impressive expansion effort. As a result, Comfy products are now more widely available and accessible, effectively catering to the diverse needs of consumers across the region.

AHCL has undertaken substantial investments in ‘Project M5K, with the primary goal of enlisting 5,000 stockists, super stockists, and sub-stockists. This strategic move is driven by the diverse product range of pain management, sanitary napkins, and beverages. Having various types of distributors becomes paramount to effectively cater to the unique demands of each product category.

In line with AHCLs distribution-focused growth agenda, the Company has consistently appointed distributors who possess expertise in OTC, Pharma, and FMCG domains. This ensures that the infrastructure needs of each category are met with precision and efficiency.

As of FY23, AHCL has successfully established 3,573 distributor points, encompassing Super Stockists,

Stockists, and Sub Stockists, effectively reaching approximately 2,800 towns. This comprehensive coverage spans across different town classes, reinforcing the companys widespread presence in the market.

Direct Distribution

Our highly efficient sales force spans across an extensive network, encompassing approximately 9,800 towns, including Metros, Town Class 1 (TC1), Rest of Urban (ROU), and Rural areas with populations less than 20,000. This wide-reaching presence empowers us to access and cater to diverse markets, ensuring effective service to our customers across various geographical regions. With such comprehensive coverage, we are well-equipped to meet the needs of our clientele in every corner of the country.

With our robust presence in these towns, AHCLs sales force effectively caters to an expansive network of 2.66 lakh outlets across India, spanning various town classes. This comprehensive coverage empowers us to adeptly serve our valued customers, meeting their diverse requirements in different regions with utmost efficiency.

Rural Distribution

With a keen focus on rural India, which constitutes a significant 65% of the total population, the Company has implemented a comprehensive van sales program. This program operates in towns with populations below 10,000 across eight states, including Tamil Nadu, Andhra Pradesh, Jharkhand, Assam, Maharashtra, Gujarat, Rajasthan, and Uttar Pradesh, encompassing an impressive 1570 towns. Through this initiative, we have appointed new sub-distributors in previously vacant towns, enhanced distribution channels, and diligently built brand awareness. The response from retailers has been overwhelmingly positive, demonstrating that our brands have gained remarkable traction even at the bottom of the pyramid.

Metro Towns

Our success in metro towns has been a crucial contributor to the Companys overall sales, accounting for an impressive33.9%* offtake (25.1%* in the overall thetotal

Rubefacients category). To fortify our presence further in these regions, we have launched an exclusive project that targets 15 towns, including the top contributing metros.

To achieve our objectives in these towns, we have implemented a series of focused initiatives:

1. Increasing per-dealer offtake (PDO) of high-growth SKUs, such as 8-ml balms, Faster Relaxation Roll-On, Electro+, and Advanced Back Pain Roll-On, in existing outlets

2. Expanding direct coverage of outlets

3. Introducing our products in new outlets where the previously available.

4. Implementing attractive gift schemes for high-volume outlets

To ensure the success of these initiatives, the company has strategically invested in various promotional strategies, including:

1. Leveraging TV media for effective brand promotion

2. Harnessing the power of digital media to promote specific products like Amrutanjan Faster Relaxation Roll-On, Amrutanjan Back Pain Roll-On, and Electro+

3. Conducting visibility drives on targeted E-commerce sites

4. Enhancing product visibility at the store level through the CHEMIST LOYALTY PROGRAMME

These efforts are aimed at further solidifying our position in metro towns and achieving significant growth in these critical markets.

* Source: IQVIA

E-Commerce

The Companys range of products is conveniently accessible through various leading e-commerce platforms, offering a wide reach to consumers. These platforms include prominent names such as Amazon, Flipkart, Flipkart Health

Plus, Big Basket, Netmeds, PharmEasy, Reliance Jio Mart,

Medplus, Apollo, D-Mart Ready, Walmart Best Price (B2B), Nykaa B2B, Tata 1mg, Zepto, City Mall, and Wellness Forever.

During FY23, AHCL witnessed a remarkable surge in sales through the e-commerce channel, amounting to 10.61 crore. The channel has consistently displayed month-on-month growth, signifying a robust acceptance of AHCLs products among consumers. Furthermore, the e-commerce channels contribution to the overall business has risen significantly, jumping from 2.1% to 2.8%, thus underscoring its ever-growing importance in AHCLs sales and distribution strategy.

Exports

Despite facing challenging conditions, the Company has achieved remarkable growth in its export sales, surpassing

10 crore, marking the highest record in the last decade. Notably, the African region hasplayed significant role in this success, contributing 67% of the total export sales and experiencing a notable growth of 2.9% in FY23 compared to the previous year.

However, its worth highlighting that the Companys reliance on Africa has decreased as other regions have shown promising growth.

1. The Middle East regions contribution has increased from 6% in FY22 to 10% in FY23.

2. Southeast Asia has also seen growth, with its contribution rising from 10% in FY22 to 11% in FY23.

3. Other Countries have shown substantial progress, increasing their contribution from 9% in FY22 to 12% in FY23.

Furthermore, the Head and Congestion segments have played a crucial role in the Companys overall performance in FY23 compared to FY22:

1. The Head Segment has notably increased its contribution from 44.9% in FY22 to 50.1% in FY23, showcasing an impressive growth rate of 27.5%.

2. The Congestion segment has experienced remarkable growth as well, raising its contribution from 11.7% in FY22 to 17.2% in FY23, demonstrating an outstanding growth rate of 69.1%.

These achievements underscore the Companys ability to adapt and excel in the face of challenges, diversifying its regional contributions and strengthening its presence in different segments.

Supply Chain Management (SCM)

During this financial year, we successfully migrated to SAP and effectively implemented it across all Supply Chain

Management functions. In the realm of manufacturing, we operate two state-of-the-art units for our OTC products and another one dedicated to our Beverage division. Our OTC Manufacturing units boast ISO certification and are fully compliant with Good Manufacturing practices and the regulations outlined in the Drugs and Cosmetics Act. We hold ourselves to the highest standards of quality during the manufacturing process to ensure the production of effective and defect-free products. With a capacity of 1700

MTe, we are well-equipped to meet market demands. To expand our reach and cater to the international market, we established a new Schedule M division equipped with a cGMP facility. This division specializes in manufacturing OTC monograph topical application products for export to the United States and other regulated markets. The facility has been meticulously designed and installed to adhere to all cGMP guidelines. We are currently in the process of obtaining regulatory approval for a permanent license to manufacture and sell drugs.

In order to mitigate the risk of production loss during unforeseen events like the recent COVID pandemic, we have set up duplicate manufacturing facilities for key products across both plants. This contingency plan ensures uninterrupted supply to meet consumer demands in case one plant faces operational challenges.

At our Beverage plant, we have the capability to produce ready-to-serve fruit juices and fruit juices with electrolytes. We strictly follow best practices in accordance with FSSAI guidelines. Recently, we upgraded the plant with a high-quality 400 BPM production line, which has been operational since September 22, doubling the plants capacity to meet the rising demand. The plant is equipped with its own Quality Control and Microbiology lab facilities, and we remain compliant with all statutory and regulatory requirements.

All three of our plants have obtained certification, ISO showcasing our commitment to maintaining international quality standards. Ensuring a safe work environment for all employees is a top priority for us. To achieve this, we have a dedicated safety committee that conducts regular safety audits to ensure compliance with safety standards. Additionally, we motivate our employees to enhance operations through training, and we have established a Multi-department Quality Circle to drive continuous improvements.

In the womens hygiene category, we source our Comfy sanitary napkins through a strategic partnership under a private label agreement. Our manufacturing plant is fully capable of producing high-quality sanitary napkins to meet the growing demand in this segment.

Overall, we take pride in our achievements in implementing SAP, adhering to high-quality manufacturing practices, expanding our international presence, and maintaining a safe and motivated workforce. We remain committed to further growth and excellence in the industry.

Purchase

In the FY23, our business faced multiple challenges, with the COVID-19 pandemic and the ongoing Russia-Ukraine conflict exerting considerable impacts, especially in the first two quarters.

During this period, we encountered significant challenges due to soaring crude oil prices and exchange rates. These factors substantially affected our business operations, leading to higher input costs for essential materials like resins, paperboard, and MC Wax. As a result, we experienced an adverse impact amounting to

300 lakh.

The combination of these external factors posed formidable obstacles, requiring us to navigate a complex and volatile economic landscape. Despite these challenges, we remained resilient and steadfast in managing our operations efficiently. As we move forward, we will continue to adapt and implement strategic measures to ensure the sustained growth and success of our business.

Price / kg

Material	FY23	FY22
PP	115.35	118.9
HDPE	116.29	106.41
PET	124.56	109.55

Unlike the previous year, when we encountered challenges with the availability of essential materials, we were fortunate to access these materials without constraints this time, leading to substantial savings of 183 lakh.

In the pursuit of our strategic objectives, we took proactive measures by maintaining ample stocks of key raw materials for our OTC products and collaborating closely with our suppliers to prevent any stock-out scenarios in our production units. This prudent approach guarantees a seamless and uninterrupted flow of materials to meet the production requirements in our Plants.

OTC Segment

Rs. in Lakh

	FY23	FY22
Sales	34,511.23	37,221.24
Material Cost	16,220.41	16,304.10
	47.00%	43.80%

On the Logistics front, we have contained the overall transportation cost by enforcing long-term contracts.

(Value in Lakh)

	FY23	FY22
	OTC Segment
Sales	34,511.23	37,221.24
Freight and handling charges	1,626.43	1,468.39
	4.71%	3.95%
	F&B Division
Sales	3,246.33	3,190.46
Freight and handling charges	385.94	322
	11.89%	10.09%

Quality, R&D, and Safety in Amrutanjan Health Care Limited

At Amrutanjan Health Care Limited, we inforeign prioritize quality in every aspect of our operations, guided by the principles of effective Quality management. Our foremost commitment is to ensure the well-being of our consumers by meeting regulatory standards and exceeding their expectations for safety, Quality, and performance as per design specifications across all our product ranges.

To achieve our quality goals, we have implemented standardized Quality Management Systems at all our operation sites, aimed at producing defect-free products while enhancing productivity. Our processes strictly adhere to the Good Manufacturing Practices prescribed by the Indian Drugs and Cosmetics Act, as well as a comprehensive Quality Management System (ISO 9001 for the OTC division) and a Food Safety Management System (ISO 22000 for the F&B division). Additionally, we employ the Six Sigma methodology to guarantee the highest level of quality and safety for our consumers.

We take great care in designing products that inherently embody Quality and Safety, and our processes are carefully tailored to achieve this objective. To ensure the best output and customer satisfaction, we place a significant focus on qualifying and continuously monitoring external service and material providers (Vendors), along with conducting thorough audits.

With our Research and Development efforts, we follow the

Quality by Design (QbD) approach to formulate new products and imbue them with quality from the very beginning. Our undergo rigorous clinical studies, proving their effectiveness and safety. Furthermore, our container design and packaging processes are designed to uphold AHCLs uniqueness and prevent counterfeit products.

At our manufacturing locations, we maintain production and inspection excellence to guarantee the production of safe and superior-quality products. Even during the challenging times of the COVID-19 pandemic, we prioritized the safety and well-being of our employees and the products we manufactured.

Our all-encompassing Quality Management System (QMS) covers every aspect of our business processes, spanning from R&D and raw material procurement to manufacturing, packaging, and delivery. We conduct internal audits of our

QMS at regular intervals to ensure continual effectiveness and review them during Management meetings.

To validate the adherence to our Quality and Food safety management systems, they undergo annual audits by TUV certification bodies, ensuring our with these systems.

As part of our commitment to expansion, we have recently established a new manufacturing facility for Allopathic products. This facility is equipped with state-of-the-art manufacturing and testing equipment, adhering to cGMP regulations. Additionally, products identified under USFDA

OTC Monograph guidelines will be registered with the USFDA for export to the USA and other countries, further exemplifying our dedication to global quality standards.

Information Technology

In FY23, Amrutanjan embarked on a transformation journey, making it the year of Digitization for the company. The focal point of this transformation was the implementation of SAP S4/HANA, a robust ERP system that replaced the legacy RAMCO ERP across the entire enterprise.

The SAP implementation covered a wide range of functions, including Finance and control (FICO), Sales and Distribution (SD), Inventory Warehouse and Material Management (WM and MM), Production planning and plant and maintenance (PP and PM), as well as Quality Management and Transportation Management (QM and TM). The key focus areas during the implementation were Global standards and system and process controls. This led to the automation of various processes, such as Requisition to Purchase, Customer Credit Control Checks and Locks, MRP, and Audit Trails.

The business processes were meticulously reviewed and aligned with SAPs standard practices while ensuring compliance with good business practices and processes (GxP). Moreover, the generation of E-invoices was seamlessly integrated into the SAP system. Post-Go-

Live Phase, the team has been refining critical focus areas like the Transportation and Logistic Module (TM),

Budget Management, and Payroll to ensure smooth ERP functioning, resulting in reduced support issues and improved stability.

The Enterprise Business Intelligence and Analytics platform called ‘Amruta has been a game-changer, providing real-time insights derived from both the current SAP S4 HANA ERP and historical data from the previous Ramco ERP. This has empowered decision-makers to analyze performance and trends through rich infographics and charts, thereby driving growth and profitability.

Despite minor challenges and delays in integrating SAP with Amruta, the team managed to achieve their high-level objectives and vision, allowing effective report generation like Slice/Dice or Drill Down and Drill Up Reports. Amruta is set to evolve as the key AI engine, offering a unified view of data from various sources related to Sales, Marketing, Manufacturing, Procurement, Quality, and more, making it crucial for AHCLs future growth.

The Sales Force Automation (SFA) Project has played a vital role in connecting the Sales team with distributors and retailers. The user-friendly SFA mobile application has enabled sales personnel to log outlet visits and share product information, photos, and videos during customer interactions. This nationwide rollout has provided valuable insights into sales performance and efficiency, with features like SMS verification, Geo-tagging, and Geo-fencing for compliance precise location tracking.

Another notable development is the World of Amrutanjan

(WOA) e-commerce Web Store and Brand store, which has become a growing channel for direct-to-consumer (D2C) business. This platform has strengthened AHCLs digital presence and brand identity, allowing customers to conveniently subscribe to products and have them delivered to their doorstep. WOA brand stores offer a comprehensive range of AHCL products, enhancing the customer experience and introducing new products to existing patrons. digital

Moreover, the Comfy Mobile App has gained popularity among Indian girls and women, providing features to record and track menstrual cycles, pain history, and mood swings.

It offers the convenience of purchasing sanitary napkins and other comfy products directly through the app, with the option to subscribe for regular deliveries.

In terms of Human Resource Management, the Core HRMS modules, supported by Darwinbox and PayReview, are fully operational, covering recruitment, onboarding, leaves, attendance, performance management, and compensation management. AHCL plans to adopt SAP Payroll and SAP Concur Travel Reimbursement modules in the future to ensure efficient tracking of HR payroll and non-payroll expenses.

Safety, security, and Business Continuity remain top priorities for AHCL. The companys Data Centre (DC) and Disaster Recovery Centre (DR) have been fully operational since FY22, while the implementation of a CCTV surveillance system has improved physical security across all locations. AHCL is committed to continuous IT security and infrastructure assessments to ensure the safety, security, and business continuity of all stakeholders, including employees, investors, customers, and consumers.

Advanced Pain Management Centre

Advanced Pain Management Centre (APMC) situated in Chennai, Tamil Nadu, is dedicated to relentless research on novel and cutting-edge pain management techniques, offering world-class treatment standards. Over 15,000 patients have received effective care for their chronic pain conditions.

This exceptional hospital has earned certification from NABH (National Accreditation Board for Hospitals &

Healthcare Providers) as part of the Pre-Accreditation Entry-Level small healthcare program for non-surgical pain management services. Adhering strictly to NABH guidelines, APMC prioritizes patients safety, subjecting all procedures and processes to regular audits conducted by its in-house quality team.

(b) Opportunities and Threats

The OTC (Over-the-Counter) business segments pain management sector remains a significant contributor to the overall OTC segment. The majority of the Companys revenue (78%) is derived from the head and body categories, reaffirming their role as the primary revenue contributors for future growth.

The following are the threats that AHCL foresees:

1. Low penetration of AHCL products in P3 markets and strong competition createing challenges to increase the Companys market penetration

2. Increase in packaging material costs, which impacts the margins

3. Changes in regulatory compliances impacting business plans

Following will be the growth drivers for the Company in the coming year

1. Build distinctiveness to existing brands by addressing consumer needs

2. Launch new products to cater to evolving consumer needs across existing and new categories through ‘The Amrutanjan Way

3. Expansion of existing brands to weaker markets

4. Continue to improve distribution reach by setting specific milestones for every year and scale-up specific targets on the appointment of distributionwith distributors, super stockists and sub-stockists

5. Build the D2C channel 6. plans to drive MT and Deploy e-Commerce

7. Continue to invest in the brand building using mass media, digital, sampling, and merchandising

(c) Segment Wise Performance

	FY23	FY22
OTC
Net Sales	34,511.23	37,221.24
Segment Results	4,880.03	8,288.14
Beverages
Net Sales	3,246.33	3,190.46
Segment Results	(393.17)	(7.09)
Total Capital Employed	29,077.19	26,512.38

(d) Outlook

IMF projects India to remain one the fastest-growing economies in the world for 2023. Indias growth is projected to be 6.1 percent this year, which is up by 0.2 percentage points since the previous forecast in April 2023. The revision has attributed growth momentum to stronger-than-expected growth in the Q4 FY22 as a result of stronger domestic investment. Indias fast-moving consumer goods (FMCG) industry is poised for a transformative year in 2023. Despite the challenges faced in 2022, industry leaders and experts are optimistic about the prospects for the coming year, as several key drivers are expected to fuel growth.

Nielsen IQ remains optimistic about Indias FMCG market, forecasting a growth rate of 7%-9% for the CY23. One of the crucial factors contributing to the positive outlook is the expectation of moderated inflation in 2023. Industry leaders anticipate the softening of raw material costs, which is likely to result in improved margins and profitability for FMCG companies. This reduction in inflationary pressures will support consumer spending and sentiment, creating a conducive environment for growth.

Digitization, premiumization, and the demand for packaged and ready-to-cook (RTC) food products are identified as significant drivers of growth in the FMCG sector this year.

FMCG businesses have adapted to changing consumer behavior by leveraging digital capabilities and ensuring seamless supply chain management and delivery through local and online platforms. This digitization drive has facilitated growth in the entire sector.

Premium segments in both urban and discretionary categories have witnessed positive growth, despite the challenges in rural demand. FMCG companies are focusing on delivering products that add value to consumers, with a keen eye on maintaining a balance between margins and top-line growth. Additionally, the shift from unorganized to organised segments, coupled with digitization, is expected to further drive the FMCG sectors growth in the new year. However, the outlook is not without its challenges. Some experts believe that high inflation may persist through

2023, potentially impacting FMCG brands, especially those reliant on online channels. Brands may need to re-evaluate their pricing strategies and loyalty programs to navigate these challenges successfully.

In terms of regional markets, rural sentiment is showing some signs of improvement, but it will require close monitoring before making a full recovery. FMCG companies will need to have a nuanced understanding of purchasing decisions in different markets and categories to optimize pricing strategies.

The demand for premium products and packaged and ready-to-cook segments is expected to drive growth in 2023. FMCG companies are focused on catering to the increasing shift towards organized segments and the rising demand for convenience foods. Digitization efforts are expected to play a significant role in expanding the digital portfolio of FMCG companies, allowing them to connect more effectively with customers.

(Source: Nielsen IQ, Times of India)

(e) Risk and Concern

A risk is a potential event or non-event, the occurrence or non-occurrence of which can adversely affect the objectives or strategy of the Company or result in opportunities being missed. Risk is measured in terms of likelihood of occurrence and potential impact if it materializes. Risks can be categorized as financial, operational, strategic, regulatory/statutory, reputational, geo-political, and catastrophic/pandemic. The areas of concern in the short-term could be the impact of the situation arising out of the recent pandemic and the resultant lockdown that is announced from time to time as a control measure. Any recurrence of the disease and its economic fallout could influence some of

AHCLs product range.

The two greatest risks for the economy at this stage stem from inflationary pressures and supply-side concerns. The super cycle of commodity prices that began in FY22 was further fuelled by the the war between Russia and Ukraine.

It led to a significant thereby further exerting inflation. Supply chain challenges and increasing logistics costs due to the war are key areas of concern to be monitored carefully.

The unpredictable fluctuation in key raw material prices, risk of new product launch not panning out, supply chain disruptions, and major changes in government policies & regulations are some of the long-term risks associated with the business

Risk Management

Risk management is a structured, consistent, and continuous process across the organization for identifying, assessing, deciding on responses to, and reporting on opportunities and threats that may affect the achievement of its objectives. Risk management does not aim at eliminating the risks, as that would simultaneously eliminate all chances of rewards or opportunities. Instead, constant efforts are made to analyze their potential impact, assess the changes to the risk environment, and define actions to mitigate their adverse impact.

Amrutanjan Health Care Limited has implemented a risk management framework that ensures timely identification, analysis, and assessment of risks and potential consequences, formulation of specific mitigation strategies, and their seamless execution. The framework recognizes that risks are highly interconnected and interdependent. This evolved approach views risks within a coordinated and strategic framework integrated throughout the organization. The Risk Management Committee, which is chaired by the Chairman & Managing Director and comprises of Chief

Financial Officer and Independent Directors, monitors organization-wide risk management activities and reports bi-annually to the Board of Directors.

(f) Internal Control Systems and their Adequacy

The adequacy of internal control systems and the processes are audited quarterly in selected areas by qualified external auditors and are reported to the Audit Committee. The follow-up action on the observations is reported back with a timeline and status.

Statutory compliances are monitored through a fully automated alert system and adherence is certified by the

Head of Departments every quarter.

The Company has also established an in-house Internal Audit wing reporting to the Chairman and Managing Director (CMD) for conducting audits, internal checks on processes, and providing suggestions for further improvements in the areas audited. The in-house team coordinates with the Internal Auditors to ensure the successful closure of their audit observations. The internal auditors have a free right to access all required information. The Audit Committee at the Board level is functioning independently with complete access to the Internal Auditors & Statutory Auditors.

The Audit Committee continues to monitor the effectiveness of internal control over the use of new technologies that impact the financial controls and reporting the risk.

(g) Discussion on Financial Performance Concerning Operational Performance

Thespikeinoiland commodityprices, Companys Financial Performance concerning operational performance can be enumerated below: upward pressure on

	FY23	FY22
Revenue from Operations	37,963.60	40,584.24
Other Income	1,454.17	1,538.25
Total Income	39,417.77	42,122.49
Total Expenditure	33,524.37	32,636.86
PBIDT	5,893.40	9,485.63
Depreciation	521.15	379.52
PBIT	5,372.25	9,106.11
Interest	7.71	48.45
Profit before tax	5,364.54	9,057.66
Current / Earlier year	1,401.30	2,339.00
Income Tax
Deferred Tax	(20.25)	(0.23)
Profit for the period	3,983.49	6,718.89
Other comprehensive	(121.91)	(63.84)
Income (net of tax)
Total comprehensive	3,861.58	6,655.05
income for the period
Key Financial Ratios
(expresses as %)
PBIDT/ Revenue from	15.52%	23.37%
Operations
PBIT/ Revenue from	14.15%	22.44%
Operations
PBT/Total Income	13.61%	21.50%
PAT/Total Income	10.11%	15.95%

Key raw material (excluding Menthol crystal) & packing material prices were higher when compared to last year coupled with product mix which has resulted in the reduction in gross margin.

(h) Material Developments in Human Resources/ Industrial Relations Front, Including the Number of People Employed

Human Capital

Amrutanjan Health Care Limited places a strong emphasis on recruiting highly qualified candidates who possess both the necessary skills for the role and a cultural fit within the organization. Despite challenging economic conditions, the Company has successfully attracted top talent by implementing cutting-edge recruitment techniques and maintaining excellent HR practices. The employees are deeply committed to achieving both personal and company objectives, aligning with the organizations growth philosophy.

The senior management team is fully dedicated to fostering a culture of continuous learning and empowerment. They actively encourage staff members to contribute original and creative ideas that will contribute to the overall success of Amrutanjan Health Care Limited. In this highly competitive environment, the Companys most valuable asset is its diverse and talented team, which serves as the bedrock of its strength.

Age Analysis

The subsequent data provides clear evidence that a significant portion of the Companys workforce, comprising 39% of the total of 572 individuals, falls within the age range of 30 to 39. Furthermore, 15% of the workforce, equivalent to 87 employees, are aged 50 or above.

Essentially, the data highlights that the majority of employees are in the 30 to 39 age bracket, while a substantial number of workers, aged 50 and above, also contribute significantly to the overall workforce composition.

Performance Management System

Amrutanjan Health Care Limited has effectively implemented Darwinbox, our state-of-the-art HRMS platform, to automate its Performance Management

System (PMS). This advanced automation has significantly enhanced transparency within the organization, instilling a sense of security and confidence among employees regarding the fairness and openness of AHCLs PMS. With this improved system in place, management can now effortlessly differentiate between high and low performers, acknowledge and reward those who excel, and duly recognize exceptional accomplishments.

For the salary incrementation process, the Company

• Uses as a 5-point scale for performance evaluation

• Leverages a merit matrix-based rating i.e., arriving at the bandwidth for each grade and segregating quadrants 1, 2, 3, and 4 as Q1, Q2, Q3 and Q4

• Provides performance rating/quartile positioning based on the table below:

Performance	Rating
Did not meet expectations	1
Often did not meet expectations	2
Met Expectations	3
Often exceeded expectations	4
Far exceeded expectations	5

2022 – 2023: As per the table the performance rating of the executives for the year 2022 – 2023 is represented as below:

Review Overall Rating (From Reviews)	Total
Did not meet expectations	8
Often did not meet expectations	16
Met expectations	90
Often exceeded expectations	187
Far exceeded expectations	35
Grand Total	336

Variable Pay

AHCL follows a variable pay model that considers organizational, departmental, and individual performance with appropriate weightage for each of the components depending on the cadre.

Learning and Development

AHCL effectively identifies the training requirements of its workforce by analyzing data from the Performance Management System (PMS) and conducting Training Need Analysis (TNA). Given the diverse composition of the employee base, it is crucial for management to provide organization-wide training on the Code of Conduct as a refresher course. Additionally, the management has taken proactive measures by conducting mandatory Prevention of Sexual Harassment (PoSH) awareness programs, utilizing both offline and online platforms.

To enhance the capabilities and skills of the sales team across India, the Company has implemented tailored learning programs. These programs aim to improve the selling skills and work patterns of all frontline sales employees.

Recognizing the importance of training, AHCL has established a dedicated division for ‘Learning &

Development during the fiscal year FY22. This division is specifically the business, ensuring a special emphasis on continuous employee growth and development.

Occupational Health and Safety

AHCLs manufacturing plants demonstrate high-level safety performance aiming at zero incidents. AHCLs Environment Health and Safety (EHS) is closely monitored by the management team to ensure all precautions are taken for the safety and good health of employees.

Employee Stock Option Plan (ESOP)

AHCL has finalized the eligibility for the 2nd vesting of the Employee Stock Option Plan 2020 (ESOP) to select employees. The Compensation Committee has approved the eligibility for final vesting and accordingly, the eligible employees will be entitled to exercise their balance options in November 2023. The table below explains the status of ESOP Scheme 2020 as on 31.3.2023:

Total Grants	1,36,472
Exercised during 1st Vesting	17,414
Exercised during 2nd vesting	779
Lapsed options	70,057
Outstanding	48,222

Leadership

In order to bolster the leadership team, AHCL made strategic hires for senior-level positions throughout the year. The management is resolute in cultivating a talent pool that is well-equipped to drive the company towards future growth and sustainability, while also prioritizing the alignment between individuals and the organization.

To enhance the quality of leadership within the company, a range of leadership programs are regularly conducted. These programs encompass various interventions and coaching sessions aimed at developing and refining leadership skills. By investing in the development of its leaders, AHCL is actively fostering a culture of strong and effective leadership throughout the organization.

Employee Engagement

AHCL reach out to its employees with a PULSE survey to record their engagement with the Company and the report identifies areas of development for the HR and department for future improvements. The scores of the PULSE survey from FY17 to FY22 are graphically represented below:

Rewards and Recognition

The Company constantly creates new incentive programs for motivating its sales force to achieve their goals and onaddressing thetrainingneedsof reward them. Also, AHCL has a vibrant variable pay policy that measures the Companys performance, individual performance, and the departments performance for arriving at individual employee eligibility.

The Company would be benefited from the good performance of the individual and vice versa. AHCL values the long service of employees and recognizes them to motivate other employees to stay and build a career within the Company.

Relationship with Unions

Amrutanjan Health Care Limited maintains a commendable relationship with its

Amrutanjan Health Care Limited Employees Union. The company takes pride in fostering a harmonious association with the union and its representatives, ensuring the smooth resolution of all Industrial Relations (IR) matters and preventing conflicts between the union and management. A significant milestone was achieved in October 2021 when

AHCL successfully signed a Long-term Settlement (LTS) with the affiliated unions, accomplishing this feat without any challenges or disputes.

With a positive growth outlook for the upcoming years, Amrutanjan Health Care Limited seamlessly aligns its HR practices with the organizations business requirements, resulting in a cohesive and efficient workforce.

In compliance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 (SHWW Act), AHCL has implemented a robust mechanism to address any reported complaints. The company has thoughtfully established a committee comprising both internal and external members with extensive expertise in this domain. Notably, in the fiscal year 2022-

2023, the committee received zero sexual harassment cases, highlighting the effectiveness of the measures implemented.

Throughout the year, Amrutanjan Health Care Limited has undertaken various initiatives to demonstrate its unwavering commitment to a zero-tolerance policy against gender discrimination and sexual harassment.

As of March 31, 2023, the companys dedicated workforce consisted of 574 employees.

(i) Details of ratios and return on net worth:

In compliance with the SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, the Company is required to provide details of significant changes (change of 25% or more as compared to the immediately previous financial year) in key sector-financial ratios.

Given below are the key financial ratios identified by the

Company including return on net worth:

Particulars	FY23	FY22
Debtors Turnover ratio	10.65	14.52
Inventory turnover ratio	13.85	18.68
Interest Coverage ratio	NA	NA
Current ratio	4.12	3.55
Debt-equity ratio	NA	NA
Operating profit margin (%)	14.15%	22.44%
Net profit margin (%)	10.49%	16.56%
Return on net worth (%)	13.79%	25.34%

Formulae used for calculation of the ratios

Ratio	Formula
Debtors	Revenue from operations/ Average of
Turnover ratio	opening and closing trade receivables
Inventory	Revenue from operations/ Average of
Turnover ratio	opening and closing inventory
Current Ratio	Current assets/ Current Liabilities
Operating profit margin (%)	Profit before interest and tax/ revenue from operations
Net profit margin (%)	Profit after tax/ revenue from operations
Return on networth (%)	Profit after tax/ Equity

The reasons for the variances in financial metrics for FY23 can be attributed to several factors. Firstly, the decrease in the debtors turnover ratio is a result of the decline in turnover during this period. Secondly, the reduction in the inventory turnover ratio is primarily due to both an increase in inventory levels and the aforementioned turnover drop.

Additionally, the operating profit margin has experienced a decline due to the decrease in turnover, coupled with a simultaneous increase in operating expenses. Furthermore, the net profit ratio has also decreased because of the reduced turnover and the amplified expenses. Lastly, the reduction in the return on net worth can be attributed to the same turnover drop, coupled with the rise in expenses, contributing to this overall decline in financial performance

Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates, and expectations may inkeyfinancial be ‘forward looking within the ambit of applicable laws and regulations. Actual results, performance, and achievements might differ substantially or materially from those expressed or implied.

The Companys performance could also be affected due to the failure of the monsoon which in turn may increase the specific input costs, major political and economic changes in India, and changes in applicable laws.