Aptus Pharma Ltd Management Discussions

The following discussion is intended to convey managements perspective on our financial condition and results of operations for the Financial year ended on March 31, 2025, March 31, 2024, and March 31, 2023. You should read the following discussion of our financial condition and results of operations together with our restated financial statements included in the Draft Red Herring Prospectus. You should also read the section entitled “Risk Factors ” beginning on page 26 of this Draft Red Herring Prospectus, which discusses a number of factors, risks and contingencies that could affect our financial condition and results of operations. The following discussion relates to our Company and, is based on our restated financial statements, which have been prepared in accordance with Indian GAAP, the Companies Act and the SEBI Regulations. Portions of the following discussion are also based on internally prepared statistical information and on other sources. Our fiscal year ends on March 31 of each year, so all references to a particular fiscal year (“Fiscal Year”) are to the twelve-month period ended March 31 of that year.

In this section, unless the context otherwise requires, any reference to “we”, “us” or “our” refers to Aptus Pharma Limited, our Company. Unless otherwise indicated, financial information included herein are based on our “Restated Financial Statements” for the Financial Year 2024-25, 2023-24 and 2022-23 included in this Draft Red Herring Prospectus beginning on page 216 of this Draft Red Herring Prospectus.

BUSINESS OVERVIEW

Our Company was originally incorporated as “Aptus Pharma Private Limited” as a private limited company under the provisions of the Companies Act, 1956 pursuant to a Certificate of Incorporation dated August 12, 2010, issued by the Assistant Registrar of Companies, Gujarat, Dadra and Nagar Havelli. Subsequently, our Company was converted into a public limited company in accordance with the provisions of the Companies Act, 2013and a fresh Certificate of Incorporation consequent upon such conversion was issued by the Registrar of Companies, Central Processing Centre, on December 12, 2024, and the name of our Company was changed to “Aptus Pharma Limited.” The Corporate Identification Number of our Company is U24230GJ2010PLC061957.

Our Company is engaged in the business of marketing, and distribution of finished pharmaceutical formulations. While the Company does not own any manufacturing facilities, it operates through a contract manufacturing model. We have not own any manufacturing plants but has entered into contract manufacturing agreement with seven manufacturing units. under various arrangements. Of these, we have formal loan and license agreements in place with two manufacturing units. The remaining production is carried out through informal arrangements with Other Manufacturers, based on purchase orders (PO). We provide a diverse range of pharmaceutical products catering to various therapeutic categories including anti-infectives, gastrointestinal, antacids, anti-allergic and respiratory, nutritional supplements, pain management, neuropsychiatric, cardiovascular, anti-diabetic, lipid-lowering, and general wellness products. These are offered across a variety of dosage forms, such as tablets, capsules, softgels, syrups, suspensions, injections, ointments, creams, balms, drops, lotions, vials, powders, gels, and sachets.

For more details, please refer chapter titled “Business Overview” on page 101 of this Draft Red Herring Prospectus. SIGNIFICANT DEVELOPMENTS SUBSEQUENT TO THE LAST FINANCIAL YEAR:

After the date of last financial period i.e., March 31, 2025 there is no any significant development occurred in the Company Except as atated below:

1. The Authorized share capital of the Company has increased from Rs. 5,00,00,000 consisting of 50,00,000 Equity shares of Rs. 10 each to Rs. 7,15,00,000 consisting of 71,50,000 Equity shares of Rs. 10 each.

KEY FACTORS AFFECTING THE RESULTS OF OPERATION:

Our Companys future results of operations could be affected potentially by the following factors:

• Changes in Laws and Regulations that apply to our Industry.

• Changes in Fiscal, Economic or Political conditions in India

• Failure to comply with regulations prescribed by authorities of the jurisdiction in which we operate

• Competition with existing and new entrants.

• Our ability to retain our key managements persons and other employees;

• Companys ability to successfully implement its growth strategy and expansion plans;

• Failure to comply with the quality standards and requirements of our customers

• Regular supply by our contract manufacturers

• Continuance of loan and license agreement

OUR SIGNIFICANT ACCOUNTING POLICIES

For Significant accounting policies please refer Significant Accounting Policies, “Annexure IV” beginning under Chapter titled “Restated Financial Information” beginning on page 200 of the Draft Red Herring Prospectus.

RESULTS OF KEY OPERATIONS

( in lakhs)

Particulars	For the year ended on
	31.03.2025	31.03.2024	31.03.2023
Income from continuing operations
Revenue from operations	2455.77	1785.70	1389.73
Total Revenue from operations	2455.77	1785.70	1389.73
% of growth	37.52	28.49	32.27
Other Income	7.87	2.53	0.00
% total Revenue	0.32	0.14	0.00
Total Revenue	2463.64	1788.23	1389.73
% Increase/(Decrease)	37.77	28.67	32.27
Expenses
Cost of Material consumed	903.69	682.64	476.28
% of Revenue from operations	36.80	38.23	34.27
Employee benefits expense	357.08	255.05	178.96
% Increase/(Decrease)	40.00	42.52	54.17
Finance Costs	46.62	23.94	14.33
% Increase/(Decrease)	94.74	67.06	57.30
Other expenses	710.22	693.34	672.60
% Increase/(Decrease)	2.43	3.08	28.01
Depreciation and amortisation expenses	26.53	21.47	18.07
% Increase/(Decrease)	23.57	18.82	88.82
Total Expenses	2044.14	1676.44	1360.24
% to total revenue	82.97	93.75	97.88
EBDITA	492.65	157.20	61.89
% to total revenue	20.00	8.79	4.45
Restated profit before tax from continuing operations	419.50	111.79	29.49
Exceptional Item	0.00	0.00	0.00
Total tax expense	109.55	31.98	10.08
Restated profit after tax from continuing operations (A)	309.95	79.81	19.41
% to total revenue	12.58	4.47	1.40
% Increase/(Decrease)	181.89	219.55	96.71

COMPARISON OF F.Y. 2024-25 WITH F.Y. 2023-24:

Income from Operations

In the F.Y 2024-25, the Companys total revenue from operation was 2455.77 lakhs, which is increased by 37.52 % in compare to total Revenue from operations of 1785.70 lakhs in F.Y 2023-24. The total revenue includes Revenue from sale of Manufactured Goods of 2319.25 lakhs & sale of service of 136.52 lakhs in FY 2024-25 as against sale of Manufactured Goods of 1785.70 lakhs in FY 2023-24. The Sale of Manufactured Goods includes sale of Pharmaceutical formulations. The increase in revenue for FY 2025 was attributed to a rise in business activity of 37.52%. The sale of service is cross selling of the additional products of other supplier or manufacturer to the existing clients by utilizing the marketing set up and infrastructure of the Company.

Other Income

The other Income for the FY 2024-25 was 7.87 lakhs which was 2.53 lakhs in the FY 2023-24. The other income includes interest earned on the fixed deposit and Credit card Cash Back income.

Expenditure:

Cost of Material Consumed

The Cost of Material Consumed for F.Y. 2024-25 was 903.69 lakhs against the cost of Material Consumed of Rs. 682.64 lakhs in F.Y. 2023-24. The cost of material consumed was 36.80% of the Revenue from operations in F.Y 2024-25 which was 38.23 % of the revenue from operations. The cost of material consumed was less in FY 2024-25 compared to FY 2023-24 on account of better discount on purchase of material by making early payment.

Employee Benefits Expenses:

The Employee expenses for F.Y 2024-25 was 357.08 lakhs against the expenses of 255.05 lakhs in F.Y 2023-24. This rise in employee costs was primarily due to an increase in the workforce to support the growing scale of operations, along with the impact of annual salary increments and other employee costs. The expansion in business activities by 37.52% necessitated a larger team, contributing to the higher employee expenditure during the year.

Finance Cost:

The Finance Cost for F.Y. 2024-25 was 46.62 lakhs against the cost of 23.94 Lakhs in the F.Y 2023-24 showing an increase of 94.74%. The finance cost was increased on account of overall increase of the Borrowings. The Company has enhanced short term borrowings during the year that charges interest. The total outstanding of the borrowings as on March 31, 2025 was 1035.68 lakhs as against 530.81 lakhs as on March 31, 2024. The cash inflow from short-term borrowings in the FY 2024-25 was 638.78 lakhs resulting in to higher finance cost.

Other Expenses

Other Expenses increased to 710.22 lakhs for F.Y. 2024-25 against 693.34 Lakhs in F.Y. 2023-24 showing minor increase of 2.43% which signifies that despite of increase in overall revenue of 37.52%, the Company was able to maintain the efficiency in expenditure.

The Increase in the Other expenses in the FY 2024-25 was on account of high rise in those expenses which forms major part of expenses such as advertising expenses of the amount of 35.68 lacs as compared to 15.02 lacs, Commission expenses amounting to 64.98 lacs as compared to 50.49 lacs, Sales Promotion expenses of the amount of 237.89 lacs as compared to 197.84 lacs, Early payment Discount of 22.09 lacs as compared to 16.93 lacs & meeting expenses of 24.02 lacs as compared to 15.61 lacs in the previous years. These costs were essential to support and sustain the expanded scale of operations and market presence.

Depreciation and Amortization Expenses:

The Depreciation for F.Y 2024-25 was 26.53 lakhs as compared to 21.47 lakhs for F.Y. 2023-24. The Sharp increase in depreciation by 23.57% was due to the acquisition of depreciable tangible assets of 60.77 lakhs & intangible assets of 1.40 in F.Y. 2024-25.

EBIDTA

The EBIDTA for F.Y 2024-25 was 492.65 lakhs as compared to 157.20 lakhs for F.Y. 2023-24. The EBIDTA was 20% of the total Revenue in FY 2024-25. EBIDTA has improved to 20% as compared to 8.79% in the previous year due to increase in the business by 37.52 % in FY 2024-25 in comparison to FY 2023-24. The new revenue segment through sale of service with the existing staff has resulted in to spurt in the EBIDTA of the Company in FY 2024-25 .This improvement was primarily driven by the efficiency in cost management in the business operations during the year, reflecting better operational efficiency and cost absorption.

Profit after Tax (PAT)

PAT is 309.95 lakhs for F.Y 2024-25 as compared to 79.81 lakhs in F.Y 2023-24. The PAT was 12.58% of total revenue in F.Y 2024-25 as compared to 4.46% in the previous year 2023-24. The new revenue segment through sale of service

with the existing staff has resulted in to spurt in the EBIDTA of the Company in FY 2024-25. Apart from that the cost of material is reduced and the increase in the business by 37.52 % in FY 2024-25 in comparison to FY 2023-24. This indicates that the Company was able to retain a significant portion of its operating income as net profit after accounting for all expenses, including finance costs, depreciation, and taxes. This significant Rise in PAT margin in business was primarily due to less cost required to manage business and reduction in other operating expenses leading to higher profit. These factors collectively impacted the profitability ratio for the year.

COMPARISON OF F.Y. 2023-24 WITH F.Y. 2022-23

Income from Operations

In the F.Y. 2023-24, the Companys total revenue from Operation was 1785.70 Lakhs, which is increased by 28.49 % in compare to total Revenue from operations of 1389.73 Lakhs in F.Y 2022-23. The total revenue includes Sale of Manufactured Goods of 1785.70 lakhs s in FY 2023-24 as against sale of Goods of 1389.73 lakhs in FY 2022-23. The increase in revenue for FY 2023-24 was 28.49% higher compared to previous year which attributed to a rise in business activity.

Other Income

The other Income for the FY 2023-24 was 2.53 lakhs which was Nil in the FY 2022-23. The other income includes interest earned on the fixed deposit.

Expenditure:

Cost of Material Consumed

The Cost of Material Consumed for F.Y. 2023-24 was 682.64 Lakhs against the cost of Material Consumed of 476.28 Lakhs in F.Y. 2022-23. The cost of material consumed was 38.23 % of the Revenue from operations in F.Y 2023-24 as against 34.27 % of Revenue from Operations in F.Y 2022-23. The primary reason for increase in Cost of material consumed was increase in price of the raw material.

Employee Benefits Expenses:

The Employee expenses for F.Y. 2023-24 was 255.05 Lakhs against the expenses of 178.96 Lakhs in F.Y. 2022-23 showing increase by 42.52%. This rise in employee costs was primarily due to an increase in the workforce to support the growing scale of operations, along with the impact of annual salary increments and other employee costs. The expansion in business activities by 28.49% necessitated a larger team, contributing to the higher employee expenditure during the year.

Finance Cost:

The Finance Cost for the F.Y. 2023-24 was 23.94 Lakhs against the cost of 14.33 Lakhs in the F.Y. 2022-23 showing increase of 67.06 %. The finance cost was increased on account of overall increase of the Borrowings that charges interest. The total outstanding of the borrowings as on March 31, 2024 was 530.81 lakhs as against 221.18 lakhs as on March 31, 2023. The cash inflow from borrowings in the FY 2023-24 was 309.63 lakhs resulting in to higher finance cost.

Other Expenses

Other Expenses increased to 693.34 Lakhs for F.Y. 2023-24 against 672.60 Lakhs in F.Y. 2022-23 showing increase of 3.08%. There was no sharp rise or fall in overall other expenses during the year 2023 -24. However, Legal & Consultancy expenses took high to 25.94 lacs as compared to 2.85 lacs, sales Promotion expenses have also increased to 197.84 lacs from 145.98 lacs & Travelling expenses increased to 58.12 lacs as compared to 49.87 lacs. Besides that, there was no major decrease or increase in any of the expenses.

Depreciation and Amortization Expenses:

The Depreciation for F.Y. 2023-24 was 21.47 Lakhs as compared to 18.07 Lakhs for F.Y. 2022-23. The depreciation increased by 18.82 % in F.Y. 2023-24 as compared to F.Y. 2022-23. The increase in depreciation amount was due to depreciation charged on acquisition of depreciable tangible assets of 31.65 lacs and intangible assets of 1.32 lacs in F.Y. 2023-24.

EBIDTA

The EBIDTA for F.Y. 2023-24 was 157.20 Lakhs as compared to 61.89 Lakhs for F.Y 2022-23. The EBIDTA was 8.79% of total Revenue in FY 2023-24 as compared to 4.45% in F.Y. 2022-23. EBIDTA has improved to 8.79% as compared to 4.45% in the previous year due to increase in the business by 28.49 % in FY 2023 -24 in comparison to FY 2022-23. This improvement was primarily driven by the efficiency in cost management in the business operations during the year, reflecting better operational efficiency and cost absorption.

Profit after Tax (PAT)

PAT is 79.81 lakhs for the F.Y. 2023-24 in compared to 19.41 lakhs in F.Y. 2022-23. The PAT margin was 4.46% of total revenue in F.Y. 2023-24 compared to 1.40 % of total revenue in F.Y. 2022-23.The increase in profit is due to increase in the business by 28.49% and better profit margin products introduced by the Company. This indicates that the Company was able to retain a significant portion of its operating income as net profit after accounting for all expenses, including finance costs, depreciation, and taxes. This significant Rise in PAT margin in business was primarily due to less cost required to manage business and reduction in other operating expenses leading to higher profit. These factors collectively impacted the profitability ratio for the year.

CASH FLOW

Particulars	March 31, 2025	March 31, 2024	March 31, 2023
Net cash from Operating Activities	(183.82)	(217.46)	(18.29)
Net cash flow from Investing Activities	(54.46)	(30.45)	(35.30)
Net Cash Flow Financing Activities	668.25	285.69	81.01

Cash flow March 31, 2025

The Company has Negative Cash flow from operating on account of net increase of working capital more than the profit earned by the company. The Company had invested in the fixed assets resulting into negative cash flow from investing activities. The Company had raised funds from share capital and short-term borrowing, which offset the repayment of the long-term borrowings and payment of interest, ultimately resulting into the positive cash flow from financing activities.

Cash flow March 31, 2024

The Company has Negative Cash flow from operating on account of net increase of working capital more than the profit earned by the company. The Company had invested in the fixed assets resulting into negative cash flow from investing activities. The Company had enhanced the long-term & short-term borrowings resulting into the positive cash flow from financing activities.

Cash flow March 31, 2023

The Company has Negative Cash flow from operating on account of net increase of working capital more than the profit earned by the company. The Company had invested in the fixed assets resulting into negative cash flow from investing activities. The Company had enhanced the long-term borrowings resulting into the positive cash flow from financing activities.

Information required as per Item 11 (II) (C) (iv) of Part A of Schedule VI to the SEBI Regulations:

1. Unusual or infrequent events or transactions

To our knowledge there have been no unusual or infrequent events or transactions that have taken place during the last three years

2. Significant economic changes that materially affected or are likely to affect income from continuing operations.

Our business has been subject, and we expect it to continue to be subject to significant economic changes arising from the trends identified above in ‘Factors Affecting our Results of Operations and the uncertainties described in the section entitled “Risk Factors” beginning on page 26 of this Draft Red Herring Prospectus. To our knowledge,

except as we have described in this Draft Red Herring Prospectus, there are no known factors which we expect to bring about significant economic changes.

3. Income and Sales on account of major product/main activities

Income and sales of our Company on account of major activities derives from manufacturing, marketing and distribution of finished pharmaceutical formulations.

4. Whether the company has followed any unorthodox procedure for recording sales and revenues

Our Company has not followed any unorthodox procedure for recording sales and revenues.

5. Known trends or uncertainties that have had or are expected to have a material adverse impact on sales, revenue or income from continuing operations.

Apart from the risks as disclosed under Section titled “Risk Factors" beginning on page 26 in this Draft Red Herring Prospectus, in our opinion there are no other known trends or uncertainties that have had or are expected to have a material adverse impact on revenue or income from continuing operations.

6. Extent to which material increases in net sales or revenue are due to increased sales volume, introduction of new products or services or increased sales prices.

Increases in revenues are by and large linked to increases in volume of business.

7. Total turnover of each major industry segment in which the issuer company operated.

The Company is in the business of Manufacturing, Marketing and distribution of finished pharmaceutical formulations, the relevant industry data, as available, has been included in the chapter titled "Industry Overview" beginning on page no 93 of this Draft Red Herring Prospectus.

8. Status of any publicly announced new products or business segment.

Our Company has not announced any new products or business segment.

9. The extent to which business is seasonal.

Our business is not seasonal.

10. Any significant dependence on a single or few suppliers or customers.

Our top 10 buyers and suppliers constitute majority of our business which is reproduce in Chapter Business Overview on page 101 of Draft Red Herring Prospectus.

Particulars			Purchases/Sales
	2024-25	%	2023-24	%	2022-23	%
Top 10 Buyers	1199.46	48.84	999.85	55.99	950.34	68.37
Top 10 Suppliers	1170.12	92.36	733.91	92.27	502.23	88.62

11. Competitive conditions.

Competitive conditions are as described under the Chapters titled “Industry Overview " and “Business Overview " beginning on pages 93 and 101, respectively of this Draft Red Herring Prospectus.

FINANCIAL INDEB1EDNESS

Our Company avails loans in the ordinary course of our businesses and for funding working capital and business requirements.

For details of the borrowing powers of our Board, see “Our Management- Borrowing Powers” on page 173. The details of the indebtedness of our Company as on March 31, 2025 are provided below:

1. Secured Loan

(Rs. In Lakhs)

Name of the Lender	Credit Facility	Sanction Date	Sanction Amount	Outstanding Amount as on March 31, 2025	Interest Rate per Annum (floating rate) (in %)	Tenure	Combined Security
ICICI Bank Limited	Cash Credit	October 21, 2024	500.00	438.67	The Rate of interest of the facility stipulated by the bank shall be the Bank shall be sum of Repo rate plus Spread Rate	On Demand	Exclusive charge over the receivables and Current assets of the borrower both present and future.
							Personal Guarantee of
					As on date the Repo rate is		1. Piyush R. Unadkat
					6.50% and spread is 3.00 %		2. Kapilbhai H. Chandarana
							3. Tejash M. Hathi
							4. Riddhish N. Tanna
							5. Chetan S. Lalseta
							6. Jyotiben Chandarana
							7. Chatrabhuj V. Bhutani
							8. Ganshyam V. Pansuriya
							9. Gaurang R. Thakkar
							10. Mayankbhai R. Thakkar
							11. Tejal Tejashbhai Hathi
	Loan Against Property- Non-Residential-OD to Self Employed Entity	February 20, 2025	67.07	67.07	The rate of interest - Floating for the Facility shall be sum of the Repo Rate + Spread per annum, plus applicable statutory levy. As on date the Repo Rate is 6.25% and Spread is 3.25% and Applicable Interest Rate is 9.50 (Repo Rate + Spread) % per annum.	180 Months	Property To Be Owned by Chandarana Hasmukhbhai Bhagvanjibhai
		February 20, 2025	97.93	97.93
		February 20, 2025	60.00	60.00			Property to be owned by Unadkat Piyushbhai Rasikbhai
Total			725.00	663.67

Standard Conditions

1. Borrower shall not avail finance from any other bank/entity for the aforesaid purpose without prior written approval of ICICI Bank.

2. Interest payment on unsecured loans shall be subservient to the interest payment to ICICI Bank Ltd.

3. Funds will not be diverted to sister concerns and associate concerns if any

4. Funds would be used for the purpose for which the facilities have been availed and funds will not be used for financing, speculation, illegal, litigation or any such purpose.

5. All other terms and conditions shall be as per General Conditions (GC-I) and the Credit Facility Agreement (CFA) to be executed between the company and ICICI Bank Ltd.

6. The customer undertakes to comply with the LEI guidelines as circulated by RBI from time to time.

7. The Bank at its sole discretion may block/ zeroise the drawing power in the account upon non-renewal or non-submission of stocks statements.

8. The borrower to rout 100% of its business including sales turnover, forex and ancillary business if any through ICICI Bank

Prepayment

1. In case of prepayment / foreclosure, there will be no prepayment premium charged Penal Charges

Sr. no. Nature of Default	Penal Charges
1. Non-compliance of sanction terms pertaining to Stock Audit. Book Debt Statement and Stock Statement	For facility amount: 50.0 mn: Rs. 5,000/- per type of compliance pending at month end
2. Irregular drawings due to drawing beyond Limit	For 1. Excess drawings over drawing power but within sanctioned limit 2. Excess drawings over sanctioned limit 2% on Excess Drawings/ Overdrawn Amount For Non- renewal of limits 2% on Expired/Non-renewed Limit “Total outstanding os on that date
3. Breach of financial covenants	For the first 15 days of the breach from due date as per sanction terms: Nil Breach continuing beyond 15 days: 1% on Average Outstanding Amount “Average outstanding of the default period to be considered
4. Non-compliance of sanction terms - Other Conditions	For the first 15 days of delay: Nil Delay> 15 days: 19% on the Average outstanding amount plus applicable taxes including GST)

Unsecured Loan

Sr no. Lenders name	Sanction Amount	Sanction Date	Outstanding Amount as on March 31, 2025	Rate of Interest	EMI	Tenure
1. Bajaj Finance Limited	50.76	November 30, 2024	38.84	17%	4.63	12 months
2. Aditya Birla Finance Limited	35.00	March 29, 2025	35.00	18%	1.27	36 months
3. Cholamandalam Investment and Finance Company Limited	50.00	March 28, 2025	50.00	17.6%	Drop Line OD	24 months
4. Godrej Finance Limited	35.00	March 31, 2025	35.00	17.75%	Monthly Dropline	48 months
5. L&T Finance	50.00	March 26, 2025	50.00	17.00%	Drop Line OD	36 months
6. Ugro Capital	40.40	March 31, 2025	40.40	16.50%	1.43	36 months
7. Kotak Mahindra Bank	25.00	January 05, 2024	11.37	-	1.22	24 months
Total	286.16		260.61

 

Sr no. Lenders name	Outstanding Amount as on March 31, 2025	Rate of Interest	Tenure
1. Tejasbhai Hathi	50.24	Interest Free	On Demand
2. Kapilbhai Chandarana	8.91	Interest Free	On Demand
3. Chatrabhujbhai Butani	20.10	Interest Free	On Demand
4. Ghanshyam Pansuriya	0.50	Interest Free	On Demand
5. Gaurang Thakkar	7.55	Interest Free	On Demand
6. Kripal Thakkar	14.55	Interest Free	On Demand
7. Riddhish Tanna	9.55	Interest Free	On Demand
Total	111.40