Bafna Pharmaceuticals Ltd Management Discussions

(Pursuant to Schedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015)

ECONOMIC OVERVIEW

Global Economy

As per World Economic Outlook Update, July 2026, the world economy grew by 3.5% in 2025 in line with 2024 levels and is projected to grow at 3.0% in 2026 amid counter undercurrents of geopolitical tensions and technology momentum. The outbreak of war during February, 2026 derailed the course of global economy with trade barriers and uncertainties to an extent. However, improved technology investments and financial conditions alleviated these impacts and kept global economy on growth trajectory.

Advanced economies grew by 1.9% in 2025 and are expected to post 1.7% growth in 2026 given uncertain global conditions as per WEOs latest update. The United States, Spain and other advanced economies led the economic growth in the advanced economy segment, registering 2.1%, 2.8%, and 3.0% growth respectively in 2025.

On the other hand, Emerging Markets and Developing Economies segment has registered 4.5% growth in its output,

driven by healthy economic performance. Emerging and Developing Asia registered 5.6% growth. Among emerging Asian countries, India remained at the forefront, recording 7.7% growth in 2025, while China observed 5.0% growth.

The headline inflation remained 4.1% in 2025, registering a decline driven by lower consumer prices. It is likely to go up and remain uneven across countries based on the movements in currency exchange, service price, labor market conditions, and country-specific energy supply and food price factors in FY26.

The global economy is projected to grow by 3.0% in 2026, lower than the previous years growth, before recovering to 3.4% in 2027. Global headline inflation is projected to average 4.7% in 2026 and is expected to moderate further in 2027 as supply- side disruptions ease and the effects of recent geopolitical and trade-related shocks gradually recede. Nevertheless, the outlook remains subject to downside risks arising from geopolitical tensions, trade fragmentation, and financial market volatility.

Here are the 2026 growth projections of few of the Companys key markets, (WEO Forecast April 2026)

Country	GDP Growth % 2025	GDP Growth % 2026	Country	GDP Growth % 2025	GDP Growth % 2026
Nigeria	4.0	4.1	Nepal	4.6	3.0
Tanzania	5.9	5.9	Ukraine	1.8	2.0
Kenya	4.9	4.5	Honduras	3.7	3.3
Ethiopia	9.2	9.2	Australia	2.0	1.9
Philippines	4.4	4.1	United Kingdom	2.0	1.3
			Europe	2.0	2.0

Source:

Indian Economy

Indian economy emerged one of the fastest growing economies in the World and Emerging and Developing Asian Economies with 7.7% GDP growth in 2025 amid global headwinds. (WEO, July 2026). As per MoSPIs provisional estimates (June 2026), real GDP grew by 7.7% while nominal GDP grew 8.9% in FY26. While agriculture or primary sector observed 3.2% growth, secondary and tertiary sectors registered 8.8% and 9.3% growth respectively, reflecting robust economic activities and momentum.

Manufacturing sector comprising pharmaceutical industry attained double-digit growth and contributed 15% to the economic output during the year. Gross Fixed Capital Formation, showing supply growth momentum of the sector and Private Final Consumption Expenditure,

mirroring demand side, also grew by more than 7.5% during FY26.

As per NSO (MoSPI) (May 2026) update, retail inflation based on Consumer Price Index remained 3.48% while Consumer Food Price Index reflecting food inflation remained 4.2% in April 2026, driven by spike in crude oil price. However, the yearly average inflation remained low, showing inflation containment to the target level.

Depreciation of Indian Rupee against US Dollar, uncertainties driven Middle East war and unfavorable monsoon conditioned have retracted the GDP growth projects for FY27, compelling Reserve Bank of India to lower its GDP projection to 6.6% and rise inflation estimate to 5.1%. Indian Government has adopted multi-pronged strategy with targeted monetary and structural interventions to drive growth and contain inflation.

Section-wise Gfowth Rates (%) of Real CVA in Q4 of 2023-24, 2024-25 and 2025- 26

Agriculture, Livestock, Forestry & Fishing

Mining & Quarrying

Manufacturing Electricity, Gas,

Water Supply & Other Utility Services

Construction Trade, Hotels,

Transport,

Communication & Services releated

to Bradecating, Storage

Financial, Real Estate, IT, Professional Services & Owership of dselling

Public Administration, Defence & Other Services

Source: Press Release (May 12, 2026), National Statistics Ofice, GOI, MoSPI .

Quarterly Estimates of Gross Domestic Product for the Fourth Quarter (January-March) Of 2025-26, National Accounts Division, MoSPI, GOI

GLOBAL PHARMACEUTICAL INDUSTRY OVERVIEW

As per Frost & Sullivan March 2026 report, global pharmaceutical industry was worth USD 1627.73 million in 2025 and is expected to grow at 5.8% CAGR to USD 1722.06 billion in 2026. North America holds 40% market share due to advanced R&D infrastructure while Asia-Pacific expands fast with supportive government incentives and capabilities. The industry expanded and is anticipated to grow further on the backdrop of biologics innovation, advanced therapy demand, and increasing healthcare spend.

While small molecules continue to provide stable base revenue supporting cashflows and expansion, the large molecules drive majority of revenue growth in global pharmaceutical industry. GLP-1 therapies and antibody-drug conjugates are key innovation drivers, specifically in cardiometabolic and oncology segments. The regulatory pressures are shaping the pricing dynamics across the globe. The pharmaceutical enterprises are leveraging AI-driven drug discovery, real-world evidence generation and digital quality control systems to improve productivity and innovation.

Source:

INDIAN PHARMACEUTICAL INDUSTRY OVERVIEW

Indias domestic pharmaceutical market is valued at USD 60 billion in 2025 in which is anticipated to reach USD 130 billion by 2030. Pharma sectors turnover in India has reached INR

4.72 lakh crores (USD 56 billion), making it the third largest by volume and 11the largest by value. It exports to more than 191 countries, accounting for 20% global generic medicine supply. The exports have registered many fold increase in exports since 2000-01 and grown at a CAGR of 7% between 2015 to 2025.

The domestic market is highly competitive with more than 3,000 companies manufacturing about 60,000 generic brands with their 10,500 production units. India has large number of plants approved by USFDA and 500 active API manufacturers. For long time, India has been known as the mass pharma manufacturing hub. However, now, it is pivoting to value-driven ecosystem of high-margin complex formulations and integrated supply network. Many companies have filed patents to protect the rights of their high-value products.

Government of India recognizes the importance of pharmaceutical sector and allocates substantial budget outlay for the same. In FY26 union budget, it allocated INR 100 billion to support biologics and biosimilars manufacturing, expand reach through NIPER (National Institutes of Pharmaceutical Education and Research) and develop 1,000 clinical trial sites. In line with governments PRIP scheme, seven excellence centers have been established to encourage R&D in India. Government also provides production linked incentives, encouraging production of major initial materials and drugs.

KEY GROWTH DRIVERS:

Pharmaceutical sector is expected to witness accelerated growth with regulatory support, investments, R&D capabilities and robust demand.

Growth in Chronic Therapy and Other Areas: Long-lasting therapy segment has emerged as the leading growth driver in pharmaceutical industry of India with more than 15% value growth in diabetes and cardiac segments. The growth was also substantiated by more demand for vaccines, anticancer therapies and nutritional supplements.

Regulatory Support: Government of India has allocated INR

100 billion to make India a biopharmaceutical hub while continuing Production-Linked Incentive Scheme for bulk and high-value drug and devices manufacturing. It has entered into free trade agreements with EU, UK, New Zealand providing access to these regions to Indian manufacturers.

Quality Standard Alignment : Schedule M guidelines have been revised and adopted to elevate quality standards aligned with global audits.

Foreign Direct Investment: Foreign investors consider Indian pharmaceutical industry as a lucrative sector and infuse capital, supporting manufacturing capacity expansion. Foreign investment flows in this sector crossed more than INR 131. 93 billion in FY26.

Technological and Value Shifts : The companies are integrating AI to shorten drug discovery pipeline and reduce overall costs. They are increasingly pivoting towards manufacturing of high- value specialized biologics for the export purpose.

Research and Development: Indian pharma sector is creating value by developing complex generics, biosimilars, and specialty products with significant R&D investment. Government also announced Biopharma Shakti Initiative to encourage clinical trials, R&D, biologics and biosimilars.

Boost to Domestic Consumption : Indian Governments Pradhan Mantri Bhartiya Janaushadhi Pariyojana network makes generic medicines accessible across tier-II, tier-III and rural areas in India, promoting drug consumption and overall demand by population.

Export and Global Integration: Indian pharmaceutical sector supplies vaccines of Diphtheria, Tetanus, and Pertussis (DPT), Bacillus Calmette Guerin (BCG), and measles to the world including UNICEF. It has steadily expanded its global presence with exports with diversified product portfolio and geographies. It largely exports to the USA and emerging destinations such as EU, Brazil, Russia, Africa and others. Indian pharmaceutical enterprises are integrating forward or backward across value chain to improve their share in branded generics, biosimilars and API/bulk drug market.

Source:

OPPORTUNITIES AHEAD

Significant GLP-1 Generic Demand: GLP-1 generic drug demand is likely to get a boost after the patent expiry of semaglutide (Ozempic) by the end of FY26. It may register 34% growth per annum till 2030, creating a valuable opportunity for Indian pharma companies with peptide capabilities.

Biosimilars and Biologics: With cost-competitive manufacturing, growing biologics infrastructure and government push, Indian generic companies have the scope to enter and thrive in oncology and immuno-oncology biosimilars after patents expiration.

Contract Development and Manufacturing: More and more international companies are seeking manufacturing partners in India. Filing timelines have reduced from 3 years to 1.5 years with combined bioequivalence studies with dossier filings in India, making country preferred destination for manufacturing.

Regulated Market : An accredited and compliant Indian pharma manufacturing company addresses the persistent shortage of complex generic, ophthalmic and devices in certain niches in the UK, US and Australian market. It helps the Indian company sustain price and earn margins.

Emerging Market : Latin America, Africa and some Asia-pacific countries present an untapped market potential for generic medicines as they drive demand because of growing disease burden, middle-class populations and healthcare infrastructure.

AI-powered Drug Development: AI in R&D shorten the drug development timelines, strengthening productivity and global competitiveness. The companies can create international market opportunities by accelerating ANDA filings, less clinical trial costs, optimizing formulation development and improving regulatory submission.

Domestic Market : India is a lucrative market for pharmaceutical companies on the backdrop of rising chronic disease burden, government healthcare schemes, increasing health insurance penetration, and new product launches.

CHALLENGES OF INDIAN PHARMACEUTICAL INDUSTRY

Indian pharmaceutical players operate in a complex environment wherein they navigate distinct and demanding challenges testing their operational resilience, regulatory compliance, financial agility and strategic foresight at the same time.

Regulatory Compliance: Indian pharma companies need to comply with escalating regulatory expectations from USFDA, EU-GMP, UK-MHRA and other authorities. The compliance requires continuous oversight and investment in quality systems, documentation and facility upgrades that immensely burden small or medium enterprises.

Pricing Pressures: Pharma products prices are controlled through Drug Price Control Order (DPCO) wherein the companies cannot charge a price above the cap determined by authorities. Such a cap or control sometimes compresses the margins on the key formulations across markets. Moreover, the companies are forced to balance commercial viability across products and markets with DPCO compliance.

Raw Material Dependency: Many Indian companies rely on China for API and raw material sourcing, exposing themselves to volatility in price, supply and geopolitical risk. They face constant operational challenge in managing API costs and product affordability and competitive pricing.

High Competition in Generic Segment: Many pharmaceutical companies operate in generic category, competing on price across the same therapeutic categories. It becomes difficult for small or midcap companies to sustain the margins and invest in quality while maintaining competitive pricing.

Talent Acquisition and Retention : Indian pharmaceutical industry faces acute supply of skilled industry professional in regulatory affairs, quality assurance, R&D and manufacturing. Therefore, small companies are at the risk of operational continuity and growth execution due to human capital unavailability.

COMPANY OVERVIEW

Bafna Pharmaceuticals Limited is a 31-year-old, NSE & BSE-listed pharmaceutical company engaged in manufacturing and export of finished drug formulations. Started as an institutional supplier, the Company has now transformed into a strong generic player that exports to as many as 20 countries of the Regulated and Emerging markets.

The product portfolio of the Company comprises 336 product formulations including antibiotics, medications for cardiovascular, diabetes, oncology, anti-infectives, and central nervous conditions. Approximately 70% of the products are dispatched to various countries of Asia, Australia, Africa, the UK, and Europe.

Bafna Pharma is known for its branded generics and contract manufacturing. It holds global accreditations - EU-GMP, UK-MHRA and TGA-Australia and accreditations from Emerging countries including Asia, Asean and Africa (West and East) apart from WHO-GMP-certified manufacturing facility with advanced and well-equipped quality-control lab in Chennai, India, for round-the-year manufacturing and exports. The lab is equipped with advanced instruments and sophisticated and cutting-edge technology features,

enabling rigorous quality control across all manufacturing processes.

The Company has a full-fledged FR&D wing approved from DSIR that creates commercial pharmaceutical dossiers, optimizes formula and works for process optimization. The wing features specialized equipment for handling highly potent formulations with worker protection mechanism. It strictly follows protocols for safety, quality and compliance.

MARKETS AND MARKET PRESENCE

We are expanding into regulated global markets, increasing contract research and manufacturing services (CRAMS) and specializing in lifestyle disease therapeutics. The Company has penetrated markets of UK, Australia. The main growth drivers will be Australia, ASEAN and Africa. It has also established presence in South and Southeast Asia by expanding registrations while holds limited presence in CIS, Latin America and other parts of the world.

At Bafna Pharmaceuticals, our focus is to maximize revenue from registered products globally while applying for more registrations to expand market. We hold active product registrations in more than 20 countries and have 100 pending product registrations across Africa, Asia and the rest of the world markets. We are exploring newer, high-potential markets through more product filings to increase our global presence. The Company is poised to deepen its presence in existing and new geographies with significant investments in compliance, R&D and infrastructure in next two to four years. It currently holds product registrations in the following regions,

African Region			Asian Region	European and CIS Region	Central/South America
Nigeria	Tanzania	Mauritius	Philippines	Ukraine	Honduras	Bolivia
Madagascar	Ethiopia	Ghana	Sri Lanka	United Kingdom	Guatemala
Kenya	Uganda		Nepal	Australia	Peru
Rwanda	DRC/Congo		Azerbaijan		Nicaragua

DISTRIBUTION CHANNELS

Bafna Pharmaceuticals Limited follows a distributor-based business model in emerging markets and operates through channel partners in regulated markets. The Company has established a strong distribution network in African and Asian regions to cater to these markets. It also participates in Government tenders for supply of essential drugs in these regions. In Nigeria, Philippines, Sri Lanka, Tanzania and Nepal, the Company has allocated a specific product line to each distributor out of its multiple product lines to ensure regional compliance, marketing and delivery.

Bafna Pharma reaches regulated European and Central American markets through export Partners and channel partners as per country-specific trade regulations.

PRODUCT PORTFOLIO

The Company operates majorly in diverse therapeutic segments, including Cardiology and Lifestyle & Potent Drugs. Its product portfolio comprises 336 formulations centered on these therapeutic segments. Here are the details of the treatment or applications offered by the company in each segment.

Therapeutic Segment	Key Products	Dosage Forms	Key Markets
Anti- Infectives	Levofloxacin, Clarithromycin, Azithromycin, Mycophenolate mofetil, Mebendazole, Linezolid, Nitrofurantoin, Moxifloxacin	Tablets	Asia, Africa, Central/South America

Therapeutic Segment	Key Products	Dosage Forms	Key Markets
Cardiovascular	Atenolol, Propranolol, Olmesartan, Irbesartan, Simvastatin, Clonidine, Telmisartan, Losartan, Atorvastatin, Rosuvastatin, Ivabradine, Lisinopril, Amlodipine, Clopidogrel, Prasugrel, Spironolactone	Tablets	Asia, Africa, Central/South America
Diabetes/Metabolic	Metformin, Sitagliptin, Vildagliptin, Glimepiride	Tablets	Asia, Africa, Central/South America
Oncology (Potent oncology formulations)	Prednisolone, Tamoxifen, Finasteride, Bicalutamide	Tablets	Asia, Africa, Central/South America, UK
Pain/Anti-Inflammatory	Paracetamol, Diclofenac, Ibuprofen, Celecoxib, Hydroxychloroquine Sulfate	Tablets, Capsules	Australia Sri Lanka, Africa
CNS	Clonazepam, Clonidine, Gabapentin, Pregabalin, Pregabalin+Methylcobalamin, Levetiracetam	Tablets, Capsules	Asia, Africa, Central/South America, UK
CRAMS	Contract manufacturing, dossier filing	All solid oral dosage forms	UK, Australia, EU clients

CONTRACT RESEARCH AND MANUFACTURING SERVICES (CRAMS)

Bafna Pharma manufactures specialty and complex generics and develops differentiated dosage forms under contract research and manufacturing services (CRAMS) for the partner companies in United Kingdom and Australia. Its current pipeline strategy is to build a high-value, low-volume specialty product pipeline, shifting to formulations with therapeutic complexity and high barriers. The present pipeline includes potent formulations (related to oncology, hormonal therapies), stability-challenging molecules, generics for emerging and regulated markets, bi-layered & modified-release tablets and dossier filings.

ENVIRONMENTAL, SOCIAL AND HEALTH

Bafna Pharma is deeply committed to advancing health responsibly and integrate environmental stewardship, community well-being and healthcare practices to create sustainable value for patients, society and the planet. It has adopted sound environmental practices of pollution control, resource conservation, and waste management.

The Company grows plants and trees in surroundings of manufacturing facilities to prevent pollution, implement water recycling and rainwater harvesting systems to conserve water. It reduced carbon impact through effluent treatment compliance (TNPCB-certified) and minimal hazardous waste generation. It ensures safe handling of hazardous chemicals by segregating waste consciously. It also undertakes effective wastewater treatment measures to protect land.

The Company has invested in energy optimization by deploying high efficiency HVAC and LED lighting and endeavored to procure renewable solar energy for its 60% power requirements.

It has also adopted green packaging for its export products for the least adverse impact on environment.

For community, Bafna Pharmaceuticals conducted CSR programs in health awareness and donation drives in Red Hills & Madhavaram. It employs as much as 65% local people in its workforce, reflecting its commitment. The Company ensures a safe, motivating and inclusive workplace for employees and provides skill development training.

The Company ensures a workspace with the utmost safety measures in place to prevent any accident, injury or chemical harm. It adheres to Good Manufacturing Practices and global health standards across operations.

OPERATIONAL AND FINANCIAL PERFORMANCE

Bafna Pharmaceuticals Limited observed growth in the top, middle and bottom lines, reflecting its healthy operational and financial performance in FY 2025-26. Its revenue from operations stood at INR 1,506.17 million against INR 1,458.57 million in previous year, registering a growth of 3.26%. The export turnover of company for FY26 was INR 958.10million (64% of revenue) against INR 729.79 million in FY25, recording growth of 31.29%. The domestic revenue stood at INR 519.77million in FY26 with 28% decline against INR 720.34 million in previous year.

The EBITDA for the financial year 2025-26 increased to INR

207.04 million with a growth of 48.74% over previous years INR 139.19 million. The Company efficiently maintained operational expenses at the same level, while increasing revenue in the year. EBITDA margin increased from 9.54% in FY25 to 13.75% in FY26. Profit After Tax increased by 167.3% from INR 41.53 million in previous year to INR 111.00 million in FY26.

Ratios	FY26			FY25			Variance					Explanation for variance
Profitability Ratios
Operating Profit Margin		6.55%			6.19%			5.82%			Improved due to higher operating revenue and better control over operating expenses.
Net Profit Margin		7.37%			2.85%			158.60%			Increased primarily due to higher turnover, increase in other income and better control over expenses.
Return on Net Worth		15.31%			6.86%			123.18%			Improved primarily due to the significant increase in net profit during the year.
EBITDA Margin		13.75%			9.54%			44.13%			Improved due to growth in revenue while operating expenses remained relatively stable.
Efficiency Ratios
Debt Equity Ratio			0.39 times			0.33 times			18.18%	Increased due to a comparatively higher increase in borrowings.
Current Ratio			1.57 times			1.63 times			- 3.68%	Decreased primarily due to an increase in current borrowings and trade payables.
Inventory Turnover Ratio			5.29 times			5.05 times			4.75%	-
Debtors Turnover Ratio			3.58 times			3.41 times			4.99%	-
Interest Coverage Ratio			4.00 times			3.52 times			13.64%	Improved due to higher earnings available to service finance costs.

OUTLOOK

The pharmaceutical industry is anticipated to witness stable growth driven by increasing aging population, healthcare expenses, chronic diseases, biologics, and specialty medicines besides automation. Affordable generics, injectables, and CRAMS are likely to witness strong demand. Indian pharmaceutical sector is set for sustained expansion, supported by robust export demand, investments in compliance, manufacturing and research capabilities, government push, and increased domestic healthcare access.

Bafna Pharmaceuticals Limited continues to build capabilities in research, manufacturing, quality assurance and compliance to stay ahead and competitive. It has improved its manufacturing capacity and upgraded in-house QC & QA labs with advanced equipment, digital validation and new stability chambers. The Company has also set up a regulated market-compliant granulation facility in the Grant Lyon facility in Chennai, Tamil Nadu. It is enhancing capacity for production, revamping high-containment zone.

The Company aims to reach revenue of INR 2.50 billion with 15% EBITDA in the ensuing financial years with its operational endeavors. Its 70% revenue comes from exports while rest 30% comes from domestic B2B contracts. Bafna Pharma is scaling branded generics production to market in regulated markets and is introducing potent molecule portfolios to capture new therapeutic segments. It plans to file 6-8 new dossiers for regulated and emerging markets and will shortly begin its regulatory groundwork for LATAM and CIS regions as per its long-term vision. In line with this vision, it will develop various dosage forms and products to be launched in these markets.

The Company is well-positioned to deliver quality products at competitive pricing with economies of scale, operational

excellence, and bulk procurement. An expanded product portfolio, strong distribution network, and sustained market demand support bright growth prospects. Promising R&D pipeline and rising product registrations across markets remain key growth drivers. Bafna Pharma is on the path of achieving the targets with sustainable EHS practices in FY27.

RISKS AND MITIGATION

The Company operates in pharmaceutical industry influenced by changes in regulations, market dynamics, supply chain and technology besides geopolitical developments. These uncertainties may pose threats to the supply chain stability, cost efficiencies, operating margins, revenue realization and profitability. Bafna Pharmaceuticals continuously identifies and addresses emerging risks that may affect its operations and growth. It mitigates operational, financial, regulatory and environmental risks through a robust enterprise risk framework, ensuring business continuity, shareholder interest and sustainable growth. Below are the description of major risks and their impact on the Company and mitigation mechanisms adopted by it.

Regulatory and Compliance Risk

Stringent domestic and global regulations govern the pharmaceutical operations of the Company, exposing it to regulatory changes enunciated by regulatory bodies of different countries and own country. The Company is required to obtain international export clearances as per GMP protocols, or such non-compliance may lead to regulatory notices, product recalls, manufacturing holdups and image impairment. For contract research and manufacturers, any regulatory action can delay approvals and revenue recognition.

Mitigation : Bafna Pharmaceuticals has a centralized Quality and Environment, Health, and Safety (EHS) system with digital

support to maintain consistent compliance across its facilities. It tracks regulatory frameworks to prevent manufacturing suspension or product bans. Internal audits and training programs are conducted to proactively identify and address anomalies with corrective and preventive actions.

Market and Client Concentration Risk

Export revenues from different countries expose the Company to macro headwinds including international tariff fluctuations, trade barriers, forex volatility, and regional market declines. Moreover, dependency on institutional clients and few buyers may impact the receivables timelines.

Mitigation : Bafna Pharmaceuticals Limited offers diverse products in each of the regions, reducing its dependency on a single geography. They focus on strategic, long-term partnerships to thrive in CRAMS by securing recurring order pipelines and minimizing default credit risks.

Pricing Risk

Intense competition, government-led controls and changing prescription patterns can diminish the prices and demand for the products, negatively impacting the profitability and upcoming products.

Mitigation : The Company rigorously implements cost reduction and efficiency measures and significantly invests in R&D to develop specialty high-value formulations and launch them in the geographies where they command better pricing.

Geopolitical and Economic Risk

Geopolitical conflicts, sanctions, inflationary pressures and global economic volatility may impact export demand, supply chains, input costs and profitability. They may limit the market access across key geographies.

Mitigation : Bafna continuously monitors global geopolitical and macroeconomic developments to assess their potential impact on its business and implements appropriate risk mitigation strategies. It maintains a diversified geographic presence to reduce dependence on any single market and adopts a prudent approach while entering new territories through reliable local distributors, strategic partners, or contract manufacturing arrangements, wherever appropriate. In addition, it actively manages foreign exchange exposure through appropriate strategies and continuously optimises its supply chain to enhance operational resilience and safeguard profitability. While supply chain disruptions arising from geopolitical conflicts and other global events cannot be fully mitigated, the Company continually evaluates alternative sourcing strategies and contingency plans to minimise their impact on business operations

Product Development Risk

A pharmaceutical company essentially invests, significantly, in product development which is subject to regulatory hurdles,

technical challenges, clinical trial delays and patent litigation. All these may lead to commercial launch delay, impacting future growth.

Mitigation : To alleviate product development risk, the company enhances its R&D capabilities and adopts a phase-review process and continuously monitors market trends and customer requirements to validate the development. Product development priorities are aligned with market demand, customer requirements, and regulatory expectations to enhance the likelihood of successful commercialization. Bafna Pharmaceuticals identifies the key launches, prioritizes resources for them and addresses the delay. While the inherent risks associated with product development and regulatory approvals cannot be eliminated entirely, the Company endeavors to mitigate these risks through robust project management, continuous portfolio review, and timely corrective actions

Operational and Quality Risk

Pharma companies are likely to experience operational challenges such as drug deterioration, expired formulations and packaging problems, leading to material revenue loss. They are also vulnerable to raw material supply chain risk, contracting their operations and margins.

Mitigation : Bafna Pharmaceuticals has adopted aggressive cost optimization measures, maintaining the operational costs at the previous year level. It regularly upgrades its manufacturing processes and quality systems and promotes cross-functional collaboration to improve product stability, optimize formulations, and develop robust packaging solutions that enhance product shelf life and integrity.

Cyber Security and IT Risk

Increasing digitization at Bafna Pharmaceuticals Limited exposes its manufacturing operations, regulatory submissions, and international distribution at cyber security and IT risk. Cyberattacks, data breaches, system failures may disrupt critical business operations, compromise sensitive regulatory dossier data, and reveal confidential customer or financial information.

Mitigation : The Company mitigates this risk through access control protocols and secure data backup systems while progressively strengthening its digital governance framework to assess the vulnerabilities and protect manufacturing execution systems, quality management data, and international regulatory filing infrastructure to ensure information security and business resilience.

Talent Acquisition and Retention Risk

The small or midcap companies face intense competition from large players when it comes to attracting and retaining talent across research, manufacturing, quality assurance, regulatory compliance and business functions. High attrition among

specialized scientists may adversely impact the product innovation while lack of leadership succession may hinder the long-term prospects of the Company.

Mitigation : Bafna Pharmaceuticals implements targeted recruitment and retention strategies for critical responsibilities and fostering a performance-driven work culture. It evaluates employee competencies, conducts compliance training, promotes internal transfers and fosters a culture of high performance with employee engagement. The Company also encourages internal career progression, cross-functional exposure, and succession planning for key roles to build leadership capabilities and enhance employee engagement, thereby supporting long-term organizational stability and growth

INTERNAL CONTROL SYSTEMS & ADEQUACY

The Company has put in place a system of Internal Controls in line with the regulatory requirements that are appropriate for its size and nature of business. These controls are designed to achieve effective governance and compliance and ensure:

?‚? orderly and efficient conduct of business,

?‚? safeguarding of its assets,

?‚? adherence to its policies and procedures,

?‚? prevention and detection of fraud and errors,

?‚? accuracy and completeness of the accounting records, and

?‚? timely preparation of reliable financial information.

The key elements of the system put in place by the Company are

?‚? a well-defined organizational hierarchy with clearly outlined role definitions, responsibilities, and authority matrix.

?‚? Financial planning and budgeting

?‚? Policies and SOPs, including for financial transactions such as purchase, etc.

?‚? IT systems to digitize the processes with in-built controls

In addition to these, the system incorporates continuous monitoring, reporting, checks and balances, and audit, etc.

Internal controls are adequately supported by Internal Audit and periodic review by management.

The Internal Audit is undertaken by an Independent Auditor, M/s K S Rao & Co., Chartered Accountants, Chennai. The Audit Committee and the Board meet periodically to review with the internal auditor, statutory auditors and management the adequacy/scope of internal audit function, significant findings and follow up there on and findings of any abnormal nature. The system is improved and modified continuously to meet changes in business conditions, statutory, and accounting requirements.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES

/ INDUSTRIAL RELATIONS FRONT

Bafna Pharmaceuticals Limited recognizes its workforce as a core strategic asset driving operations and global expansion. The Company invested in upskilling, regulatory compliance training, and retention models for employees and provided growth opportunities as per employee experience, choice and aptitude. It deepened its endeavors for talent acquisition and succession planning to build future-ready teams. It optimized workforce efficiency by offering performance-based incentives and structural leadership development. The focus on employee wellbeing directly supported the companys financial and operational execution during FY26.

The Company maintained cordial relations with employees across all levels. Its employee strength stands at 339 as on March 31, 2026, as against 406 at the end of the previous financial year.

CAUTIONARY STATEMENT

The information and opinions expressed in this report may contain certain forward-looking statements, which the management believes are true to the best of its knowledge at the time of its preparation. Actual results may differ materially from those either expressed or implied in this report.

On behalf of the Board of Directors

For BAFNA PHARMACEUTICALS LIMITED

SD/- SD/-

S. Hemalatha Vinayak Dinesh Dendukuri Whole-Time Director Whole-Time Director DIN:02714329 DIN: 07601309

Place: Chennai Place: Hyderabad Date: 11.08.2026