BDH Industries Ltd Management Discussions

Industry Structure and Developments - The global economy demonstrated resilience during FY 2025-26 despite geopolitical tensions, trade uncertainties, supply chain re-alignments, inflationary pressures and evolving monetary policies across major economies. The outbreak of war at the end of February 2026 caused disruption to the Strait of Hormuz that pushed crude oil prices higher, tightened LPG supplies and fueled volatility across financial markets. As per International Monetary Fund report published in April 2026, the global growth is projected at 3.1% in 2026 and 3.2% in 2027. Global inflation is projected to rise moderately in 2026 and decline in 2027. Among emerging market and developing economies, growth is expected to remain comparatively stronger supported by domestic demand, investment in infrastructure and development projects and strengthening manufacturing activity. As per PharmaTrac report, the Indian Pharmaceutical market continues to deliver growth of 8.6% for year ending March 2026 reflecting its inherent resilience, consistent performance and strong fundamentals supporting long term expansion. Government initiatives such as Ayushman Bharat, the Production Linked Incentive Scheme (PLI), Biopharma SHAKTI and the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) continue to enhance healthcare accessibility, strengthen domestic manufacturing capacities and support the growth of the pharmaceutical sector. Penetration of health insurance is expected to surge with Ayushman Bharat Pradhan Mantri Jan Aarogya Yojana. The restructuring of the personal income tax and GST rate rationalization were aimed at improving disposable income, easing tax burden on households and supporting consumption across income segments. The investments under the Pradhan Mantri Ayushman Bharat Health Infrastructure Mission to upgrade district hospitals and the investments under the Ayushman Bharat Digital Mission and National Biopharma Mission to build digital infrastructure for quality and scalable healthcare signal clear repositioning of countrys healthcare. With a clear ambition of becoming a developed nation through initiative of Viksit Bharat 2047, the Government of India is building strong foundations of economic growth, structural reforms and social progress. These government led initiatives show Indias pharmaceutical agenda of expanding healthcare access and affordability in building healthier lives for all, structural shift towards digitally enabled healthcare services and strengthening the countrys position in the global pharmaceutical market.

Outlook - India continued to be one of the fastest growing major economies despite the volatile global environment. As a supplier of quality, affordable generics and vaccines to the world India has established itself as the "Pharmacy of the World." It is the third largest globally in volume and eleventh largest by value. Today the Indian pharmaceutical industry is evolving beyond manufacturing to emerge as global innovation hub with a strong emphasis on R&D, biologics and specialized therapies. This innovation is being actively enabled by sustained investments in advanced manufacturing technologies, digital infrastructure, data driven R&D and integrated digital health ecosystems. Rising demand for prescription medicines is fueled by the increasing prevalence of chronic and lifestyle related conditions such as diabetes, cardiovascular disorders, obesity, CNS disorders etc. Chronic diseases are long lasting conditions that often cannot be fully cured but can be managed and controlled. Their incidence is increasing due to factors such as poor nutrition, physical inactivity, dietary changes and sedentary lifestyle. The Indian healthcare market is also witnessing a structural shift towards preventive healthcare, wellness and specialized therapeutics and digitally enabled healthcare services. Preventive healthcare measures are also boosting demand for vaccines for children, adults and travelers due to rising health awareness. These evolving consumer trends are creating new opportunities beyond traditional pharmaceuticals and expanding the addressable market across multiple healthcare categories. The Indian pharmaceutical industry has steadily advanced up the value chain from its foundational strength in affordable generics to becoming a recognized hub for complex generics, biosimilars and specialty formulations. This transition has been driven by sustained investments in R&D, regulatory compliance and manufacturing scale. Indias pharmaceutical ecosystem spans generic formulations, over-the-counter-medicines, bulk drug, vaccines, biologics and contract research and manufacturing. With highest number of US-FDA complaint factories outside US and over 500 API manufacturers, India remains a dependable partner in global healthcare supply chain. Indias pharmaceutical industry is underpinned by a strong and interconnected supplier network comprising over 3000 companies and over 10500 manufacturing facilities. Established hubs such as Hyderabad, Ahmedabad and Mumbai provide seamless access to APIs, intermediates, logistics infrastructure and skilled talent, enhancing operational efficiency, cost competitiveness and supply chain resilience. The Indian pharmaceutical sector is shifting towards innovation led growth. Companies are expanding R&D investments in complex generics, biosimilars, advanced drug delivery systems and select new molecular research. The Union Budget 2025-26 increased funding for the Department of Pharmaceuticals including specific outlays for bulk drug parks and medical device clusters. New initiatives aim to foster research in high-value areas such as biologics and biosimilars. Trade prospects strengthened during the year with the conclusion of Free Trade Agreements with United Kingdom, New Zealand and European Union for pharmaceuticals and medical devices signal deeper economic co-operation. The Companys long term outlook continues to be promising subject to overall growth in Indian and global pharmaceutical industry marked by geopolitical uncertainties, rising logistics compliance costs, supply chain disruptions, inflationary pressures across markets and foreign exchange volatility.

Opportunities, Risks and Concerns - India has emerged as a formidable force in the global pharmaceutical landscape supported by progressive policymaking, scientific depth, a robust supplier ecosystem and an expanding innovation force. Indias leadership in generic drug production is well aligned with global demand for affordable, highquality therapies. Indian pharmaceutical companies adherence to international regulatory standards enhances credibility in the regulated markets. Their ability to provide integrated solutions from early stage development and analytical services to commercial scale manufacturing has positioned them as strategic partners to global pharmaceutical innovators. The evolving geopolitical environment particularly China plus one strategy is a significant opportunity for India to emerge as a preferred destination for pharmaceutical manufacturing and capture a growing share of global outsourcing. The integration of digital technologies in pharmaceutical manufacturing and supply chain operations is expected to further enhance its efficiency, traceability and product quality. Key benefits include real time data monitoring and predictive maintenance, smarter decision making and reduced human error and automation of production lines with enhanced regulatory compliance. The use of augmented reality, virtual reality and machine learning enhances training, batch predictability and operational efficiency. Digital platforms and ecommerce channels play an important role in industry growth, improving accessibility and product penetration across markets. The expansion of organized retail, online pharmacies and health tech ecosystems are enjoying growing demand. Telemedicine, e-prescriptions and remote monitoring are evolving tools in healthcare delivery. Regulatory frameworks are evolving to support innovation while ensuring safety, transparency and faster market access. Harmonization of regulatory standards is expected to ease cross border approvals. Rising disposable incomes, increasing healthcare awareness, expanding insurance penetration and favorable demographics continue to strengthen the pharmaceutical industry. Your company has a diversified portfolio and its manufacturing excellence is strengthened by quality systems and compliant production for domestic and international partners. Your company has a dedicated R&D centre focused on formulation development and improving operational efficiency. The factors such as geopolitical frictions, tariff volatility, supply chain dependencies, regulatory constraints, pricing pressures, rising inflation and resultant all round increase in input costs remain a few causes of concern. The Company owns two windturbines at Jaisalmer in Rajasthan with capacity of 1.6MW. The electricity generated by them is sold on Indian Energy Exchange.

Financial Performance and Operations Review - During the FY 2025-26 the Company earned total income of Rs. 9819.84 lakhs as against Rs. 6834.71 Lakhs in 2024-25, registering an increase of 44% over previous year. Export Sales in the FY 2025-26 was Rs. 5002.49 lakhs as compared to Rs. 3095.69 lakhs in FY 2024-25. In FY 2025-26 Domestic Sales was Rs. 4592.97 lakhs as compared to Rs. 3555.14 lakhs in FY 2024-25. The operations resulted in net profit of Rs. 1081.38 lakhs in FY 2025-26 as against Rs. 927.33 lakhs in previous FY 2024-25.

As per Schedule V read with Regulation 34(3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, details of significant changes i.e. change of 25% or more as compared to the immediately previous financial year in Key Financial Ratios are given below :-

Internal Control Systems and its adequacy - The Company has an adequate system of internal controls commensurate with the nature of its business and the size of its operations. These controls are designed to ensure operational efficiency, accuracy, completeness of financial and operational records, compliance with applicable laws and regulations, safeguarding of assets, prevention of errors, efficient use of resources and adherence to policies and procedures. The effectiveness of these controls is monitored through a combination of management reviews and periodic control assessments. There are well-defined SOPs for every function, internal policies, guidelines, authorizations and approval procedures to ensure the appropriate checks and balances and regulatory compliance at all levels alongwith system of management reporting. The Company undertakes periodic reviews and continuous improvements to ensure that the internal control systems are regularly updated and aligned with evolving business needs.

Human Resources - The Companys employees remain central to its success. The pharmaceutical industry is knowledge driven and requires highly skilled human resources in its major operations. The Company fosters an inclusive and performance-oriented workplace that encourages accountability, continuous improvement and recognize contributions. Employee well-being and workplace safety remain integral priorities. The Company recruits, develops and retains experienced personnel. Ongoing training programs are conducted regularly for employees that help sharpen skills and build professional strengths. All employees undergo annual performance evaluation aligned with individual objectives and organizational goals. The Company has Reward and Recognition Programme. The Company has 95 employees as on 31^st March, 2026. The Company reviewed the implications of the new labour code introduced by the Government of India and assessed its impact. The Company continues to monitor the issuance of rules, notifications and clarifications by the relevant authorities.

Cautionary Statement - In the Management Discussion and Analysis section there may be forward looking statements within the meaning of applicable laws and regulations. The forward looking statements are based on certain assumptions and expectations of future events. Actual results may differ materially from those expressed in this section due to external factors beyond the control of the Company. The Company assumes no responsibility to any forward looking statements on the basis of any subsequent developments.