BDH Industries Ltd Management Discussions

Industry Structure and Developments – In the year 2024-25, the global economy experienced a challenging operating environment influenced by persistent geopolitical conflicts, escalation of trade tariff tensions, inflationary pressures and policy uncertainty impacting global trade flows. The trade war dynamics between US and China have contributed to global trade fragmentation and higher costs for businesses. The governments around the world reorder policy priorities and the policy shifts are resetting the global trade system, giving rise to uncertainty and testing the resilience of the global economy. As per International Monetary Fund report published in April 2025, the global growth is projected to drop to 2.8% in 2025 and 3% in 2026 – down from 3.3% for both years in January 2025 update. This is much below the historical (2000-19) average of 3.7%. The Indian Pharmaceutical market continued its upward momentum and delivered robust growth. As per PharmaTrac report for April 2025, the Indian Pharmaceutical market reflected growth of 8.3% highlighting its continued resilience and long term growth potential. The Government of India provides significant support to the pharmaceutical sector through various schemes and initiatives aimed at boosting domestic manufacturing, promoting research and development and ensuring affordable healthcare. Key measures include the Production Linked Incentive (PLI) scheme, the Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP), Bulk Drug Parks Scheme, Strengthening of Pharmaceutical Industry (SPI) Scheme and 100% foreign investment in medical devices and greenfield pharma projects. These initiatives demonstrate the governments commitment to strengthening the pharmaceutical sector, promoting domestic manufacturing, ensuring access to affordable medicines and fostering innovation and research. The government is focused on healthcare for all ensuring the medicines are made in India, for India and for the world keeping costs low and quality high.

Outlook – The Indian pharmaceutical industry ranks third in volume and fourteenth in value. It is the largest supplier of generic medicines providing 20% of the worlds supply and a key player in affordable vaccines. The industry boasts of a diverse product portfolio encompassing generic drugs, bulk drugs, over-the-counter medications, vaccines, biosimilars, and biologics, establishing a strong global presence. It has shown tremendous progress in terms of infrastructure development, technology base creation and a wide range of products. It has established its essence and determination to flourish in the changing environment. The industry produces bulk drugs belonging to all major therapeutic groups requiring complicated manufacturing technologies. Formulations in various dosage forms are being produced in GMP compliant facilities. Strong scientific and technical manpower and pioneering work done in process development have made this possible. Indian companies are also making their presence felt in the emerging markets around the world, particularly with a strong portfolio. The Indian Pharmaceutical industrys strengths are strong export market, low cost of production, low R&D costs, innovative and scientific manpower, excellent laboratories specializing in process development and development of cost effective technologies and affordable clinical trials. India has largest number of US-FDA compliant plants with modern state of the art Technology. Thus Indian pharma companies have a wide variety of experience in manufacturing as per global standards. Through intensive competition in the Indian market, Indian companies are experienced in the manufacturing of a variety of formulations that makes them efficient and competitive in their operations. The Indian pharma market is mature with decades of experience in generics manufacturing, catering to the needs of the general population. These companies have the experience and know-how to produce quality drugs in an efficient, high-quality and cost-effective manner without compromising on any aspect. The Government has taken several policy initiatives for strengthening Research & Development in Pharmaceuticals sector such as fiscal incentives to R&D units sector and streamlining of procedures concerning development of new drug molecules, clinical research and new drug delivery systems leading to new R&D set-ups with excellent infrastructure in the field of original drug discovery. India has a large branded generics market which enables most companies to launch their version of a generic drug in the market place. Research and Development is an important aspect for development of generics that match the quality and cost targets. India is recognized as a strategic partner in the drug discovery value chain. Further, Indian companies in their R&D centers are offering early stage discovery services as well as promising molecules. A large talent pool of scientists and engineers in India is dedicated to Research and Development. Various government measures such as production linked incentive (PLI) scheme and the strengthening of pharmaceutical industry (SPI) scheme are backbones of the Indian pharmaceutical sector. The Indian pharmaceutical industry is expected to sustain a steady growth supported by domestic demand, government policies, increasing foreign investment, rising income levels & healthcare expenditure, rapid use of technology and innovation and emphasis of domestic manufacturing of quality pharmaceutical products. Improving affordability driven by rising per capita income, growth in health insurance coverage and infrastructure, increasing chronic diseases, growing penetration of e-pharmacy and supportive ecosystem are the growth drivers for the Indian pharmaceutical industry. The Companys long term outlook continues to be promising subject to overall growth in the Indian and global pharmaceutical industry and disruptions emerging due to escalation of geopolitical conflicts causing trade disruptions which would lead to increase in oil prices, shipping costs, tighter financial conditions and inflation.

Opportunities, Risks and Concerns – Indian pharmaceutical companies are making their presence felt in the emerging markets around the world, particularly with a strong portfolio in anti-infective and antiretroviral. Large domestic pharma companies have continued to grow, assuming leadership position in many therapies and segments in the Indian market as well as creating a strong international exports back-bone. Companies have also begun to invest in increasing their presence in tier II cities and rural areas and making medical care more accessible to a large section of the Indian population. Indian pharma companies have a wide variety of experience in manufacturing as per global standards. Adoption of emerging digital technologies like robotics, artificial intelligence (AI), telemedicine and machine learning (ML), 3D printing etc. shall amplify the demand for innovative medicines, revolutionize distribution channels and propel pharmaceutical market in India. Emerging economies are experiencing rapid growth in non-communicable diseases (NCDs) like diabetes and cardiovascular disorders, fuelling demand for reliable, affordable medicines. Demographic trends indicate that large, ageing populations and rising incomes are increasing healthcare consumption. On the other hand, though regulatory hurdles persist, improving standards and harmonisation are gradually making it easier for quality-focused companies to expand branded generics portfolios. The growth is fuelled by rising chronic disease prevalence, improved healthcare access and government support for local manufacturing and R&D. The Indian pharmaceutical industry operates under highly regulated environment and influenced by the healthcare reforms, pricing regime, rising competition and challenging regulatory landscape with increased scrutiny. The business environment has always been dynamic but currently with tariff tensions it has become uncertain and complicated. Your company regularly assesses its product portfolio to make it more diversified and focus on operational efficiencies to control costs. The factors such as poor public healthcare funding and infrastructure, low per capita consumption of medicines in emerging economies including India, currency fluctuations, geo-political conflicts, tariff tensions, supply chain disruptions, regulatory changes, government mandated price control, rising inflation and resultant all round increase in input costs remain a few causes of concern. The Company owns two wind turbines at Jaisalmer in Rajasthan with a capacity of 1.6MW. The electricity generated by these wind turbines is sold on Indian Energy Exchange (IEX).

Financial Performance and Operations Review - During the FY 2024-25 the Company earned total income of Rs. 6834.71 lakhs as against Rs. 8741.17 Lakhs in 2023-24, registering a decline of 22.50% over previous year. Export Sales in the FY 2024-25 was Rs. 3095.69 lakhs as compared to Rs. 4837.61 lakhs in FY 2023-24. In FY 2024-25 Domestic Sales was Rs. 3555.14 lakhs as compared to Rs. 3745.49 lakhs in FY 2023-24. The operations resulted in net profit of Rs. 927.33 lakhs in FY 2024-25 as against Rs. 986.78 lakhs in previous FY 2023-24.

Key Financial Ratios–

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 a reliable system of internal controls that is the prerequisite of good governance. The internal control framework is structured to consistently evaluate the sufficiency, efficiency and effectiveness of these controls commensurate with the size and nature of business of the Company.

This ensure adherence to applicable laws, regulations, accuracy in record keeping, efficient operations, safeguarding of resources and assets and overall risk minimisation. 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 and periodic review of the business to ensure timely decision-making. The Company reviews the internal control systems to ensure continuous improvements and regular updates.

Human Resources - The Company believes that its human capital is the most valuable asset. The employees of the Company are the stakeholders in its growth and key drivers of its performance. The Company provides a safe and healthy work environment enabling employees to perform at their highest potential and consistently deliver results. The Company provides training to help employees enhance their skills, perform job effectively and advance their careers. Training sessions are regularly conducted to sensitize employees on the processes, SOPs, best practices, regulatory changes, health & safety, GMP compliances, quality control and assurance measures to enhance operational efficiency and elevate product quality. The Company employs suitably qualified, capable and experienced personnel, as per requirement. Further the Company deputes employees for attending workshops, webinars, virtual training programs and seminars to improve their operational competency, shoulder more responsibilities and take part in the growth of the Company. The Company has maintained cordial and harmonious relations with all employees. The Company has Reward and Recognition Programme. The Company has 112 employees as on 31st March, 2025.

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.