Bharat Parenterals Ltd Management Discussions

The following discussion of the financial condition and results of operations of Bharat Parenterals Limited ("BPL", "the
Company" or, together with its subsidiaries, "the Group") should be read together with the audited consolidated and
standalone financial statements for the year ended 31 March 2026. Unless stated otherwise, figures are presented on a
consolidated basis and in Indian Rupees (Rs) crore. Amounts and percentages are rounded; growth rates are computed
on unrounded figures.

1. ECONOMIC OVERVIEW

The global economy sustained moderate growth through 2025-26 as inflation continued to ease from its recent peaks
and major central banks began to normalise policy. Growth remained uneven across regions, and geopolitical
tensions, elevated shipping costs on key trade lanes, and currency volatility persisted as sources of uncertainty.
Against this backdrop, healthcare spending remained comparatively resilient, supported by ageing populations, the
rising burden of chronic disease, and continuing demand for affordable, high-quality medicines.

India remained among the fastest-growing major economies, underpinned by robust domestic demand, public capital
expenditure and a stable policy environment. For the pharmaceutical sector specifically, government initiatives such
as the Production-Linked Incentive (PLI) schemes for bulk drugs and the Bulk Drug Park programme continued to
encourage domestic manufacturing and to address the industrys dependence on imported active pharmaceutical
ingredients. These structural supports, combined with Indias established cost and quality advantages, position
domestic manufacturers such as your Company to benefit from the reconfiguration of global pharmaceutical supply
chains.

2. INDUSTRY STRUCTURE AND DEVELOPMENTS

2.1 Global and Indian pharmaceutical market

Global medicine spending is expected to approach US$2.3 trillion by 2028. India occupies a central role in global
supply: it is the third-largest producer of pharmaceuticals by volume, supplies approximately one-fifth of the worlds
generic medicines, and accounts for close to two-fifths of generic drug imports into the United States. Indian
pharmaceutical exports crossed US$31 billion in FY26, extending a decade-long compound growth rate of roughly
11%. Industry estimates (ICRA) place FY26 revenue growth for a representative set of Indian pharmaceutical
companies at 7-9%, with the domestic market growing 8-10% and Europe 10-12%, even as growth in the United States
moderated to 3-5% from close to 10% a year earlier. The sectors continued dependence on China for roughly
three-quarters of its bulk-drug and intermediate imports remains a structural risk that the industry, supported by
policy, is working to reduce.

2.2 Sterile injectables and injectable contract manufacturing

Sterile injectables are among the most technically demanding and fastest-growing dosage forms in the industry,
reflecting the shift of the innovation pipeline toward biologies, complex molecules and hospital-administered
therapies. The global market for sterile injectable contract manufacturing is estimated at approximately US$24.5
billion in 2025 and is projected to reach about US$57.2 billion by 2033, a compound annual growth rate of roughly
11%, with the Asia-Pacific region growing fastest. The specialty injectable generics segment is separately forecast to
exceed US$71 billion by 2034. High capital intensity, stringent regulatory requirements and long qualification cycles
create meaningful barriers to entry and reward manufacturers with proven, multi-jurisdiction regulatory track records
- precisely the position your Company has invested to occupy.

2.3 Contract development and manufacturing (CDMO) and the outsourcing shift

Global innovators and generic companies alike are outsourcing a growing share of their development and
manufacturing to specialist partners in order to control cost, add capacity and de-risk their supply chains. This
structural "China-plus-one" reconfiguration has been reinforced by legislative developments in the United States,
including the proposed BIOSECURE Act, which encourage diversification of the pharmaceutical supply base away from
concentrated single-country dependence. India, with its scale, cost position, skilled talent pool and the largest number
of regulator-approved manufacturing sites outside the United States, is a natural beneficiary of this shift. The Groups
CDMO platform, Innoxel Lifesciences, is positioned directly in the path of this opportunity.

2.4 Biologies and biosimilars

Biologies are the fastest-growing component of global medicine spending, yet the biosimilar response remains
strikingly under-developed. Industry research (IQVIA) indicates that close to 90% of biologies losing patent exclusivity
this decade have no biosimilar in active development, and that biosimilar and generic competition could erode roughly
US$192 billion of originator revenue by 2028 - a gap widely described as the "biosimilar void". At the same time, the
outsourced manufacturing of biologies is expanding at a mid-teens growth rate. This combination of large unmet
supply, patent-cliff economics and an accelerating outsourcing trend is the strategic rationale behind the Groups
decision to reposition its newest facility, Varenyam Biolifesciences, toward biologies and biosimilars manufacturing.

2.5 Domestic branded and institutional formulations

Within India, demand for branded hospital and specialty formulations - anaesthesia, critical care and pain
management in particular - continues to grow with the expansion of organised and corporate hospital chains and
rising surgical volumes. Success in this segment is driven less by price and more by brand equity, field-force reach,
hospital relationships and product differentiation, characteristics that support durable margins. This is the market
served by the Groups branded business, Varenyam Healthcare.

3. COMPANY OVERVIEW AND GROUP STRUCTURE

Bharat Parenterals Limited is an integrated pharmaceutical formulation manufacturer headquartered at Savli,
Vadodara (Gujarat), with a heritage dating to 1992. The Company manufactures sterile injectables, parenterals and
oral solid dosage forms, and exports to more than 40 countries across Latin America, the CIS, South-East Asia, the
MENA region and Africa. It is WHO-GMP certified and holds Star Export House status. The Group operates through the
parent company and three subsidiaries, each addressing a distinct segment of the pharmaceutical value chain:

Entity	Holding	Business	FY26 status
Bharat Parenterals Ltd (parent / standalone)	Listed	Export-oriented sterile injectables, parenterals & oral solids; branded + tender business across RoW regulated markets	Profitable; anchor
Innoxel Lifesciences Pvt Ltd	55.9%	Complex generics & specialty-injectable CDMO for the US and Europe; licensing, milestones and contract manufacturing	Inflection; Q4 EBITDA+
Varenyam Healthcare Pvt Ltd	100%	Domestic branded formulations - anaesthesia, critical care, pain management	Turned profitable
Varenyam Biolifesciences Pvt Ltd	100%	Facility being repositioned as a biologies & biosimilars CDMO for regulated markets	Under construction; pre-revenue

4. OPPORTUNITIES AND THREATS

OPPORTUNITIES

- Regulatory optionality now unlocked. With Innoxel having secured a US FDA Establishment Inspection Report ant
EU-GMP clearance (zero critical, zero major observations), the Group can now supply the worlds two larges
regulated markets from a validated asset base.

- Supply-chain diversification. The global "China-plus-one" shift and initiatives such as the BIOSECURE Act favou
Indian CDMOs, directly benefiting InnoxeFs contract-manufacturing pipeline.

- Under-utilised, paid-for capacity. The standalone plant is operating well below potential (General block 48.5%
Beta-Lactam 21.0%, Cephalosporin 24.3%), allowing 10-15% revenue growth with limited fresh capital.

- Branded operating leverage. Rising productivity per representative and deepening corporate-hospital coverag<
position Varenyam Healthcare to compound profitably as it enters new therapy areas.

- The biologies wave. The biosimilar void and the outsourcing of biologies manufacturing represent a large
long-dated opportunity that Varenyam Biolifesciences is being built to address.

THREATS

- Geopolitical and logistics disruption, particularly in oil-producing and transit regions that affect input costs ant
shipping routes for the export business.

- Currency volatility, as an appreciating US Dollar raises the cost of imported active pharmaceutical ingredients
while export realisations are Dollar-linked.

- Regulatory and inspection risk, including the possibility that scheduled PIC/S and EU-GMP inspections, or approva
timelines at overseas agencies, are delayed.

- Tender timing and concentration, where the deferral of large institutional orders can move revenue material!
between periods.

- Execution and capability risk in scaling the newer platforms, including the build-out of biologies competencies a
Varenyam Biolifesciences.

5. SEGMENT-WISE AND BUSINESS-WISE PERFORMANCE

Annual Report 2025-26

The Group reports three business segments under Ind AS 108 - Manufacturing of Pharmaceutical products, Trading of
Pharmaceutical products, and Contract Development and Manufacturing Operations (CDMO). Segment performance
for the year is set out below.

Reportable segment (t crore)	Revenue FY26	Revenue FY25	Result FY26	Result FY25
Manufacturing of Pharma products	210.97	303.07	60.18	114.76
Trading of Pharma products	62.16	11.00	31.23	1.78
Contract Development & Mfg (CDMO)	72.31	26.31	(7.09)	(30.17)
Total	345.43	340.38	84.31	86.36

Segment results are stated before unallocable expenses of f 115.28 crore (FY25: Rs 131.93 crore), which include
Group-level depreciation and corporate overhead, and before other income of T9.54 crore (FY25: f 11.62 crore); the
resulting loss before tax was Rs21.42 crore (FY25: Rs33.95 crore).

Management additionally reviews the Group by legal entity. The build-up from the four operating entities to the
consolidated result is set out below.

Entity (Rs crore, FY26)	Revenue	EBITDA	EBITDA %	PAT
Bharat Parenterals (standalone)	234.0	21.1	9.0%	16.0
Innoxel Lifesciences (55.9%)	72.4	(7.0)	(9.6%)	(43.3)
Varenyam Healthcare (100%)	58.4	2.5	4.3%	2.3
Varenyam Biolifesriences (100%)	0.0	(0.7)	-	(0.8)
Inter-company eliminations	(19.4)	(0.1)	-	(1.5)
Consolidated	345.4	15.8	4.6%	(27.3)

5.1 Bharat Parenterals - standalone (parent)

The standalone business recorded revenue from operations of Rs234.0 crore, against Rs304.0 crore in FY25. The
reduction reflected three deliberate or one-time factors: the deferral of a large export tender into the following year; a
conscious decision to exit certain low-margin volume business; and planned production downtime taken to upgrade
the General Injectable Vial Line and the Beta-Lactam block - including a new water system - in preparation for the
European inspection cycle. Notwithstanding lower volumes, the standalone business delivered EBITDA of Rs21.1 crore
at a 9.0% margin and profit after tax of Rs16.0 crore (6.8% margin), and ended the year almost debt-free with
borrowings of Rs20.1 crore. During the year the Company completed 214 dossier submissions and secured 48 new
product registrations, taking cumulative live filings past 350 across more than 40 countries, and opened a
representative office in Vietnam to support South-East Asian growth. Capacity utilisation remained low - General block
48.5%, Beta-Lactam 21.0% and Cephalosporin 24.3% - providing substantial headroom for growth without major fresh
capital. The order book stood at T171 crore at year-end.

5.2 Innoxel Lifesciences - complex-generics and specialty-injectable CDMO

FY26 was the inflection year for Innoxel, the Groups 55.9%-held CDMO platform serving the United States and
Europe. Revenue grew 174% to Rs72.4 crore, comprising upfront licensing fees and milestone-linked income earned
across 23 deals signed during the year (seven out-licensing arrangements and sixteen CMO/CDO partnerships), taking
cumulative deals since inception to 42. The defining achievements were regulatory: Innoxel received its US FDA
Establishment Inspection Report following the April-May 2025 inspection, and its facility was cleared by the FAMHP
(Belgium) for EU-GMP with zero critical and zero major observations - opening both the US and select European
markets to commercial supply. The business ended the year with 19 active partners (eight in the US, six in Europe and
five in India) and a development pipeline of 42 assets. The EBITDA loss narrowed sharply to T7.0 crore from Rs30.4
crore, and - importantly - Innoxel turned EBITDA-positive for the first time in the fourth quarter, at T1.4 crore. The
reported PAT loss of Rs43.3 crore (FY25: f67.9 crore) is largely a function of depreciation on newly validated capacity
and finance costs; approximately 44% of this loss is borne by non-controlling interests and does not accrue to the
Companys shareholders.

5.3 Varenyam Healthcare - domestic branded formulations

The Groups wholly-owned branded business returned to profit in FY26. Revenue grew 13.7% to Rs58.4 crore, EBITDA
turned positive at T2.5 crore (from a loss of T3.0 crore) and profit after tax was T2.3 crore (from a loss of T2.1 crore).
The business markets 45 active brands across anaesthesia, critical care and pain management; the top five brands
together contributed Rs28.7 crore, or roughly half of revenue, led by the flagship Sugammadex 100 mg/ml - Indias first
such product and the only one in the country with a three-year shelf life - which contributed about f 10 crore. Three
operating metrics defined the year: the field force expanded to 211 medical representatives; productivity per
representative per month rose 31% to Rs3.85 lakh; and corporate-hospital coverage extended past 7,500 institutions
across 26 states, including leading chains such as Apollo, Narayana Health, Manipal, Max, Medanta, KIMS and
Yashoda. The year demonstrated the operating leverage inherent in a branded model as field-force investment
converts into profitable growth.

5.4 Varenyam Biolifesciences - biologies and biosimilars platform

Varenyam Biolifesciences is the Groups newest wholly-owned platform. With the small-molecule complex-injectable
platforms now validated, the Group has resolved to reposition this facility toward the manufacture of biologies and
biosimilars, addressing the large and under-served "biosimilar void" and the accelerating outsourcing of biologies
manufacturing described in Section 2.4. In line with this expanded ambition, the Group has scaled up the planned
Phase-1 investment behind the facility to approximately T300 crore, targeting US FDA, EU-GMP and ANVISA
accreditations. During the year the Company increased its equity investment in the subsidiary, and capital
work-in-progress on the facility stood at approximately T33 crore at year-end. The platform is pre-revenue and is
expected to remain so through the medium term as construction, commissioning and validation progress; it will
continue to absorb modest losses during this phase. Management regards this as the Groups principal long-dated
value-creation opportunity.

The scope, phasing, funding and accreditation timeline of the biologies repositioning are being finalised, and the
Company will update shareholders as specific milestones are approved.

6. FINANCIAL PERFORMANCE REVIEW (CONSOLIDATED)

A summary of the consolidated statement of profit and loss is set out below.

Particulars (f crore)	FY26	FY25	YoY
Revenue from operations	345.43	340.38	+1.5%
Other income	9.54	11.62	(17.8%)
Cost of materials & stock-in-trade	191.40	199.64	(4.1%)
Employee benefits expense	67.28	49.66	+35.5%
Other expenses	70.94	88.38	(19.7%)
EBITDA (excluding other income)	15.82	2.70	+485%
EBITDA margin	4.6%	0.8%	+380 bps
Finance costs	12.53	12.95	(3.2%)
Depreciation & amortisation	34.25	35.32	(3.0%)
Profit / (loss) before tax	(21.42)	(33.95)	+36.9%
Tax expense	5.88	9.72	-
Profit / (loss) after tax	(27.31)	(43.68)	+37.5%
- attributable to owners	(8.19)	(12.63)	-
- attributable to non-controlling interests	(19.12)	(31.05)	-
EPS (Rs, basic & diluted)	(39.62)	(66.64)	-

Revenue and profitability. Consolidated revenue from operations rose 1.5% to ^345.43 crore. The composition
changed materially: the softer standalone export contribution was offset by a 174% increase at Innoxel and 13.7%
growth at Varenyam Healthcare, producing a substantially de-risked revenue mix. Consolidated EBITDA (excluding
other income, consistent with the Groups convention of presenting other income below EBITDA) expanded almost
six-fold to Rs15.82 crore, lifting the EBITDA margin by around 380 basis points to 4.6%. The improvement was led by the
Rs23.5 crore reduction in Innoxels EBITDA loss and the return to profit at Varenyam Healthcare, and was supported by
a 19.7% reduction in other expenses. Employee costs rose 35.5%, reflecting field-force expansion at Varenyam
Healthcare and team build-out across the newer platforms.

Below EBITDA. Finance costs fell 3.2% to f 12.53 crore as the Group deleveraged, and depreciation was broadly stable
at ^34.25 crore. The consolidated loss before tax narrowed to ^21.42 crore (FY25: Rs33.95 crore) and the loss after tax
to ^27.31 crore (FY25: ^43.68 crore), a 37.5% improvement. Of this loss, Rs19.12 crore is attributable to non-controlling
interests - principally the minority holders of Innoxel - such that the loss attributable to the owners of the Company
was Rs8.19 crore (FY25: ^12.63 crore).

Balance sheet. Total consolidated borrowings reduced to Rs146.1 crore from T180.2 crore, an 18.9% reduction, and the
debt-to-equity ratio eased to 0.47. Trade receivables declined 12.3% to Rs150.7 crore, improving the receivables
position, while inventories rose to Rs84.7 crore ahead of the resumption of deferred orders. The current ratio
strengthened to 1.97 (FY25:1.60). Consolidated net worth stood at f 311.6 crore.

Cash flow. The Group generated f38.4 crore of net cash from operating activities, a marked improvement from an
outflow of Rs27.3 crore in FY25, reflecting the release of working capital and improved operating performance. This

supported both the Groups continued investment and the reduction in borrowings.

7. OUTLOOK

Management expects FY27 to mark the commercial inflection of the Group. The Company has chosen to guide in
ranges it is confident of achieving. Indicative guidance by business is set out below.

Business	Revenue growth	EBITDA margin	Key drivers
Bharat Parenterals (standalone)	10-15%	10-15%	Order book of Rs171 crore; growth led by South-East Asia, Africa and MENA; PIC/S and EU-GMP inspections scheduled during the year
Innoxel Lifesciences	35-45%	20-25%	First commercial CMO supply from Q2 FY27; 2-3 CMO products commercialising; 10 new filings; first MHRA and Health Canada filings; out-licensing income of Rs70-90 crore
Varenyam Healthcare	20-25%	8-13%	Field force to expand toward 250 representatives; seven new launches; entry into a second therapy division (gynaecology)
Varenyam Biolifesciences	Pre-revenue	Investment phase	Biologics/biosimilars facility build-out; targeting US FDA, EU-GMP and ANVISA accreditations

Taken together, these ranges imply steady recovery in the standalone business as deferred orders resume, a
step-change at Innoxel as commercial supply and licensing income build, and continued profitable growth at
Varenyam Healthcare, even as Varenyam Biolifesciences remains in its investment phase.

8. RISKS AND CONCERNS

- Regulatory risk. The Group operates in highly regulated markets; adverse inspection outcomes, delays in
approvals, or changes in regulatory requirements at the US FDA, EU authorities or other agencies could affect
timelines and revenue. Scheduled PIC/S and EU-GMP inspections at the standalone facilities during FY27 carry the
usual preparatory disruption.

- Currency and input-cost risk. A significant portion of raw materials, including active pharmaceutical ingredients, is
imported; adverse movements in the US Dollar and in API prices could pressure margins. The industrys broader
dependence on China for bulk drugs remains a structural exposure.

- Customer, tender and concentration risk. Institutional and tender business can be lumpy; the timing of large
orders can move revenue materially between periods, as seen in FY26.

- Geopolitical and logistics risk. Disruption in oil-producing and transit regions can raise input costs and freight and
can affect the export order book.

- Execution and funding risk on new platforms. Scaling Innoxels commercial operations and building biologies
capability and capacity at Varenyam Biolifesciences require capital, talent and disciplined project execution; the
funding plan for the expanded Varenyam Biolifesciences investment will be an area of focus.

The Group seeks to mitigate these risks through diversification across geographies, therapies and business models, a
broad and growing regulatory-approval base, prudent balance-sheet management and continued investment in
quality systems.

9. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company maintains an adequate system of internal controls commensurate with its size, scale and the nature of
its operations, designed to ensure that assets are safeguarded, transactions are authorised, recorded and reported
correctly, and that applicable statutes, accounting standards and Company policies are complied with. The internal
control framework is supplemented by an independent internal audit function; the internal auditors present their
findings and recommendations to the Audit Committee of the Board, which reviews the adequacy and effectiveness of
the internal control systems, monitors the implementation of audit recommendations, and oversees the financial
reporting process. The statutory auditors have issued an unmodified opinion on both the standalone and consolidated
financial results for the year ended 31 March 2026.

10. HUMAN RESOURCES AND INDUSTRIAL RELATIONS

The Group regards its people as central to its performance and its quality culture. The standalone company employs
more than 500 people at its Vadodara operations, and headcount across the CDMO and branded platforms continued
to grow with the scale-up of those businesses. At Varenyam Healthcare, the medical field force expanded to 211
representatives during the year, with a corresponding 31% increase in productivity per representative. The Group
continued to invest in training, quality systems and talent development, and industrial relations remained cordial
throughout the year, with no material disruptions. The Company also assessed the estimated impact of the new
Labour Codes and continues to monitor developments for their eventual implementation.

11. KEY FINANCIAL RATIOS

In accordance with Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the
key financial ratios are set out below on both a consolidated and a standalone basis. Ratios are computed on year-end
balances; turnover ratios use closing trade receivables / inventories, interest coverage is earnings before interest and
tax divided by finance costs, debt-equity is total borrowings to total equity, and return on net worth is profit after tax
to average net worth.

Ratio	Consol FY26	Consol FY25	Std FY26	Std FY25
Debtors turnover (x)	2.29	1.98	1.94	1.85
Inventory turnover (x)	2.26	2.77	2.80	4.05
Interest coverage (x)	(0.71)	(1.62)	7.36	8.59
Current ratio (x)	1.97	1.60	2.15	1.69
Debt-equity (x)	0.47	0.53	0.05	0.17
Operating profit margin (%)	(2.6)	(6.2)	10.8	13.5
Net profit margin (%)	(7.9)	(12.8)	6.8	8.7
Return on net worth (%)	(8.4)	(12.9)	4.1	7.1

Explanation of significant changes (25% or more). On a consolidated basis, interest coverage, operating profit margin,
net profit margin and return on net worth all improved by more than 25% as the Groups losses narrowed on the back
of the turnaround at Innoxel and the return to profit at Varenyam Healthcare. On a standalone basis: inventory
turnover declined (from 4.05x to 2.80x) as cost of goods fell with lower volumes while inventory was built ahead of the

resumption of deferred orders; the current ratio improved (from 1.69x to 2.15x) and the debt-equity ratio fell sharply
(from 0.17x to 0.05x) following the repayment of short-term borrowings; and return on net worth declined (from 7.1%
to 4.1%) as standalone profit after tax reduced on the lower revenue base even as net worth grew. Consolidated
return on net worth improved from (12.9)% to (8.4)% for the reasons noted above, while standalone return on net
worth moderated as described.

12. CAUTIONARY STATEMENT

Statements in this Management Discussion and Analysis describing the Companys objectives, projections, estimates
and expectations may constitute "forward-looking statements" within the meaning of applicable laws and regulations.
Actual results could differ materially from those expressed or implied. Important factors that could make a difference
to the Companys operations include economic and market conditions affecting demand and pricing, changes in
government regulations, tax laws and other statutes, regulatory and inspection outcomes, currency and input-cost
movements, and other geopolitical and incidental factors. The Company assumes no obligation to publicly amend,
modify or revise any forward-looking statements on the basis of any subsequent developments, information or events.