Biofil Chemicals & Pharmaceuticals Ltd Management Discussions.

INDUSTRY STRUCTURE AND DEVELOPMENT

According to the Indian Economic Survey 2021, the domestic market is expected to grow 3x in the next decade. Indias domestic pharmaceutical market is estimated at US$ 42 billion in 2021 and likely to reach US$ 65 billion by 2024 and further expand to reach ~US$ 120-130 billion by 2030.

OPPORTUNITIES AND THREATS

As the entire world is facing the COVID-19 pandemic, a deadly condition induced by SARS-CoV-2, a coronavirus which emerged in the last days of 2019. COVID-19s impact is dramatic and our lives and livelihoods have been impacted beyond all recognition. The COVID-19 pandemic has shone a light on the biopharmaceutical industry essential role played in combating this public health crisis through its expertise, innovation, and resources.

Beyond COVID-19, biopharmaceutical industry improving the quality of life for all people worldwide. industry is working on innovations that are transforming healthcare and helping tackle unmet medical needs. Today, our scientists are discovering the new treatments that will transform the lives of future generations. The volume of clinical trials has increased in the last 5 years. In 2020 alone, around 5,000 clinical trials were started to investigate and develop new treatments and vaccines, despite the disruption caused by the COVID19 pandemic.

Invention of Covid -19 Vaccine

India began administration of COVID-19 vaccines on 16 January 2021. As of mid August 2021, India has administered over 543 million doses overall, including first and second doses of the currently-approved vaccines

India initially approved the Oxford-AstraZeneca vaccine (manufactured under license by Serum Institute of India under the trade name Covishield) and Covaxin (a vaccine developed locally by Bharat Biotech). They have since been joined by the Sputnik V (manufactured under license by Dr. Reddys Laboratories), Moderna vaccines, Johnson & Johnson vaccine [b] and other vaccine candidates undergoing local clinical trials.

Your Company is major manufacturer and Traders of Ferrous Sulphate in its Crystal, Exsiccated & Granular form. The Granular form of Ferrous Sulphate are ready ingredients for the manufacture of Ferrous Sulphate & Folic Acid Tablets. By these form of Ferrous manufactures can save 4 to 5 stages during the manufacturing in of tablets..These Tablets are used in Health care for treating anemia in therapeutic as well as prophylactic doses. Ferrous sulphate crystal are widely used in affluent treatment plant.

Over and above, your Company has started manufacturing Silver sulfadiazine

• Silver sulfadiazine: Silver sulfadiazine has antibacterial properties. It fights bactaria and yeast on the skin. Silver sulfadiazinetopical for the skil is used to treat or prevent serieous infection on areas of skin with second or third degree burnt.

Looking at the market opportunities, the company plans to extend its product portfolio by making additions to the same. The proposed expansion is proposed at the Sector-III, Plot No. 8, Kheda Industrial Area Pithampur, Dist. Dhar (M.P). Proposed products to be manufactured are as follows:

Active Pharmaceutical Ingredient (API): Tinidazole, Clobetasol propionate, Para Nitro Benzyl -2 Diazo Acectoacetate (PNDBA), Mebendazole,Metronidazole Benzoate, Ornidazole, Chlorpheniramine Maleate Pennyleffrine HCI Steroids.

• Tinidazole: Tinidazole is a drug used against protozoan infections. It is widely known throughout Europe and the developing world as a treatment for a variety of anaerobic amoebic and bacterial infections

• Clobetasol propionate: It is a corticosteroid used to treat skin conditions such as eczema, dermatitis, and psoriasis. It is applied to the skin as a cream, ointment, or shampoo

• Chlorpheniramine Maleate: It is widely used anti allergic drug

• Phenylephrine HCI: This drug is used to relieve nasal discomfort caused by colds, allergies

Hormones and Others: Betamethasone, Dexamethasone, Betamethasone sodium phosphate, Dexamethasone Sodium phosphate, Nandrolone decanoate,

Tablets: Beta-lactam antibiotic, Non- Beta-lactam, Hormonal Preparation Capsules: Beta-lactam antibiotic.

There is a good potential for some of the products, a clear demand supply gap exists for some Bulk Drugs in the Domestic Market. Very good market for Beta-lactam products for export. (Because Beta-lactam product separate facility for manufacture for export market). The finished formulations and Plastic products, have excellent domestic market.

For the above proposed Expansion Company has also approached Pollution Control Department for Environmental Clearance. In this regard Company has also approached home branch of State Bank of India for term loan requirement in response of which the Bank has also principally consented to the sanction term Loan of Rs 20 Crores subject to approval from Pollution Control Board and other necessarily requirement by the Banks.

SEGMENT WISE PERFORMANCE

Your Company is multi segment Company as it deals in Pharmaceuticals and Chemicals products. During the year under review the performances in terms of revenue of the segments were as follows:- Pharma Unit

In the financial year 2019-20 revenue generated from Pharma Unit was Rs 2436.17 Lacs and in the year 2020-21 the same unit generated revenue of Rs 2700.01 Lacs.

Chemicals Unit

In the financial year 2019-20 revenue generated from Chemical Division was Rs 532.85.Lacs and in the year 2020-21 the same unit generated revenue of Rs 875.03.

OUTLOOK

The pharma sector has been the performing sector in 2020, rising as much as 54 percent in comparison to a 12 percent rise in the benchmarks. While other sectors were facing the brunt of the pandemic, the sudden importance of the healthcare sector brought the pharma sector into investors focus. The sector outperformed the broader market led by growth visibility, profitability improvement led by cost savings, stable pricing in the US market, and no major regulatory hurdles. Progress of the COVID-10 Vaccines also lifted the investor sentiment in the space.

The global pharmaceutical manufacturing market size was valued at USD 405.52 billion in 2020 and is expected to grow at a compound annual growth rate (CAGR) of 11.34% from 2021 to 2028.

Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic therapies for diseases such as such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers, which are on the rise.

RISKS AND CONCERN

There are a lot of potential problems that can throw a roadblock Into the goals of the pharmaceutical Industry, but some of the most crucial are going under the radar. Here are 3 surprising risks facing pharma-and none of them have to do with the opioid crisis.

The mission of every pharmaceutical company is, ultimately, the same: To take better health care of the people. But there are some issues that are going under the radar-and theyre the ones that are really stopping pharma from doing their job. Some of them are as follows

• Delayed in supply of Raw Material

• Unexpected high prices of Raw material due to their shortage resulting to high prices of final products

• Monopoly of Chinese API and intermediate chemicals in the market

• Non availability of Containers for import export purposes.

INTERNAL CONTROL SYSTEM

The Company has a reasonable system of internal control comprising authority levels and powers, supervision, checks and balances, policies and procedures so as to ensure orderly and efficient conduct of business, safeguard the assets of the business, prevent and detect fraud, ensure the completeness and accuracy of accounting records, to ensure the timely preparation of financial information. Further, the system is reviewed and updated on an on-going basis on recommendations as and when made by the Statutory Auditors, Internal Auditors and Independent Audit Committee of the Board of Directors. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the financial year your company has achieved the turnover of Rs 3655.04 Lacs in comparison to previous years turnover of Rs. 2986.17 lacs and net profit of the company is Rs. 124.59 lacs in comparison to previous net profit of Rs. 123.35 lacs.

HUMAN RESOURCES

At Biofil we believe that"company grows when its people grow" and hence we continuously strives to emphasize creation of a conducive work environment and development of a robust and consistent approach towards talent management & leadership development. As on 31st March, 2021, Company had 31 employees.

DETAILS OF SIGNIFICANT CHANGES IN THE KEY RATIOS

As per the amendment made under Schedule V to the Listing Regulations read with Regulation 34(3) of the Listing Regulations, details key financial ratios and any changes in return on net worth of the Company are given below:

Particulars 2020-21 2019-20 Change
Debtors turnover 1.52 1.42 -7.09
Inventory turnover 11.26 19.01 40.76
Interest coverage ratio 30.89 12.97 -138.16
Current ratio 1.4 1.17 -19.25
Debt-Equity ratio 1.05 1.69 37.87
Operating profit margin (%) 0.06 0.05 -20.00
Net profit margin (%) or sector-specific equivalent ratio as applicable 0.03 0.04 25.00

Reason for change of 25% or more in Financial Ratios:

Inventory Turnover

Increase in COGS and increase in Average Inventory Interest Coverage Ratio

Higher Interest Coverage Ratio is better. Significant increase in Profit before Taxation. Debt Equity Ratio

Lower Debt to Equity Ratio is better. Significant Decrease in Trade Payables Net Profit Margin

Increase in sales, but a comparatively lower increase in Net Profit.

DETAILS OF CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR

There was a change of 7.52% in Return on Net Worth due to increase in profits.

CAVEAT:

Some of the Statements in Management Discussion and Analysis describing companys objective may be "forward looking statement" within the meaning of applicable Securities Law and Regulations. Actual results may differ substantially or materially from those expressed or implied. Important factors that could influence companies operation include various global and domestic economic factors.