Blue Jet Healthcare Ltd Management Discussions

MACRO ECONOMY

Global Economy

In 2024, the global economy exhibited signs of stabilisation. Inflation eased gradually, moving closer to central bank targets, while labour markets continued to normalise, with unemployment and vacancy rates returning to pre pandemic levels. Economic growth remained resilient, averaging around 3 percent, and global output moved closer to its potential.

However, the recovery is facing renewed challenges. Shifts in international trade policy, including the imposition of broad tariffs by the United States and retaliatory actions by key trading partners, have reintroduced uncertainty across global markets. Financial markets experienced significant corrections, with sharp declines in major equity indices and rising bond yields, though partial recoveries followed targeted policy interventions.

There are clear signs of slowing momentum across regions. Recent data indicates weaker than expected gross domestic product growth, subdued retail activity, and declining business sentiment. Progress on inflation has largely stalled, with core goods prices increasing and services inflation remaining elevated compared to pre pandemic levels. While global trade volumes have held steady, this trend is largely driven by temporary factors such as stockpiling ahead of anticipated tariff changes.

In the United States, private consumption which has been a key contributor to growth is beginning to soften amid increased uncertainty and ongoing policy shifts. The euro area continues its cyclical recovery, although domestic demand remains muted, and growth patterns are uneven between economies led by manufacturing and those driven by services.

China continues to grapple with a prolonged real estate downturn and weakening consumer confidence,both of which have been further strained by intensifying trade tensions. At a global level, structural vulnerabilities including energy dependence, productivity disparities, and ageing populations are contributing to diverging recovery trajectories. Many economies are now operating within constrained fiscal and monetary environments due to elevated debt levels and tighter financial conditions.

Outlook

The global growth projection for 2025 has been revised downward to 2.8%, reflecting the combined impact of trade disruptions, heightened policy uncertainty, and softening domestic demand across major economies. A modest recovery to 3% is anticipated in 2026, supported by gradual improvements in financial conditions and external demand. However, risks to the outlook remain firmly on the downside, with persistent policy ambiguity, volatile commodity markets, and underlying structural imbalances continuing to pose significant challenges.

Indian Economy

The Asian Development Bank (ADB) forecasts Indias GDP to grow by 6.7% in FY2025 (ending March 31, 2026), driven by strong domestic demand, rising rural incomes, a resilient services sector, and moderating inflation all boosting consumer confidence. Growth is expected to edge up to 6.8% in FY2026, supported by accommodative monetary and fiscal policies.

ADBs Country Director for India, Mio Oka, stated that Indias economy remains resilient despite global headwinds, supported by sustained infrastructure investment and job creation. Regulatory reforms are expected to strengthen manufacturing, while strong performances in services and agriculture, along with tax benefits for the middle class, will continue supporting expansion.

Private consumption is expected to remain the key growth driver, backed by higher rural incomes and increased urban middleclass spending, aided by income tax cuts. Inflation is projected to moderate to 4.3% in FY2025 and further to 4.0% in FY2026, potentially allowing for monetary easing amid global uncertainty.

The services sector will continue leading growth, supported by rising exports in business services, education, and healthcare. Agriculture is expected to perform well in FY2025, driven by robust rabi sowing of wheat and pulses. Manufacturing is projected to rebound after a subdued FY2024.

Urban infrastructure investment is set to rise, supported by a new government fund with an initial USD 1.17 billion outlay. While global uncertainty may weigh on private investment in the short term, improved borrowing conditions and reform momentum are likely to boost investment ahead.

Outlook

Indias economic outlook remains largely optimistic despite external headwinds, thanks to solid fundamentals, active policy support, and a favourable investment environment. Although global risks like rising U.S. tariffs on Indian exports and potential spikes in commodity prices present challenges, the countrys stable macroeconomic framework and continued structural reforms are expected to absorb these shocks and help maintain growth momentum in the medium term.

PHARMA INDUSTRY

Global Pharma Industry

The global pharmaceutical industry is projected to reach USD 1.21 trillion in revenue by 2025, with a CAGR of 6.15% from 2025 to 2034. Growth will be fueled by rising chronic illnesses, an ageing population, and increasing healthcare spending.

Key industry trends include:

Digital Transformation: AI and machine learning are reshaping drug discovery, manufacturing, and patient care, enabling greater efficiency and personalised treatments.

Contract Manufacturing: CMOs are becoming critical in scaling production and meeting global demand.

Sustainability: Theres growing emphasis on ecofriendly manufacturing and sustainable supply chains amid climate and ESG concerns.

Innovative Therapies: Advances in oncology, immunology, and rare diseases, along with personalised medicine, are set to drive innovation.

Sector challenges include:

Patent Expirations: Loss of exclusivity on topselling drugs may impact revenues.

Pricing Pressure: Government and payer scrutiny is expected to affect margins.

Regulatory Changes: Evolving drug pricing and policy reforms may pose additional hurdles.

M&A Activity: Increased consolidation is anticipated as firms seek to strengthen pipelines and diversify revenue.

Outlook:

The 2025 outlook for the global pharmaceutical industry is positive, supported by technology advances, rising healthcare demand, and a shift toward sustainable and personalised therapies. Challenges remain patent expirations, pricing pressure, regulatory changes, and new U.S. reciprocal tariffs that weigh on exporters. Nonetheless, the sectors essential role in healthcare should limit tariff impact. Companies that emphasise innovation, adaptability, and strategic focus will be best placed to manage risks and capture growth.

(Source: Statista, Alpha Sense)

Indian Pharma Industry

Indias pharmaceutical industry is on track to reach a market size of USD 450 billion by 2047, anchored in selfreliance, innovation, and aspirations for global leadership. The upcoming growth wave will be shaped by progress in nextgeneration therapies, enhanced domestic production of APIs and KSMs, the rise of the CRDMO ecosystem, and greater integration of healthcare services.

Key growth drivers include:

NextGeneration Therapeutics & Innovation:

Advances in personalised medicine, biologics, and treatments for rare and complex diseases will drive the industry forward. Strong collaboration among industry players, academia, government, and startups will be crucial to accelerate R&D.

API and KSM SelfSufficiency: Efforts to strengthen local manufacturing of Active Pharmaceutical Ingredients and Key Starting Materials focus on reducing import dependence, adopting sustainable processes, and expanding production capacity.

CRDMO Ecosystem Growth: The Contract Research, Development, and Manufacturing Organisation (CRDMO) sector is becoming a key growth engine amid global economic and geopolitical shifts. India has the potential to lead globally by improving efficiency, compliance, and cost competitiveness.

Digital & MedTech Integration: The convergence of digital tools, pharmaceuticals, and medical technology is transforming drug discovery and delivery. Innovations like AI, digital therapeutics, smart devices, and health apps are enabling more personalised and connected care.

Foundational Enablers – Quality, Talent & Digital: Over 80% of industry leaders highlight quality excellence, digital transformation, and skilled talent development as central to achieving the sectors longterm ambitions.

Sustainable Manufacturing: A growing number of industry leaders support green manufacturing practices to reduce costs and align with evolving global ESG norms.

Integrated & Inclusive Healthcare: Initiatives such as the Ayushman Bharat Digital Mission (ABDM) are building a more connected and inclusive healthcare ecosystem, with rising emphasis on prevention, early diagnosis, and valuebased care.

Talent Development: Addressing talent shortages in specialised areas like biologics and precision medicine remains a priority. Strengthening industryacademia partnerships and promoting handson training will be vital for building a futureready workforce.

Outlook:

Indias pharmaceutical sector is set to evolve from the Pharmacy of the World into a Global Pharma Powerhouse by 2047. Realising this vision will demand a unified, ecosystemdriven strategy focused on innovation, digitalisation, quality standards, and developing a skilled, futureready workforce. Despite ongoing challenges such as talent shortages, pricing pressures, and regulatory compliance, Indias robust fundamentals and proactive policy support provide a strong foundation for longterm growth and global leadership.

API Industry

Pharmaceutical manufacturing is transforming with rising demand, stricter regulations, and new technologies. API production is becoming smarter, greener, and more resilient driven by automation, AI, continuous manufacturing, predictive analytics, and green chemistry. Advances in biotech, nanotech, and 3D printing support precision medicine under tighter compliance norms.

India, the worlds thirdlargest API producer (~8% share), faces import dependence (~35% from China) but is boosting selfreliance through Atmanirbhar Bharat, PLI schemes, and bulk drug parks. The industry, growing at 8.4% CAGR (2017 2023), is scaling domestic capacity, green processes, vertical integration, and supply chain resilience.

Globally, technology is redefining API manufacturing, while India combines these shifts with its policy push to achieve selfreliance and global leadership by 2030. Success will depend on sustainability, R&D, and competing with lowcost Chinese players.

(Source: Mordor Intelligence, EY Report)

GLP1Market Trends:

GLP1 agonists, approved since 2005 for diabetes and 2014 for obesity, are now also used in cardiovascular, liver, and kidney disorders driving demand beyond supply. With global sales at USD 55.9 billion in 2024 and projected to reach USD 108.1 billion by 2029 (14.1% CAGR), the segment is set for strong growth. Patent expiries from 2026 will spur biosimilar entry, creating opportunities for the few CDMOs with GLP1 manufacturing capabilities particularly in India.

GLP 1 Molecule Market Size (USD Bn), CY 20242029F

F: Forecast

(Source: Frost & Sullivan)

Pharmaceutical Outsourcing Market:

Pharmaceutical outsourcing has shifted from a costsaving tool to a strategic necessity. Once limited to largescale manufacturing and latestage trials, it now spans the entire drug lifecycle driven by rising R&D costs, regulatory scrutiny, and the need for speed, risksharing, and specialised expertise.

By leveraging CROs and CDMOs, pharma companies gain cost savings (up to 55 75% in India), faster development, scalability, advanced technologies, and resilient supply chains. This assetlight model lets innovators focus on R&D, commercialisation, and market expansion while CDMOs manage complex development and manufacturing.

Integrated CDMOs are emerging as longterm partners, central to global pharma innovation, competitiveness, and supply chains.

ARTIFICIAL (HIGH INTENSITY) SWEETENERS

Global

In 2024, the global sweeteners market was valued at USD 86.42 billion and is expected to grow at a 4.4% CAGR through 2030. Asia Pacific, led by India, holds the largest share, with sucrose dominating at 79.5% and solid forms driving bakery and confectionery use.

The Artificial & HighIntensity Sweeteners segment was USD 7.01 billion in 2023 and is projected to reach USD 10.42 billion by 2030 (5.8% CAGR). North America leads with over 33% share, while Asia Pacific will grow fastest (~6.5% CAGR).

SWEETENERS MARKET

Trends, by Region, 2025 2030

Growth is fuelled by rising diabetes, obesity, and health awareness, pushing consumers toward low/nocalorie options. Natural sweeteners like stevia and monk fruit are set for strong gains, while artificial HIS remain critical. Asia Pacific will anchor expansion with its large population and evolving consumption patterns.

India

The Indian sweetener market spans traditional sucrose and starchbased sugars to modern highintensity sweeteners (HIS) like sucralose, aspartame, stevia, and others. Artificial sweeteners, far sweeter per unit weight than sugar, are especially valuable in caloriesensitive applications.

In 2024, the market was valued at USD 3.20 billion and is projected to reach USD 3.86 billion by 2030 (3.17% CAGR), with HIS and artificial sweeteners driving growth. Widely used in bakery, beverages, dairy, confectionery, and pharma, they deliver sweetness with negligible calories. Liquid formats are gaining popularity for easy integration into drinks and syrups.

Rising health awareness and lifestyle diseases like obesity and diabetes are fuelling demand for sugarfree options. Growth opportunities lie in beverages and healthcare, alongside cleanlabel and lowcalorie trends. Players investing in natural HIS, innovative blends, liquid formats, and collaborations are best positioned to capture this healthdriven shift.

(Source: Mordar intelligence, GIIResearch, GMI Research)

Contrast Media Industry

Global

In 2025, the global contrast media market is estimated at USD 6.20 billion, with projections to grow to USD 8.88 billion by 2030 reflecting a CAGR of 7.44% over the period. This robust expansion is driven by rising volumes in diagnostic imaging, quicker regulatory clearances for macrocyclic gadolinium agents, and increased investment in manufacturing capacity to ensure steady supply.

By product type, iodinated contrast media dominated with approximately 62.1% market share in 2024, while microbubble agents are anticipated to grow fastest, with a CAGR of 14.8% through 2030. In terms of imaging modalities, Xray/CT held 69.2% of the market in 2024, while ultrasound is poised for rapid growth, at an 11.5% CAGR. Applicationwise, cardiovascular imaging accounted for 31.2% of 2024 usage, whereas neurological applications are expected to expand fastest, at a 9.3% CAGR. Geographically, North America emerged as the largest regional market, capturing 36.1% of global share in 2024. Meanwhile, Asia Pacific is expected to exhibit the highest growth rate through 2030, underpinned by expanding healthcare infrastructure and rising demand for diagnostic imaging. Bluejet Healthcare emerged as Indias largest exporter by volume in 2024 for this intermediate, commanding a market share of more than 75%. The company also ranks among the top six Indian exporters of 5Nitro Isophthalic Acid, with a share of about 3.5%. Strategically, Bluejet is focused on complex chemistry categories across both contrast media intermediates and highintensity sweeteners. It directly supplies critical advanced intermediates and building blocks to three of the worlds largest contrast media manufacturers GE Healthcare, Guerbet, and Bracco with whom it has cultivated longstanding partnerships ranging from 6 to 26 years.

Looking forward, the global contrast media market is poised for sustained momentum. Growth will likely be fuelled by ongoing expansion in imaging volumes, higher adoption of AIenabled automated injectors to enhance dosing precision and reduce waste and increasing use of safer macrocyclic formulations. Regionally, while North America continues to lead, Asia Pacifics accelerated growth signals rising opportunities in emerging markets. Overall, the continued focus on safety, efficiency, and costeffective diagnostics will underpin longterm industry growth.

Contrast Media Market

Market Size in USD Billion

CAGR 7.44%

(Sources: Mordor Intelligence, Frost & Sullivan)

CDMO Market Outlook Global:

The global pharmaceutical CDMO market reached USD 156.62 billion in 2024 and is projected to escalate to USD 315.08 billion by 2034, reflecting a CAGR approximately 7.24% over the forecast period.

In 2025, the markets value is anticipated to rise further to USD 167.96 billion, indicating strong momentum. The upward trajectory is underpinned by heightened R&D activities, increased demand for biologics, and the strategic outsourcing of manufacturing tasks to CDMOs.

Growth in the CDMO segment is largely driven by pharmaceutical companies growing reliance on external partners for specialised capabilities like API production, biologic therapies, and advanced formulations. This outsourcing trend is fuelled by cost efficiencies, regulatory complexity, and the need for agile scaleup in response to market demands.

North America retains its dominance in the CDMO landscape, manifested through elevated adoption of cuttingedge manufacturing technologies and strong investment in contract services. The AsiaPacific region is also emerging as a highgrowth zone, driven by expanding pharma infrastructure, regulatory support, and growing manufacturing capacities within the region.

Looking ahead, the global CDMO sector is poised for sustained expansion, with the market expected to nearly double over the next decade. Demand for biologics, specialty APIs, cell and gene therapies, and injectable formulations will be pivotal in this growth. CDMOs that adopt advanced technologies such as continuous manufacturing, AIdriven process optimisation, and digital quality control will gain a competitive edge. Moreover, geographic diversification especially into AsiaPacific and emerging markets will be critical to capitalising on evolving regulatory landscapes and costsensitive production needs. In sum, CDMOs that combine innovation, scalability, and global reach will be best positioned to lead this fast evolving market.

(Sources: Precedence Research, GlobeNewswire)

Indian:

Indias CDMO industry is among the worlds fastestgrowing, having expanded at a CAGR of 12.3% between 2019 and 2024. Emerging as a key hub for pharmaceutical innovators, India is gaining strong momentum supported by multiple growth drivers across the APAC region. The industry is projected to grow at a robust 14.0% CAGR from 2024 to 2029, reaching USD 10.8 billion by 2029 well ahead of the global growth rate and outperforming markets such as China, which faces headwinds from the US BIOSECURE Act. Backed by structural tailwinds and the proven capabilities of domestic players, India is positioned to command a larger share of the global pharma outsourcing market.

F: Forecast

(Source: Frost & Sullivan)

Global CDMO API:

The global API CDMO market is projected to grow from USD 128.26 billion in 2025 to USD 193.83 billion by 2030 (8.61% CAGR), driven by rising R&D spend, demand for generics, and complex APIs pushing pharma to outsource. Synthetic APIs dominate, fuelled by therapies for chronic diseases, with companies expanding highpotency facilities and forming partnerships to meet demand.

AsiaPacific, led by India and China, is the fastestgrowing region, supported by cost advantages and promanufacturing policies like Indias PLI scheme, while North America and Europe remain critical for highvalue and biologic APIs under strict regulatory norms. Oncology continues as a key growth driver.

Sustained growth will hinge on innovation, advanced technologies, and resilient supply chains, while navigating regulatory scrutiny, IP protection, and competition.

FINANCIAL PERFORMANCE AND REVIEW

Income statement summary

Particulars	FY2025	FY2024	YoY
Revenue from Operations	10,299.85	7,115.98	44.74%
Gross Margins	5,687.64	3,971.97	43.19%
% to Revenues	55.22%	55.82%	0.60%
EBITDA	3,777.30	2,292.30	64.78%
% to Revenues	36.67%	32.21%	4.46%
Exceptional Items		(97.43)
PBT	4,060.99	2,200.95	84.51%
Net Profit	3,052.03	1,637.51	86.38%
% to Revenues	29.63%	23.01%
EPS ()	17.59	9.44	86.33%

() On November 03, 2023, there was a fire incident at the Mahad facility. The Company has intimated identified loss of stock and assets to the insurance company and all the assets are adequately insured. The loss of damaged assets and compensation to employees aggregating to 97.43 million has been accounted for as an exceptional item for the year ended March 31, 2024. The insurance claim will be recognised when its finalised and approved by the insurance company.

Financial operational highlights.

Our revenue from operations increased by 44.74% to 10,299.85 million for the Financial Year 2025 from 7,115.98 million for the Financial Year 2024, primarily due to a robust growth in the sales of pharma intermediates and APIs by 3,674.43 million. This was mainly attributable to new plant scale up at Ambernath facility and increase in annual requirements from our innovator client. Net profit margins increased by 86.38%, on account of increase in revenue from operations and other income and effective management of operating expenses. The increase in EPS from 9.44 to 17.59 indicates that the companys profitability has improved on a pershare basis.

Revenue Analysis

For the financial year ended March 31, 2025, the Company reported Revenue from operations of 10,299.85 million, as compare to 7,115.98 million in the previous year, the increase is primarily due to (i) an increase in the revenue from the sales of pharma intermediates and API by 387.75 % to 4,622.07 million in the Financial Year 2025 from 947.64 million in the Financial Year 2024, and (ii) a marginal increase in the sales of Artificial sweeteners by 4.10% to 1,335.06 million in the Financial Year 2025 from 1,282.49 million in the Financial Year 2024. This is partially offset by a decrease in the revenue from the sales of contrast media intermediates to 4,038.91 million from 4,799.40 million in the financial year 2025.

REVENUE FROM OPERATIONS

The sale of product and services distribution across different Product Category were as follows:

Product Categories	FY2025 ( in mn)	FY2024 ( in mn)
Artificial Sweeteners	1,335.06	1,282.49
Contrast Media Intermediate	4,038.91	4,799.40
Pharma Intermediates and API	4,622.07	947.64
Others	251.25	54.60
Total	10,247.29	7,084.13

Represents sales of industrial mix solvents and others, which were generated in the process of manufacturing contrast media intermediates and artificial sweeteners, pharma intermediates and of R&D Services.

PRODUCT CATEGORYWISE REVENUE

The sale of product and services distribution across different geographic locations were as follows:

Geographic Locations	FY2025 ( in mn)	(%)	FY2024 ( in mn)	(%)
Norway	3,488.07	34%	4,017.39	57%
France	4,341.86	42%	958.98	14%
India	1,323.01	13%	933.12	13%
Rest of World#	1,094.35	11%	1,174.64	17%
Total	10,247.29		7,084.13

# Rest of the World includes USA, Italy, Sweden etc.

GEOGRAPHYWISE REVENUE

Net cash:

The business generated Net Cash Flow from Operating activities of 457.64 million in FY2025. The capital expenditure of 798.80 miilion was incurred during the year. The net cash (including investments) available with the company was of 3,064.80 million as of March 31, 2025, compared to 3,201.94 million as of March 31, 2024, and the Company remains debtfree.

Net Working capital:

The net working capital has increased primarily during FY2025 due to increase in inventory holding period on account of increase in operations and supply chain needs of the Company. There was increase in trade receivables in FY2025 due to increase in sales, change of products mix leading different credit period from customers.

Financial Year	Working	Net Working
	Capital ( in Mn)	Capital Days
Mar25	4,435.60	157
Mar24	1,794.78	92

Key Financial Indicators:

The following table sets forth the certain key financial data for financial year 2025 and 2024.

( in Mn unless otherwise specified)

Particulars	As of / For the financial year
	2025	2024
Revenue	10,299.85	7,115.98
from Operations
Profit for the year	3,052.03	1,637.51
Profit Margin (%)	29.63%	23.01%
EBIDTA	3,777.30	2,292.30
EBITDA Margin (%)	36.67%	32.21%
Return of Capital	35.85%	26.01%
Employed (%)
Return on Equity (%)	30.85%	21.45%
Net Cash	457.64	2,412.57
Generated from
Operating Activities
Fixed Asset Turnover	3.97	4.77
(in times)
Free Cash Flow	105.81	(224.98)

Internal Control Systems and its Adequacy

The companys internal control system continues to ensure the accuracy of financial transactions and effective fiscal management, aligned with the scale of its business operations. Prioritising operational efficiency and integrity, the company has further strengthened its risk management and documentation processes. This year, the Big 4 consultant has not only designed but also implemented the standard operating procedures (SOPs). Ongoing monitoring processes have been established to ensure compliance, effectiveness, and continuous improvement of the internal controls, reinforcing the companys commitment to strong governance and risk mitigation.

Additionally, the company is currently rolling out its IT automation initiatives, including the implementation of advance high end ERP solution alongside the development of robust IT infrastructure. All these initiative are aimed for robust internal financial control and risk management.

Risk Overview

The Company recognises that risk is an integral and unavoidable component of business and is committed to managing the risk in a proactive and effective manner. In todays challenging and competitive environment, strategies for mitigating inherent risks in accomplishing the growth plans of the Company are imperative. The common risks, inter alia, are regulations, competition, business risk, technology obsolescence, retention of talent etc. Business risk, interalia, further includes financial risk, political risk, legal risk etc.

For managing risk more efficiently, the Company would need to identify the risks that it faces in trying to achieve the objectives of the Company. Once these risks are identified, the Company would need to evaluate these risks to see which of them will have critical impact on the Company and which of them are not significant enough to deserve further attention.

RISK MANAGEMENT FRAMEWORK

Risk can result from both actions and inactions. Its crucial to manage and monitor risks to identify and control them. Risk mitigation involves efforts to reduce potential losses or harm from different risk exposures. The company systematically minimises risks related to achieving objectives, operations, revenues, and compliance with regulations.

To mitigate risks proactively and help achieve stated objectives, the company will consider activities at all organisational levels and focus on three key elements.

a) Risk Assessment A comprehensive examination of threats, vulnerabilities, and exposure to different risks.

b) Risk Management and Monitoring The probability of risk assumption is estimated with available data and information.

c) Risk Mitigation All identified Risks should be mitigated using any of the following Risk mitigation plan stated below:

i) Risk avoidance: Avoidance may seem like the solution to risks, but refraining from an activity portionthat couldof revenuecarry risk also means missing out on the potential gain that accepting (retaining) the risk may have allowed.

ii) Risk transfer: Mitigation by having another party to accept the Risk, either partial or total, typically by contract or by hedging / Insurance.

iii) Risk reduction: Employing methods/ solutions that reduce the severity of the loss e.g. concreting being done for preventing landslide from occurring.

iv) Risk retention: Accepting the loss when it occurs is an essential part of managing risk. Risk retention is a viable strategy for small Risks where the cost of insuring against the Risk against the total losses sustained. All Risks that are not avoided or transferred are automatically retained.

v) Develop systems and processes for internal control of identified risks.

vi) Business continuity plan: Outlining strategies and procedures to ensure critical business functions can continue during and after a disruption, mitigation potential risks and mitigating potential risks and minimising operational downtime.

Customer Concentration Risk

The companys business depends on selling our products to a limited number of key customers. The loss of one or more of such customers, the deterioration of their financial condition or prospects, or a reduction in their demand for the companys products could adversely affect the business, results of operations, financial condition and cash flow.

The company secures business through multiyear / annual contracts in the CDMO business, thereby ensuring continuity of business in the medium to long term. The company expanded its customer base in FY2025 by adding new product and new customers, which eventually will minimise the current concentration risk

Geography Concentration Risk

Companys significant operations are from Europe and the United States, which are regulated markets and will continue to remain in that manner in the medium term. Any change in these market conditions or regulatory actions would result in an adverse effect on the business. The company is evaluating customer acquisitions in other geographic areas and developing products specific to the domestic market. While these initiatives can expand the geographical presence, more is needed to eliminate the geographical concentration risk.

Manufacturing Capacity Risk

Following the companys growth strategy to increase its pharma intermediate and API manufacturing capabilities, a greenfield manufacturing site (Unit IV) in Ambernath, Maharashtra was acquired in the Financial Year 2021 to build several multipurpose blocks. However, this sight being use as solvent storage facility as of now and the site can be use for further expanding the capacity as and when required. In addition, the company is expanding the production capacity at the Unit III facility. The expansion of existing production capacities and the addition of new manufacturing facilities are subject to certain risks that could result in delays or cost overruns, which could require the company to expend additional capital. The company has strengthened the project management capabilities including additional resource and expertise in technology evaluation. The Company is in the process of evaluation the capacities for future needs.

Operations Risk

Due to its uses, chemicals, including that are hazardous, the Company is exposed to safety and health risks. Fire incident at Unit III resulted in fatalities and injuries among the workforce and disrupted the construction activities. The company has conducted safety risk audit in all of its manufacturing sites and implemented necessary safe measures, including adequate training and mitigations.

Working capital & foreign exchange Risk

Companys working capital cycle, remained elongated at 157 days in FY2025, compared to 92 days in FY2024. The elongation is primarily due to highcost inventory held at yearend and long collection periods. As a result, the company typically has a high inventory holding period. The collection period also remains high, as the company extends credit in line with industry norms and to maintain strong client relationships since several years. Company generally works with Innovator and marque customers and have not witnessed any major bad debts till now.

Company also is exposed to foreign exchange risk, as a significant portion of its revenue, 87% in FY2025 is derived from exports. Imports accounted for ~43% of raw material purchases in FY2025 (previous year: 56%), providing a natural hedge to some extent. The company continuously monitors the impact of currency volatility on its cost structure and proactively engages with customers to address such risks. Additionally, the company undertakes hedging transactions as and when required.

Regulatory & customer audit Risk

The Company supply its product to the customer who operates in a highly regulated industry, leading to a stringent quality checks and audits from the customers end. Further, with a significant portion of its revenue derived from exports to Europe and the United States, both of which have stringent regulatory requirements. This dependence on regulated markets exposes the Company to risks indirectly related to regulatory changes, compliance costs, and market dynamics in these regions. Given the complex and evolving nature of regulations, any changes in laws, rules, or regulations in the European or US markets could adversely impact the company customer and in turn may have an adverse impact on Companys ability to continue operating smoothly and or may lead to increased costs of compliances.