Brooks Laboratories Ltd Management Discussions

PARTICULARS	STANDALONE		CONSOLIDATED
	2024-25	2023-24	2024-25	2023-24
Revenue from operations	8255.68	7948.60	8255.68	7948.60
Other Income	88.31	91.82	88.31	91.82
Total Income	8343.99	8040.92	8343.99	8040.92
Expenditure	7758.25	7623.12	7761.79	7623.12
Profit before Depreciation, Interest & Tax (PBDIT)	585.74	417.3	582.2	417.8
Financial Expenses (Interest)	102.83	84.49	102.83	84.49
Profit before Depreciation and Tax (PBDT)	482.91	332.81	479.37	333.31
Depreciation and Amortization	160.15	177.32	160.15	177.32
Profit before Tax (PBT)	322.76	155.49	319.22	155.49
Extraordinary items Gain / (Loss)	-	-	-	-
Net OCI Impact Gain / (Loss)	(1.83)	(4.33)	(1.83)	(4.33)
Share of Profit/(loss) from Jointly Controlled Entity and Associate	-	-	(1298.38)	(2112.06)
Income Tax net of MAT credit Income / (Expense)	(17.54)	(2.59)	(17.54)	(2.59)
Total comprehensive income/(loss) for the year, net of tax	303.39	148.57	(998.53)	(1963.49)
Earnings per Share (in Rs.)	1.14	0.58	(3.72)	(7.67)

Revenue

During FY 2024-25, the Companys Revenue from Operations grew by 3.86%, reaching Rs 8,255.68 lakhs compared to Rs 7,948.60 lakhs in FY 2023-24. The steady growth in revenues was primarily supported by a strong performance in domestic markets, which helped offset the slowdown in exports.

Cost of Goods Sold (COGS)

The cost of materials consumed increased to Rs 4,704.40 lakhs from Rs 4,472.27 lakhs in the previous year, reflecting higher input requirements in line with production. At the same time, purchases of stock-in-trade reduced to Rs.717.69 lakhs as againstRs 1,049.82 lakhs, indicating improved sourcing efficiency and greater reliance on in-house production.

Employment Cost

Employee benefits expenses rose by 23%, from Rs 1,054.05 lakhs in FY 2023-24 to Rs1,296.04 lakhs in FY 2024-25. The increase was on account of expanded manpower requirements, performance-linked increments, and statutory provisions. This investment in human capital supports the Companys long-term growth and operational scale.

Finance Cost

Finance costs stood at Rs 102.83 lakhs against the previous years cost of Rs. 84.49 lakhs. The primary reasons for the increase are interest on account of lease liability, bank charges, and CC interest.

Depreciation

Depreciation and amortization expenses declined to Rs 160.15 lakhs fromRs 177.32 lakhs in FY 2023-24, largely due to ageing of certain assets and the impact of prior capital investments already being amortized. Despite this moderation, the Company continues to maintain adequate investment in productive assets to support operational efficiency.

Industry Structure and Developments

The pharmaceutical industry in India remains one of the fastest growing sectors, supported by rising domestic demand, increasing healthcare awareness, and a strong export market. India continues to be a global leader in the production of generic medicines

and Active Pharmaceutical Ingredients (APIs), owing to cost competitiveness and adherence to international quality standards. Government initiatives such as the Production Linked Incentive (PLI) scheme and the establishment of bulk drug parks are expected to further strengthen the industrys growth prospects. The sector is also witnessing increasing focus on innovation, research and development, and contract manufacturing, positioning India as a key player in the global pharmaceutical landscape.

Opportunities

At Brooks Pharma, our focus is on achieving sustainable growth, strengthening our global position, and enhancing patient health outcomes through a clear and well-structured strategy. We prioritize cost efficiency to ensure affordability and wider access, enabling us to serve millions of patients worldwide. Our business development initiatives are designed to expand our capabilities and speed up the delivery of innovative therapies. By maintaining a balance between profitability and quality, we stay dedicated to creating value while improving patient care.

India - CDMO, Third Paty Business, Institutional and Critical Care

Our manufacturing capabilities, enable us to deliver a wide range of dosage forms. This is further reinforced by our strong commercial relationships with wholesalers, distributors, retail chains, healthcare providers and Institutions. The CDMO and third party business remain a key contributor to our consolidated revenues and continue to be a core area for sustainable growth.

Manufacturing Capabilities

Our manufacturing facilities, accredited by regulatory authorities in Yemen, Afghanistan, Cambodia, Ivory Coast, and Nigeria, hold over 50 market authorizations and a portfolio of 95+ products. These facilities ensure delivery of high-quality products that comply with the requirements of non-regulated and semi-regulated markets.

Export Growth and Strategic Focus in International Markets

The company remains focused on driving growth by leveraging partnerships and B2B models, with particular emphasis on LATAM and select African markets where regulatory frameworks are comparatively less complex. Strengthening ties with existing domestic partners for merchant exports, along with expanding presence in other semi-regulated regions, continues to be a core strategy for maintaining business momentum.

Going forward, our international business will remain focused on semi-regulated markets and SPOT tender opportunities to drive profitable growth. This will be supported by:

• Expanding product registrations in priority markets

• Developing a differentiated and diversified portfolio, with a strong focus on the Beta-lactam segment

• Establishing and nurturing strategic partnerships across key regions

• Strengthening the regulatory team and enhancing dossier preparation capabilities

• Enhancing and upgrading the product portfolio

Through these initiatives, we are targeting higher growth in the FY 25-26.

Opportunities

At Brooks Pharma, our focus is on achieving sustainable growth, strengthening our global position, and enhancing patient health outcomes through a clear and well-structured strategy. We prioritize cost efficiency to ensure affordability and wider access, enabling us to serve millions of patients worldwide. Our business development initiatives are designed to expand our capabilities and speed up the delivery of innovative therapies. By maintaining a balance between profitability and quality, we stay dedicated to creating value while improving patient care.

India - CDMO, Third Paty Business, Institutional and Critical Care

Our manufacturing capabilities, enable us to deliver a wide range of dosage forms. This is further reinforced by our strong commercial relationships with wholesalers, distributors, retail chains, healthcare providers and Institutions. The CDMO and third party business remain a key contributor to our consolidated revenues and continue to be a core area for sustainable growth.

Export Growth and Strategic Focus in International Markets

The company remains focused on driving growth by leveraging partnerships and B2B models, with particular emphasis on LATAM and select African markets where regulatory frameworks are comparatively less complex. Strengthening ties with existing domestic partners for merchant exports, along with expanding presence in other semi-regulated regions, continues to be a core strategy for

maintaining business momentum.

Export Markets and Opportunities

Our primary export markets include Afghanistan, Yemen, Kosovo, Bolivia, Guatemala, Turkmenistan Nigeria, Lebanon, Mauritius, Sudan, Madagascar, DR Congo, Mozambique and regions across LATAM and Africa. These markets also offer significant SPOT tender opportunities.

During the year, we successfully capitalized on spot opportunities in Uganda, Lebanon and Sudan. Looking ahead, we plan to pursue registrations in FWA, Nigeria, Sudan, Bolivia, Ecuador, Kosovo, Myanmar, Dominican Republic, El Salvador, Georgia, Nigeria, Sudan, and other semi-regulated countries to further enhance turnover to build the strong foundation with our partners and continue the legacy

Manufacturing Capabilities

Our manufacturing facilities, accredited by regulatory authorities in Yemen, Afghanistan, Cambodia, Ivory Coast, and Nigeria, hold over 50 market authorizations and a portfolio of 95+ products. These facilities ensure delivery of high-quality products that comply with the requirements of non-regulated and semi-regulated markets.

Strategic Outlook

Going forward, our international business will remain focused on semi-regulated markets and SPOT tender opportunities to drive profitable growth. This will be supported by:

• Expanding product registrations in priority markets

• Developing a differentiated and diversified portfolio, with a strong focus on the Beta-lactam segment

• Establishing and nurturing strategic partnerships across key regions

• Strengthening the regulatory team and enhancing dossier preparation capabilities

• Enhancing and upgrading the product portfolio Critical Care Division

Our Critical Care Division (CCD), established in 2018, operates through a robust distribution network, delivering high-quality injectables to hospitals and healthcare institutions across India. Our team of qualified medical sales professionals of appx. 140 people across PAN INDIA is dedicated to ensuring the highest standards of service and product quality.

At Brooks, we aim to make a difference through our integrated approach, collaborating with clinicians to provide medicines that lead to optimal patient treatment outcomes. Our goal is to achieve growth and secure a leading position in the Indian pharmaceutical and healthcare industry. In CCD, We offer-

Critical care

Specialty medicines designed for the treatment, diagnosis, and management of critical conditions.

Antibiotics

Broad spectrum antibiotic range effective on multi-drug resistant microbial infections Pain Management & Nutritional

This segment ensures effective pain relief before and after surgical procedure Ophthalmic Range

This covers wide range of eye drops, aiming to alleviate various eye problems, including infections, allergies, dry eyes, inflammation, and support surgical recovery and vision correction.

Strategic Arrangement:

The Company looks for opportunities in order to expand its product line through strategic arrangement. The Company in past entered into a joint venture agreement with a strategic partner who have understanding and international reach and strong track record and presence in many regulated countries. This was a significant step to aggregate mutual synergies and speedup the Companys footprints in international markets like Europe and America, together with a more accomplished and experienced partner. The strategic arrangement will transform the companys credibility in those territories and open up more business opportunities. It shall also enhance the manufacturing capabilities of the company with more innovative products, as a result of fresh investments and

richer experience coming in from strategic partner.

Outlook

Outlook for Domestic Market

The Indian pharmaceutical industry is poised for robust growth this fiscal, primarily because of active growth both in India and the US, new product launches, and a healthy product mix, according to the financial services firm, Sharekhan. The firm projects an 11% year-on-year (YoY) revenue increase to Rs 60,202 crore, Ebitda growth of 24% to Rs 14,971 crore, and PAT growth of 43% to Rs 9,174 crore for the industry.

Outlook for International Markets

According to IQVIA Institute, Growth outlook is raised by 2 percentage points despite lower expectations for COVID-19 vaccines and therapeutics. This increase in growth outlook is driven by more patients getting treated with better medicines, especially in immunology, endocrinology, and oncology. Medicine use in Latin America and Asia will grow faster than other regions over the next five years. Global use of medicines grew by 14% over the past five years and a further 12% increase is expected through 2028, bringing annual use to 3.8 trillion defined daily doses. Global spending on medicine using list prices grew by 35% over the past five years and is forecast to increase by 38% through 2028. The global use of medicines · based on modeling medicine volumes shipped according to defined daily dose assumptions · increased by 414 billion defined daily doses over the past five years, and is expected to grow another 400 billion by 2028. The highest volume growth over the next five years is expected in China, India and Asia-Pacific, all exceeding 3% compound annual growth.

The Company thrives to grow at a similar pace in the international markets. The Company continued to focus on increasing its operational efficiencies and optimising costs to mitigate the risks arising out of tightening rules by the local governments, evolving regulatory environment and volatility in the currency exchange rates. To augment the growth in these markets, the Company is focusing on with more international approvals in coming year to have multifold increase in sales.

Internal Control System and their adequacy

The management believes that internal controls are the prerequisite of governance and that action emanating out of agreed business plans should be exercised within a framework of checks and balances. The management is committed to ensuring an effective internal controls environment, commensurate with the size and complexity of the business, which assures compliance with internal policies, applicable laws and regulations, ensures reliability and accuracy of records, promotes operational efficiency, protects resources and assets, helps to prevent and detect fraud, errors and irregularities and overall minimises the risks.

Brooks has a well-established internal controls framework comprising a set of policies, procedures and systems, instrumental in enhancing the efficiency and effectiveness of business operations, reducing risks and costs, and improving decision-making and accountability.

Human Resources Policy

Mission Statement

HR supports and upholds Brooks goals by nurturing a Positive and Engaging work environment while identifying and responding to the changing needs of the Organization and our Society.

Vision Statement

Brooks Human Resources department will serve as a Guardian for Excellence and Leadership through:

• Improving Organizational Effectiveness

• Innovative HR solutions

• Attract, Retain and Develop the talent

• Extraordinary Quality of services

• Building collaborative partnerships (HR as Business Partner)

• Develop a Robust Employee engagement plan for the staff & wage workforce through multiple engagement initiatives across

the year.

Core values of HR Department s Focused Approach

We advance Brooks mission by thinking and acting in the best interests of the organization and the workforce; in particular, when developing policies, processes, programs and delivering services.

s Innovative

HR at Brooks would be dedicated to Quality, Excellence and Continuous improvement. We work to ensure the Brooks remains competitive in its Human Resources policies and practices by actively seeking and developing best practices, methods and approaches.

s Being Professional

We adhere to high professional standards of quality, competency and conduct. We act with honesty and integrity. We anticipate and are proactive, collegial and collaborative in our work. We remain current in professional practice.

s Accountable

We are accessible and answer to stakeholders for results in accordance with policies, standards, commitments and principles. We document, measure and report performance and evaluate program effectiveness.

s Transparent

We balance requests to share information clearly and openly while respecting the security of confidential and personal information entrusted to the department.

s Employees

We have 323 peoples employed on the payroll of the Company.

Risk management

For its operations the Directors believe that, the company has laid down internal financial controls to be followed by the company; and that such internal financial controls are adequate and were operating effectively for Risk Management.

Risk & Concerns:

Risk is a potential event or non-event, the occurrence or non-occurrence of which can adversely affect the objectives of the Company. Impact of risks could either be monetary that is impact on business profits due to increase in costs, decreasing revenue amongst others or non-monetary which is delay in securing regulatory approvals, reputational damage etc. The Company is susceptible to risks arising out of our business strategy, succession planning and decision on innovation or product portfolio. If there is any significant unfavorable shift in industry trend or pattern of demand, our returns on investments might get affected. We have risks associated with clients and prospective clients dispositions.

We operate in regulated, semi regulated countries with their own specific complex operating environments. In addition, this business landscape is dynamic and constantly evolving. This brings to the fore a multitude of risks which are closely monitored, mapped, and mitigated. By effectively identifying, assessing, and mitigating risks we strive to enhance our resilience, drive sustainable growth, and maximise value creation.

Regulators across the globe strictly monitor the pharmaceuticals manufacturing facilities. Governing laws across the globe are becoming increasingly stringent over time, with severe penalties or actions in the event of non-compliance or violations to regulatory standards. In the scenario, where we or any of our suppliers fail to comply with such regulations, there could be a regulator-enforced shutdown of concerned production facilities, withdrawal of drug approvals previously granted, failure or delay in obtaining approvals for new products, prohibition on the sale or import of noncomplying products etc. Such impact would significantly affect the delivery of our objectives. Given the evolving nature and regulatory complexities relating to Injectables production, there is a continuous challenge in meeting the regulatory requirements. This might also lead to additional requirements from the regulators before granting commercialization approval. The additional requirements would not only increase our financial commitments but also shift the launch timelines, there by impacting Company strategy.

In addition to the above, other key risks relating to our current operations include human capital risk such as loss of key personnel, timely replenishment of critical vacant roles, reliance on third party sole suppliers or service providers including reliance on regional suppliers, disruption of operations from natural disasters, risk arising out of strategic projects, foreign exchange fluctuations, changing landscape of statutory regime etc.

At Brooks, Risk Management is a key strategic focus for the Members of Board. All key functions of the Company are independently

responsible to monitor risks associated with in their respective areas of operations such as production, supply chain, marketing, finance, accounting, treasury, legal, human resource and others areas like health, safety and environment.

Brooks Lab Operations:

Manufacturing:

All facilities and production lines are upgraded regularly to meet current GMP and GLP, Safety, Health and Environmental Standards. Various initiatives are taken towards energy and water conservation. The Companys journey towards achieving operational excellence across functions was driven through its efforts through automation of operations & upgrading the facility to qualify for higher regulatory approvals. We offer a variety of dosage from Beta lactam Tablets, Beta lactam Dry Syrup, General Injections, Liquid Injections, Dry Powder Injections, and Eye/Ear Drops, Oncology Products, Hormonal Injections etc. At Brooks, we are committed to providing high-quality pharmaceutical products that make a positive impact on peoples lives. We have Accreditations from Yemen, Ivory Coast, Cambodia, Nigeria etc.

Environment, Health & Safety (EHS)

Brooks is committed to comply with high standards of environment, health and safety performance and is an integral to its working. Brooks ensures that each employee strives to achieve EHS excellence.

Quality

Brooks assures a culture of compliance and follows systematic interventions to consistently meet and exceed quality standards. Brooks is committed to enhance its quality management systems to meet and exceed the current expectations of regulatory authorities such as WHO,CDSCO, FDA Philippines, NAFDAC- Nigeria, Kenya, Yemen, Cambodia, Ivory Coast, Vietnam etc. Its state- of-the-art manufacturing facilities at Baddi is WHO-GMP compliant in conformity with national and international standards. Brooks looks forward for implementation of robust and effective quality management systems for continuously monitoring through quality metrics and internal audits.

THREATS, RISKS AND CONCERNS for Brooks Operations:

Drug Price Control:

The Health Ministry keeps on revising the list of Drugs under price control. It is likely that the Government may bring more drugs and formulations under price control or change the mechanism of calculating the ceiling price of the drugs, which are under the ambit of the revised policy, which in turn will affect the net margins of the Company.

Generics:

The Government of India is continuously bringing in policies to shift the market towards generic products. The implementation of this process requires action by all stakeholders. This may have impact on future business strategies of the Company.

Manufacturing & Supplying Risk:

Although a major portion of the Companys finished formulations and injectables are being manufactured at in-house facilities, the Company also depends on its suppliers for sourcing of its raw materials. Any significant disruption at in-house facilities or any of its suppliers locations due to economic, political & social factors or any other event may impair the Companys ability to meet the markets demand on a timely basis. In addition, the Companys manufacturing capabilities could be impacted by quality deficiencies in the products, which its suppliers provide, leading to impact on its financial performance.

New capital investments:

The Company has earmarked all capital investments in FY 2022-23 towards marketing of our products in domestic & international market. Company has started with own marketing team in entire country except in southern states of India in a phased manner.

Company is in process of registration of its products in various countries by filing Dossiers in regulated markets and semi regulated markets to capture sales in these markets, these are procedural steps which have to be followed and these steps take its own time, but processes are being followed actively.

Critical Care Division (CCD) captures domestic market and sales of our (CCD) is growing on yearly basis.

Currency fluctuation risks:

Foreign currency risks arise out of overseas operations and financing activities. Exchange rate volatility significantly impacts earnings and net equity because of invoicing in foreign currencies, expenditure in foreign currencies, foreign currency borrowings

and translation of financial statements of overseas subsidiaries into Indian rupees. The Company has a defined foreign exchange risk management framework to manage these risks excluding translation risks.

International Taxation:

As the Company has potential tax exposure resulting from application of varying laws and interpretations, which include intercompany transactions with related parties in relation to various aspects of business. Although the Company believes its cross border transactions between affiliates are based on internationally accepted practices, tax authorities in various jurisdictions may have different views or interpretations and subsequently challenge the amount of profits taxed in their jurisdiction resulting into increase in tax liability including interest and penalties causing the tax expenses to increase.

Global Shortage of API:

According to the study, the lack of raw materials and APIs generates major challenges in the manufacturing of medications, resulting in delays and unfulfilled customer demands. These shortages also have an impact on the availability and cost of essential drugs. These shortages are also limiting the expansion of pharmaceutical business and making it less competitive on the global market. The Company has a defined strategic planning framework in ensuring the robustness and worldwide competitiveness to manage these risks of pharmaceutical industry during issues like as raw material and API shortages.