concord drugs ltd share price Management discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS:

World:

The global economy witnessed a GDP growth of 8.72% in FY 22-23, compared to 6.1% de-growth in FY2021-22. The strong recovery was mainly driven by increased global demand, rising

investments, backed by supportive policy from government and central banks. A large part of the worlds population got vaccinated in FY22, which boosted consumer confidence and increased economic activities. This has been a crucial growth driver.

India:

The revival of contact-intensive services, as well as continued monetary and fiscal policy assistance, resulted in a stronger rebound of Indias GDP by 8.7% in FY22 . The massive vaccination drive, increased mobility, and rising consumer confidence, have contributed to the solid recovery. The inflation continued to trend higher led by surging crude oil prices and supply chain disruptions driven by geopolitical issues.

Industry Insight Global Pharmaceutical Industry:

The global pharmaceutical market was valued at US$ 1.4 trillion in 2021, and is expected to grow at a CAGR of 3-6% in the next five years, reaching a market size of US$ 1.8 trillion by 2026. Spending on COVID-19 vaccinations is also included in this projection, and the overall vaccine spending is expected to reach US$ 251 billion by 2026.

OPPORTUNITIES AND THREATS:

According to the government of Indias own estimates, India ranks third worldwide for pharmaceutical production by volume and 13th by value. It accounts for about 10% of the worlds production by volume and 1.5% by value. This apparent discrepancy points towards the relatively lower price of Indian pharmaceutical products, and the high demand they enjoy in the global market. A major supplier of affordable low-price drugs across the world, Indias role as the "pharmacy of the world" is well acknowledged by experts.

As the novel corona virus spread across countries, concern about the potential for disruption to the manufacture and distribution of pharmaceutical products has intensified. The Indian government is contemplating ways to encourage domestic manufacturing of APIs by creating a suitable ecosystem in the country. The FDA is working with the domestic manufacturer as to mitigate the shortage. FDA is trying to ensure that there is no shortage has been identified for products which cannot be replaced by others. Indian government is also planning on how to grow in the API sector in future.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE:

Company has its operations in Manufacture of Pharmaceuticals and the operations is mentioned in Directors Report

OUTLOOK:

Global growth forecast:

Considering these rising uncertainties, the IMF revised and brought down its earlier global economic projections for 2022 and 2023. It suggests that effective national policies, and multilateral efforts, are becoming increasingly imperative for better economic output. In addition, central banks will need

to tighten monetary policies more aggressively, if inflation deviates from central bank targets, or core inflation remains persistently high.

Indias GDP trend (%):

According to World Bank, Indias GDP is expected to increase by 8.7% in FY23 and 6.8% in FY24. Widespread vaccine coverage, easing regulations, long-term advantages of supply side fiscal policies, strong export growth, and higher capital spending, will contribute to the growth. Deregulation of several sectors, process simplification, and the elimination of legacy issues, such as retrospective taxation, privatisation, and PLI schemes, are among the supply-side reforms.

RISKS AND CONCERNS:

While the industry is seeing amazing growth, there is increasing focus on associated risks such as high compliance standards, government reform and pricing pressures, expiration of key drug patents, marketing practices, mergers and acquisitions, increasing litigations, and supply chain management.

Our risk management framework is intended to ensure that risks are identified in a timely manner. We have implemented an integrated risk management framework to identify, assess, prioritize, manage/mitigate, monitor and communicate the risk across the county. Senior management personnel meet at regular intervals to identify various risks, assess, and prioritize the risks. After due deliberations, appropriate strategies are made for managing/mitigating the risks. The company takes the help of independent professional firms to review the risk management structure and implementation of risk management policies. Audit Committee on a quarterly basis, review the adequacy and effectiveness of the risk management strategies, implementation of risk management/mitigation policies, it advises the board on matters of significant concerns for Redressal.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

We believe that the companys overall system of internal control is adequate given the size and nature of operations and effective implementation of internal control self-assessment procedures and ensure compliance to policies, plans and Statutory requirements.

The Company maintains a system of well-established policies and procedures for internal control of operations and activities, and these are continually reviewed for effectiveness. The internal control system is supported by qualified personnel and a continuous program of internal audit. The prime objective of such audits is to test the adequacy and effectiveness of all internal control systems laid down by the management and to suggest improvements.

The internal control system of the company is also reviewed by the Audit Committee periodically. The Management duly considers and takes appropriate action on the recommendations made by the statutory auditors, internal auditors and the independent Audit Committee.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

The Financial performance of the company is already discussed elsewhere in the Annual Report.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

During the year under review the company has taken HR initiatives to train and develop talent pool. The company has also taken up a root cause analysis on bringing down the attrition rates. In order to improve the performance of management and to scale up the business operations, the company has recruited experienced personnel at senior level apart from strengthening other departments with competent people.

Details of changes in key financial ratios:

Particulars	As at March 31, 2023	As at March 31, 2022	% Change	Reason for Variance
Debtors Turnover	3.82	4.22	(9.37)	NA
Inventory Turnover	5.14	4.98	3.2	NA
Interest Coverage Ratio	1.72	2.41	(28.48)	Change due to decrease in net Profit on Account of incrase in material consumptio n
Current Ratio	1.98	1.83	8.24	NA
Debt Equity Ratio	0.06	0.09	(36.31)	Change due to decrease in debts
Operating Profit Margin	5.22	6.34	(17.67)	NA
Net Profit Ratio(%)	1.74	2.7	(35.61)	Change due to decrease in net Profit on Account of incrase in material consumption.
Return on networth(%)	2.81	5.62	(49.94)	Change due to decrease in net Profit & increase in paid Up capital.

DISCLOSURE OF ACCOUNTING TREATMENT:

The Company has not carried out any treatment different from that prescribed in Accounting Standards.

CAUTIONARY STATEMENTS:

Certain statements in the Management Discussion and Analysis describing the Companys objectives, predictions may be "forward-looking statements" within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward looking statements contained in this document due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India, volatility in interest rates, new regulations and Government policies that may impact the Companys business as well as its ability to implement the strategy. The Company does not undertake to update these statements.