decipher labs Management discussions

Overview

We look ahead and push ourselves to re-innovate and Decipher the Future by grasping the opportunity while being introspective and realising and building on our core strengths. We see great potential and seek to explore new markets and new fields.

Industry Structure and Developments

Companies across the globe have expanded and are capitalizing on numerous opportunities that they come across. Your Company has also utilised its investment plans and close collaboration with customers, banks, financial institutions, suppliers and employees and was able to focus on costs, efficiency and initiatives for the long tenn. The numbers of the company may have declied today compared to the earlier year, but the initiates taken by the company this year have yielded creditable market share and is set to enhance its financial performance in the future catapulting it as one of the leaders in the business.

Your company by itself and/or through its Subsidiary / SDS now operates in India, USA and Bahrain and targets to expand further to other countries.

Looking ahead, our long-tenn outlook continues to remain positive. The management is continuously experimenting with the business and operating models without any presumptions and the series of initiatives set in motion, to reconfigure the Company aimed at sustainable growth whilst focusing its efforts on securing contracts, completing key collaborations for growth while developing integrated digital channels to enhance the values of the company and its subsidiary to be an agile player geared up for sustained growth in the coming years, are yielding results.

Opportunities and Threats

The company is continuously striving to acquire niche, low competition and high-tech barrier/complex products and enter into various Joint venture(s) to develop products and Services and bring to US market in a short period of time.

The Company is concentrating on new products with very high scope and is also in the process of entering Joint Ventures while contemplating takeovers of Pharma companies and IT Companies in India and USA. The IT subsidiary Company in USA, caters to various healthcare companies apart from other clients and is helping the company expand its presence across the globe. The company has also started offering its services in the Middle East through its Step Down Subsidary in Bahrain. Led by the enterprising Promoter, the company expects to see substantial growth in the new areas of operation and further looks to expand to other countries.

While the pharmaceutical industry sees a growth pattern in the recent months, several key challenges have emerged which include setting up of an alternate of the suppliers from China while

ensuring compliances with global CGMP standards; thereby involving continuous improvement in systems and processes including training of the work force

Further, due to the economic pressure envisaged due to the withdrawal of the Pharmaceutical supplies across the globe, pricing and anti-dumping will become the key concern for the pharmaceutical sector in the coming years adding to the concern and eminent threat of decline in the margins because of increasing competition from smaller new entrants, Generic medicine pricing & policies of various Governments.

Segment-wise or product wise performance Revenues - standalone

During the year under review, the Company on a standalone basis has recorded an income of Rs.83.82 Lakhs and incurred a loss of Rs. 261.75 Lakhs as against the income of Rs. 103.43 Lakhs and Profit of Rs. 36.04 Lakhs respectively in the previous financial year ending 31.03.2022.

Revenues - Consolidated

During the year under review, the Company on a consolidated basis has recorded an income of Rs. 5294.33 Lakhs and incurred a loss of Rs. 95.66 Lakhs as against the income of Rs. 7299.63 Lakhs and Profit of Rs. 1194.47 Lakhs respectively in the previous financial year ending 31.03.2022.

The details of the financial performance of the Company are comprised in the Balance Sheet, Profit and Loss Account and other financial statements which are annexed hereto along with the Directors and the Auditors Report.

Internal Control Systems and their Adequacy

The Company has an adequate internal control system which commensurate with the size and nature of its business. The internal control system is being supported by internal audits, regular reviews by management to ensure reliability of financial and all other records to prepare financial statements and other data. Further the Audit Committee of the Board review the findings and recommendations of the internal audit and suitable implementations are affected.

Risk Management System

The company manages our business risk through strict compliance and internal control system.

Risk and Concerns

Decipher Labs Limited does a regular and stringent monitoring of its business activities to identify, evaluate and resolve risks. The top management of the Company and the Board are involved in monitoring of risk assessment and mitigation, thus ensuring a quick resolution mechanism.

In line with our stated philosophy and strategy, the company will continue to pursue various options to achieve growth while trying to reduce the cost and focus more on marketing tie-ups to expand its market reach.

Your Company has adequate internal control systems commensurate with the size of its operations for the purpose of exercising adequate controls on day to day operations of the Company and is at present involved in sourcing the products and services through third party facilities in various locales.

The details of the financial performance of the Company are comprised in the Balance Sheet, Profit and Loss Account and other financial statements which are annexed hereto along with the Directors and the Auditors Report for the financial year 2022-2023.

Outlook

FY23 has been a year of experimentation and that of consolidation with focus on trimming the expenses and narrowing fields to generate maximum profitability. Growth is expected in most of our business segments and we expect to reach greater numbers in FY24. As part of the consolidation and expansion targets, the company is also aggressively pursuing collaborations and Joint Ventures and Takeovers in USA and in India. We expect to sustain the healthy core EBITDA margins in FY24.

We intend to complete the organizational structuring and strengthening of Businesses and the human resources required to fully operationalize all the core Revenue enhancing Divisions in the coming years.

Disclosure of Accounting Treatment:

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

Details of significant changes

Particulars	F.Y 202223	F.Y 202122	% of changes	Remarks
Debtors Turnover	4.72	3.65	0.29	Due to writeoff of Debtors
Inventory Turnover	36.648	22.36	0.64	Due to write off of non-Moving inventory in the current year.
Interest Coverage Ratio	-	-	-	—
Current Ratio	2.15	32.37	-0.93	Due to write off of Deposit made to others and Inventory
Debt Equity Ratio	0	0	-	—
Operating Profit Margin (%)	-49.00%	36.00%	-0.50	Due to Sale of Plant and Machinery and Write off of
				Inventory.
Net Profit Margin (%)	-323.00%	36.00%	-0.986	Due to Sale of Plant and Machinery and Write off of Inventory.
Return on Net- worth	-4.00%	3.00%	-0.244	Loss reported in current financial year when compared to profit in previous financial year.

There is change in net worth as compared to the immediately previous financial year.

Human Resources

The company is in the process of expansion of its operations and with time will need to expand the man power which had previously come down during consolidation. There is a conscious effort by the Company to build diversity in the workforce. The company through its subsidiary has sufficient manpower.

Cautionary Statement

Some of the statements in this Management Discussion & Analysis, describing the Companys objectives, projections, estimates and expectations may be "forward looking statement" within the meaning of applicable laws and regulations. Actual results might differ substantially from those expressed or implied. Important developments that could affect the Companys operation including changes in the industry structure, significant changes in political and economic environment in India, tax laws, import duties, litigation and labor relations. The Company does not undertake endeavors to update these statements.