Denis Chem Lab Ltd Management Discussions

a. Industry Structure and Developments:

The Indian Pharmaceutical Industry is 3rd Largest in volume and 13th Largest in terms of value in the world. The industry recorded decent growth in FY 2023-24. The foundation of the industry continues to remain strong and will be aided by growth in healthcare budgets across the board. Hospital penetration is also observed to be increasing.

b. Opportunities and Threats:

Our Competitive Strengths:-Diverse Product Portfolio -Wide sales, marketing and distribution network -Wide range of fill volumes -Experienced management team and well qualified senior executives -Adoption of superior technology for manufacturing sterile injectable -Our contract manufacturing and institutional sales business stabilizes our revenue streams -Targeting new domestic and export markets -Wide range of Sterile Injectable Products. The recent growth of Pan India hospital chains presents a significant opportunity for us to cater to their infusion requirements via our ‘Aqua pulse brand. Since our distribution network and our brands are well established, we can also leverage the same by increasing the basket of products that are offered.

The prices of our pharmaceutical products are or may be restricted by the price controls imposed by government and healthcare providers in several countries including India. In India, prices of certain pharmaceutical products are determined by the Drug Prices Control Order ("DPCO"), promulgated by the Indian government and administered by the National Pharmaceutical Pricing Authority ("NPPA"). If the price of one or more products are administered or determined by the DPCO/NPPA, it may have a material adverse impact on our profitability in case we are not able to control costs.

Enhanced regulations relating to Pollution Control, Drug Manufacturing etc. may place additional cost burden on the company.

c. Segment wise Performance:

The Company is operating in single segment. Hence, there is no need of reporting segment wise performance.

d. Recent Trend and Future Outlook:

India is now among the top 5 pharmaceutical emerging markets. There will be new drug launches, new drug filings and Phase II clinic trials throughout the year. On back of increasing sales of generic medicines, continued growth in chronic therapies and a greater penetration in rural markets, the domestic pharmaceutical market grew at 9-11% in FY 2023-24.

e. Risks and Concerns:

We operate in a competitive sector. Our institutional customer base includes government, semi-government, hospitals & nursing homes, aided agencies and the defense sector which forms a part of our Companys income. Our Company procures orders from these institutions by tender process. We may face competition during this tender process. Enhanced regulations also may add to the compliance cost of the company.

f. Internal Control Systems and their Adequacy:

The Company has adequate systems of Internal Controls commensurate with its size and operations to ensure orderly and efficient conduct of business. These controls ensure safeguarding of assets, reduction and detection of fraud and error, adequacy and completeness of the accounting records and timely preparation of reliable financial information.

g. Financial Performance with respect to Operational Performance:

The financial performance of the Company for the year 2023 24 will be described in the Directors Report.

h. Material Developments in Human Resources and Industrial Relations Front:

Your Company has undertaken certain employees development initiatives, which have very positive impact on the morale and team spirit of the employees. The Company has continued to give special attention to Human Resources/Industrial Relations development. Availability of skilled labour is an important metric for the smooth operations of the company and the company is taking special measures to attract and retain skilled labourers. Industrial relations remained cordial throughout the year. We are also concentrating on building up of our Human Resource Capital especially in our Sales Team by under taking various T & D activities. We are also creating adequate support systems at our HO which will provide requisite knowledge and data to our sales team. These activities will lead to a more informed and motivated sales team.

i. Key Financial Ratios:

Key Ratios	FY 2023-24	FY 2022-23	Change %	Explanation, if required
Debtors Turnover (Days)	68	72	5.56%	Better Management of A/c Receivable
Inventory Turnover (Days)	40	42	4.76%	-
Interest Coverage Ratio	29	18.02	60.93%	-
Current Ratio	2.55	2.46	3.66%	-
Debt Equity Ratio (long term)	0.01	0.02	50.00%
Operating Profit Margin (%)	28.20	27.15	3.87%	-
Net Profit Margin (%)	6.48	4.91	31.98%	Rise in the Net Profit
Return on Networth	13.54	10.92	23.99%	Rise in the Net Profit

j. Cautionary Statement:

Statement in this Management Discussion and Analysis Report, describing the Companys objectives, estimates and expectations may constitute ‘Forward Looking Statements within the meaning of applicable laws or regulations. Actual results might differ materially from those either expressed or implied.