Earkart Limited Management Discussions

The Management of Earkart Limited is pleased to present its Management Discussion and Analysis Report for the financial year ended 31 March 2026. This report provides an overview of the business environment, industry trends, operational performance, opportunities, risks, and outlook of the Company.

Industry Overview

The Indian pharmaceutical and healthcare sector continues to be one of the fastest-growing sectors of the economy, driven by increasing healthcare awareness, rising disposable incomes, expanding healthcare infrastructure, and growing demand for quality healthcare products and services. The pharmaceutical distribution and healthcare supply chain segment has witnessed significant transformation with increased adoption of digital technologies, enhanced regulatory oversight, and growing emphasis on timely product availability.

The healthcare distribution ecosystem plays a vital role in ensuring efficient movement of pharmaceutical and healthcare products from manufacturers to healthcare providers and consumers. Growing penetration of e-commerce, improved logistics networks, and advancements in supply chain management continue to create opportunities for organized players operating in this segment.

India remains one of the worlds largest pharmaceutical markets and is expected to witness sustained growth supported by demographic trends, government healthcare initiatives, increasing health insurance penetration, and continued investments in healthcare infrastructure.

Business Overview

Earkart Limited is engaged in the business of healthcare and pharmaceutical product distribution, facilitating the availability of healthcare products through an efficient supply chain network. The Company focuses on providing quality products, maintaining strong customer relationships, and leveraging technology-driven processes to improve operational efficiency.

During the financial year under review, the Company achieved a significant milestone with the successful listing of its equity shares on the SME Platform of BSE Limited on 03 October 2025. The listing has enhanced the Companys visibility, strengthened its governance framework, and provided a platform for future growth and expansion.

The Company also incorporated its wholly owned subsidiary, Earkart Inc., in the United States of America as part of its long-term strategy to explore international business opportunities.

Financial Performance

Revenue

The Company reported total income of INR 541.42 million during FY 2025-26 as against INR 431.92 million during FY 2024-25, registering a growth of approximately 25.35%.

The increase in revenue was primarily driven by expansion in business operations, growth in customer base, and increased demand across the Companys product portfolio.

Profitability

Profit Before Tax (PBT) stood at INR 72.56 million during FY 2025-26 as compared to INR 88.09 million during FY 2024-25.

Profit After Tax (PAT) stood at INR 49.32 million during FY 2025-26 compared to INR 66.41 million during FY 2024-25.

Although revenue growth remained strong, profitability was impacted by:

- Increased logistics and transportation costs;

- Higher operational and employee-related expenses;

- Costs associated with public listing and enhanced compliance requirements;

- Competitive market conditions.

The management remains focused on improving operational efficiencies and optimizing costs while continuing investments necessary for long-term growth.

Key Developments During the Year

Successful IPO and Listing

The Company successfully completed its Initial Public Offering and listed its equity shares on the SME Platform of BSE Limited. The listing represents an important milestone in the Companys growth journey and reflects investor confidence in its business model and future prospects.

International Expansion Initiative

The Company incorporated a wholly owned subsidiary, Earkart Inc., in the United States of America. While the subsidiary remained non-operational as of 31 March 2026, it establishes a strategic platform for evaluating future international opportunities.

Employee Stock Option Scheme

The shareholders approved the Earkart Limited ESOP Scheme 2025 during the year. The scheme is intended to strengthen employee engagement, retention, and alignment with long-term shareholder value creation.

Opportunities

The Company sees several opportunities for future growth:

Growing Healthcare Demand

Increasing healthcare awareness, changing demographics, and rising healthcare expenditure continue to support growth in pharmaceutical and healthcare product demand.

Digital Transformation

Growing adoption of technology across healthcare distribution presents opportunities to improve operational efficiency, inventory management, customer engagement, and supply chain visibility.

Expansion into New Markets

The Companys expanding customer network and the establishment of its overseas subsidiary provide opportunities to explore new markets and business relationships.

Organized Supply Chain Growth

The healthcare distribution industry continues to shift towards organized and compliant distribution networks, creating opportunities for established and professionally managed companies.

Risks and Concerns

Like any business, the Company faces certain risks and uncertainties that may affect its operations and performance.

Regulatory Risk

The healthcare and pharmaceutical sector is subject to extensive regulation. Changes in government policies, pricing controls, licensing requirements, and compliance obligations may impact business operations.

Competitive Risk

The Company operates in a highly competitive market characterized by numerous regional and national participants. Maintaining customer relationships and service quality remains critical.

Supply Chain Risk

Disruptions in supply chains, transportation challenges, vendor dependency, and fluctuations in logistics costs may affect operational performance.

Economic Risk

Changes in macroeconomic conditions, inflationary pressures, interest rates, and consumer spending patterns may influence business growth.

Technology and Cybersecurity Risk

Increasing reliance on digital systems requires continuous focus on information security, data protection, and system reliability.

The Company continuously evaluates these risks and has implemented appropriate mitigation strategies wherever feasible.

Internal Control Systems and Their Adequacy

The Company has established adequate internal financial controls commensurate with the size, scale, and complexity of its operations. These controls are designed to ensure:

- Protection of assets;

- Accuracy and reliability of financial reporting;

- Compliance with applicable laws and regulations;

- Efficient conduct of business operations;

- Prevention and detection of frauds and errors.

The Company has appointed an independent Internal Auditor who periodically reviews internal control systems and processes. The Audit Committee regularly reviews internal audit findings and monitors implementation of corrective actions.

The Board believes that the internal control framework remains effective and adequate.

Human Resources

The Company considers its employees to be one of its most valuable assets. It continues to focus on attracting, developing, and retaining talent through a supportive work environment and opportunities for professional growth.

As on 31 March 2026, the Company had 58 permanent employees.

The Company maintains cordial industrial relations and continues to promote a culture of integrity, accountability, teamwork, and continuous learning.

Corporate Governance

The Company remains committed to maintaining high standards of corporate governance, transparency, and ethical business conduct. Following its listing on BSE SME, the Company further strengthened its governance framework through enhanced compliance systems, Board oversight, and stakeholder engagement practices.

The Board of Directors, supported by its Committees, continues to provide strategic guidance and oversight to ensure sustainable value creation for all stakeholders.

Outlook

The Company remains optimistic about its long-term growth prospects. The healthcare and pharmaceutical distribution industry continues to offer significant opportunities driven by increasing healthcare demand, technology adoption, and supply chain modernization.

The managements focus during FY 2026-27 will be on:

- Expanding business operations and customer reach;

- Improving operational efficiencies and profitability;

- Strengthening supply chain capabilities;

- Leveraging technology for business growth;

- Exploring international opportunities through Earkart Inc.;

- Enhancing shareholder value through sustainable growth.

While certain challenges such as cost pressures and competitive intensity may continue, the Company believes that its business model, experienced management team, strong customer relationships, and governance framework position it well for future growth.

Cautionary Statement

Statements in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates, expectations, or predictions may be forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed or implied due to various factors including economic conditions, regulatory developments, competitive pressures, and other risks beyond the Companys control. The Company undertakes no obligation to publicly update any forward-looking statements, whether as a result of new information, future events, or otherwise.