Eiko Lifesciences Ltd Management Discussions

GLOBAL AND ECONOMIC OUTLOOK

1. Economic Environment & Industry Size (2026)

- Macroeconomic Climate: In 2026, the pharmaceutical manufacturing sector remains highly resilient despite geopolitical realignments and inflationary pressures. To mitigate global risks, companies are aggressively diversifying supply chains, accelerating a shift toward localized "China+1" manufacturing models and increased outsourcing.

- Active Pharmaceutical Ingredients (APIs): The global API market size is estimated to have reached approximately USD 261 Billion as of 2026.

- Pharmaceutical Formulations: The broader global pharmaceutical manufacturing and finished formulations market is valued at roughly USD 630 Billion to USD 665 Billion in 2026.

2. Growth Trajectories & Leading Categories

- API Segment Growth: The API market is projected to expand at a steady compound annual growth rate (CAGR) of 7.0% to 7.3% through the next decade.

- Formulations Segment Growth: The pharmaceutical formulations sector is experiencing robust expansion, with forecasted CAGRs ranging from 6.0% to 10.2%.

- Formulations Dominance & Growth: Conventional Oral Dosage Forms (tablets and capsules) dominate the current market share. The highest future growth is concentrated in Specialty Injectables, Biosimilars, and Personalized Medicine, supported by smart facilities and continuous manufacturing technologies.

3. Key Issues and Challenges in 2026

- Environmental & Regulatory Burdens: The rollout of stringent environmental policies, such as the EU Carbon Border Adjustment Mechanism (CBAM), forces API and formulation manufacturers to invest heavily in green chemistry or face significant cost penalties.

- Supply Chain & Input Costs: Volatility in raw material pricing, rising tariff barriers, and heavy regional reliance on imported chemical intermediates continue to compress operating margins.

- Technological Integration: The industry faces challenges in scaling up from traditional batch manufacturing to fully automated, continuous production systems, which requires intensive capital investment.

4. Forward-Looking Statement

Expectations regarding the future performance of the API and formulations markets are forward-looking statements based on current industry trajectories. Strategic vertical integration bringing API synthesis and formulation under one roof—will be a critical differentiator for capturing value-chain margins. However, actual market realization may differ materially due to unforeseen macroeconomic volatility, evolving environmental regulations, and shifts in global healthcare policies.

INDIAN ECONOMY AND OUTLOOK:

The Indian economy continues to be a beacon of growth and stability in a world navigating significant economic and geopolitical uncertainties. Remaining the fastest-growing major economy, this macroeconomic resilience provides a robust foundation for the domestic pharmaceutical and specialty chemicals sectors. The strategic pivot toward localized supply chains, supported by strong domestic fundamentals and policy reforms, positions India as a highly competitive and critical node in global pharmaceutical manufacturing.

1. ACTIVE PHARMACEUTICAL INGREDIENTS (API) MARKET: The domestic API sector is undergoing a transformative expansion phase, actively driven by global supply chain decentralization and the strategic "China+1" sourcing model.

- Market Scale & Growth: The Indian API market size is estimated to reach approximately USD 20.70 billion in 2026, exhibiting a strong compound annual growth rate (CAGR) of over 7.7% through the end of the decade.

- Segment Leadership: Generic APIs continue to dominate the landscape, capturing nearly 60% of the market share, fueled by surging global demand for affordable therapeutics and imminent pharmaceutical patent cliffs.

- Policy Catalysts: Government initiatives, particularly the Production Linked Incentive (PLI) scheme and the development of bulk-drug parks, are accelerating domestic capacity expansion and progressively reducing historical reliance on imported chemical intermediates.

2. FINISHED FORMULATIONS & CONTRACT MANUFACTURING: Indias finished formulations and contract manufacturing ecosystem is rapidly scaling up, supported by an unparalleled combination of cost-efficiency, technical expertise, and an expanding skilled workforce.

- Growth Trajectory: The broader Indian pharmaceutical manufacturing sector is projected to expand at a steady CAGR of over 6.3%, driven by rising domestic healthcare consumption and robust export opportunities for generic medicines.

- Value Chain Integration: There is a pronounced industry shift toward vertical integration, allowing manufacturers to capture higher value-chain margins by combining captive API production with advanced, globally accredited formulation capabilities.

- Quality & Compliance: The increasing adoption of WHO-GMP standards and automated manufacturing technologies is cementing Indias status as a preferred, high-quality hub for finished dosage forms.

3. STRATEGIC OUTLOOK & RISK MITIGATION: While the long-term growth horizon remains exceptionally positive, the industry must navigate near-term systemic headwinds. Persistent volatility in raw material pricing and the necessity of adhering to stricter environmental compliance norms require proactive operational agility. Integrating continuous manufacturing frameworks, adopting green chemistry principles, and aggressively strengthening localized supply networks will be essential for manufacturers to sustain long-term profitability and global competitive advantage.

FORWARD LOOKING STATEMENTS

Statements in the Management Discussion and Analysis, which describe the Companys objectives, projections, estimates and expectations, may be forward-looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could influence the Companys operations include economic developments within the country, demand and supply conditions in the industry, input prices, changes in government regulations, tax laws and other factors such as litigation.

SEGMENT

The primary business segments of the Company comprise Specialty Chemicals and APIs, along with Container Leasing and Logistics through its subsidiary. During the year under review, pursuant to the definitive agreement for acquisition of a 51% stake in SSM Formulations Private Limited, the Company expanded its presence into the pharmaceutical formulations segment, thereby broadening its business operations beyond its established specialty chemicals and API portfolio.

During FY 2025-26, the Company recorded income from operations of Rs4,212.68 lakhs, compared with Rs3,249.18 lakhs in the previous year, representing a growth of approximately 29.66%. Profit after tax stood at Rs358.11 lakhs, compared with Rs174.08 lakhs in the previous year, registering a growth of approximately 105.71%.

As of 31st March 2026, the Company operates through the following business segments:

1. Specialty Chemicals, APIs and Pharmaceutical Formulations:

The Company continues to operate in the specialty chemicals business and has expanded into pharmaceutical formulations through its investment in SSM Formulations Private Limited. The segment represents the Companys strategic focus on strengthening its presence across the chemical and pharmaceutical value chain.

2. Container Leasing and Logistics:

Through its material subsidiary, EikoVivify Logistics Private Limited, the Company operates a container leasing and logistics business. The subsidiary has a fleet of over 800 TEU containers deployed under long-term arrangements, providing an asset-backed and recurring revenue-oriented logistics business.

MATERIAL DEVELOPMENTS DURING THE YEAR

1. Strategic Acquisition of M/s SSM Formulations Private Limited

During the year under review, the Company entered into a definitive agreement for acquisition of a 51% stake in SSM Formulations Private Limited, a pharmaceutical formulations company. The acquisition marks a strategic expansion of the Companys operations into the pharmaceutical formulations segment and represents a step towards strengthening its presence across the pharmaceutical value chain.

The transaction is expected to provide the Company with an additional platform for growth and diversification. Further details regarding the acquisition, its strategic rationale and future outlook are provided in the relevant sections of this Annual Report.

2. Preferential Issue of Warrants and Equity Shares

During FY 2025-26, the Board of Directors approved the issuance of 29,50,000 warrants, each convertible into one equity share of the Company and 6,25,000 equity shares, on a preferential basis, to persons belonging to both the Promoter/Promoter Group and Non-Promoter/Public categories.

The relevant date for determining the floor price for the preferential issue was 8th December 2025. The requisite approval of the shareholders was obtained at the 01st Extra-Ordinary General Meeting of the Company held on 7th January 2026. An Escrow Account was also opened with Bank of India for receipt of the subscription monies in connection with the issue.

The funds raised through the preferential issue are intended to support the Companys strategic acquisition, business expansion and other growth initiatives. The participation of existing promoters as well as new investors in the issue reflects continued confidence in the Companys growth strategy and future prospects.

3. Increase in Authorised Share Capital

During the year under review, the Board of Directors approved, subject to the approval of the shareholders, the increase in the Authorised Share Capital of the Company from Rs14,00,00,000, comprising 1,40,00,000 equity shares of Rs10 each, to Rs20,00,00,000, comprising 2,00,00,000 equity shares of Rs10 each.

The increase in authorised share capital was undertaken to facilitate the proposed preferential issue and provide the Company with adequate headroom to meet its future capital requirements and growth initiatives.

4. Expansion of Primary Business Operations

During the year, the Company continued to expand its core business operations and entered into multiple strategic agreements having an aggregate value of at least Rs10 crore, which are proposed to be executed within a period of one year.

These agreements are expected to contribute to the Companys business growth and strengthen its presence across its primary business segments. The Company remains focused on developing new business relationships, expanding its product and market portfolio and creating sustainable opportunities for long-term growth.

FINANCIAL AND OPERATIONAL PERFORMANCE

During the financial year 2025-26, the Company delivered a strong performance across key financial indicators, reflecting the early contribution of its diversification into logistics and pharmaceutical formulations alongside continued growth in its core specialty chemicals business.

On a consolidated basis, revenue from operations grew by approximately 39% to Rs5,257.14 Lakhs from Rs3,766.40 Lakhs in the previous year, aided by the commencement of operations at the Companys logistics subsidiary, EikoVivify Logistics Private Limited, alongside sustained growth in the core specialty and fine chemicals business. Consolidated Profit after Tax grew by approximately 130% to Rs532.47 Lakhs from Rs231.86 Lakhs in the previous year.

On a standalone basis, revenue from operations grew by approximately 30% to Rs4,212.68 Lakhs from Rs3,249.18 Lakhs, while Profit after Tax more than doubled, growing by approximately 106% to Rs358.11 Lakhs from Rs174.08 Lakhs in the previous year, with basic earnings per share nearly doubling to Rs2.60 from Rs1.34. These results underscore the Companys continued focus on profitability, operational discipline and value creation, and reflect the growing contribution of its diversification into logistics and pharmaceutical formulations, which are expected to contribute more meaningfully in the years ahead.

STANDALONE KEY FINANCIAL INFORMATION AND KEY PERFORMANCE INDICATORS (KPIS)

(Rs in Lakhs unless otherwise specified)

Particulars	Fiscal 2026	Fiscal 2025	Fiscal 2024
Revenue from operations	4,212.68	3,249.18	2,792.93
EBITDA	471.30	231.82	178.88
EBITDA Margin (%)	11.19	7.13	6.40
Profit/ (loss) after tax	358.11	174.08	75.15
PAT margin (%)	8.50	5.36	2.69

OPPORTUNITIES AND THREATS FOR SPECIALTY CHEMICALS & PHARMACEUTICALS COMPANIES IN INDIA

OPPORTUNITIES:

- The "China+1" Strategy and Export Surge: As global customers aggressively diversify their supply chains away from China due to geopolitical uncertainties and production costs, Indian players are capturing a significant structural advantage. This shift is driving increased outsourcing, custom synthesis, and contract manufacturing (CRAMS/CDMO) opportunities across both specialty chemicals and Active Pharmaceutical Ingredients (APIs).

- Favourable Government Policies: Robust government initiatives, including Production-Linked Incentive (PLI) schemes, "Make in India," and the development of bulk-drug and chemical parks, are directly improving manufacturing competitiveness. These policies are accelerating domestic capacity expansion and reducing the historical reliance on imported chemical intermediates.

- Rising Domestic and Global Demand: The industry is buoyed by surging consumption in fast-growing end-user sectors, particularly healthcare, pharmaceuticals, and electronics. The steady rise in per capita consumption domestically signals significant untapped potential.

- Technological and Sustainable Innovation: There is a growing global mandate for green chemistry, bio-based products, and sustainable formulations. Indian companies that invest heavily in advanced R&D, continuous manufacturing, and eco-friendly process optimization are successfully distinguishing themselves internationally.

- Value Chain Integration: Strategic expansions such as forward-integrating from specialty APIs into finished pharmaceutical formulations?allow companies to capture full value-chain margins and establish themselves as reliable, end-to-end global suppliers.

THREATS:

- Raw Material and Energy Volatility: The sectors remain highly dependent on imported feedstocks and specialty intermediates. Fluctuations in crude derivative prices, uncompetitive global energy costs, and supply-demand imbalances continuously challenge operational planning and erode profitability.

- Chinese Overcapacity and Price Dumping: Persistent structural overcapacity in China continues to exert severe pricing pressures. Aggressive dumping by Chinese producers remains a primary threat to Indian market share and margin realization.

- Stringent Regulatory and Environmental Compliance: Navigating the complex web of evolving global regulations?such as REACH in Europe and new environmental, social, and governance (ESG) standards?requires substantial capital investment. Delays in regulatory approvals or environmental clearances can significantly slow down market entry and escalate costs.

- Supply Chain and Logistical Bottlenecks: Geopolitical tensions, shifting global trade policies, and domestic infrastructure gaps (especially in ports and utilities) amplify the risks of severe logistical disruptions.

- Macroeconomic Headwinds: Sluggish economic recovery, elevated interest rates, and cyclical risks in developed export markets (US and Europe) can impact demand stability and constrain revenue growth.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES AND INDUSTRIAL RELATION FRONT

The Company has a young, capable, experienced and dedicated workforce, supported by professionals from in-house and external sources with expertise across various functional areas, contributing to the Companys operational and financial growth. The number of permanent employees as of 31st March 2026 stood at Seven. During FY 2025-26, with the expansion of business activities – including the appointment of Mr. Sumukh Vartak as Whole-Time Director of the Company – the Company continued to strengthen its manpower base and management bandwidth to support its growing operational complexity. The Company values continuous growth and development of its people and maintains top priority for the safety, welfare, and job satisfaction of its employees.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has a proper and adequate system of internal audit and controls which ensures that all assets are safeguarded against loss from unauthorized use or disposition and that all transactions are authorized, recorded, and reported correctly. The Company continuously strives to improve upon and implement best practices with a view to strengthening internal control systems.

The Company has assigned the internal audit function to a leading firm of Chartered Accountants. Regular internal audits and checks are carried out to ensure that responsibilities are discharged effectively. During FY 2025-26, the Company also received the Internal Audit Report on the operations of its RTA, M/s Bigshare Services Private Limited, as required under applicable SEBI regulations. All major findings and suggestions arising out of the internal audit are reported to and reviewed by the Audit Committee. The Management ensures implementation of these suggestions and reviews them periodically.

RESEARCH AND DEVELOPMENT

Research and Development (R&D) plays a pivotal role in innovation and invention of new molecules. New product development is always a priority for the Company as the needs of consumers are constantly changing globally. Apart from new product development, it is paramount for specialty chemicals companies to develop and upgrade existing products. The Company encourages R&D to cater to the needs of customers, and has developed a number of niche molecules and chemicals as per customer specifications for pharmaceutical, agrochemical, fragrance and flavour industries. Through Eiko Scientific Solutions LLP, the Company is also building longer-term R&D capabilities in specialty chemicals and healthcare solutions.

ENVIRONMENTAL ISSUES

The Company is constantly engaged in upgrading its manufacturing processes by adopting the best available technology, which is environmentally sustainable and safe to operate. The primary focus of the Company has been pollution control and clean environment solutions. Our aim is to have processes that have minimal impact on employees and the environment. We follow efficient manufacturing processes by using minimum energy and raw materials. The effluents generated at our manufacturing facilities are treated on-site to meet all standards set by the applicable regulatory authorities.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATION PERFORMANCE

The Company maintains tight budgetary control on key operational performance indicators with judicious deployment of funds. During FY 2025-26, financial performance was impacted by the Companys deliberate strategic choices – including funding the SSM Formulations acquisition, investing in the preferential allotment process, and strengthening its capital base – while continuing to run its core specialty chemicals business with discipline.

CAUTIONARY STATEMENT

The statement in this report on Management Discussion and Analysis may be forward looking statement within the meaning of applicable security laws or regulations. These statements are based on certain assumptions and expectations of future events. Actual results could, however, differ materially from those expressed or implied.

Important factors that could make a difference to the companys operations include global and domestic demand supply conditions, finished goods prices, raw material cost and availability and changes in government regulations and tax structure, economic development within India and the countries with which the company has business contacts and other factors such as litigation and industrial relations.

The Company assumes no responsibility in respect of forward – looking statements, which may be amended or modified in future on the basis of subsequent developments, information or events.

For and on behalf of the Board

For Eiko LifeSciences Limited

Laxmikant Kabra

Chairman

DIN: 00061346

Date: 24th August 2026

Place: Thane