Fabino Enterprises Ltd Management Discussions

1. GLOBAL ECONOMY REVIEW

The world population has tripled since the 1950s and continues to increase, with populous middle-income countries accounting for the largest share of growth. India, now the worlds most populous country, is estimated to keep growing at a modest pace through the current decade, while African economies continue to post CAGRsof 2-4% between 2022 and 2027. The addition of roughly 600 million people across Asia and Africa in the current decade continues to underpin long-term demand for essential healthcare and pharmaceutical products.

The aging of the global population remains a structural driver of pharmaceutical consumption. The United Nations continues to project that the number of people aged 65 and above will double over the next three decades, reaching 1.5 billion by 2050 and rising to 16% of the worlds population from 8% in 2016. This trend, combined with continuing urbanisation — nearly 57% of the worlds population already lives in cities, a share expected to cross 70% by 2050 — keeps healthcare and pharmaceutical expenditure on a rising trajectory. Global healthcare expenditure as a share of GDP, which had risen from 9.3% in 2013 to 9.8% in 2019, has continued its gradual upward climb through FY 2025-26.

The global economy navigated a more turbulent FY 2025-26 than the year before. Growth had been holding steady at around 3.3% through late 2025 and early 2026, supported by resilient technology investment, accommodative financial conditions and easing trade tensions. However, the outbreak of conflict in the Middle East in the spring of 2026 introduced a fresh shock, pushing commodity prices higher, firming inflation expectations and tightening financial conditions. As per the IMFs July 2026 World Economic Outlook Update, global growth for calendar year 2026 is now projected at around 3.0%, before recovering to about 3.4% in 2027, with the impact felt unevenly — energy-importing and vulnerable economies bearing the brunt of the shock, while economies integrated into the AI-driven technology value chain continue to see robust demand. Advanced economies are expected to grow near 1.7-1.8%, while emerging market and developing economies continue to outpace them, growing above 4%. Risks to the outlook remain tilted to the downside, including a further escalation of the conflict, renewed trade tensions, and a potential re-assessment of AI-related investment expectations; a swift resolution of the conflict or faster AI-driven productivity gains could instead lift the global outlook.

Notwithstanding these headwinds, the worlds pharmaceutical markets have continued to expand. This backdrop presents both opportunity and uncertainty for pharmaceutical companies with export exposure, given the interplay of currency movements, commodity costs and geopolitical risk.

2. INDIAS ECONOMIC REVIEW

India has continued to strengthen its position as the fastest-growing major economy through FY 2025-26, even as the global backdrop turned more uncertain. As per the Provisional Estimates released by the National Statistical Office (NSO) in June 2026, Indias real GDP is estimated to have grown by 7.7% in FY 2025-26, up from 7.1% in FY 2024-25, while nominal GDP grew by approximately 8.9% over the same period, taking real GDP to about ?323.12 lakh crore and nominal GDP to about ?346.36 lakh crore. Growth was led by the services sector — trade, hotels, transport, communication and broadcasting-related services expanded by over 10% — while manufacturing and construction also supported the secondary sectors 7% expansion. The economys momentum was evident through the year, with Q1 FY 2025-26 GDP growth touching a five-quarter high of 7.8%, aided by a low base and resilient domestic consumption. India also crossed the US$4 trillion GDP mark during the year at current exchange rates, overtaking Japan to become the worlds fourth-largest economy.

The Indian pharmaceutical industry remained one of the standout performers within this broader growth story. Known for its expertise in generic drugs, biosimilars and biologics, the industry has continued to grow at a long-run CAGR of over 9%, retaining its position as the third-largest pharmaceutical producer by volume globally and the pharma sectors contribution to Indias GDP has been sustained at close to 1.7-1.8%. Indias pharmaceutical and drug exports rose 9.4% year-on-year to reach about ?2.66 lakh crore (US$30.47 billion) in FY 2024-25, and the industry is targeting double-digit export growth for FY 2026-27, supported by deepening market access and trade engagement. India continues to meet around 20% of global demand for generic drugs by volume and about 60% of global vaccine demand, while hosting the largest number of USFDA-compliant pharmaceutical manufacturing facilities outside the United States. Industry estimates place the domestic pharmaceutical market at roughly US$57-60 billion in FY 2025-26, with the sector expected to expand at 7-9% during the year, aided by reforms such as GST 2.0 rate rationalisation and the revised Schedule M manufacturing standards, alongside continuing government support for health insurance penetration and universal healthcare access.

3. OVERVIEW OF COMPANY

Fabino is the brand under which the Company markets its pharmaceutical products, including tablets, ointments, syrups and other formulations for various medical treatments across its allopathic and select herbal range.

Keepshine is the brand under which the Company markets its shampoo and hair-maintenance products.

4. INDUSTRY STRUCTURE AND DEVELOPMENTS

Overview of Global Industry: As economies and per-capita spending power grow, healthcare infrastructure and insurance mechanisms expand, and health-conscious behaviour persists post-pandemic, global spending on pharmaceutical products continues to rise. The growing burden of aging populations and chronic diseases, along with continuing drug innovation and the affordability created by exclusivity losses and generic entry, keeps propelling market growth. According to IQVIA, the global prescription medicine market reached approximately US$1.7 trillion in 2025 at list prices, reflecting around 10% year-on-year growth, driven by both established medicines and a strong flow of new launches — an estimated 73 novel active substances were launched globally during the year. Looking ahead, global medicine spending is expected to exceed US$2.6 trillion by 2030, growing at 5-8% annually, even as loss of exclusivity on several major products is expected to be the largest drag on growth over the period, underscoring the importance of sustained innovation.

Overview & Developments of the Indian Pharmaceutical Industry: The Indian pharmaceutical industry remains ranked third globally in production by volume, having grown at a CAGR of over 9% over the past decade. India continues to hold the largest number of USFDA-compliant manufacturing facilities outside the US and has around 500 API producers accounting for roughly 8% of the worldwide API market. The domestic industry comprises a network of about 3,000 drug companies and over 10,500 manufacturing units, directly and indirectly employing more than 2.7 million people.

The Economic Survey 2025-26, released in January 2026, reaffirmed Indias position as the third-largest pharmaceutical producer by volume, with exports reaching US$30.5 billion in FY 2024-25 on the back of policy support, market diversification and stronger manufacturing capability. Industry estimates from Bain & Co and other research houses place the Indian pharmaceutical market at roughly ?4.7-5.2 lakh crore (US$57-60 billion) in 2025-26, with a trajectory toward US$120-130 billion by 2030 and continuing ambitions of reaching a US$450 billion market by 2047. A visible shift is underway from traditional generics toward higher-value segments such as biosimilars and GLP-1 therapies, alongside a rise in global partnerships.

The Union Budget 2026-27 continued the governments supportive stance toward the sector. The Department of Pharmaceuticals was allocated approximately ?5,931 crore for FY 2026-27, an increase of over 12% year-on-year, while combined PLI outlay for bulk drugs, medical devices and pharmaceuticals was raised to about ?2,500 crore. The government launched the Biopharma SHAKTI initiative with an outlay of ?10,000 crore over five years to build an end-to-end domestic biopharma ecosystem spanning research, clinical trials and manufacturing, alongside setting up three new National Institutes of Pharmaceutical Education and Research (NIPERs) and upgrading seven existing ones. Overall healthcare-related allocation, including the Ministry of Health and Family Welfare, the Department of Pharmaceuticals and the Ayush Ministry, crossed ?1.16 lakh crore for FY 2026-27, alongside continuing outlay for bulk drug parks, medical device parks and the Jan Aushadhi scheme for affordable generic medicines.

5. OPPORTUNITIES AND THREATS

Opportunities of Pharmaceutical Industry

- Government support: Continuing policy initiatives ? including GST 2.0 rationalisation, the revised Schedule M quality standards, the Biopharma SHAKTI initiative and enhanced PLI outlays ? remain supportive of the industrys growth and favour companies with compliant, scaled-up manufacturing.

- New sector: The Companys herbal and Ayurvedic manufacturing division continues to widen its product range, with products undergoing rigorous testing before reaching consumers, supporting affordability and accessibility.

- Growing space: The industry remains in a growth phase of its life cycle, leaving room for the Company to expand market share through focused marketing and distribution.

- Foreign investment: Indias Consolidated FDI Policy continues to permit up to 100% FDI in greenfield pharmaceutical projects and up to 100% for medical device manufacturing without prior approval, keeping the door open for capital inflows into the sector.

Threats of Pharmaceutical Industry

- Demand for skilled workforce: The industry continues to require a workforce with specialised knowledge and skills; addressing skill gaps through continuous training remains an ongoing challenge.

- Supply chain disruption: Geopolitical developments during FY 2025-26, including the conflict in the Middle East, added fresh strain to global supply chains and input costs, prompting companies to pursue supply chain diversification and resilience measures.

- Regulatory compliance: Evolving requirements, including the revised Schedule M manufacturing standards rolled out during the year, raise compliance costs even as they improve overall quality standards across the industry.

- R&D costs: Developing new drugs and formulations remains expensive and time-consuming, requiring companies to continuously optimise resource allocation.

- Pricing pressure: Continuing pressure from regulators and consumers to control product pricing can compress margins and constrain reinvestment in R&D and new product launches.

6. ECONOMIC OUTLOOK

The global economy is expected to grow at a more moderate pace in the near term, with the IMFs July 2026 update placing global growth at around 3.0% for calendar year 2026, before recovering to about 3.4% in 2027. This marks a downward revision from the roughly 3.3% pace seen through 2025 and early 2026, largely reflecting the impact of the conflict in the Middle East on energy-importing and vulnerable economies, even as economies integrated into AI-driven technology value chains continue to see resilient demand. Advanced economies are projected to grow around 1.7-1.8% in 2026, while emerging market and developing economies are expected to grow meaningfully faster, above 4%, with low-income developing countries projected to grow around 5%. Risks to the global outlook remain tilted to the downside, including the possibility of a longer or broader conflict, renewed trade tensions, or a reassessment of AI-related productivity expectations, while a swift resolution of the conflict or stronger AI-driven productivity gains present upside potential.

Indias economy has continued to outperform this global backdrop, supported by a young, tech-savvy population, resilient domestic consumption and continuing government emphasis on infrastructure and innovation. Real GDP growth for FY 2025-26 is estimated at 7.7%, ahead of the governments own initial projection range of 6.3-6.8%, with momentum sustained through the year on the back of strong services-sector performance and a recovering manufacturing base. Government programmes such as Ayushman Bharat, which provides free healthcare insurance coverage to over 500 million people, and the National Health Stack, aimed at building a unified digital healthcare system, continue to support both economic growth and health outcomes.

For the pharmaceutical sector specifically, IQVIA projects global medicine spending to exceed US$2.6 trillion by 2030, growing 5-8% annually, while pharmerging markets — including India — are expected to continue outpacing developed-market growth. The Indian pharmaceutical industry itself is expected to grow 7-9% during calendar year 2026, supported by GST and regulatory reforms, continuing export momentum, and rising domestic health insurance penetration.

7. RISKS AND CONCERN

- Regulations and directives: Pharma manufacturing remains highly regulated, and compliance obligations increased further during FY 2025-26 with the rollout of the revised Schedule M manufacturing standards and continuing USFDA guidance on quality-data management, raising both compliance costs and the operational bar for manufacturers.

- Cyber security and data protection: Cyber security threats remain a material concern across the industry; the pharmaceutical sector continues to rank among the industry verticals with the highest average cost of a data breach globally, making continued investment in data protection essential.

- Geopolitical and macroeconomic risk: The conflict in the Middle East during FY 2025-26 added a new source of volatility to global commodity prices, freight costs and currency markets, with a direct bearing on input costs and export realisations for pharmaceutical companies with international exposure. Ownership of these risks rests with the CFO.

- Financial risks: These pertain to the effective and efficient utilisation of financial resources ? currency fluctuations, credit risk, liquidity risk and interest-rate movements ? which can affect the Companys revenue, profitability and liquidity. Ownership of these risks rests with the CFO.

- Operational risk: These pertain to business operations such as production capacity, quality assurance, customer demand and availability of raw materials, which can affect business continuity. Ownership of these risks rests with the Operations team.

8. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has an Internal Control System commensurate with the requirements and size of its business, to ensure that the assets and interests of the Company are safeguarded. The adequacy and effectiveness of internal controls across various activities, as well as compliance with laid-down systems and policies, continue to be comprehensively and frequently monitored by the Companys management at all levels of the organisation. The Company has established well-defined policies and processes across the organisation covering all major activities, including authority for approvals, with appropriate limits and authorities in place for all monetary decisions.

The Companys internal controls are structured to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with applicable statutes, safeguarding assets from unauthorised use or losses, executing transactions with proper authorisation, and ensuring compliance with corporate policies, laws and accounting standards.

With a strong monitoring system in place, the Company continues to be supported by its Audit Committee, details of which are provided in the Corporate Governance Report. The Audit Committee reviews existing audit procedures and internal control systems on an ongoing basis, keeping in mind the organisations requirements, growth prospects and the evolving business environment, and follows up on the implementation of corrective actions arising from internal audit findings.

9. KEY FINANCIAL RATIOS:

(Disclosure of the following ratios where the change is 25% or more compared to the previous year)

Sr. No.	Ratio Analysis	31-Mar-26	31-Mar-25	% Change	Reasons for Change, if more than 25%
1	Net Profit Ratio	(3.15%)	0.72%	(537.50%)	Due to loss net profit ratio has gone negative
2	Return on Capital Employed	(6.36%)	7.14%	(189.08%)	Due to operating loss in current financial year.
3	Return on Investment	NA	NA	NA	NA
4	Current Ratio	1.36	1.75	(22.29%)	Increase in Current Liabilities
5	Debt Equity Ratio	0.28	0.38	(26.32%)	Decrease in Borrowings
6	Inventory Turnover	11.17	12.56	(11.07%)	Decrease in Sales and COGS
7	Return on Equity Ratio	(8.75%)	3.12%	(380.45%)	Due to Loss Return on Equity has gone negative
8	Net Capital Turnover Ratio	1.17	3.67	(68.12%)	Decrease in Sales and Increase in Working Capital
9	Debt Service Coverage Ratio	(1.92)	0.28	(787.71%)	Due to negative EBITDA in current financial year
10	Trade Receivable Turnover Ratio	1.07	2.41	(55.60%)	Decrease in Sales during the year
11	Trade Payables Turnover Ratio	1.24	2.90	(57.24%)	Decrease in purchases during the year

Reasons for Differences, if Difference is More than 25% — The Company shall provide commentary explaining any change (whether positive or negative) in a ratio of more than 25% compared to the ratio of the preceding year, once the FY 2025-26 figures above are finalised.

10. Operations of the Company:

The Companys teams remain engaged in the manufacturing, marketing, trading and packing of pharmaceutical and other wellness-focused consumer products. Its core business continues to be the marketing of pharmaceutical formulations and products in the domestic market through its own distribution network and sales force under its own brand names, with Ayurvedic formulations manufactured through loan-licensing facilities, along with packing and labelling. The Company continues to export wellness and FMCG products such as coffee, malt powder, protein powder and hair shampoo.

The Company continues to focus on strengthening its distribution network in the pharmaceutical field. Its Promoter continues to hold registrations and patents for various products. Certain products continue to be manufactured in-house at the Companys processing centre in Sonipat, Haryana, others at its contract manufacturing facility in Haryana, and the remaining product range through third-party manufacturers on a made-to-order basis as per the Companys instructions.

11. Review of Financial Performance

Particulars	Standalone FY 2025-26	Standalone FY 2024-25	Consolidated FY 2025-26	Consolidated FY 2024-25	Remarks
A. Statement of Profit & Loss (Rs. in Lakhs)
Revenue from Operations	1,142.79	1,803.60	2,084.06	1,803.60	Standalone revenue down 36.6%; Consolidated up 15.5% on subsidiary contribution
Other Income	130.19	28.85	156.39	29.03	Sharp rise, largely forex gains and export incentives
Total Income	1,272.98	1,832.46	2,240.44	1,832.63
Total Expenses	1,320.56	1,806.52	2,314.16	1,813.83
Profit/(Loss) Before Tax	(47.59)	25.93	(73.71)	18.80
Profit/(Loss) After Tax	(35.97)	13.19	(55.87)	6.11	Swing from profit to loss at both levels
Basic/Diluted EPS (Rs.)	(1.71)	0.63	(2.66)	0.29
B. Balance Sheet Highlights (Rs. in Lakhs)
Net Worth	392.93	428.90	364.61	420.48	Decline mirrors net loss for the year
Total Assets	1,732.31	1,300.64	2,214.26	1,765.82	Standalone assets up 33.2%
Long-Term Borrowings	111.25	161.23	162.39	179.10
Trade Receivables	1,267.84	861.56	1,646.32	1,417.02	Standalone up 47.2%
Trade Payables	1,214.07	646.65	1,647.16	1,141.84	Standalone up 87.8%
Inventories	93.15	120.30	106.41	120.30
C. Key Financial Ratios (Standalone) — variance > 25% as disclosed
Current Ratio	1.36	1.75	—	—	(22.3)% — increase in current liabilities
Return on Equity Ratio	(8.75%)	3.12%	—	—	(380.5)% — loss for the year
Net Capital Turnover Ratio	1.17	3.67	—	—	(68.1)% — decrease in sales, increase in working capital
Net Profit Ratio	(3.15%)	0.72%	—	—	(537.5)% — loss for the year
Return on Capital Employed	(6.36%)	7.14%	—	—	(189.1)% — operating loss in current year
Debt Service Coverage Ratio	(1.92)	0.28	—	—	(787.7)% — negative EBITDA
Trade Receivable Turnover Ratio	1.07	2.41	—	—	(55.6)% — decrease in sales
Trade Payables Turnover Ratio	1.24	2.90	—	—	(57.2)% — decrease in purchases
D. Key Exceptional Items Impacting FY 2025-26 Results (Rs. in Lakhs)
Write-off of trade receivables/loans & advances	71.55	—	71.55	—	Incl. Rs. 47.79 Lakhs of litigated receivables assessed unrecoverable
Write-off of expired/obsolete inventory	57.73	—	57.73	—
Sundry balances written back (income)	1.45	—	1.45	—
Cash loss for the year	13.47	Nil	—	—	Per CARO 2020 disclosure (standalone)

12. HUMAN RESOURCES

Fabino Enterprises Limited remains part of a dynamic and progressive group that actively fosters a challenging work environment and encourages entrepreneurship. With trust as a critical part of the Companys business philosophy, it continues to place strong emphasis on integrity, teamwork, innovation, performance and partnership. The Companys professional staff, drawn from diverse backgrounds, continue to bring varied talent, knowledge and experience to the Group, helping the business remain competitive.

The Companys management team and Board of Directors remain committed to acting in the best interests of shareholders, clients and associates. As on March 31, 2026, the Companys team comprised 3 people.

The Company continues to view internal selection and succession as critical to the long-term sustenance of the business, as it ensures business continuity, preserves corporate culture, enhances knowledge capital and improves retention. The Company continues to invest in technology and fair HR practices to create a supportive environment for its people, while upholding high standards of governance with respect to statutory compliance and regulatory requirements.

13. OUTLOOK OF THE COMPANY

The Company believes it remains well-poised to capitalise on the healthy prospects of the pharmaceutical industry and to further solidify its position in the market. Its brand equity, disciplined investment philosophy, robust processes, customer-centric approach, expansive reach and healthy financials continue to underpin its growth strategy for FY 2026-27 and beyond.

The Companys strategic priorities continue to include:

- Increase in order-taking appetite by augmenting the Companys working capital base ? given the working-capital-intensive nature of its operations, the Company continues to require access to a larger quantum of liquid funds to expand its product portfolio, business verticals and geographical footprint.

- Geographical diversification ? the Company continues to cater to both domestic and international markets, aiming to strengthen its domestic sales networks by nurturing existing client relationships and creating new distribution channels in non-penetrated geographies. The Company continues to supply into Haryana, Delhi, parts of Punjab, Himachal Pradesh, Eastern Uttar Pradesh, Odisha, Jharkhand, parts of West Bengal, Andhra Pradesh and Nepal, and continues to evaluate further geographical expansion.

- Digital marketing ? the Company continues to actively use social media and e-commerce channels for customer engagement, service provision and interaction with its vendors.

- Capitalising on sector tailwinds ? the Company aims to align its growth with continuing government support for the pharmaceutical sector, including the Biopharma SHAKTI initiative, GST rationalisation and rising health insurance penetration, which are together expected to expand the addressable market for affordable, quality pharmaceutical and wellness products over the coming years.

14. SAFE HARBOUR

This report, describing the Companys activities, projections and expectations for the future, may contain certain forward-looking statements within the meaning of applicable laws and regulations. The actual results of the business may differ materially from those expressed or implied due to various risk factors and uncertainties. The Company cannot guarantee that these assumptions and expectations are accurate or will be realised. The Company assumes no responsibility to publicly amend, modify or revise forward-looking statements on the basis of any subsequent developments, information or events. Actual results may differ materially from those expressed in this statement. Important factors that could influence the Companys operations include determination of tariffs and other charges and levies by regulatory authorities, changes in government regulations, tax laws, economic developments within the country, and such other factors globally, including the evolving global geopolitical and trade environment during FY 2025-26 and beyond.

The financial statements are prepared under the historical cost convention, on an accrual basis of accounting, and in accordance with the provisions of the Companies Act, 2013 (the "Act") and comply with the Accounting Standards notified under Section 133 of the Act. The management of Fabino Enterprises Limited has used estimates and judgements relating to the financial statements on a prudent and reasonable basis, so that the financial statements reflect, in a true and fair manner, the profit for the year.