Fermenta Biotech Ltd Management Discussions

Global economy Overview

Global economic growth declined from 3.5 per cent in 2022 to an estimated 3.1 per cent in 2023. A disproportionate share of global growth in FY 2023-24 is expected to come from Asia, despite the weaker-than- expected recovery in China, sustained weakness in USA, higher energy costs in Europe, weak global consumer sentiment on account of the Ukraine-Russia war, and the Red Sea crisis resulting in higher logistics costs. A tightening monetary policy translated into increased policy rates and interest rates for new loans.

Growth in advanced economies is expected to slow from 2.6 per cent in 2022 to 1.5 per cent in 2023 and 1.4 per cent in 2024 as policy tightening takes effect. Emerging market and developing economies are projected to report a modest growth decline from 4.1 per cent in 2022 to 4.0 per cent in 2023 and 2024. Global inflation is expected to decline steadily from 8.7 per cent in 2022 to 6.9 per cent in 2023 and 5.8 per cent in 2024, due to a tighter monetary policy aided by relatively lower international commodity prices. Core inflation decline is expected to be more gradual; inflation is not expected to return to target until 2025 in most cases. The US Federal Reserve approved a much- anticipated interest rate hike that took the benchmark borrowing costs to their highest in more than 22 years.

Global trade in goods was expected to have declined nearly US$2 Trillion in 2023; trade in services was expected to have expanded US$500 Billion. The cost of Brent crude oil averaged $83 per barrel in 2023, down from $101per barrel in 2022, with crude oil from Russia finding destinations outside the European Union and global crude oil demand falling short of expectations.

Global equity markets ended 2023 on a high note, with major global equity benchmarks delivering double-digit returns. This out performance was led by a decline in global inflation, slide in the dollar index, declining crude and higher expectations of rate cuts by the US Fed and other Central banks.

Regional growth (%)	2024	2023
World output	3.1	3.5
Advanced economies	1.69	2.5
Emerging and developing economies	4.1	3.8

(Source: UNCTAD, IMF)

Performance of major economies, 2023

United States	China	United Kingdom	Japan	Germany
Reported GDP growth of 2.5 per cent in 2023 compared to 1.9 per cent in 2022	GDP growth was 5.2 per cent in 2023 compared to 3 per cent in 2022	GDP grew by 0.4 per cent in 2023 compared to 4.3 per cent in 2022	GDP grew 1.9 per cent in 2023 unchanged from a preliminary 1.9 per cent in 2022	GDP contracted by 0.3 per cent in 2023 compared to 1.8 per cent in 2022

(Source: PWC report, EY report, IMF data, OECD data, Livemint)

Outlook

Asia is expected to continue to account for the bulk of global growth in FY 2024-25. Inflation is expected to ease gradually as cost pressures moder-ate; headline inflation in G20 countries is expected to decline. The global economy has demonstrated resilience amid high inflation and monetary tightening, growth around previous levels for the next two years.

(Source: World Bank).

Indian economy

Overview

The Indian economy was estimated to grow 7.8 per cent in the FY 2023-24 against 7.2 per cent in FY 2022-23 mainly on account of the improved performance in the mining and quarrying, manufacturing and certain segments of the services sector. India retained its position as the fifth largest economy. The Indian rupee displayed relative resilience compared to the previous year; the rupee opened at H82.66 against the US dollar on the first trading day of 2023 and on 27 December was H83.35 versus the greenback, a depreciation of 0.8 per cent.

In the 11 months of FY 2023-24, the CPI inflation averaged 5.4 per cent with rural inflation exceeding urban inflation. Lower production and erratic weather led to a spike in food inflation. In contrast, core inflation averaged at 4.5 per cent, a sharp decline from 6.2 per cent in FY 2022-23. The softening of global commodity price led to a moderation in core inflation.

The nations foreign exchange reserves achieved a historic milestone, reaching $645.6 Billion in March 2024. The credit quality of Indian companies remained strong between October 2023 and March 2024 following deleveraged Balance Sheets, sustained domestic demand and s government-led capital expenditure.

Rating upgrades continued to surpass rating downgrades in H2 FY 2023-24. UPI transactions in India posted a record 56 per cent rise in volume and 43 per cent rise in value in FY 2023-24.

Growth of the Indian economy

	FY21	FY22	FY23	FY24E
Real GDP growth (%)	-6.6%	8.7	7.2	8.2

E: Estimated

Growth of the Indian economy quarter by quarter, FY 2023-24

	Q1FY24	Q2FY24	Q3FY24	Q4FY24
Real GDP growth (%)	8.2	8.1	8.4	7.8

(Source: Budget FY 2023-24; Economy Projections, RBI projections, Deccan Herald)

The FY 2024-25 growth in the economy was the highest since FY 2016-17, excluding the 9.7 per cent post-Covid rebound in gross domestic product (GDP) in FY 2021-22 from the 5.8 per cent contraction in FY 2020-21.

Indias monsoon for 2023 hit a five-year low. August was the driest month in a century. From June to September, the country received only 94 per cent of its long-term average rainfall. Despite this reality, wheat production was expected to touch a record 114 Million Tonnes in the FY 2023-24 crop year on account of higher coverage. Rice production was expected to decline to reach 106 Million Metric Tonnes (MMT) compared with 132 Million Metric Tonnes in the previous year. Total kharif pulses production for FY 2023-24 was estimated at 71.18 Lakh Metric Tonnes, lower than the previous year due to climatic conditions.

As per the first advance estimates of national income released by the National Statistical Office (NSO), the manufacturing sector output was estimated to grow 6.5 per cent in FY 2023-24 compared to 1.3 per cent in FY 2022-23. The Indian mining sector growth was estimated at 8.1 per cent in FY 2023-24 compared to 4.1 per cent in FY 2022-23. Financial services, real estate and professional services were estimated to record a growth of 8.9 per cent in FY 2023-24 com-pared to 7.1 per cent in FY 2022-23.

Real GDP or GDP at constant prices in FY 2023-24 was estimated at H171.79 Lakh Crore as against the provisional GDP estimate of FY 2022-23 of H160.06 Lakh Crore (released on May 31,2023). Growth in real GDP during FY 2023-24 was estimated at 7.3 per cent compared to 7.2 per cent in FY 2022-23. Nominal GDP or GDP at current prices in FY 202324 was estimated at H296.58 Lakh Crore against the provisional FY 2022-23 GDP estimate of H272.41 Lakh Crore. The gross non-performing asset ratio for scheduled commercial banks dropped to 3.2 per cent as of September 2023, following a decline from 3.9 per cent at the end of March 2023.

Indias exports of goods and services were expected touch US$ 900 Billion in FY 202324 compared to US$ 770 Billion in the previous year despite global headwinds. Merchandise exports were expected to expand between US$ 495 Billion and US$ 500 Billion, while services exports were expected to touch US$ 400 Billion during the year. Indias net direct tax collection increased 19 per cent to H14.71 Lakh Crore by January 2024. The gross collection was 24.58 per cent higher than the gross collection for the corresponding period of the previous year. Gross GST collection of H20.2 Lakh Crore represented an 11.7 per cent in-crease; average monthly collection was H1,68,000 Crore, surpassing the previous years average of H1,50,000 Crore.

The agriculture sector was expected to see a growth of 1.8 per cent in FY 202324, lower than the 4 per cent expansion recorded in FY 2022-23. Trade, hotel, transport, communication and services related to broadcasting segment are estimated to grow at 6.3 per cent in FY 2023-24, a contraction from 14 per cent in FY 2022-23. The Indian automobile segment was expected to close FY 202324 with a growth of 6-9 per cent, despite global supply chain disruptions and rising ownership costs.

The construction sector was expected to grow 10.7 per cent year-on-year from 10 per cent in FY 2023-23. Public administration, defence and other services were estimated to grow by 7.7 per cent in FY 2023-24 compared to 7.2 per cent in FY 2022-23. The growth in gross value added (GVA) at basic prices was pegged at 6.9 per cent, down from 7 per cent in FY 2022-23.

India reached a pivotal phase in its S-curve, characterized by acceleration in urbanization, industrialization, household incomes and energy consumption. India emerged as the fifth largest economy with a GDP of US$ 3.6 Trillion and nominal per capita income of H123,945 in FY 2023-24.

Indias Nifty 50 index grew 30 per cent in FY 2023-24 and Indias stock market emerged as the worlds fourth largest with a market capitalization of US$4 Trillion. Foreign investment in Indian government bonds jumped in the last three months of 2023. India was ranked 63 among 190 economies in the ease of doing business, according to the latest World Bank annual ratings. Indias unemployment declined to a low of 3.2 per cent in 2023 from 6.1 per cent in 2018.

Outlook

India withstood global headwinds in 2023 and is likely to remain the worlds fastest- growing major economy on the back of growing demand, moderate inflation, stable interest rates and robust foreign exchange reserves. The Indian economy is anticipated to surpass US$ 4 Trillion in FY 2024-25.

Union Budget, FY 2024-25

The Interim Union Budget FY 2024-25 retained its focus on capital expenditure spending, comprising investments in infrastructure, solar energy, tourism, medical ecosystem and technology. In FY 2024-25, the top 13 ministries in terms of allocations accounted for 54 per cent of the estimated total expenditure. Of these, the Ministry of Defence reported the highest allocation at H6,21,541 Crore, accounting for 13 per cent of the total budgeted expenditure of the central government. Other ministries with high allocation included Road transport and highways (5.8 per cent), Railways (5.4 per cent) and Con-sumer Affairs, food and public distribution (4.5 per cent).

(Source: Times News Network, Economic Times, Business Standard, Times of India)

Global pharmaceutical industry overview

The global pharmaceuticals market is projected to generate revenue of US$1,156 Billion in 2024. Looking ahead, the revenue in this sector is anticipated to exhibit an annual growth rate (CAGR 2024-2028) of 6.19 per cent, resulting in a market volume of US$1,470.00 Billion by 2028. The United States revenue stood at US$636.90 Billion in 2024. The pharmaceuticals market in China is expected to achieve a revenue of US$ 119.00 Billion in 2024. The industry is further anticipated to grow at an annual growth rate of 7.22 per cent CAGR 2024-2028, resulting in a market volume of US$ 157.30 Billion by 2028. This increase in growth outlook is driven by more patients getting treated with better medicines, especially in immunology, endocrinology, and oncology. Global use of medicines grew by 14 per cent over the past five years and a further 12 per cent increase is expected through 2028, bringing annual use to 3.8 Trillion defined daily doses. Global spending on medicine using list prices grew by 35 per cent over the past five years and is forecast to increase by 38 per cent through 2028. The global pharmaceutical industries had a neutral outlook of good growth in 2024, supported by supportive underlying secular trends and a moderating inflationary environment.

(Source: Research and Markets, Statista, IQVIA, Fitch Ratings)

Growth drivers

Growth of the ageing population

The number of people aged 60 and older is expected to grow from 1 Billion in 2020 to 1.4 Billion in 2030 when 1 in 6 people worldwide will be considered elderly.

AI-based tools will accelerate drug discovery

The global market for AI in drug discovery is forecasted to grow from US$ 1.5 Billion in 2023 to US$ 13 Billion by 2032. AI-based solutions in clinical research are projected to exceed 7 Billion U.S. Dollars globally by the end of the decade.

(Source: Forbes, Statista)

Indian pharmaceutical industry overview

The Indian pharmaceutical market was valued at US$ 54.6 Billion in 2023 and is projected to reach US$ 163.1 Billion by 2032, with a CAGR of 12.3 per cent during 2024-2032. Factors such as the growing burden of diseases, government initiatives for healthcare infrastructure, and increasing health consciousness drive this growth. The Indian pharma industry, acknowledged as the pharmacy of the world, consistently provides medicines globally. Indian pharmaceutical sector supplies over 50 per cent of global demand for various vaccines, 40 per cent of generic demand in the US and 25 per cent of all medicine in the UK. The domestic pharmaceutical industry includes a network of 3,000 drug companies and 10,500 manufacturing units. India enjoys an important position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers with the potential to steer the industry ahead to greater heights.

100 per cent Foreign Direct Investment (FDI) in the pharmaceutical sector is allowed under the automatic route for greenfield pharmaceuticals. 100 per cent FDI in the pharmaceutical sector is allowed in brownfield pharmaceuticals; wherein 74 per cent is allowed under the automatic route and thereafter through the government approval route. The Indian pharmaceutical industry is a prominent player in the global pharmaceutical market, with a market share of 3rd worldwide in production volume and 14th by value. India is a major exporter of pharmaceuticals, with over 200 countries served by Indian pharma exports. Indias pharmaceutical exports are projected to reach US$28 Billion in FY 2023-24, a remarkable growth of 10.2 per cent. This surge is largely attributed to the critical drug shortages in the United States and Europe. (Source: IBEF, investindia.gov.in, policycircle.org)

Growth drivers

Riding the wave of biosimilars

By 2030 the global biosimilar market is expected to be worth US$ 60 Billion, and capturing even 10 per cent of this market could grow the Indian pharma industry by 13 per cent. As biosimilars have more complex regulatory pathways than small molecule generics, the industry will have to address quality and compliance issues by deploying India-specific interventions coupled with global best practices to better realize this opportunity.

Innovative drugs and next-gen therapies

Indian pharma companies are transitioning to build pipelines of innovative drugs, with three to five new molecular entities launched or in late clinical trial phases each year until 2030. This is expected to boost the industry to reach US$130 Billion. With personalized medicines taking centre stage in treating chronic and rare diseases, the global cell and gene therapies market is expected to grow by over 36 per cent (CAGR) from 2019 to 2025. This presents a growth opportunity for the Indian pharma industry.

Worlds reliable drug supplier

Indian pharma imports 60 to 90 per cent of APIs depending on the type of API. This heavy dependence on external sourcing, in addition to the disruption in the supply chains caused by the COVID-19 pandemic, has led to calls for self-sufficiency to enable India to become the worlds most reliable drug supplier. A recent announcement by the government of a US$1.3 Billion investment to develop three mega bulk drug parks, together with production incentive schemes to manufacture 53 critical bulk drugs, should help the industry become more self-reliant over the next five to eight years.

Growth in generic drugs export

India, the worlds largest provider of generic drugs exported pharmaceuticals worth over US$ 25 Billion in the financial year 2023. In terms of volume, Indian drugs constituted 20 per cent of the global generic drug exports, with North America having the largest share.

Strong research and development capabilities

The pharma industry has sought fiscal incentives to promote research and development, as it is likely to reach US$ 400-450 Billion market size by 2047.

(Source: Deloitte, Times of India)

Government initiatives

Liberalized foreign direct investment (FDI) limit: The government has allowed up to 100 per cent FDI through the automatic route for greenfield investments and up to 74 per cent for brownfield investments.

National Pharmaceutical Policy: The policy is being drafted to serve as a comprehensive framework to address the challenges faced by Indian pharmaceutical industries and provide a definitive policy encompasses five key pillars: Fostering global pharmaceutical leadership, promoting self-reliance, advancing health equity and accessibility, enhancing regulatory efficiency in the Indian pharmaceutical sector and attracting investments.

Scheme for strengthening of the pharmaceutical industry: The scheme, launched with a total financial outlay of H500 Crore until FY 2025-26, to strengthen the existing pharmaceutical clusters capacity by creating common facilities, to facilitate the growth and development of pharmaceutical and medical devise sector and to facilitate MSMEs of a proven track record to meet regulatory standards.

Scheme for promoting research and innovation in the pharma MedTech sector: The scheme launched in 2023 with a financial outlay of H5000 Crore FY 2027-28, aims to transform the Indian pharma MedTech sector from cost-based to innovation-based growth by promoting industry-academia linkage for R&D in priority areas.

PLI Scheme: The outlay allocation for PLI (Production Linked Incentive) schemes in the pharmaceutical sector witnessed a significant increase from H1,696 Crore in the FY 2023-24 period to H2,143 Crore in the FY 2024-25 budget recast. This indicates a substantial boost in government support aimed at incentivizing and promoting domestic pharmaceutical manufacturing. Such allocations are pivotal in fostering growth, innovation, and self-reliance in the pharmaceutical industry, ultimately contributing to the healthcare ecosystems development and resilience.

Scheme for promoting bulk drug parks: The scheme boosts domestic manufacturing of identified KSMs, drug intermediates and APIs by attracting large investments in the sector. Financial assistance up to H1000 Crore will be provided for the creation of common infrastructure facilities in three bulk drug parks selected in Gujarat, Himachal Pradesh and Andhra Pradesh.

(Source: Invest India, Business Line, PIB, India briefing)

Active pharmaceutical ingredients (APIs)

Global active pharmaceutical ingredients industry overview

The active pharmaceutical ingredients market size is estimated at US$ 206.13 Billion in 2024, and is expected to reach US$ 304.46 Billion by 2029, growing at a CAGR of 6.72 per cent during the forecast period 2024-2029. Factors such as the increasing prevalence of infectious, genetic, cardiovascular, and other chronic disorders, increasing adoption of biologics and biosimilars, as well as rising prevalence of cancer and increasing sophistication in oncology drug research, are expected to boost the market growth over the forecast period.

(Source: Mordor Intelligence)

Indian active pharmaceutical ingredients industry overview

The India active pharmaceutical ingredients market size is estimated at US$ 13.64 Billion for 2024 and is expected to reach US$ 20.32 Billion by 2029, growing at a CAGR of 8.31 per cent during the forecast period (2024-2029). Such growth is likely fueled by various factors including increasing demand for generic drugs, a robust pharmaceutical manufacturing sector, and the rising prevalence of chronic diseases requiring medication. India is the 3rd largest producer by volume and 14th largest by value worldwide. The Indian active pharmaceutical industry has been on an upward trajectory over the past few decades, contributing 1.72 per cent of the GDP of the nation.

(Source: Mordor Intelligence, Invest India)

Nutraceuticals

Global nutraceuticals market overview

The global nutraceuticals market size stood at US$ 317.22 Billion in 2023 and further the global nutraceuticals market size is projected to reach US$ 599.71 Billion by 2030, powered by ongoing health awareness, global economic shifts, and changing dietary trends. The surge in digital health and e-commerce, alongside the demand for personalized nutrition, will be significant drivers. Key trends driving this growth include functional beverages, sports nutrition, mental wellness products, immune system support, and a growing focus on gut health.

(Source: Grandviewresearch.com, Research and market)

Growth drivers

Rising metabolic disorders

The prevalence of metabolic disorders is on the rise and this is fueling the growth of the nutraceuticals market. More than 30 per cent of the US population has a metabolic syndrome. This is expected to lead to increased demand for nutraceuticals which, in turn, will fuel market growth.

(Source: US National Cholesterol Education Program and International Diabetes Federation)

Sport and health supplements

The nutraceutical industrys growth is supported by the simultaneous expansion of sports and health supplements. Increasing awareness of health supplement benefits for various medical concerns is driving the demand for nutraceutical products.

Indian nutraceuticals market overview

Indias nutraceuticals market size is expected to expand at a CAGR of 29.1 per cent during the forecast period between 2023 and 2029. Having seen a rapid growth of over 20 per cent during the COVID period, the market for nutraceuticals is expected to double in 5 years in India as a growing number of people are seen adopting these products to boost immunity. Nutraceutical is a broad term that refers to any product derived from food that provides additional health benefits in addition to the basic nutritional value found in foods. nutraceuticals are non-specific biological remedies used to improve overall health, control symptoms, and prevent cancer.

(Source: The Hindu, Blue weave)

Growth drivers

Increasing demand for functional and healthy foods

Functional foods are gaining popularity among consumers due to their perceived wellness, performance, and health benefits. The demand for functional end products like dairy, bakery, confectionery, snacks, cereals and baby food is increasing as a result of how simple it is to incorporate nutraceutical ingredients into them. Protein, fibre, vitamins, and minerals are common fortifications. High-protein foods are currently the real winners, as they gained popularity among fitness enthusiasts. Compared to the baby boomer generation, people today are even more concerned about their health.

Growth of the health-conscious population in India

The market for nutraceuticals is growing as a large chunk of the population is consuming these as dietary supplements. The market for nutritional supplements is anticipated to expand by a com-pounded rate of 50 per cent from US$4 Billion in 2017 to 18 Billion in 2025, according to the national food regulator.

(Source: Blue weave, Hindustan Times)

Biotechnology - enzymes

Global biotechnology market overview

The global enzymes market size was estimated at US$ 60.48 Billion in 2023 and is expected to grow at a compound annual growth rate (CAGR) of 4.9 per cent from 2024 to 2030. The rising demand for food & beverage products is attributable to the increasing consumer awareness related to ones health and is expected to positively impact product demand over the forecast period. The U.S. biotechnology market size was valued at US$ 246.18 Billion in 2023 and is anticipated to reach around US$763.82 Billion by 2033, poised to grow at a CAGR of 11.90 per cent from 2024 to 2033. The Asia-Pacific is estimated to hit a growth rate of over 12.7 per cent during 2023-2033. The improvement of healthcare infrastructure, clinical trial services, and supportive government regulations are all contributing to the Asia-Pacific biotechnology market growth. Moreover, the international market players are partnering actively with local companies in order to accelerate the biotechnology markets growth.

(Source: Grand View Research, Predence Research)

Indian biotechnology market overview

India is the third-largest biotechnology market in the Asia-Pacific region and one of the top 12 globally. The nation controls 3 per cent of the Asia pacific biotechnology market. India is also the worlds second-largest producer of BT cotton and the third-largest producer of the recombinant Hepatitis B vaccine. The biotechnology sector is divided into five segments - biopharmaceuticals, bioservices, bio-agriculture, bio-industrial and bio-IT. Indias bio-economy industry has grown from US$ 10 Billion in 2015 to US$ 80 Billion in the last 8 years in 2023. Indias bio-economy is poised to reach US$ 300 Billion by 2030. The Indian biotechnology industry is expected to reach US$ 150 Billion by 2025. By 2025, the vaccination market in India is projected to be worth US$ 3.04 Billion.

(Source: IBEF, Invest India, Business Standard, PIB)

Environmental solution overview

Environmental solution services have become a dynamic and rapidly growing segment of the environmental industry. The demand for these services has surged in recent years, driven by increasingly stringent standards and regulations to address global challenges such as climate change, resource depletion and waste generation. These services improve public health by reducing exposure to harmful pollutants, ensure the sustainable use of natural resources, protect ecosystems and biodiversity, and enhance resilience against climate impacts. By promoting green infrastructure and sustainable practices, environmental solution services contribute to a healthier, more sustainable future for all.

The demand for environmental solutions industries is growing as societies worldwide seek cleaner air, water and land. With increasing concerns about climate change and pollution, these industries are crucial for managing waste, conserving resources, and developing sustainable energy sources. They are essential for improving public health and ensuring a better quality of life for future generations by addressing environmental challenges effectively. The development of new technologies has also significantly boosted international trade in environmental services. Innovations such as providing environmental solution services online and the remote monitoring of renewable energy systems have facilitated the crossborder supply of these services, enhancing their accessibility and efficiency.

(Source: World Trade Organisation)

Indian real-estate sector overview

In 2023, the real estate industry In India market size reached US$ 0.25 Trillion. The real estate sector in India is expected to reach US$ 1 Trillion in market size by 2030, up from US$ 200 Billion in 2021 and contribute 13 per cent to the countrys GDP by 2025. Retail, hospitality, and commercial real estate are also growing significantly, providing the much-needed infrastructure for Indias growing needs. Further the Indias real estate sector is expected to expand to US$ 5.8 Trillion by 2047, contributing 15.5 per cent to the GDP from an existing share of 7.3 per cent. The sale of luxury homes in India increased by 130 per cent in 2023 compared to the previous year. In the Union Budget FY 2023-24, a commitment of Rs. 79,000 Crore US$ for PM Awas Yojana has been announced, which represents a 66 per cent increase compared to last year. Factors like government policies, technological advancements, sustainable practices, rising demand for housing, and regulatory measures like RERA are pivotal in shaping the current real estate sector

(Source: Mordor Intelligence, IBEF, Economic Times)

Company overview

Fermenta Biotech Limited, an established enterprise with a rich seven-decade history, operates across diverse sectors, including pharmaceuticals, animal feed, nutrition, integrated biotech, environmental solutions and real estate.

A key focal point of Fermentas expertise lies in the comprehensive manufacturing of Vitamin D3. The Company maintains a sustainable supply chain, providing a notable advantage in the contemporary global market.

Fermentas array of Vitamin D3 variants is finely balanced to meet the requirements of both human and animal nutrition, rendering them applicable across a broad spec-trum of uses. In addition to Vitamin

D3 products, Fermenta engages in the production of APIs for muscle relaxants and anti-flatulent applications. The Company also pioneers the development of innovative enzymes crucial for manufacturing active pharmaceutical ingredients, alongside offering environmental solutions for wastewater treatment and management.

The strategic possession of legacy properties in Thane and Worli, Mumbai, serves as a lucrative source of income for Fermenta. This supplementary revenue stream complements the core business activities, reinforcing the Companys financial position. Through a developmen agreement with Mextech Property Developers LLP, Fermenta is poised to construct residential-cum-commercial buildings on its free-hold Thane land and would acquire affordable luxury residential apartments from Mextech on an areasharing basis.

Furthermore, the Company has undertaken sale transactions for its IT/ ITES building, Thane One. As of the report date, Fermenta has successfully divested a significant portion of the IT/ITES building to third parties. The proceeds from these transactions were judiciously utilized to retire outstanding loans associated with the IT/ITES building.

Areas that we aim to grow in Rice fortification

Rice fortification is a process of adding more micronutrients to increase the nutritional value of rice. It helps in making the food healthier and the taste is similar compared to normal rice. Fortified rice has been developed to meet the malnutrition problem in India.

Milk fortification

India is the largest producer of milk in the world with a production of 230.58 Million Tonnes. Fortified milk is enriched with vitamins A and D with other nutrients to cater for the dietary requirements of India.

Edible oil fortification

The nutrition-enriched edible oil is getting popular due to the wide use of cooking oil is a cost-efficient way of adding nutrients to edible items and thus all kinds of edible oils can be easily fortified to meet the desired nutrition requirement.

Our strengths

Established track record and strong R&D

The Company meets its growing demand by consistently demonstrating its expertise. The Company has its own well-established research and development (R&D) team to enhance its process and product technologies.

Established clientele in the domestic and export markets

Fermenta is a preferred vendor for various pharmaceutical multinationals worldwide and the Company has a reputed client base in the pharmaceutical industry. The Company has expanded its export market presence since 2010 with well-established Vitamin D3 variants exported to 60 countries, including the USA, UK, New Zealand, Australia and the European Union.

Market leader

Fermenta is one of the three global players to receive a certificate of suitability from the European Directorate for the quality of medicines and it has a leadership position in the Vitamin D3 segment. To meet the increasing demand for Vitamin D3, the Company has focused on expanding its production capacity.

Risk management

Geographical risk	The revenue generation potential can be restricted during localized slowdown to a few geographies which could hamper the growth of the Company.	Mitigation: With a network of around 60 countries the effects of localized slow-down can be taken care of in any one location, and the Company is also expanding its presence in other geographical areas.
Regulatory risk	Regulatory environment changes might cause operational disruption.	Mitigation: By maintaining proper and constant communication with regulatory agencies to comprehend the effects of any changes to take corrective measures and to minimize operational disruptions. The Company checks the consistency of the relevant rules for all its operations.
Finance risk	The inability to acquire long-term funds could hamper its expansion and reinvestment plans of the Company.	Mitigation: The Company maintains a healthy balance sheet to support its expansion and reinvestment plans and its net debt-equity ratio stood at 0.42 as of March 31,2024; average cost of funds stood at 0.79 per cent. The Company continuously explores funding options and maintains a healthy balance sheet to support its expansion and rein-vestment plans. Various financial ratios of the Company are stated in the financial statements forming part of this Annual Report.
Environment risk	The business might affect the environmental ecosystem which can cause possible disruption to the Companys operation.	Mitigation: The Company is involved in activities that safeguard the relevant laws for the environment. The objectives include arranging training courses on environmental topics, developing technology and providing information on operations with significant environmental impacts. The Company is dedicated to lowering its carbon footprint.
Competition risk	The entry of new players can hamper the Companys business.	Mitigation: The Company mainly trades in markets with entry barriers. The Company also focuses on R&D and innovation to develop products and services that offer value to customers. The Company maintains its long-term relationships with customers by offering quality products and services.

Internal control systems and their adequacy

Fermenta has some of the best internal control procedures in place that are commensurate with size and operations. The Board of Directors is responsible for the internal control system and sets the guidelines to ensure its efficiency adequacy, effectiveness, verifiability and application. The Company aim to provide correct reliable management and accounting information. The Company is involved in managing the risks including those related to operations, compliance and finance. A robust internal control system is built to achieve the objectives and ensure accountability. It helps to prevent fraud and errors and enhance the reliability of financial reporting.

Human resources

Fermentas human resource practices have reinforced its leadership in the market. Fermenta is involved in giving on-the-job learning to enhance the skills and knowledge of its employees. Fermenta prioritizes engagement with the employees by providing a challenging workplace for the professional growth of its employees. Identifying and developing employees with the required potential strengthens the prospects for the long-term success of the Company. This approach not only benefits the Company but also provides opportunities for professional growth and advancement for employees. The employee strength of Fermenta stood at 558 as of March 31, 2024.

Cautionary statement

This statements made in this section describes the Companys objectives, projections, expectations and estimations which may be forward-looking statements within the meaning of applicable securities laws and regulations.