Godavari Drugs Ltd Management Discussions.

Global Industrial Structure Overview

Global industries have spent the majority of the time scrambling to adapt and evolve in the new normal. Although the fight against the pandemic COVID - 19 is far from over, with few vaccines in circulation and better iterations in the trials, there is a silver lining in the darkest cloud we have seen in recent times.

Entire 2021-22 was the year of transition for almost all the players across all the industries in the global landscape. The focus for all the industries globally is on two fronts. Viz., address the sustainability concerns of investors, and focuses on providing an exceptional customer/client experience whose behaviors have changed significantly during the pandemic while balancing the profitability as well.

Pharmaceutical Industrial Structure Overview

Globally, the R&D and production of COVID-19 vaccines dominated the global pharmaceutical industry in 2021-22. More than 200 vaccines are currently under development for COVID-19 globally with various institutes and industries, with nearly 47 and 10 in clinical development and Phase III clinical trials respectively.

Apart from the vaccine R&D and manufacturing, digitization, growth, and improvements in biosimilar adoptions, more investments in the innovative breathrough medications and therapies and continual demand to be under the global lens are the overall trends that the pharma industry and its contributors and participants are experiencing.

The scene in the Indian pharma industry is no different. We saw approx. 15% growth particularly driven by Covid-19 products R&D and manufacturing as compared to approx. 3% in pre-COVID years. As we swiftly pass 2021-22 and are currently going through a more optimistic 2022, India shined bright in the limelight. It became the largest provider of generic drugs globally.

Indian pharmaceutical sector caters to an excess of 50% of the demands generated globally of which approx. 40% and 25% of generic demands are from US and UK respectively. India ranks 3rd and 14th in terms production of various pharma by volume and value respectively. A network of ~3k drug companies and ~10.5k manufacturing units are contributing to this growth and achievement.

Opportunities and Risks:

Financial Highlights are as under

(Rupees: In Lakhs)

Sales for the Year 2021-22 16110.62
Profit after Tax 524.53
Paid up Capital as on 31.03.2022 753.05
Finance Cost 284.93
Deprecia tio n/Amortizatio n 169.64
Employee Benefit Expense 495.65

I Risks and Outlook

We have an integrated risk management approach through which we assess risks on a regular basis. Our robust system of risks controls and mitigation can be put in place immediately based on the assessment. This system is also periodically reviewed to ensure it is updated and ready to be deployed.

Internal Control Systems

We have designed the Internal Control Systems to ensure and enable reliability of financial reporting, timely feedback on various achievements both operational and strategic goals, compliance with policies, procedures, applicable laws, and regulations.

Under the watchful and guiding eyes, there have been no instances of fraudulent activities or behavior across the board viz, Partners, employees, vendors, and management. We accept the responsibility for establishing and maintaining internal controls for financial reporting.

We have set up mechanisms to audit our financial reporting process to identify the defects. And during such audits, if defects are observed, the auditors will disclose this to the committee which will take the necessary corrective and preventive actions.

Human Resources

We continue to focus on Human resource development We have a structured process to identify recruit, train and retain young talent. We also have programs specifically designed to nurture these young talents to take up senior and more responsible positions enabling them to take us through the evolving landscape and into the next phase. We firmly believe that our employees are the key to achieving all the outlined objectives and moving on the growth path.

Quality and Compliance

We have always believed in the quality of our products and patients safety. We enable this by implementing the best quality systems. As we envision ourselves ahead of the curve. We continue to sustain a high level of transparency with our partners, customers, regulators, statutory bodies, and employees. As a proactive organization, we have started the implementation of aggressive plans for expanding our quality function to include investments in laboratories, newer analytical capabilities, and technologies to make us future-ready.