Godavari Drugs Ltd Management Discussions

For the Financial Year Ended 31st March 2025 [Godavari Drugs Limited]

I. Industry Structure and Developments

The global pharmaceutical industry in 2025 has been marked by innovation, regulatory transitions, and changing economic dynamics. The sector has shown resilience post-pandemic and is transitioning into a phase dominated by digital transformation, data-driven R&D, and personalized medicine.

In India, the pharmaceutical industry has seen a promising future, driven by the governments PLI schemes and the push for self-reliance under the Atmanirbhar Bharat initiative. Global dependency on Indian APIs remains high due to cost efficiency and compliance with stringent quality standards and various Geo political situation.

Key industry trends in 2024–25:

• Strong Demand for Generics and APIs: India continues to be a global hub for generic manufacturing.

• Adoption of Flow Chemistry: Improves process safety and scalability and reduces cost of manufacturing.

• Investment in CDMO Models: Pharma companies are increasingly partnering with contract manufacturers to scale operations.

• Digital and AI Tools: Used in drug discovery, pharmacovigilance, and quality assurance.

• Increased Regulatory Surveillance: Regulatory bodies have intensified inspections and compliance requirements.

The market remains dominated by small molecule drugs, contributing over 50% of global pharma sales, due to ease of manufacturing and cost-Effectiveness. However, biologics, biosimilars, and complex generics are gaining ground, especially in regulated markets like the US, EU, and Japan.

II. Opportunities and Business Strategy

Key Therapeutic Segments and Pipeline Development

Godavari Drugs Limited is leveraging its technical strengths to focus on high-growth therapeutic categories:

1. Anti-HIV Segment: Process innovation for cost-Effective intermediates going into APIs that can meet global HIV treatment demand.

2. Nootropic Products: Research on molecules enhancing cognitive performance – an emerging global trend.

3. Xanthines: Exploring molecules for anti-infiammatory and bronchodilator applications.

4. Anticonvulsants: Expansion of product portfolio beyond Carbamazepine to cater to neurological disorders.

R&D and Technology Initiatives

• A state-of-the-art kilo lab and pilot plant has been commissioned, supporting development and scale-up.

• Adoption of flow chemistry and continuous manufacturing techniques to improve yields, reduce batch variability and enhance safety.

• Investment in intermediate manufacturing infrastructure, with a focus on efficiency, compliance, and cost leadership.

Manufacturing and Market Expansion

• Ongoing expansion is to increase manufacturing capacity and handle future product launches.

• The new facility will incorporate:

4 Automation

4 Advanced instrumentation for safety and precision

4 Regulatory-compliant plant design

4 The company is continuously working and is taking Significant steps towards tapping into Various Export Markets.

III. Risks

Despite strategic progress, every company operates in an environment of certain inherent risks.

• Geo political situation can impact raw material imports and exports.

• Fluctuations in foreign currency rates can have impacts.

• Global economic downturns can reduce optional healthcare spending.

Mitigation Measures

• Forex risk managed through hedging policies and natural hedge planning.

• Ensuring regulatory preparedness through internal QA audits.

• Supply chain risk minimized through multi-vendor sourcing and strategic inventory bu_ers.

IV. Financial Highlights (_ in Lakhs)

	Particulars	FY 2024–25
Revenue from Operations		11,335.01
Other Income		97.72
Total Income		11,432.73
Cost of Materials Consumed		8,523.96
Changes in inventories of finished goods, stock in trade and work-in-progress		(358.20)
Employee Benefit Expenses		502.81
Finance Cost		473.20
Depreciation and Amortisation		244.76
Other Expenses		1483.66
Profit Before Tax		562.54
Tax Expense		124.54
Profit After Tax (PAT)		438.00
Paid-up Share Capital		753.05
Reserves (excluding revaluation reserve)		3,581.56
Earnings Per Share (EPS) – Basic & Diluted		_5.82

V. Outlook for FY 2025–26

The company is cautiously optimistic about growth in FY 2025–26, driven by:

• Commercialization of new APIs and intermediates

• Better realization from export markets

• Benefits from backward integration and cost optimization

• Environmental compliance and sustainability projects.

VI. Risk and Outlook

We are actively addressing global risks through a proactive approach that combines strong risk management practices, continued investment in technology and compliance, and the development of agile supply chains.

VII. Internal Control Systems

Our company has established a comprehensive internal control framework designed to align with the specific nature of our operations. This framework ensures the regular identification and assessment of risks that may affect the achievement of our objectives. We remain committed to maintaining the highest ethical standards and integrity across all levels of the organization.

To support this, we have implemented well-Defined policies and procedures to ensure the Effective execution of directives. Relevant information is systematically identified, captured, and communicated in a timely manner. Our internal controls are subject to ongoing monitoring through consistent management oversight and supervisory reviews.

We are pleased to share that there are no cases of fraud have been identified involving management or employees in critical positions within our internal control over financial reporting. Our steadfast commitment to robust internal controls reflects our dedication to transparency, accountability, and sound corporate governance. We remain focused on continuously enhancing this framework to safeguard stakeholder interests and preserve the integrity of our financial reporting processes.

VII. Human Resources

Godavari Drugs Limited acknowledges that its people are its core strength. The companys HR framework is designed to:

• Attract and retain technically skilled and innovative professionals

• Provide continuous learning opportunities

• Promote a culture of innovation, accountability, and collaboration

Key HR initiatives in 2024–25:

• Competency mapping and training interventions

• Leadership grooming programs for mid-level management

• Employee engagement activities and performance-linked rewards

As of 31st March 2025, the company maintained a healthy employee retention rate, reffecting its efforts in building a motivated workforce.

Conclusion

FY 2024–25 was a year of strategic investment, process innovation, and infrastructure enhancement for Godavari Drugs Limited. Despite macroeconomic pressures, the company upheld its commitment to quality, compliance, and sustainability.

With a clear vision and robust foundations, the company is poised to leverage emerging opportunities and deliver sustainable value to all stakeholders in the years ahead.