Gujarat Themis Biosyn Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

Cautionary Statement:

The statements in the "Management Discussion and Analysis Report" describe the Companys objectives, projections, estimates and expectations which may be "forward-looking statements" within the meaning of the applicable laws and regulations. The actual results could differ materially from those expressed or implied, depending upon the economic and climatic conditions, government policies, taxation and other laws and other incidental factors.

Financial Overview:

The financial performance of the Company for the financial year ended 31^st March, 2025, is as under:

Total revenue from operations stood at Rs. 150.80 Crores for the year ended 31^st March, 2025, as against Rs. 169.82 Crores for the corresponding previous financial year, a decrease of 11.20%.

The total cost of raw materials incurred (including changes in inventory) for the financial year ended 31^st March, 2025 was Rs. 24.51 Crores as against Rs. 36.68 Crores for the corresponding previous period.

The EBIDTA (earnings before interest, depreciation and tax, excluding other income) was Rs. 68.84 Crore for the year ended 31^st March, 2025, as against Rs. 78.73 Crore for the corresponding previous period, a decline of 12.56%.

The PAT (profit after tax) was Rs. 48.77 Crores for the year ended 31^st March, 2025, as against Rs. 59.16 Crores for the corresponding previous period, a decline of 17.56%.

Business category wise performance:

GTBL operates in one segment i.e. pharmaceuticals intermediaries and APIs. The Company is presently manufacturing Rifamycin S, which is an intermediate for manufacturing the drug Rifampicin (an Antibiotic used for the treatment of several types of bacterial infections, including tuberculosis, Mycobacterium avium complex, leprosy and Legionnaires disease) and Rifamycin O, which is an intermediate for manufacturing the drug Rifaximin (this is an Antibiotic used for treatment of travelers diarrhea, irritable bowel syndrome and hepatic encephalopathy).

Risks & Concerns:

The business of the Company is exposed to some risks.

Unfavourable Policy Changes

Drug pricing and other policies and laws are subject to changes by the Government. Any potentially adverse changes in government policies with respect to essential medicines and pricing with respect to the products may impact the revenue and/or margins of the Company.

Competition Risk

The Company operates in a competitive space, with the presence of domestic as well as Chinese peers. GTBL has key differentiators in terms of R&D, execution, quality and delivery which make it resilient to competition. The Company continues to invest in R&D and its talent pool to maintain a competitive edge. Stable and long-standing client relationships further help maintain a strong order book and insulate the Company from this risk. GTBL also mitigate this risk with its robust infrastructure and specialized fermentation-based methodologies, coupled with prudent financial management and tight control over costs.

Input Cost Risk

Our profitability and cost effectiveness are potentially impacted by changes in the prices of raw materials, power and other input/ utility costs. This is offset by stringent efficiency measures and cost saving initiatives.

OPPORTUNITIES & THREATS

Opportunities

Growth in Pharma Sector

Growth in Pharma sector is driven by rising lifestyle diseases, an aging population, increased focus on holistic health and the growing consumerization of healthcare. India allows 100 percent FDI under automatic approval for greenfield investments and up to 74 percent for brownfield investments, with higher stakes requiring government approval, making it a prime destination for global investors seeking growth in the healthcare and life sciences domain.

Outsourced Manufacturing in Global Pharma Sector

There is an increasing trend of outsourcing manufacturing for various drugs and pharma products across the world. Pharmaceutical research firms are increasingly looking to focus on R&D and outsource the manufacturing to Companies that have requisite manufacturing expertise. Such trends present new opportunities for Companies that can leverage their production capacities. The contract Research and manufacturing service (CRAMS) segment is experiencing rapid growth which will augur well for the Company.

Government Support

- Production Linked Incentive (PLI) Scheme: aimed at boosting domestic manufacturing. This is part of a broader effort to reduce import dependence and enhance self-reliance.

- Customs Duty Exemptions: The Union Budget 2025 proposed adding 36 life-saving drugs and medicines, including treatments for cancer and rare diseases, to the list of items fully exempted from Basic Customs Duty. This measure aims to improve the affordability and accessibility of essential medications.

- Expansion of Medical Education and Cancer Care: The government announced plans to add 10,000 new seats in medical colleges across India, with a target of increasing by 75,000 seats over five years.

- Pharmaceutical Promotion & Development Scheme (PPDS): This scheme focuses on promoting the pharmaceutical sector by providing financial support for seminars, conferences, exhibitions and studies to facilitate growth and export promotion.

Source: https://kpma.com/in/en/services/tax/india-union-budaet-2024-25.html

https://www.expresspharma.in/mixed-reactions-from-pharma-to-union-budaet-2025/#:~:text=We%20applaud%20^th-e%20 exemption%20of.diseases%2C%20and%20other%20chronic%20conditions. https://www.impriindia.com/insiahts/union-budaet-2024-25-healthcare/#aoogle vignette

Threats

Threat from Global Competitors

Indian pharma companies face competition from bigger, global pharma companies, backed by larger financial strength, as well as from China-based players.

Threat from Generics

Generic drugs offer cost-effective alternatives to drugs innovators and significant savings to customers. Increasing adoption of such alternatives could impact market share of innovation-based drug developers.

Internal control system and adequacy

The Company ensures the orderly and efficient conduct of its business, including adherence to Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records and the timely preparation of reliable financial information, as required under the Companies Act, 2013.

The Statutory and Internal Auditors while conducting the audit, review and evaluate the internal controls and their observations are discussed with the Audit Committee of the Board. Other statutory requirements especially, in respect of pharmaceutical business are also vigorously followed in order to have better internal controls over the affairs of the Company.

Industry structure and developments

Cost Competitiveness and Manufacturing Excellence

Indias pharmaceutical sector benefits from cost advantages due to lower labor costs, economies of scale and efficient manufacturing processes. This enables Indian firms to offer competitively priced products globally. The industrys broad reach and diversity provide resilience and adaptability, allowing companies to navigate market volatility and meet diverse supply chain demands effectively.

Government Initiatives for Pharmaceuticals Industry

The Union Budget 2024-25 reflects a forward-looking and inclusive vision for the healthcare and pharmaceutical sectors, emphasizing affordability, innovation and self-reliance.

A strong emphasis has been placed on intellectual property rights (IPR) to encourage domestic pharmaceutical companies to invest in new drug development and bolster Indias position as a global pharmaceutical hub.

The budget outlines strategic initiatives to boost local manufacturing under the Make in India program, reducing dependence on imports and ensuring a robust supply chain for essential medicines.

To enhance accessibility and affordability, policy measures have been proposed to regulate the pricing of essential drugs and improve their availability across urban and rural areas.

The government plans to expand healthcare infrastructure and invest in medical technology to strengthen the industrys capabilities and provide better healthcare solutions.

Public-private partnerships are being encouraged to foster innovation, accelerate drug development and improve healthcare delivery across the country.

The budget also highlights regulatory reforms aimed at streamlining the approval process for new drugs and medical devices, ensuring faster market access and better patient outcomes.

Source: https://www.expresspharma.in/union-budget-2024-25-reflects-a-forward-looking-and-inclusive-approach/

Companys Strategy

GTBL is focusing on organic growth initiatives to capitalize on the rising market opportunities.

The Company is expanding its growth avenues through an ongoing capex plan which will help increase its product portfolio as well as position in the overall value chain. As part of this strategy, the Company has been investing in new product development through R&D, as well as forward integration into API and lastly, in expanding its fermentation capacity.

Consequently, the Company aims to expand its product portfolio with new fermentation-based molecules, as well as some APIs. The increase in top line and profitability of the Company have continued to sustain over the last year. The Company is fully aware of its capabilities and strengths and is going ahead with the expansion initiatives.

Segment-wise or product-wise performance:

The Company operates in single segment i.e., pharmaceuticals intermediaries and APIs. The results of the Company under review depict business growth during the period.

Operational Performance:

The operational performance during the year under review has grown year-on-year. The Company has maintained its levels of production at optimal utilization. Demand for both products has also remained healthy.

Outlook

The pharmaceutical industry in India is a significant part of the nations foreign trade and offers lucrative potential for investors. Millions of people around the world receive affordable and inexpensive generic medications from India, which also runs a sizable number of plants that adhere to Good Manufacturing Practices (GMP) standards set by the World Health Organization (WHO) and the United States Food and Drug Administration (USFDA).

Among nations that produce pharmaceuticals, India has long held the top spot. Medicine spending in India is projected to grow 9-12% over the next five years, leading India to become one of the top 10 countries in terms of medicine spending. Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards therapies such as such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers for chronic diseases, which are on the rise. The Indian Government has taken many steps to reduce costs and bring down healthcare expenses. The National Health Protection Scheme, which aims to offer universal healthcare, the ageing population, the rise in chronic diseases and other government programmes, including the opening of pharmacies that offer inexpensive generic medications, should all contribute to boost the Indian pharmaceutical industry.

Source: https://www.ibef.ora/industrv/pharmaceutical-india The Company is investing in:

• Expanding fermentation capacities; and

• Forward integration into API, through an API facility

• R&D for new product development;

This capex is well underway and the new facilities will comply with global standards.

With R&D and manufacturing capacities in place, the Company GTBL is in a good position to capitalize on the significant growth opportunities in this sector going forward in the domestic as well as global markets.

Material developments in Human Resources/Industrial Relations front, including number of people employed:

The core of the Human Resource philosophy at Gujarat Themis Biosyn Ltd. is empowering human resources towards achievement of Company target aspirations. Your Company has a diverse mix of youth and experience which nurtures the business. As on 31^st March 2025 the total employee strength was 224.

Sources: https://www.ibef.org/industry/pharmaceutical-india https://www.ibef.ora/download/1659942652 Pharmaceuticals-June 2022.pdf https://www.ibef.ora/industrv/pharmaceutical-india.aspx.