HVAX Technologies Ltd Management Discussions

Pharmaceutical Industry: Strong Growth Catalyst for Compliant Infrastructure

According to the India Brand Equity Foundation (IBEF, May 2025), Indias pharmaceutical industry has consolidated its position as one of the worlds leading producers, ranking 3rd globally by volume and 14th by value, with an extensive network of ~3,000 drug companies and 10,500 manufacturing units. The sector was valued at USD 55 billion in FY25 and continues to expand at a healthy pace, supported by rising domestic consumption, strong export performance, and increasing R&D intensity. Exports of drugs and pharmaceuticals stood at USD 30.38 billion in FY25, contributing nearly 20% of global generic exports, and reinforcing Indias role as the “Pharmacy of the World.”

Government policy support, as highlighted by IBEF, has further accelerated industry growth. Key initiatives include the Production-Linked Incentive (PLI) scheme with an outlay of USD 2.04 billion to boost domestic manufacturing, the Strengthening of Pharmaceutical Industry (SPI) program to aid clusters and MSMEs, and investments in bulk drug and medical device parks. Collectively, these measures are fostering expansion in APIs, formulations, biologics, biosimilars, and CRAMS (contract research and manufacturing services).

With rising investment, expanding exports, and greater regulatory alignment (USFDA, WHO-GMP, EU compliance), the sector is witnessing sustained capacity additions across formulations, injectables, and biologics. This growth trajectory continues to generate strong demand for audit-ready, contamination-controlled, and compliant infrastructure solutions. As a specialist in turn key cleanroom and controlled environment projects, HVAX Technologies is strategically positioned to serve this expanding sector, enabling pharmaceutical companies to meet global standards while scaling capacity for future growth.

Business Overview

HVAX Technologies Limited is a turnkey solutions provider specializing in the design, engineering, and execution of cleanrooms and controlled environments. Established in 2010 and headquartered in Mumbai, the Company has built strong expertise in providing end-to-end project delivery ? spanning conceptual design, engineering, procurement, installation, validation, and commissioning. With a skilled workforce and a focus on innovation, HVAX operates on an asset-light yet integrated model that ensures quality, cost efficiency, and timely project execution.

Operations & Execution Footprint

Over the years, HVAX has successfully delivered 250+ projects across 22+ countries, establishing a strong presence in India and international markets including Iraq, Algeria, Kenya, Ghana, Uganda, Sri Lanka, and Nepal. The Companys portfolio spans pharmaceuticals, biotechnology, healthcare, FMCG, semiconductors, and renewable energy, with repeat clients underscoring trust in HVAXs execution capabilities.

Service Portfolio

• Turnkey Cleanroom Projects -

Design, build, and commissioning of contamination-controlled environments for pharma, biotech, healthcare, and electronics industries.

• HVAC Solutions - Specialized heating, ventilation, and air conditioning systems tailored to cleanroom and regulatory requirements.

• Modular Infrastructure - Delivery of prefabricated partitions, ceilings, and cleanroom accessories.

• IoT & Smart Solutions - Integration of AI- and IoT-enabled monitoring systems for contamination control and energy efficiency.

• Validation & Compliance Services -

Ensuring readiness for USFDA, EU-GMP, and WHO audits.

Strategic Strengths

• Regulatory Alignment: Expertise in global compliance standards including USFDA, EU-GMP, and ISO 14644.

• Global Presence: Execution across diverse geographies with proven adaptability to varied regulatory environments.

• Asset-Light Model: Focus on cost efficiency, scalability, and financial prudence.

• Innovation Focus: Development of AI- driven contamination detection, IoT- based monitoring, and UV sterilization technologies.

• Diversified Client Base: Serving leading pharmaceutical companies, hospitals, biotech firms, FMCG players, and expanding into semiconductors and renewable energy.

Milestones in FY25

• Expanded international projects in Africa, MENA, and South Asia.

• Delivered large-scale multi-dosage formulation facilities and hospital infrastructure projects.

Financial Highlights - FY25

• Total Income: ?131.42 Cr, up 22.29% YoY (FY24: ?107.47 Cr).

• EBITDA: ?18.97 Cr, up 31.52% YoY, with margin improvement to 14.44%

• Net Profit (PAT): ?11.04 Cr, up 29.69% YoY, with PAT margin at 8.40%.

• Net Worth: Strengthened to ?72.02 Cr, supported by reserves of ?69.24 Cr.

• Cash & Bank Balance: ?14.27 Cr (vs. ?4.67 Cr in FY24), supported by IPO proceeds and operational efficiency.

• Debt Position: Long-term borrowings remain minimal, reflecting an asset-light and financially prudent model.

Key Ratios- FY25

Particulars	FY24	FY25
EBITDA Margin (In %)	13.42%	14.44%
Net profit Margin (In %)	7.92%	8.40%
ROE (In %)	27.49%	15.34%
ROCE (In %)	24.13%	17.43%
Interest Coverage (In Times)	8.47	7.06
Debt to Equity (In Times)	0.79	0.39
Current ratio (In Times)	1.82	2.44
Fixed Asset Turnover (In Times)	11.81	16.89

Risk Management & Mitigation

HVAX Technologies operates in highly regulated and project-driven industries where risk management is central to sustaining growth and ensuring stakeholder confidence. The Company has adopted a proactive framework to identify, monitor, and mitigate risks across operational, financial, regulatory, and strategic areas.

1. Regulatory & Compliance Risk

Risk: Projects are often subject to stringent international standards such as USFDA, EU-GMP, and ISO 14644. Any noncompliance could impact client trust and project delivery.

Mitigation: HVAX has built in-house expertise in global regulatory requirements and follows rigorous validation and quality assurance processes. Every project is executed to be audit-ready, ensuring adherence to domestic and international compliance norms.

2. Client Concentration & Sectoral Dependence

Risk: A significant share of demand is driven by pharmaceutical and life sciences industries, exposing the business to sectoral cycles.

Mitigation: HVAX is diversifying its portfolio into semiconductors, electronics, renewable energy, and healthcare infrastructure, reducing dependency on a single sector and broadening its revenue base.

3. Project Execution & Delivery Risk

Risk: Large-scale turnkey projects require strict control over timelines, cost, and coordination with multiple stakeholders.

Delays could affect client satisfaction and profitability.

Mitigation: The Company follows a

structured project management framework, leveraging a skilled workforce, repeat-client relationships, and an asset-light execution model. Average project turnaround time remains ~120 days, demonstrating execution reliability.

4. Competition Risk

Risk: The industry attracts established global players with strong financial and technical capabilities.

Mitigation: HVAX focuses on specialization, customization, and innovation ? including IoT-enabled smart cleanrooms, AI-driven contamination monitoring, and modular solutions ? to create differentiation. Cost efficiency through an asset-light model further strengthens competitiveness.

5. Financial & Liquidity Risk

Risk: As a project-based business, cash flow cycles can be impacted by client payment schedules and project timelines.

Mitigation: The Company maintains a prudent financial policy with minimal longterm debt, strong reserves, and enhanced liquidity from its NSE listing. Disciplined working capital management ensures stability across cycles.

6. Talent & Resource Risk

Risk: The business relies on specialized engineering and design talent, making retention and availability critical.

Mitigation: HVAX invests in continuous training, leadership development, and crossfunctional skill building. A collaborative work culture and global exposure opportunities help attract and retain talent.

Outlook

HVAX Technologies is entering the next phase of growth backed by a strong track record of execution and trusted client relationships. The demand for compliant, audit-ready infrastructure is expected to remain robust, driven by expansion in pharmaceuticals, biotechnology, and healthcare, alongside emerging opportunities in semiconductors, electronics, and renewable energy. Policy support in India and rising global investments in regulated industries further reinforce this positive outlook.

The Companys strategic priorities are centered on broadening its sectoral presence, deepening its global reach, and enhancing its technology edge. Efforts are underway to strengthen representation in high-potential markets such as MENA and Africa, while simultaneously developing AI- and IoT-enabled solutions that bring greater efficiency, safety, and flexibility to cleanroom infrastructure.

With disciplined execution, financial prudence, and innovation-led offerings, HVAX is confident of sustaining momentum and scaling its leadership position in the industry. The Company remains committed to creating long-term value for stakeholders while contributing meaningfully to the growth of Indias manufacturing and healthcare ecosystem.

Internal Control Systems & Their Adequacy

HVAX has instituted a well-defined internal control system to safeguard assets, ensure the reliability of financial reporting, and support efficient project execution. The framework is aligned with the Companys business model of delivering turnkey cleanroom and controlled environment solutions across highly regulated industries. Policies, standard operating procedures (SOPs), and defined accountability structures guide financial, technical, and operational workflows.

The internal audit function operates independently and reports directly to the Audit Committee of the Board. Regular reviews are conducted to evaluate compliance with statutory requirements, contractual obligations, and internal policies. Particular emphasis is placed on project governance, cost control, and audit readiness for regulated environments. Based on reviews by auditors, management, and the Audit Committee, the Board affirms that HVAXs internal control systems were adequate and effective as on March 31, 2025, with no material weaknesses identified.

Human Resource Development

At HVAX Technologies, people remain the cornerstone of success. The Company has fostered a workplace culture that values collaboration, accountability, and continuous learning. Employees are encouraged to embrace innovation and quality excellence in every project, reflecting the Companys vision of being a trusted partner in regulated industries.

Training and development remain a key focus, with initiatives covering project management, regulatory compliance, engineering design, and leadership development. Cross-functional exposure across diverse projects and geographies enables employees to broaden their skills and grow with the organization. As of 31^st March, 2025, HVAX maintained stable and collaborative industrial relations, underscoring its commitment to employee well-being and long-term talent development.

Cautionary Statement

This Management Discussion and Analysis (MD&A) contains forward-looking statements reflecting the current views and expectations of HVAX Technologies Limited with respect to its business performance, growth outlook, and strategies. These statements are based on managements assessment of prevailing economic and market conditions, internal plans, and other factors considered relevant at the time of reporting.

However, such forward-looking statements are subject to risks and uncertainties, including changes in economic conditions, regulatory requirements, competitive pressures, and global market developments, which could cause actual results to differ materially from those expressed or implied. While the Company believes these assumptions are reasonable, it does not assure their accuracy or completeness. HVAX Technologies undertakes no obligation to update these statements except as required by applicable law. This MD&A should be read in conjunction with the audited financial statements and related disclosures forming part of the Annual Report for the year ended 31^st March, 2025.