Jenburkt Pharma Management Discussions

Management Discussion & Analysis Report:

A. Overview of Indian pharmaceutical industry structure, development and important changes:

Looking back at what Pharmaceutical sector in India has achieved in 2022, it has been transformed from a volume creator to a value provider in 2022. Covid came as a huge challenge for the pharmaceutical industry. Identifying the disease and then developing medicine for it was the biggest challenge for Indian and global pharma. The Indian pharmaceutical industry, however, took it as a challenge and developed vaccines that saved millions of lives. World leaders have already been impressed with Indian pharma industry and how it has the potential to reduce barriers to produce drug with affordability and accessibility.

The pharmaceutical industry was primarily focused on covid drugs in 2020, but by 2022, the focus had shifted to other severe diseases such as anaemia and cancer. In addition, the Indian pharmaceutical industry placed a high value on research and development. By expanding its R&D ecosystem and increasing pharmaceutical exports, India has emerged as a global medical giant in 2022. The COVID-19 pandemic has altered public perception of pharmaceutical research. It has demonstrated the significance of investigating novel therapeutic modalities, conducting complex clinical studies, and cultivating specialised knowledge and abilities to navigate the drug research and development process. A greater degree of collaboration between the government and industry was seen this year, with both playing an important role in helping the sector strengthen its position on the global market. A paradigm shift has taken place in the pharmaceutical industry as a result of COVID-19, and the industry and government have become increasingly united, resulting in an increasing sense of collaboration. In 2022-23, despite geopolitical concerns, India continued to supply medicines to over 200 countries, living up to its reputation as the worlds pharmacy. However, as the industry expands its global footprint, it will need to invest continuously in upgrading manufacturing standards in order to keep its promise of being a high-quality, dependable supplier of medicines to the world.

India has been placed at the forefront of the global stage by CRO and CMO, for its agility, competence, and quality in supplying efficacious vaccines in large quantities, using COVID-19 as a model. It is critical that Indian pharmaceuticals continue to move upstream, which provides small and large molecule discovery, development, and manufacturing in order to develop the next generation of medicines and materials while creating value for investors.

The pharmaceutical industry has grown tremendously in recent years, and the outlook for 2023 remains positive.

According to a recent EY FICCI report, the Indian pharmaceutical market is expected to reach $130 billion in value by the end of 2030, as there has been a growing consensus on providing new innovative therapies to patients. Meanwhile, the global market for pharmaceutical products is expected to exceed $1 trillion by 2023.

The advancement of advanced biologics, cell therapies, and gene therapies has the potential to change peoples lives. "India is working to develop a policy framework that includes intellectual property and technology commercialization, government procurement, scientific research, education, and skill development, as well as ease of doing business, regulatory legislation, and tax and financial incentives." These regulatory changes will allow for additional private-sector investment in pharmaceutical R&D.

(Source: Mint December, 2022)

B. Business performance, opportunities and outlook:

Post covid the operations of the entire company returned to normal. All the employees even while remotely have ensured that the continuity of the operations remain unhindered.

During covid while the major brands were not impacted significantly, the new brands launched a year or so prior to covid, which were in the initial stages of building stage were severely affected as medical practioners could not be met and the momentum built could not continue.

However this year, post covid, we launched a new product in the Indian market ~ Nervijen D3 tablets. The initial response has been encouraging and this will further increase the visibility and equity of our brand Nervijen, which is now a prominent brand in the industry.

Last year your company had launched a new OTC division ~ Jenburkt Wellness, with a view to blend the best of nature and science. The first brand launched was Zixa Strong. Zixa Strong a high performance, natural, pain relief product was developed at Jenburkts R & D.

The launch of Zixa Strong also marked the foray of your company to market and sell products digitally, apart from being the first OTC brand. Zixa Strong (Gel, Roll-on, and Spray) is now available on Amazon and 1mg, apart from companys web site

The launch was on a pilot basis, OTC being a new frontier for your company.

The launch was very successful in terms of creating a high level of interest and awareness of the brand .The advertisement film was much appreciated for its creativity garnering a lot of attention and accolades. Your company also participated in a couple of events, as the Pain Relief partner, like the Ladakh Marathon, the highest marathon in the world, Indian Football League, as Pain Relief partner to the Mumbai City FC and FC Goa. This was apart from several local events. The concept of pain relief partners in such associations was introduced byyour company ~ a unique marketing collaboration.

The response to the product itself has also been encouraging and we have been observing repeat purchase from consumers.

Based on the above, your company has now decided to take the next step and create a field force to make the wellness products available at physical retail stores apart from other online market places. Though in the short term it will impact the profitability of the Company, as additional expenses will have to be incurred for promotion of the product and employing talent at the head office and field in the wellness division, we are hopeful that this will pave the way for future growth for the company.

C. Risks, concerns and threats

Post covid, while in India, overall, we did not feel a significant downturn. However, in smaller countries, which are important markets for your company, are still struggling with foreign exchange crisis. Those countries which depend for their foreign exchange earnings, primarily on tourism and export of goods are yet to see a complete recovery of business. Their challenges were added by the inflationary pressure created by more expensive, foreign exchange intensive fuel and costly medicines. The extraordinary challenges faced by Sri Lanka, one of our foreign markets, is known to all. Our brands continue to be available in spite of this unprecedented crisis.

Some of our international distributors are finding it difficult to procure and remit foreign exchange in time as procurement of fuel has been prioritise in their country.

As your company is very conscious of its financial discipline, some shipments had to be delayed if the distributor had not paid for the past dues, beyond the financial exposure limits. This has impacted the sales and profits and it may continue to impact in future.

The impact of the war and global economy is a matter of concern for the international business.

Legal Matters:

A. NPPA had served a show cause notice to the Company alleging that a Companys product was violating a NPPAs standing order. However, after a Personal Hearing and detailed submission, NPPA passed a written order stating that the Companys product did not violate the standing order. Subsequently, NPPA reviewed its own order, without having any power to review, issued show cause notices and demand notice to the Company. The Company subsequently filed a writ petition against the demand of NPPA, at the Honble High Court of Bombay. The matter was settled in favour of the company. The NPPA after over a year filed a Special Leave Petition (SLP) (demanding Rs.16.45 crore) at the Honble Supreme Court. DPCO, 1995, explicitly debars NPPA to review its own order, the very reason cited by Honble High Court of Bombay, while quashing the show cause notices and demand notice in their judgment dated 08th August, 2013 and 26th September, 2013. The Company has been legally advised, that based on the facts and merits of the case, the demand raised by NPPA is not likely to crystallize.

The matter is pending at Supreme Court after being admitted for further hearing.

B. The Assistant Director, Employee State Insurance Corporation (ESIC), had on 18th May, 2018, issued order under Section 45A of E.S.I. Act 1948, ordering the Company to pay Rs.0.75 Lacs being contribution @6.50% on alleged omitted wages for the month of March 2013 and to pay Rs.19.67 Lacs being contribution @6.50% on Head Quarter allowance and other expenses during the year 2013-14 and 2014-15. The company has been regular in paying contribution to ESIC. However, the subject order is based on alleged wrong interpretation by the Assistant Director ESIC, that Head Quarter Allowance paid by the company to its Field Force cadre is a part of wages. As the Company is not in agreement with the interpretation of ESIC, has filed petition on 23rd October, 2018 at Employees Insurance Court, Mumbai, challenging the order of the Assistant Director, ESIC. The Company has also deposited on 5th October, 2018, an amount of Rs.10.21 Lacs- as 50% of the Demand as per requirement. The company has got an Interim Order from the ESIC Court, Mumbai, staying the Demand under Section 45A and restraining the ESI Corporation from proceeding to recover any amount on the basis of said orders pending hearing and disposal of main application.

C. The Drug Inspector, Tirupati, took a company product from a local chemist and sent for test at a Government laboratory in Vijayawada which declared the samples as not of standard quality. Further, the said samples were sent to Central Drug Laboratory at Kolkata. Both these laboratories did not test the product in accordance to the Companys method of analysis, as mandated for the Proprietary medicine where no previous reference is available for testing. They conducted testing by different/ random method of Analysis which was inappropriate and hence the product failed at such analysis. Whereas same product of same batch tested thereafter at Companys laboratory at Sihor and recognised Laboratory in Mumbai which passed the analysis, as they were based on the Companys method of analysis for proprietary medicine. The Drug Inspector then filed a case at I-Additional District Sessions Court, Chittoor. The Company swiftly approached the High Court, of Andhra Pradesh, Amravati and succeeded in obtaining stay on 5th May, 2022 on all further proceedings initiated by lower court i.e. at I-Additional District Sessions Court, Chittoor.

D. The company received a notice dated 04th October, 2022 from Narpoli Police Station that crime has been registered by them. They have confiscated expired stock of 500 strips of Cartisafe D Tablets from a third party godown which was expected to be destroyed after expiry. They have vide their letter dated 26th April, 2023 handed over the said stock to the company, with advise to get them destroyed and submit the certificate to them. The company has complied with the same.

1. Buyback and Change in Paid-up Share Capital:

The Board of the Company had, in compliance with the applicable provisions of the Companies Act, 2013, SEBI (Buyback of Securities) Regulations, 2018 and all other applicable laws, by a resolutions passed at its meeting held on 1st December, 2022 approved the buyback of the Companys fully paid-up equity shares of the face value of Rs.10/- (Rupees Ten only) each from its shareholders / beneficial owners (excluding promoters, promoter group and persons who are in control of the Company), via the open market route through the stock exchange (BSE Ltd.), for a total amount not exceeding Rs.11,60,00,000/- (Maximum Buyback Size), and at a price not exceeding Rs.702/- per Equity Share (Maximum Buyback Price), payable in cash. Company was also authorised to utilize at least 50% of the Maximum Buyback Size i.e. Rs.5,80,00,000/- (Minimum Buyback Size) towards the Buyback of equity shares in terms of the Buyback regulations. The above buyback sizes were exclusive of transaction cost associated to the buyback and the buyback tax.

The Buyback commenced on 13th December, 2022 and was closed on 24th March, 2023. During this period, the Company bought back 1,76,078 Equity Shares (representing 3.84% of pre Buyback outstanding equity shares of the Company) at total cost of Rs.11,42,39,205.25, excluding transaction cost.

The Buyback tax in accordance to Income Tax Act, 1961 was paid by the Company. The Shareholders who participated in the buyback, are not liable to pay any capital gain tax, according to said Act.

As required a Public Announcement was published in nationwide newspapers, prior to opening of buyback and an advertisement was published in similar newspapers, post closure of the buyback offer.

Post buyback the paid-up share capital of the Company has been reduced from 4589378 equity shares of Rs.10/- each to 4413300 equity shares of Rs.10/- each. The shareholding of the promoter has been increased from 45.73% to 47.56% and the shareholding of the Public was reduced from 54.27% to 52.44%.

The history of capital structure of the Company is as shown in the Table below:

2. Management:

A. Appointment of Director(s):

Shri Ashish U. Bhuta (DIN: 00226479) director of the Company is liable to retire by rotation basis at the ensuing AGM of the Company. Being eligible for reappointment, he has offered himself to be re-appointed. He was appointed as the Chairman and Managing Director of the Company, for a period of five consecutive years from 1st April, 2021 to 31st March, 2026 by a special resolution at the 35th AGM of the Company held on 1st September, 2020. In accordance to the said Special Resolution his remuneration was approved for three years from 1st April, 2021 to 31st March, 2024. A special resolution is proposed, for payment of his remuneration for the remaining period of two years from 1st April, 2024 to 31st March, 2026, in the ensuing 38th AGM of the Company.

A brief profile of Shri Ashish U. Bhuta being re-appointed as the Director, is appearing in the Report on Corporate Governance in this Annual Report.

Shri Dilip H. Bhuta (DIN 03157252) Director of the Company was appointed as the Whole Time Director and CFO of the Company at the 36th AGM of the Company held on 7th September, 2021 for a period of five years from 1st April, 2022 to 31st March, 2027. His remuneration was approved for a period from 1st April, 2022 to 31st March, 2025 under the said special resolution. His appointment was subject to retirement by rotation.

Shri Sumit Ajaybhai Thakkar (DIN: 10157663): A ordinary resolution is recommended in the ensuing 38th AGM, for the appointment of a new director viz. Shri Sumit Ajaybhai Thakkar, as a non-executive and independent director of the Company, for a period of five years, from the date of the AGM i.e. 26th July, 2023 to 25th July, 2028.

S. No. Events


No. of Authorised equity Shares (F.V. Rs.10/-) No. of issued, Subscribed and Paid-up equity Shares (F.V. Rs.10/-)

1 Pre Public issue


5000000 25700

2 Post Public Issue


5000000 4649300

3 Increased in Authorised share Capital


10000000 4649300

4 Post First Buyback (06th December, 2017 to 19th December, 2017) 59,922 shares bought back @ Rs.576/- by tender route.


10000000 4589378

5 Post Second Buyback (13th December, 2022 to 24th March, 2023) 1,76,078 equity shares bought back through Stock Exchange @ Rs.648.80 average price (excluding transaction charges and buyback taxes).


10000000 4413300

A brief profile of Shri Sumit A. Thakkar being appointed as an Independent Director, is appearing in the Report on Corporate Governance in this Annual Report.

B. Independent Directors:

At present, the Company has four independent Directors, viz. Shri Bharat V. Bhate (DIN: 00112361), Shri Rameshchandra J. Vora (DIN: 00112446), Shri Arun R. Raskapurwala (DIN: 00143983) and Mrs. Hina Ravindra Mehta (DIN: 08719453). The total strength of the Board is six directors.

The existing independent Directors on the Board of the Company have confirmed compliance with the Code for independent Directors as prescribed in Schedule IV to the Act and the code of business conduct of the Company, for the financial year 2022-23.

The Board has received necessary declaration from the individual Independent Directors confirming their independence from the management of the Company and that there has been no circumstances affecting their status as an Independent Director of the Company. There is no conflict of interest of any of the Independent Directors with the Company.

The Board propose to appoint one more independent director viz. Shri Sumit A. Thakkar and recommend his appointment in the ensuing AGM.

The composition of the Board of Directors is in accordance and in compliance with the provisions of SEBI-LODR.

The Company has insured all the Directors on the Board and officers of the Company under Directors and officers (D&O) insurance policy.

For further details with regard to independent Directors of the Company, kindly refer to report on Corporate Governance in this Annual Report.

C. Details of the Meetings of Board of Directors:

The Directors of the Company met for five times, for the meeting of the Board during the year under review, on 27th May, 1st August, 8th November, 1st December, 2022 and 7th February, 2023.

Kindly refer to report on Corporate Governance in this annual report for further details about Board, its composition and meetings.

D. Composition and details of meeting of the Committees of the Board:

No changes in the composition of any of the Committees of the Board of the Company has taken place during the financial year under review. Details of the meetings of each of the Committees is as under:

i. Audit Committee: This Committee met for five times during the year under review: on 27th May, 1st August, 8th November, 1st December, 2022 and 7th February, 2023.

ii. Stakeholders Relationship Committee: This Committee met for four times during the year under review: on 27th May, 1st August, 8" November, 2022 and 7th February, 2023.

iii. Corporate Social Responsibility Committee: This Committee met for three times during the year under review: on 27th May, 1st August, 2022 and 7th February, 2023.

iv. Nomination and Remuneration Committee: This Committee met for three times during the year under review: on 27th May, 1st August, 2022 and 7th February, 2023.

For further details about the above Committees and its meetings, kindly refer to report on Corporate Governance in this annual report.

The Committees take decisions at their respective meetings and recommended them to the Board for its considerations. All such recommendations forwarded by the Committees to the Board, which are considered by the Board, to arrive at appropriate decisions. None of such recommendations were rejected during the year under review by the Board, i.e. all the recommendations of all the Committees have been accepted by the Board for its consideration.

E. Annual performances evaluation procedure:

Annual evaluations/reviews of performances of the Board, its Committees and individual Directors were carried out, at the meetings of Board and Committees, based on set criteria for evaluations/reviews. Criteria such as qualifications, knowledge, attendance at the meetings, participation in long-term strategic planning, leadership qualities, responsibility shouldered, interpersonal relationship and analytical decision making and other abilities were taken in to consideration, in evaluating the performance of individual Directors. In accordance to the applicable provisions of Section 134(3)(p) read with rule 8(4) of companies (Accounts) Rules, 2014, section 178(2), Schedule IV and other applicable provisions of the Act and regulation 17(10) and 25(4) and other applicable regulation(s) of SEBI- LODR, the Board carried out performance evaluation of independent Director without the participation of the Director being evaluated. The evaluation by the Board was carried out, after seeking inputs from all Directors at the Board and Committee meetings, including observance of governance, quality of deliberation and effectiveness of the procedures adopted by the Board. The performances of the Committees were evaluated by the Board, by seeking feedback/inputs on set criteria, from the members of the respective Committees. Evaluation of the Chairperson was also carried out by the Directors. All the directors shown their satisfaction for the fair evaluation process.

The assessment about the quality, quantity and timeliness of flow of information between the management of the Company and the Board of Directors, necessary for the Board of Directors to effectively and reasonably perform their duties, was carried out by the independent directors at their separate meeting.

F. Salient features of Companys policies on Directors appointment and remuneration:

Followings are the salient features of the Companys two policies viz. "Selection of Directors, Senior Managerial Personnel and determining Directors independence" and "Remuneration of Directors, Key Managerial Personnel and other Employees".

i. For selection of Directors and determining Directors independence:

For providing guidance towards appointees qualification, experience as required and determine their independence of the management of the Company, the Company has framed a policy viz. "Selection of Directors, Senior Managerial Personnel and determining Directors independence" containing the guiding principles for the Nomination and Remuneration Committee for identifying Directors.

The Nomination and Remuneration Committee, for the appointment of a Director on the Board of the Company take in to account criteria such as education, professional background, knowledge, experience, understanding about Companys business and industry, in general, personal and professional ethics, integrity values and willingness to shoulder his/her duties, attendance at the Board and Committee meetings, perform his/her role with responsibility, analytical decision making ability, interpersonal relationship qualities and participation in long-term strategic planning, adherence to the companys policies and codes, provision of all acts, rules and regulations, as applicable, are consider to act as the Director on the Board of the Company. In case of independent Directors, his/her independence of the management of the Company, no conflict of interest in any transaction entered in to or to be entered in to by the Company with any person(s), firms, Companies, body corporates, whether directly or indirectly are take into account.

This policy has been hosted on the website of the Company viz.

ii. For remuneration of Directors, Key Managerial Personnel and other employees:

The Nomination and Remuneration Committee recommend to the Board about the remuneration of all the Directors, key managerial personnel and senior employees of the Company including the sitting fees of the independent Directors, in pursuance to the Companys policy viz. "Remuneration of Directors, Key Managerial Personnel and other Employees". The remuneration packages are designed in such a manner that they are not only competitive but also are attractive enough to retain the talent in the Company. For employees of the Company this package basically include, the salary, perquisites, allowances, bonus and other benefits, etc., as applicable. Your company has also insured all its Directors and senior officers, under D&O liability insurance, for indemnifying them from any liability that may occur while performing their role, duties, responsibilities etc. The premium towards the said policy is borne by the Company.

This policy has been hosted on the website of the Company viz.

H. Key Managerial Personnel (KMP)

In compliance with the provisions of the Section 203(1) of the Act, the Company has three KMPs, viz. Shri Ashish U. Bhuta - Chairman and Managing Director, Shri Dilip H. Bhuta - Whole Time Director and CFO and Shri Ashish R. Shah - Company Secretary and Compliance Officer as on 31st March, 2023. No changes in KMP took place during the year under review.

3. Internal control system and their adequacy :

The Internal control system involve overseeing the process effected by the Board and Senior Personnel of the Company, to provide reasonable assurance that the Company compliances with the applicable laws, policies, codes, etc. and that such compliances are done in timely manner and are accurate and reliable. The Audit Committee, the internal and statutory auditors seek information as required for audit of financial records of the Company and maintain stricter vigilance for the financial control to avoid and mitigate the risk involved with financial activities of the Company. Proactive approach towards prevention and corrective measures are ensured.

Appropriate systems of internal control, including monitoring procedures are maintained at the Company. This ensure that all assets are safeguarded against loss from unauthorized use or disposition and that the overall objections and goals are met within the organisation.

The policies and procedures framed and practiced by the employees of the Company endeavours to provide for adequate checks and balances and are meant to ensure that all the approvals, authorisations, verifications, reconciliation, reviews are performed and recorded.

The Company keeps investing in automation and latest technology to improve efficiency in business operations. A SAP based ERP system is in place in the Company. This ERP system integrate the Companys manufacturing and supply chain and key supporting functions like finance and accounts, marketing, sales, HR, etc. The system has also been installed with your Compa nys Su per Stockists to get data of their sales, stock, collection, breakage/expiry etc. The Companys investment in such technology ensured that your Company could work remotely almost instantaneously during pandemic.

A software for Structured Digital Database has been installed in the own server of the Company, as required under SEBI - Prohibition of Insider Trading Regulations, 2011 (SEBI - PIT). All the Unpublished Price Sensitive Information (UPSI) of the Company are recorded in it, as and when generated. The trading, transactions etc. by the designated and connected persons in the equity shares of the Company are also recorded regularly.

The audit committee of the Company carries out inter-alia, the functions specified under the Act and SEBI-LODR. The Company has a well-defined whistle blower policy under its vigil mechanism.

Based on internal financial control policy frame work established and followed by the Company, the audit work performed by the Companys internal auditors, statutory auditors, cost auditors and secretarial auditors and based on reviews of the management and the audit Committee, the board is of the opinion that the Companys internal financial controls are adequate and effective.

4 Research and Development (R&D)

The newly upgraded and renovated R&D set up at Sihor, approved by Ministry of Science and Technology, Government of India is developing products for both the pharmaceutical and wellness division.

We hope to keep adding to our list of brands on promotion products developed at our state of the art R&D Centre.

5 Material development in human resources

We consider People - "Jenburktians" - as our core asset who consistently keep Jenburkt on the path of growth. Covid unlock presented us with opportunity to implement people centric initiatives to help them grow technically, functionally and behaviourally. We introduced power packed twin programs - Management Development and Executive Development. These programs helped our employees to develop relevant competencies. In-person training programmes for the field force have resumed.

Its a proven fact that an actively engaged employee delivers high performance. In line with the discovered insight we launched series of employee engagement activities delivering specific business objectives.

Performance planning and assessment is an integral aspect of a successful organisation. Last year, we launched a new robust initiative to build a culture of planned performance. We are certain about building a high potential and high performance team through this initiative.

Organisational culture plays a vital role in its journey to sustained growth. We did existing culture mapping and have consciously arrived at a desired organisational culture to match the competitive environment. HR has initiated various initiatives enabling cultural shift.

It is our constant endeavour to build policies which are assisting compliance and are industry wide competitive.

It will be our continuous endeavour to build a robust people centric organisation delivering sustained growth.

During the year, the Company had total 724 employees on its payroll.

6 International Business:

The global pharmaceutical market is highly competitive. We compete against other major international companies that have substantial financial and other resources, as well as against smaller companies and exporters from India that operate regionally or nationally.

Competition within the industry is intense and extends across a wide range of activities, including pricing, product characteristics, regulatory approvals, customer service, credit facilities, sales and marketing, and research and development.

Despite having above competitions, challenges in getting regulatory approvals to launch newer molecules in the markets and by maintaining a healthy accounts receivable to sales ratio, your company has registered growth in the business, as compared to the previous financial year and achieved 25 Crores Sales during the year.

Your Company is aiming for a better business volumes from the global operations by increasing products portfolio of 3-5 Products in the current Markets and Venturing into 2-3 newer countries during 2023-2025.

7. Segment wise performance

Your Company operates exclusively in one segment i.e. pharmaceutical formulations.

8. Cautionary Statement:

Few statements in this report particularly that pertains to management discussion and analysis may contain certain remarks that might be considered forward looking. These statements are subject to certain risks and uncertainties and actual results may differ materially from those expressed in the statement as unforeseen factors could influence the Companys operations such as domestic or international governments policies, adversities that may be caused by situations like natural calamities, Covid-19 like pandemic, political and economic developments, risks inherent to the Companys growth and such other factors.