Kerala Ayurveda Ltd Management Discussions.

1. ECONOMIC OVERVIEW

Global Economic growth remains subdued. Global growth is forecast at 3.2 percent in 2019, picking up to 4.9 percent in 2020 as per IMF which is 1.9 percent points below the April 2020 World Economic Outlook forecast . The COVID-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previous forecast. GDP releases so far this year, together with generally softening inflation, point to weaker-than-anticipated global activity.

India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers of the world over the next 10-15 years, backed by its strong democracy and partnerships. Indias GDP is estimated to have increased 6.1 per cent in 2018-19 and 4.2 per cent in 2019-20. India has retained its position as the third largest startup base in the world with over 4,750 technology start-ups. India is expected to fall by 3.2% in 2020-21, Indian Government is targeting to be a $5 Trillion Economy by 2024-25.

Indias labour force is expected to touch 160-170 million by 2020, based on rate of population growth, increased labour force participation, and higher education enrolment, among other factors, according to a study by ASSOCHAM and Thought Arbitrage Research Institute.

Indias foreign exchange reserves were US$ 538.191 billion in the week up to August 7, 2020, according to data from the RBI.

2. INDUSTRY STRUCTURE AND DEVELOPMENTS

Ayurvedic products are increasing in popularity. Many Indians are turning to Ayurveda and other alternative medicine systems and treatments, such as unani, siddha, naturopathy, and homoeopathy. The industry is anticipated to almost triple in size in the coming years.By 202 2, the market will reach US$ 9.7 billion in size.

Kerala Ayurveda Limited has a long heritage of over 74 years and pioneer in bringing efficacious

Proprietary Range of Ayurveda products and first to setup treatment centers outside Kerala. It is a full spectrum Ayurveda company which manufactures Ayurveda Medicines both Classical and Proprietary, operates treatment centers, Hospital and Ayurveda Resorts all over India, has Ayurveda Academy in India & US and does Ayurveda Research. KAL is Powered by various Pioneering Entities like Katra Phytochem (India) Private, Renovel Discoveries, USA and Asthagiri Herbal Research Foundation, India, that ensure that all batches of its Products meet the Highest Standards of Safety, Purity and Efficacy. KAL is the first Public Limited Company in Ayurvedic domain, Kerala Ayurveda Limited is truly on a mission to be the number one choice in Ayurveda Globally.

3. OPPORTUNITIES

We believe the following are our competitive opportunities:

? Strong R & D capability, many new products under development. Develop medicines which can provide relief to medical conditions for which allopathy medicines do not provide much relief.

? Have fully integrated GMP manufacturing facility to manufacture both classical and proprietary ayurvedic formulations in the most hygienic condition and strict adherence to prescribed norms.

? Have Competent and experienced team of experts for the standardization of treatments. Growing the well-established network of clinics and treatment centre and distribution centres.

4. RISK, CONCERNS AND THREATS

The market has both organized and unorganized players and the capability and the strengths differ. But both are classified under Ayurveda industry. So, the organized sector has to work hard to maintain the parameters so that the high standards are maintained, and customers should not lose faith in the practice. Major threats for Ayurveda industry are regulatory concerns, consumer perceptions and competition. The regulatory agencies all over the world are focusing on the Quality, efficacy, safety and standardization of herbal medicines. Your company has been working in this area. We have demonstrated excellence in quality of our medicines and KAL is well positioned in the market for quality products. We rely on repeat business based on the strength of our client relationship and a major portion of our revenue comes from key clients. Initiatives are focused on improving client relationship.

5. SEGMENT-WISE OR PRODUCT WISE PERFORMANCE

The primary business segment of your Company is Ayurveda and hence no segment wise reporting is required.

6. FUTURE OUTLOOK

While the government is on a major drive to Promote Yoga and Ayurveda Globally as Key Wellness Initiative, inadequate scientific scrutiny and concerns regarding standards and quality is of major concern. This has prompted the Department of Ayush to enforce a stricter regime under National Ayush Mission. The National Rural Health Mission has a declared policy of promoting Pluralistic Healthcare by involving, alongside the allopathic system, the AYUSH systems, including local health traditions in its operational mission. Insurance companies have started accepting Ayurveda Treatments under insurance claims.

7. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The company has strong internal controls systems commensurate with the nature of its business, the size and complexity of its operations. In order to ensure orderly and efficient conduct of business the company has put in place systems which include policies and procedures, IT systems, delegation of authority, segregation of duties, internal audit and review framework etc. The team is cognizant of applicable laws and regulations particularly those related to protection of resources and assets, and the accurate reporting of financial transactions. The audit findings are reviewed by the audit committee.

8. FINANCIAL PERFORMANCE AND OPERATIONAL PERFORMANCE

The company had Net revenues of Rs.5384.11 Lakhs as against Rs.4674.52 Lakhs during previous year showing a growth of 15.24%. The consolidated net revenue for current year is Rs.7679.30 Lakhs against Rs. 6235.39 Lakhs during the previous year resulting in a growth of 23.15%. Consolidated net profit increased to Rs 4.05 crores, up 61% vs previous year. This growth has been led by two promising sectors - USA and the Digital / eCommerce India business.

The companys growth was aided by its key business operations in the USA by scaling up both the academy operation and also the launch of new product range in the USA.

9. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT AND NUMBER OF PEOPLE EMPLOYED

The company places great emphasis on its employees and believes that they are the core of the Corporate Purpose. The HR mission is to empower employees to make continuous improvements and enhance their professional skills. The company believes in respecting the individual rights and dignity of the people. The company believes that human resources are the most valuable assets and a major driver for achieving its goals. Your company continues to invest in human resources to build new businesses while simultaneously improving the individual & organisational preparedness for future challenges.

The manpower strength of the Company as on 31st March 2020 was 372 permanent employees including Management Staff across different locations.

10. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

In accordance with SEBI (Listing Obligations &Disclosure Requirements) (Amendment) Regulations,2018, the Company is required to give details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year), None of the ratios have dropped beyond the limits specified under the disclosure norms.

11. DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE

IMMEDIATELY PREVIOUS FINANCIAL YEAR

Return on Net Worth is 5.98% in the current year as compared to 8.4% in the previous financial year the drop is on account of lower profits as Kerala Floods impacted the revenues and profitability of the business.

Place: Bangalore By Order of the Board of Directors
Date: 14/08/2020 For Kerala Ayurveda Limited
Sd/-
Ramesh Vangal
Chairman (DIN 00064018)