Kerala Ayurveda Ltd Management Discussions

1. ECONOMIC OVERVIEW

Despite facing significant challenges in the global economic landscape, the Indian economy has displayed remarkable resilience. The recovery process from the contraction caused by the COVID- 19 pandemic, coupled with uncertainties stemming from events like the Russian Ukraine conflict and inflationary pressures, has been a formidable task. However, Indias economy has managed to stage a broad-based recovery across various sectors, showing promising signs of regaining its prepandemic growth trajectory by the fiscal year 2023. This positive outlook indicates that the country is on track to achieving robust GDP growth in FY24, with forecasts projecting it to be in the range of 6.3% to 6.5%.

One of the standout performers in Indias economic recovery has been its pharmaceutical industry. Experiencing rapid growth, the sector has been estimated to achieve a remarkable 8-10% expansion during the fiscal year 2024 25, as reported by credit rating agencies. This impressive performance has captured the attention of global pharma giants, who now consider India a priority market. With its strong growth trajectory and the potential for further development, Indias pharmaceutical industry is becoming increasingly attractive to international players seeking to tap into the countrys burgeoning market.

In 2024 25, the global Ayurvedic market size was valued at USD 18.2 billion, highlighting the increasing popularity and demand for traditional Indian medicine worldwide. Projections for the forecast period indicate a compounded annual growth rate (CAGR) of 12%, which is expected to propel the market to USD 16.23 billion by 2028. This significant growth trajectory signifies the expanding global recognition and acceptance of Ayurveda, positioning India as a key player in the traditional medicine market. As the market continues to flourish, it offers promising opportunities for both domestic and international businesses interested in the Ayurvedic sector.

2. INDUSTRY STRUCTURE AND DEVELOPMENTS

The AYUSH and alternative medicine sector in India is poised for significant growth, projected to achieve a Compound Annual Growth Rate (CAGR) of 12% per cent from 2025 to 2030. Several factors are driving this expansion, including a notable increase in awareness among individuals regarding the benefits of alternative medicine. Moreover, there is a rising demand for natural and organic products, as people prioritize holistic and sustainable approaches to health and wellness. The Indian governments dedicated efforts to promote and support the AYUSH sector have also contributed to its growth trajectory. This collective momentum has opened numerous growth opportunities and heightened the industrys prospects.

Ayurveda is a traditional system of medicine that originated in India thousands of years ago. It is based on the belief that health and wellness depend on a delicate balance between the mind, body, and spirit. Ayurvedic medicine utilizes natural remedies and techniques to promote health and prevent illness. These remedies can include herbal medicines, dietary guidelines, massage, meditation, and yoga. Ayurveda is making its way more into lives of people as diet & lifestyle activities around the globe. Healthy daily habits like Oil pulling, Nasyam, Abhyangam are being adopted by many. With Ayurveda being practiced all over the world, the way up ahead would be quite exciting. Cures are being invented every other day based on Ayurveda herbal wisdom by researchers. Doctors in hand in with scientists are working on innovating Ayurveda across different fronts. We hope as Ayurveda spreads more, the essence of it will trickle more, into lives of many- Wellness Naturally.

Kerala Ayurveda Limited is a One-of-its-kind, Full-spectrum, and Listed Ayurveda Company in India with a rich Heritage of over 75 years and having touched the lives of over a Million people. Its Footprint spans Wellness Resorts, Hospitals, Clinics, Academies, Products and Services in India & US.

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

The post-pandemic era has witnessed a resurgence in the popularity of ayurveda and alternative drugs worldwide. As people sought immunity-boosting solutions with minimal side effects during the pandemic, they rediscovered the true potential of these traditional practices. Ayurveda and alternative medicine have gained increased traction due to their holistic approach and natural remedies. India, renowned for its expertise in alternative medicine, has emerged as one of the leading exporters of such products on the global stage. Major export destinations include the United States, as well as European nations like Germany and France. This international recognition and demand have further bolstered the growth prospects of Indias AYUSH and alternative medicine sector.

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 Financial Performance

During FY25, the Company recorded a consolidated total income of U2,215.03 lakhs, reflecting a growth of 18% over the previous year (Rs.10,345.16 lakhs). Revenue from operations grew to Rs.12,033.35 lakhs (FY24: Rs. 10,315.11 lakhs), driven by expansion across domestic and international markets. However, higher employee benefit expenses, increased depreciation, and continued investments in growth initiatives impacted profitability. The Company reported a net loss of Rs.1,395.90 lakhs (FY24: loss of Rs.56.02 lakhs).

Operational Performance

Operationally, the Company continued to strengthen its integrated Ayurvedic ecosystem across products, services, and wellness solutions. Focused investments in people, technology, and brand building supported revenue growth, with strong momentum in both the Indian and overseas businesses. The Company maintained discipline in raw material and finance cost management, while strategically scaling operations to support longterm growth and market leadership in holistic wellness.

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 & organizational preparedness for future challenges.

The manpower strength of the Company as on 31st March 2025 was 367 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.

1. Debt - Equity Ratio (+34%)

The ratio rose sharply as the Group drew down additional long-term loans (including current maturities) to fund capital expenditure and working-capital needs, while equity contracted on account of the net loss and charge for the Employee Stock Option Plan.

2. Debt Service Coverage Ratio ( -180%)

DSCR flipped from a positive 0.83x to a negative -0.66x. A consolidated operating loss before interest & tax, combined with increased principal repayments on long-term debt and leases, drove the ratio well into negative territory.

3. Net Capital Turnover (+30%)

Although still negative, the improvement reflects a reduction in working-capital outflow. Current liabilities (notably, reclassification of current maturities of long-term borrowings) rose faster than current assets, reducing the absolute value of the denominator.

4. Return on Equity (-4,065%) & Net Profit Margin (-2,149%)

The net loss after tax of Rs. 1,395.9 lakhs (versus a loss of Rs.56.0 lakhs in the prior year) depressed both ROE and the net margin. Key drivers included:

• A sharp increase in non-cash ESOP expense (Rs.622.9 lakhs)

• Higher depreciation/amortisation, especially on right-of-use assets

• Adverse deferred-tax and foreign-currency translation adjustments

All remaining ratios moved within ?25% of the prior year.

11. DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR

Return on Net Worth has decreased by 47.6% as to compared previous financial year. Our Company is progressing by overcoming the pandemic situation.