Kilitch Drugs (India) Ltd Management Discussions

In the recent years, the global pharmaceutical industry demonstrated significant dynamism amid evolving regulatory mandates, rapid technological adoption and significant growth across regions, setting the stage for robust expansion in the coming years. Global medicine market is expected to continue on its growth path over the years driven by higher spending in regions such as the US, Europe and key Emerging Markets. Pharmaceuticals Market size was valued at USD 1,550.84 Billion in 2023 and is poised to grow from USD 1,645.75 Billion in 2024 to USD 2,646.93 Billion by 2032, growing at a CAGR of 6.12% in the forecast period 20252030.

The injectable industry is a large and growing market, driven by factors like the increasing prevalence of chronic diseases, advancements in drug delivery technologies, and the rise of biologics.

The global injectable drug delivery market was valued at US$633.77 billion in 2024 and is projected to reach US$1,034.78 billion by 2030, growing at a CAGR of 8.4%. The generic injectable market is also experiencing significant growth, with a market size of USD 123.26 billion in 2022 and a projected value of USD 316.14 billion by 2030, with a CAGR of 12.93%.

TIndias pharmaceutical industry continues to solidify its position as a global powerhouse, with strong leadership generic medicines and API production. India uniquely offers end to end support with capacity, capability and cost advantages to global clients. In FY 2024-25, India demonstrated robust growth driven by cost-effective manufacturing, expansive R&D capabilities and favorable government initiatives. Kilitch Drugs (India) Limited, as a one of the leading pharmaceutical manufacturer has significantly contributed to the enhancing Indias global export performance.

The Indian pharmaceutical industry is one of the largest and most important sectors within the countrys economy. It plays a vital role in providing affordable healthcare solutions not only to the Indian population but also to the global market. India is often referred to as the "Pharmacy of the World" due to its large-scale production of high-quality, cost-effective and innovative generic medicines. India is one of the biggest suppliers of low-cost vaccines in the world. Because of the low price and high quality, Indian medicines are preferred worldwide, thereby rightly making the country the ‘Pharmacy of the World

The Indian Pharmaceutical industry continues to demonstrate a positive outlook characterized by a deeper emphasis on quality manufacturing, drug affordability and the adoption of innovation and technology. Domestic market has shown consistent growth, with rising exports contributing substantially to overall industry revenues.

According to department of pharmaceutical (DOP), the Indian Pharmaceutical Market reached over USD 50 billion in FY2024, growing at more than 10% over the prior five years. The domestic market is projected to more than double, reaching US$130 billion by 2030.

Furthermore, the market is expected to approach US$450 billion by 2047. India exported US$ 30 billion worth of pharmaceuticals in FY2025, making an increase of over 9% from the increase of over 9% from the previous years - US$ 27 billion. Notably, these exports fulfil 40% of all UK prescriptions, underscoring Indias status as a major global manufacturing hub - (Pharmexcil).

Increased public and private healthcare spending along with progressive regulatory reforms, has fuelled continued sector growth acceleration the move towards a more self-reliant and valued added pharmaceutical economy. Ongoing domestic and foreing investments are catalyzing innovations and capacity enhancement across the industry. (IBEF).

Kilitch Drugs is one of the Indias fastest growing pharmaceutical manufacturing company broad range of pharmaceutical formulations in various dosage forms like Solid, Liquid and Parental marketed across the Globe with an ultimate purpose of making the world a healthier place. The Company has formidable presence in many countries in Asia, Africa, CIS and Latin America with a broad product portfolio to suit the needs of each country. With a favourable outlook for the pharmaceutical industry and robust products portfolio, the Company is well-positioned to benefit from upcoming trends.

Our product range encompasses OSD, Parenteral, Nasal Products, Opthalmic Products, Nutritional Products, Medical Devices and Cosmetics Products. Our international business strategy has yielded new product approvals and registrations across new markets that includes French West Africa, Philippines etc. With our strong product portfolio, we are well positioned to leverage our existing customers & markets and targeting new market opportunities.

Kilitchs robust quality management system ensures the highest quality standards are maintained across its manufacturing divisions. Our Quality Management Team oversees regulatory compliance for all products and manufacturing plants and we hold current Good Manufacturing Practice (cGMP) certifications from regulatory bodies.

Kilitch has built a sales force comprising well-trained and scientifically oriented representatives with a strong performance track record. The Company maintained the highest field force productivity among key players. Additionally, the Company focuses on increasing its field force to expand geographical reach, amplifying brand presence across key markets.

With predominance of its exports, the company is exposed to a wide spectrum of risks relating to markets, legal disputes relating to contracts, various statutory compliances, credit from suppliers or to customers, interest rates, liquidity as well as foreign exchange rates volatility, sudden changes in the regulations related to trade by countries where the company operates. The company constantly reviews its systems and processes and takes adequate measures to address these risks or meet its obligations.

In line with our commitment to sustainability, we continuously strive to expand our production capacity while maintaining compliance with environmental and safety regulations. Our manufacturing plant in Mumbai has facility to dry powder section, ophthalmic products as well as the capacity to produce small volume liquid ampoules and vials.

With the increase in demand, we have doubled our manufacturing capacity of ophthalmic products at Mumbai Plant. With ongoing infrastructural developments, the construction of our new Greenfield pharmaceutical project at Khopoli Maharashtra India is under progress. The facility to produce various pharmaceutical products will enable the Company to make a greater impact in both the domestic and international markets.

In the financial year 2024-25, the Company achieved an income from operations of Rs. 18,158.73 Lakh as compared to Rs. 13,159.90 Lakh in previous year. The Companys total income stood Rs. 19,530.26 Lakh. Net Profit after tax for the year end 31^st March, 2025 from continuing operations was Rs. 3,115.69 Lakh.

In the financial year 2024-25, the Companys consolidated income from operation was Rs. 19,831.85 Lakh as compared to Rs. 15,437.25 Lakh. Total consolidated total income stood Rs. 20,947.91 Lakh. Consolidated Net Profit after tax as on 31^st March, 2025 was Rs. 2,494.01 Lakh.

The Company strives to identify opportunities that enhance organisational values while managing or mitigating risks that can adversely impact its future performance through integrated process for identification, assessment and reporting, decentralised management of specific opportunities and risks and aggregation at corporate level monitored by the Risk Management Committee with the overall direction and control by the Board.

The Company continues its initiatives aimed at assessment and avoidance of various risks affecting its business and towards cost control and efficiency across its businesses and functions, taking appropriate measures and reviewing them from time to time. The Companys risk management and control procedures involve prioritisation and continuous assessment of these risks and devise appropriate controls, evaluating and reviewing the control mechanism and redesigning from time to time in the light of its effectiveness.

Category of risks experienced and mitigated by the Company are related to Global Market, Competition, Regulatory and Quality Compliance, Intellectual Properties, Commercial and Financial Risk, Environment, Health and Safety, Human Resource, Regulatory and Sustainable Operations.

The Company has in place adequate internal financial controls over financial reporting. It has adopted necessary policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Companys policies safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records and timely preparation of reliable financial information.

The Company maintains a system of policies and procedures for internal control of operations and activities and these are continually reviewed for effectiveness. The internal control system is supported by qualified personnel and a continuous programme of internal audit. The prime objective of such audits is to test the adequacy and effectiveness of all internal control systems laid down by the management and to suggest improvements.

Kilitchs overall system of internal control is adequate given the size and nature of operations and has effective implementation of internal control self assessment procedures to ensure compliance to policies, plans and statutory requirements.

The Audit Committee of the Company periodically review the functions of Internal Audit. The Management of the Company assessed the effectiveness of the Companys internal control over financial reporting. Based on its evaluation, the Audit Committee has concluded that the internal financial controls of the Company are adequate and operating effectively.

Kilitch and its subsidiaries are striving to build and maintain a positive employee experience with high satisfaction and quality of life, so that employees can contribute their best efforts to their work. We consider employees as an integral part of our operations and we put in place appropriate compensation plans, feedback processes, continuing training and upgradation of skills in their functional areas while maintaining safe and healthy working environment to ensure all round contribution and participation in the self-growth as well as growth of the Company.

Our motive has been to create a committed work force through people-enabling processes and knowledge sharing practices based upon our value system. The key element of our Human Resource strategy is to provide a healthy working environment that empowers people, encourages innovation, enhances work satisfaction and builds a merit - driven organization. As on 31^st March, 2025, there were 187 employees of the Company.

Certain statements made in the Management Discussion and Analysis Report relating to the Companys objectives, projections, outlook, expectations, estimates, and others may constitute forward-looking statements within the meaning of applicable laws and regulations. Actual results may differ from such expectations, whether expressed or implied. Several factors could make a significant difference to our operations. These include climatic and economic conditions affecting demand and supply, government regulations and taxation, any epidemic or pandemic and natural calamities over which we do not have any direct/indirect control. Readers are cautioned not to place undue reliance on any forward - looking statements. The report should be read in conjunction with the Companys financial statements included herein and the notes thereto.