Lactose (India) Ltd Management Discussions

Lactose India Limited, is a leading Asian manufacturer of pharmaceutical-grade lactose monohydrate and lactulose. Holding a 40% share of Indias lactose market, it produces 10,000 MT of lactose and 2,400 MT of lactulose annually, adhering to WHO-cGMP,ISO 9001:2008 and EXCiPACT standards. The company invests in automation to enhance efficiencies in manufacturing, supply chain and quality operations. Lactose (India) Limited maintains a robust quality management system to ensure regulatory compliance and manufacturing capabilities for high quality products.

Lactose (India) Limited operates in two B2B niches of the pharma value chain:

Lactose (Excipients): Primarily used as a filler/diluent in solid oral dosage forms; quality and consistency drive customer stickiness.

Lactulose (API): A synthetic disaccharide used in hepatic encephalopathy (HE) and chronic constipation; demand is tied to GI and liver-care therapy trends and formulary access.

Our competitive positioning rests on GMP-compliant manufacturing, supply reliability, and cost discipline. For Lactose,

, compressibility) and impurity control. For Lactulose API, by process (flowability differentiationisdrivenbyparticleengineering control (galactose/fructose profiles), low RRT impurities, and robust documentation (DMFs/CEP).

The global pharmaceutical lactose market, valued at USD 2.03 billion in 2023, is projected to reach USD 3.21 billion by 2032 (CAGR 5.2%). Lactose monohydrate milled and sieved grade dominates (38.6%–45% market share), with pharmaceuticals consuming 100,000–150,000 tons annually. Lactose India Limited expanding its 10,000 MT capacity to 20,000 MT, targeting

Asia-Pacifics booming pharmaceutical industry (7.5% CAGR in India). Introducing specialized grades (spray-dried, anhydrous, inhalation) and leveraging partnerships can boost exports. Competitive pricing, cGMP compliance, and marketing at global expos will further enhance our share.

Global lactulose production exceeded 9,800 MT in 2024, with 85% (8,330 MT) used in pharmaceuticals. Lactose India Limited existing 2,400 MT facility is the Asias only lactulose plant, positions it for growth. Expanding to 3,500–5,000 MT, targeting constipation and prebiotic applications, and penetrating markets like South Asia and Africa can drive revenue. R&D into high-purity grades and new uses (e.g., probiotics) will differentiate its offerings.

Our Company is into manufacture of Excipients (Lactose), which falls under binders segment of excipients. The Binders segment held the largest share in the Pharmaceuticals Excipients in 2021. Binder excipients also play a major role during the formulation of drugs or medicines because they improve the bulkiness, disintegration, and dissolution rate of the drugs. Hence there has been an increasing demand of these excipients during the manufacturing of drugs and medicines.

There are very few manufacturers of API (Lactulose) developed by the company worldwide, which has high demand in the global and domestic market.

While the underlying demand drivers for global markets continue to remain broadly intact, the operating environment has become significantly tougher for sub-scale business models, as sector profitability comes under pressure.

The Companys business activity falls within a single business segment i.e. Pharmaceutical Business.

The company now emphasizes optimum utilization of its Excipients and API plant capacity for production and is focused on new product development. The outlook of the company remains positive during the financial year. The company enjoys cGMP approvals, and all the facilities are built and operated according to the cGMP (current Good Manufacturing Practices).

Concerns: y Set-up of Raw Material supply chain for Lactose Manufacturing, due to increased sales. y Increase in Working Capital requirement, due to increased sales.

Being a pharma company and ISO Certified the process parameters are fully documented and are in place. The role and responsibilities of various people are fully defined in all the functional level. There is a continuous flow of information at all level and effective internal audit and internal checks are done at regular interval to ensure their adequacy and efficiency.

Additionally, the following measures are taken to ensure proper control: y Budgets are prepared for all the operational levels. y Any material variance from budget has to be approved by the Commercial director. y Any major policy change is approved by the managing director. y Any deficiency in not achieving target is reviewed at management meetings.

The company continues to focus on training and motivation of manpower so as to develop team of qualified and skilled personnel to effectively discharge their responsibilities in a number of projects and activities. It is in this context; we have been working towards promoting the skills and professionalism of our employees to cope with and focus on the challenges and growth. The overall industrial relations atmosphere continues to be cordial. The company has revamped the existing HR policies to me more people friendly and offered them a better work-life balance.

The Company Return on Net Worth (RoNW) has decreased to 8.71% for financial year 2024-25 as compared to 13.88% for financial year 2023-24. The increase in RoNW was primarily due to increase in turnover of the company.