Lyka Labs Ltd Management Discussions

ECONOMIC OVERVIEW AND OUTLOOK

As per the International Monetary Fund (IMF) , Indias economy will grow @ 6.4% -6.6 % in fiscal year (FY) 2026 and 6.5% in FY2027, supported by Strong investment in artificial intelligence (AI) , resilient services sectors and monetary easing with increased private consumption, private investment on the back of Government policies to improve transport infrastructure, logistics and business eco systems.

The current account deficit has been reduced due to higher exports of services. However, continued geopolitical tensions leading to higher energy prices, trade protectionism and debt vulnerabilities in emerging economies. Despite these challenges, India continues to witness sustained economic growth.

PHARMACEUTICAL SECTOR OVERVIEW

Indian Pharma industry is projected to reach USD 130 billion by 2030 with a target of USD 450 Billion by 2047 driven by high quality generics (20% Global Share) API growth (12.24% of CAGR) and PLI scheme incentives with compound Annual Growth Rate (CAGR) around 8-9% as India is the largest provider of generic drugs globally. Indian pharmaceutical sector serves more than 200 countries supplied over 60% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicines in the UK. Globally, India ranks 3rd in terms of pharmaceutical production by volume and 13th by value. India enjoys an important position in the global pharmaceuticals sector.

The Indian pharmaceutical exports reached USD 30.5 billion in 2024-25 with a 7% CAGR over last decade and the industry is poised for significant expansion, targeting USD 120-130 billion market has grown at a 37 percent CAGR from 2020 to 2023, reaching US$ 50 billion growing from its current status as the Pharmacy of the World".

The Indian Government has taken many initiatives like the PLI Scheme, which provides incentives of 8% of FY 2026-27 and 6% for FY 2027-28 (category 1 & 2) aim to boost high-end drug manufacturing, such as complex generics and biosimilars and it is expected to benefit the Indian pharmaceutical companies.

The pharma sector contributes to around 1.72% of the Countrys GDP.

COMPANY OVERVIEW

Lyka Labs Limited is a pharmaceutical company engaged in the development, manufacture and marketing of quality finished dosages. The Company has a well-diversified business model in terms of markets, therapies and products. The Company believes in Innovation. It provides state-of-the-art prepositions to advance the companys relevance and foster a spirit of experimentation. The pharmaceutical products of the Company are consistent in terms of quality and reliability.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE

The Company is engaged in only one segment viz. pharmaceuticals. The Company has a presence in Domestic as well as international markets. The Company has a commercial presence in various countries.

OUTLOOK

The Company is focused towards expanding its geographical reach in Human & Veterinary Healthcare Business Segments. The Company re-entered into the business of animal healthcare in 2023 by acquiring the animal healthcare business of Agilis Healthcare Private Limited and financial year 2025-26 was the 3rd full year of operations.

During the financial year under report:

1. The Company has invested in building brands and distribution networks in Human and Veterinary Healthcare segments, both in the domestic as well as international markets.

2. The Company has continued to invest in Research & Development (R&D) for New Products and Novel Drug Delivery Systems. The R&D Department is focused on developing of New Formulations and has successfully developed several products in the following categories:

a. Injectables: Lyophilised Injection, Liquid Injections & Dry Powder Injections

b. Topical Preparation: Ointment, Creams and Lotions.

3. The Company successfully launched its patented product Pregabalin Gel in India after completing clinical trials and getting CDSCO approval in November 2024.

RISKS AND CONCERNS

Your Company does not perceive any risks or concerns other than those that are common to the industry such as regulatory risks, exchange risk, cyber risks and other commercial and business related risks.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2026.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the financial year, the total consolidated Income was Rs.13,194.24 Lakhs. The Company has reported net loss of Rs. (1,057.96) Lakhs during the financial year 2025-26.

HUMAN RESOURCE

There has been no material development on human resources and industrial relations front. The relationship with employees and workers continued to be cordial at all levels. As on 31st March 2026, permanent employees inclusive of workers strength was 648.

KEY FINANCIAL RATIOS

The key financial ratio for the financial year 2025-26 and changes therein as compared to the immediately preceding financial year along with detailed explanation in cases where the change is 25% or more are as under:

a. Interest Coverage ratio: EBIT / Interest Expense. The ratio for the year was (8.99) (times) as against 5.82 (times) in the previous year. Due to negative EBIT the ratio is negative.

b. Current Ratio: Current Assets/ Current Liabilities. This ratio for the current financial year was 1.13 (times) as compared to 1.56 (times) in the previous year. Current ratio has decreased due to increase in borrowings for the year compared to previous year.

c. Debt-Equity ratio: Total Debt/ Shareholders Equity. This ratio for the year was 0.58 (times) as against 0.33 (times) in the previous year. This ratio has increased due to new loans availed during the financial year.

d. Operating Profit Margin: EBIT/Sales operating profit margin for the year was (24.74) % as against 9.95 % in the previous year. Due to operating loss, the ratio is negative for the year ended 25-26. The operating loss reported for the period is primarily on account of a one-time impairment charge of Rs.2301.44 related to our investment in and outstanding loans given to our subsidiary (Lyka BDR International Limited). This charge has been presented as an exceptional item in the financials.

e. Net Profit Margin: Net Profit/Total Revenue from operations for the current financial year was (27.95) % as against 6.11 % in the previous financial year. Ratio is negative due to negative PAT (Majorly on account of exceptional items).

CHANGE IN RETURN ON NET WORTH

Return on Net Worth: This financial performance is calculated by dividing net income by shareholders equity.

Return on net worth or return on equity during the year was (0.31) % as compared to 0.08% in the previous year.

Return on equity is negative due to net losses incurred for the current year.