Lyka Labs Ltd Management Discussions.

Economic Overview And Outlook

India?s economy will grow 7.5% in fiscal year (FY) 2022 and 8% in FY2023, supported by increased public investment in infrastructure and a pickup in private investment, the Asian Development Bank (ADB) forecasts.

The outlook assumes sustained progress in coronavirus disease (COVID-19) vaccinations and that any new variants of the virus are of limited severity. It also factors in the impacts of Russia?s invasion of Ukraine—primarily higher global oil and commodity prices that will contribute to rising inflation and a widening of the current account deficit.

India is on the path to a sustained economic recovery, thanks to the vigorous countrywide drive to deliver safe and wide-reaching COVID-19 vaccinations, which helped reduce the severity of the third pandemic wave with minimal disruptions to mobility and economic activity.

Pharmaceutical Sector Overview

Ilndia is the largest provider of generic drugs globally. Indian pharmaceutical sector supplies over 50% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicine in the UK. Globally, India ranks 3rd in terms of pharmaceutical production by volume and 14th by value. India enjoys an important position in the global pharmaceuticals sector.

The market is expected to develop at a 37 percent CAGR from 2020 to 2025, reaching US$ 50 billion. According to the Indian Economic Survey 2021, the house market is expected to grow in the next years. By 2024, the domestic pharmaceutical market in India is estimated to be valued US$ 65 billion, rising to US$ 120-130 billion by 2030.

India is the world?s largest supplier of generic pharmaceuticals, providing more than 60% of worldwide vaccination demand and 20% of global supply by volume.

The Indian Government has taken many steps to reduce costs and bring down healthcare expenses. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies

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 company?s relevance and foster a spirit of experimentation. Pharmaceutical products of the Company are consistent in term of quality and reliability.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE:

The Company is engaged in only one segment viz. pharmaceuticals. The Company has presence in Domestic as well as International markets. The Company has commercial presence in various countries either on its own or through its subsidiary company.

OUTLOOK:

1. Development of broad range of dosage forms such as conventional Solid oral dosage forms, Sustained release tablets, Liquid orals, Ready Mix granules, Derma products, Neutraceuticals & Cosmeceuticals.

2. Development of Formulations with New Molecules and Development of Novel Drug Delivery Systems.

3. DCGI approvals for new drug molecules.

4. Development of Cosmeceutical products for ‘P to P business? such as- Anhydrous Sunscreen, Oil Free Non-Comedogenic Sunscreen Gel, Skin Lightening Gel, Skin Lightening Cream etc.

5. Development of Cosmeceutical products for Export Market such as- Intimate Gel lubricant for men, Bust care Cream, Cream for Legs etc.

6. Upgradation of products and processes to improve quality, stability, shelf-life and thus reduce cost.

7. Tie ups with Medical Institutions to carry out Clinical Trials, Dermal Toxicity, Skin Irritation and Sensitivity studies, Comedogenicity Study etc.

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 2022.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the financial year, the total Income was Rs. 167.07 Crores. The Company has earned profit of Rs. 100.22 Crores before charging interest and depreciation and taxes and write offs during the financial year 2021-22.

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 2022, permanent employees inclusive of workers strength was 164.

KEY FINANCIAL RATIOS :

The key financial ratio for 2021-22 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. Debtors Turnover ratio: Net credit sales/Average Account Receivable. The ratio for the year was 11.26 (times) as against 5.42 (times) in the previous year. This year this ratio is higher as compared to previous year due to higher revenue.

b. Inventory Turnover ratio: Cost of Goods Sold / Average Inventory. This ratio for the year was 6.00 (times) as against 5.00 (times) in the previous year.

c. Interest Coverage ratio: EBIT / Interest Expense. The ratio for the year was 4.02(times) as against 0.28 (times) in the previous year. This ratio has become positive in the current year due to increase in Profit before interest and tax.

d. Current Ratio:Current Assets/ Current Liabilities. This ratio for the year was 0.51 (times) as compared to 0.57 (times) in the previous year.

e. Debt-Equity ratio:Total Debt/ Shareholders Equity. This ratio for the year was 02.89 (times) as against 36.76 (times) in the previous year. This ratio has decrease due Repayment oF Loans during the year and operating margin also improved resulted in improved ratio.

f. Operating Profit Margin: EBIT/Sales operating profit margin for the year was 48% as against 11% in the previous year. Increase in Operating profit margin due to sales of higher realisation price.

g. Net Profit Margin :Net Profit/Total Revenue from operations for the year was 24% as against -23% in the previous year. Due to increase in net profit as compared to loss in previous year.

CHANGE IN RETURN ON NET WORTH

Return on Net Worth:This financial performance is calculated by dividing net income by shareholders equity. Return on networth or return on equity during the year was -328% as compared to -295% in the previous year. The negative return on net worth increased due to reduction in equity as compared to previous year.

For and Behalf of Board of

Lyka Labs Limited

Kunal N. Gandhi

Managing Director

DIN: 01516156

Date: 20th May, 2022

Place: Mumbai