Macro International Ltd Management Discussions

The Management Discussion and Analysis Report have been prepared in compliance with the requirements of Listing Agreements and contain expectations and projections about the strategy for growth. Certain statements in the Management Discussion and Analysis Report are forward looking statements which involve a number of risks and uncertainties that could differ from actual results performance or achievements which such forward looking statements on the basis of any subsequent developments, information or events for which the Company do not bear any responsibility.

INDUSTRY OVERVIEW

According to India Brand Equity Foundation, Indian healthcare infrastructure is expected to reach $349 billion and the size of the e-health market is estimated to reach $10.6 billion by 2025. Public health experts hold that the pandemic was a huge challenge but also provided India with an opportunity to become self-reliant in healthcare.

The Indian pharma industry has achieved significant growth in both domestic and global markets during the past five decades. From contributing just 5% of the medicine consumption in 1969, the share of "Made in India" medicines in Indian pharma market is now a robust 80%. The country has also established leading position in the global generic pharmaceuticals landscape and is now known as the "Pharmacy of the world". The pharma industry in India contributes more than 20% by volume of the global generics market and 62% of the global demand for vaccines. Popularly called the "archetype of affordable healthcare," the industry has significantly contributed towards improving public health outcome, both in India and across the globe.

The pharma sector has been contributing significantly to Indias economic growth as one of the top 10 sectors in reducing trade deficit and attracting the Foreign Direct Investment (FDI). The drugs and pharmaceuticals sector attracted cumulative FDI inflow worth US$16.54 billion last previous year. It is of prime importance also due to the trade surplus it has been generating with pharmaceuticals exports accounting for US$20.7 billion and imports at US$2.31 billion in FY2024. The industry employs over 2.7 million people either directly or indirectly, and ranks third in terms of volume and 14th in terms of value globally.

Indian pharma exports have grown at a CAGR of 6.2% between 2015 and 2020. This was largely driven by exports of generics drugs to >200 countries. India is the source of 60,000 generic brands across 60 therapeutic categories. The country accounts for 40% of the generics demand in the US and ~25% of all medicines in the UK3. India also fulfils about 80% of global demand for antiretroviral drugs for Acquired Immune Deficiency Syndrome (AIDS), significantly contributing towards increasing accessibility of AIDS treatments. The anti-infective segment is the leading indication with ~14% market share of the total domestic pharma business and continues to witness double digit growth. Other segments that are growing in double digit include diabetes, cardiovascular disease and respiratory.

Your company has its Corporate and sales office presence in Hyderabad, TS, India. Hyderabad has a dominant position in Pharma Sector; it ranks first in manufacturing of bulk drugs and third in formulations in the country.

It accounts for 40 per cent of the total Indian bulk drug production and 50 per cent of the bulk drug exports and is considered as the ‘Bulk Drug Capital of India.

In value terms, the industry is worth US$ 11.6 billion and exports accounting to over US$ 4000 million. The Pharma industry and exports from here are expected to grow at 20 per cent annually.

The Telangana and Andhra Pradesh has over 2500 Pharma companies and is home to few of the top pharma companies. There are more than 200 ‘Active Pharmaceutical Ingredients (API) units in the state, which are poised to grow at a rate of 10 to 15 per cent annually in the coming days.

Hyderabad is also referred to as the Vaccine Hub of India. The city is home to leading vaccine producers and the Clinical Trial sector in Hyderabad has also witnessed a steep rise, with leading clinical trial companies having their presence.

OPPORTUNITIES AND EXISTING THREATS AND RISKS FACED BY THE INDUSTRY.

Opportunities

1. The Central Government has been extending legislative support as well as rolling out several initiatives, in the form of the Production Linked Incentive (PLI) scheme and bulk drugs park scheme, to reduce the domestic pharma sectors reliance on China and encourage local production. With the successful implementation of these schemes, it is likely that the Indian pharma industry will capitalise on the enhanced Government impetus going forward. These schemes are projected to boost the API industrys growth and lower the domestic pharma industrys reliance on China by 25-30% over the next 4 5 years.

2. The Indian pharma industry is already an established player in the manufacturing of generic drugs. However, in recent years, the industrys focus on the research-based formulations is anticipated to drive growth and generate new revenue streams.

EXISTING THREATS AND RISKS FACED BY THE INDUSTRY.

1. Fake Products/Spurious drugs:

Fake drugs constitute 25% of the domestic medicines market in India (ASSOCHAM). According to WHO, 35% of the worlds spurious drugs are produced in India. Around 25% of Indias drugs are fake, counterfeit, or substandard. Mentions Wikipedia which is a common source of Information for everyone. These headlines do create a general perception that India is growing into a den of spurious or fake drugs and these types of perceptions will surely tarnish the image of Indian Pharma.

The US Trade Representatives has questioned India for the countrys growing spurious medicine problem. According to the USTR report, nearly 20% of all pharmaceutical goods sold in the Indian market are counterfeit.

2. Indias significant dependence on China for APIs

Indian Pharma market is heavily dependent on China for its API needs. Currently, about 80% of the Indian Pharma Market APIs requirement is fulfilled by the Chinese Pharma Market. Occasionally there is an increase in API pricing due to policy changes & geo-political reasons. For example, to curb pollution, China closed many of the API manufacturing units which led to a shortage of API supply. Ultimately the prices of APIs were increased.

OUTLOOK

The outlook of the Company remains positive. Astal Laboratories Limited is cautiously optimistic about its prospects in the coming years. The Company aims at providing quality products to the customers and to provide them with greater satisfaction. For last couple of years, the company has taken a number of initiatives to re- structure and re- engineer the operation to enable the company to compete better in this profound competitive regime.

BUSINESS OPERATIONS:

Your companys objects were altered in the year 2023 to venture into pharmaceutical bulk drug business. To suit the business the companys name was also changed to ASTAL LABORATORIES LIMITED Thus, your company has successfully ventured into bulk drug business and in the first 3 quarters of operations itself has established its presence in the Intermediates field. The Company continues its business operations in single segment i.e. Pharmaceuticals and there is no change in the nature of business during the year under review.

Revenue and net profits:

(i) The Company has recorded revenue of Rs. 2364.77 Lakhs for the financial year ended 31^st March 2024 which is 589.82 % growth in revenue when compared to the previous years revenue of Rs. 342.81 Lakhs (ii) Net profit for the period stood at Rs.78.47 Lakhs against Rs. 1.64 Lakhs during the previous FY.

(iii) The entire sales were domestic Rupee sales.

(iv) Earnings per share for the F.Y 2023 - 2024 stood at Rs. 1.55 as against Rs.0.04 recorded during the previous financial year.

Operational Highlights

(i) During the year the company has manufactured and sold Intermediates through third party manufacturing.

(ii) The company has enquiries for production of APIs and would produce this product in the next quarter onwards

(iii) There is immense growth opportunity in the Intermediates and API business as most of the APIs are imported from China. Your company has signed a Business Transfer Agreement (BTA) for purchase of a Pharmaceutical Intermediates plant at Raichur, KIADB industrial area, Yadgir district, Karnataka. The unit is a running plant with all clearances and completely take over is expected in the ensuing financial year ending 31^st March 2025. Once taken over, the Intermediates manufacturing unit will cater to the domestic and internal markets.

HUMAN RESOURCE STRATEGY

Strategic human resource (HR) management is the foundation of a strong business. At Astal Laboratories Limited, a young dynamic team of promising and talented employees, work relentlessly to pursue MILs business plans. With high focus on the values of Innovation, Initiative,

Passion and Humility, the HR of the Company is aligned towards hiring, developing and retaining highly proficient talent and works to provide an inclusive environment that is welcoming to all diversities. The HR department continuously benchmarks best practices across the industry -in the areas of Talent Management, Learning & Development, Performance Management System and Employee Care.

Internal Controls

An external agency is auditing the Companys internal controls. This results in an unbiased and independent examination of the adequacy and effectiveness of the internal control systems in achieving the Companys goal of optimal operation. The activities are safeguarding and protecting the Companys assets from unauthorized use or disposition, keeping proper accounting records, and verifying the authenticity of all transactions.

The independent Audit Committee and the Board of Directors regularly review the Companys performance to ensure that it is by overall corporate policy and in line with predetermined objectives.

Risk and Concerns

Astal laboratories Limited faces risks and uncertainties typical to that faced by global pharmaceuticals industry, which could have a material impact on earnings and the ability to operate in the future. These are determined via robust assessment considering our risk context by the Board of Directors with inputs from the executive management. The Board is satisfied that these risks are being managed appropriately and consistently.

Cautionary Statement

The Management Discussion and Analysis statements describing Astal Laboratories Limiteds objectives, projections, estimates, and expectations may be "forward-looking statements" within applicable securities laws and regulations. Actual results could differ from those expressed or implied. Important factors that could make a difference to the Companys operations include economic conditions affecting demand-supply and price conditions in the domestic and overseas markets. It operates changes in the government regulations, tax laws, and other statutes & other incidental factors.