mangalam drugs and organics ltd share price Management discussions


TO DIRECTORS REPORT

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

FOR THE YEAR ENDED MARCH 31ST 2023

Company Philosophy on Corporate Governance :

Corporate Governance involves balancing of the interest of a companys stakeholders. Corporate governance practices are a reflectionof the values, policies and relationship with our stake holders .The essence of Corporate Governance lies in promoting and maintaining integrity, transparency and accountability through out the organization.

Outlook :

If there is one important vantage point for our company during its journey, last year indeed proved to be the one.

In the antimalarial generic API space, on one hand, we have acquired a unique position of being the largest manufacturer & exporter of Sulphadoxine, an API which was globally introduced three decades back. On the other hand, we, being the only DMF holder for Pyronaridine after innovator, we are now in collaboration with USA based Medicines for All to address solving pivotal issues in a frontline combinatio- antimalarial formulation. The sulphadoxine culminated from backward integration efforts, whereas Pyronaridine resulted from sustained efficiency improvement, helping us occupy this unique position.

Besides these two major achievements , our R and D has identifiedthe following products to diversify the existing pipeline : Etodolac ( antiinflammatory),

Risedronate sodium (Oseteoporosis) .

Industrial Structure And Development :

The pharmaceutical industry is responsible for the research, development, manufacturing and distribution of medications. The entire world recognized the importance of healthcare and pharmaceuticals as the world battled the Covid-19 pandemic in the last 3 years. The pharmaceutical industry product landscape has since changed. New molecules such as cell and gene-therapy and mRNA have increased in the drug development pipeline. This change is likely to bring newer technologies, supply chain and unique product life cycle.. Pharmaceutical industry is one of the top performing industries globally.

The new medications are being constantly developed, approved and marketed resulting in significant market growth. Factors

,an upsurge in lifestyle diseases, demographic shifts ,and new product introductions are expected to fuel the growing market demands. The coming years are likely to open doors of innovation, opportunities and growth avenues for the Indian pharma Industry . The biologics market is also growing at a significant rate in the therapy areas such as oncology, diabetes and auto-immune diseases.

Though the pharmaceuticals industry is developing at a rapid pace, the growth wont come easily for this industry that is heavily influenced by the healthcare reforms, cost pressure, economic and geo-political fluidity, pricing regime, increased competition and challenging regulatory landscape with increased scrutiny.

Opportunities Risk And Concerns :

The Indian pharmaceutical industry is globally respected and India is the largest provider of generic drugs globally and the country is known for its affordable vaccines and generic medications. Indian pharmaceutical industry is currently ranked third in pharmaceutical production by volume after evolving over time into a thriving industry. India is also the largest supplier of low cost quality generics drugs and vaccines to the world. Indian pharmaceutical companies have also carved out a niche in both the Indian and world market with expertise in reverse engineering new processes for manufacturing of pharmaceuticals at low cost, which became the advantage for this industry.

The contribution of the pharmaceutical industry to the countrys economy is immense. Apart from large employment generation, either directly or indirectly, this industry also contributes significantly to the countrys GDP. The Indian pharmaceutical industry growth will be driven by R&D capabilities, cost efficiencies, huge talent pool of scientists and new opportunities in the emerging global economies.

Government initiatives, including PLI 2.0, MSME support, and pharma clusters, along with industry-academia collaborative efforts, are expected to act as significant catalysts for growth. Furthermore, the Indian pharma industry is committed to meeting sustainability infrastructure for rapid drug discovery and development capabilities to sustain its growth trajectory.

Internal Control System and its Adequacy :

The Company has an adequate system of internal controls commensurate with the nature, size and complexity of its manufacturing, finance and marketing operations including controls over financial reporting

Appropriate review and control mechanisms are in place for ensuring the internal control systems are operating effectively. 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, robustness of internal processes, policies and accounting procedures, compliance with laws and regulations. For this purpose, a yearly audit plan will be made with the approval of the Audit Committee of the Board of Directors.

Human Resources :

The human resource plays a vital role in the growth and success of an organization. The Company has maintained cordial and harmonious relations with employees across various locations.

We consider employees as an integral part of our operations and we put in place appropriate compensation plans, feedback process, continuing training and upgradation of skills in their functional areas. Employee relations are affable and harmonious with safe and healthy working environment and all-round contribution and participation in the growth. The Company has built a competent team to handle challenging assignments. The Company strives to enhance the technical, work related and general skills of employees through dedicated training programs on a continuous basis. The Total employees strength of the company during the financial year 2022-23 is 523.

State of the Affairs of the Company :

During the financial year under report the company registered a total revenue from operations of 37225.29 Lakhs as against 45106.84 in the previous year.

Financial year Ratios

Sr. No.

Particulars

2022-23

2021-22

1 Debtors Turnover Ratio 7.96 9.70
2 Inventory Turnover Ratio 2.72 6.28
3 Interest Coverage Ratio 1.17 3.48
4 Operating Margin Ratio 0.04 0.09
5 Net Profit Margin 0.003 0.04
6 Return on net worth 0.01 0.13

Due to lower business growth, increase in the material cost, energy cost as well as increase in the other overhead expenses due to inflationary trend in the economy, the operating margins have reduced. This has resulted in lower operating profit margin, lower net profit margin and lower net worth as compared to previous financial year.

Health& Safety Measures :

As the Companys manufacturing operations involve complex chemical reactions, risks exist on any issues relating to safe operations and environment compliances. Our companys policies and processes are designed and reviewed from time to time to adhere to all applicable regulations on the environment management, employee health and safety. Our company continually strives to optimise the resources and upgrade its processes in order to reduce the environmental impact of its processes, products and services, besides ensuring health and safety of employees involved in the processes

Cautionary Statement :

This report may contain certain statements that the Company believes are or may be considered to be ‘forward looking statements which are subject to certain risks and uncertainties. These estimates and Judgements relating to the financial statements have been made on a prudent and reasonable basis, in order that the statements reflect, in a true and fair manner, the state of affairs and profits for the year. Actual results may differ materially from those expressed or implied. Significant factors that could influence the Companys operations include government regulations, tax regimes, market access related regulatory compliances, patent laws and domestic and international fiscal policies.

For and On Behalf of the Board of Directors

Sd/-
Mr. Govardhan M. Dhoot
Chairman & Managing Director
DIN: 01240086
Place : Mumbai
Date : August 10, 2023,