Mangalam Drugs and Organics Ltd Management Discussions

ANNEXURE E TO DIRECTORS REPORT

FOR THE YEAR ENDED MARCH 31 2024

Management Discussion and Analysis (MD&A) Global Economy

Looking ahead, the pharmaceutical market is projected to reach approximately US$ 2,970 billion by 2034, expanding at a CAGR of 5.74% from 2025 to

2034. The global pharmaceutical industry is evolving with a sharp focus on enhancing core capabilities in research, development, and manufacturing to meet the growing demand for complex therapies and biologics. There is a strong shift toward biopharmaceuticals, including monoclonal antibodies, biosimilar, and advanced treatments such as gene and cell therapies. Technological shifts such as AI-assisted drug discovery, digital therapeutics, and telemedicine are gradually reshaping how treatments are developed, delivered, and monitored, though the industrys core focus remains on advancing complex therapies and strengthening global supply capabilities. Alongside, the rising emphasis on affordability, cost-effectiveness, and patient access is shaping investment and development priorities. Together, these forces position the pharmaceutical market for sustained growth, even as it navigates regulatory pressures, pricing challenges, and the evolving needs of healthcare systems worldwide.

Indian Economy.

The Indian pharmaceutical industry has experienced significant growth in recent years and is poised for sustained expansion In FY25, the industry is estimated to reach a market size of 2.38 lakhs crores (US$ 28.5 billion), reflecting an 8.2% growth from the previous year. The Indian pharmaceutical market is expected to maintain this robust growth trajectory, with a CAGR of 8-9% over the next 5-7 years. This growth is underpinned by a combination of factors, including increasing demand from both domestic and international markets, a strong export performance, and regulatory support from the Indian government.

Global CDMO industry overview

The global pharmaceutical Contract Development and Manufacturing Organisation (CDMO) market is projected to reach approximately US$ 169.87 billion in 2025, continuing its upward trajectory as a critical player in the pharmaceutical value chain. This growth is supported by a range of key factors, including the increasing complexity of drug development, the rise of biologics and personalised medicines, and the ongoing trend towards outsourcing.

The need for specialized expertise in biologics, gene therapies, and other complex drugs is expanding the role of CDMOs in pharmaceutical manufacturing. The outsourcing trend will also accelerate as companies strive to improve operational efficiencies and reduce costs while meeting the growing global demand for innovative medicines.

However, there are several challenges on the horizon. Stringent regulatory requirements will require CDMOs to continuously adapt and invest in compliance-related technologies and practices. Additionally, the rapid pace of technological advancements means that CDMOs will need to stay ahead of the curve to remain competitive.

Indian CDMO market overview

With a market size of US$ 22.51 billion in 2024, the Indian CDMO sector is poised for significant expansion over the coming years as a top destination for pharmaceutical outsourcing, benefiting from a combination of a skilled workforce, highly competitive costs, and regulatory-compliant facilities.

India continues to be a dominant player in the generic medicines and vaccine markets, commanding a substantial share of global exports, including over 40% of the US OTC drug market and producing approximately 60% of the worlds vaccines. These strong global positions provide a solid foundation for the sectors growth in both small molecule and biologics manufacturing. Moreover, continued investments in research and development are enabling Indian CDMOs to diversify their service portfolios, particularly in cutting-edge areas such as peptides, oligonucleotides and other specialised drug modalities.

Company Review

Mangalam Drugs and Organics Ltd.is a 5-decade old Company, is promoted and managed by a first-generation entrepreneur. The Company is engaged in the manufacture and sale of Active Pharmaceutical Ingredients (API) for various therapeutic segments viz. Anti-Malaria, Anti-Retrovirat,

Anti-Hypertensive etc. It is approved by the Bill Clinton Foundation.

The company is Actively producing Pyronoridine Tetraphosphate a new ingredient (API) used in antimalarial Treatments. In July 2022 the company has received prequalification from the World Health Organisation (WHO) for both Micronised and non micronized forms of Pyronaridine Phosphate.

Risk Management

The Company has a well - established process of risk management which, inter-alia, includes identification of design gaps, analysis and assessment of various risks, formulation of risk mitigation strategies and implementation of the same to minimise the impact of such risks on the business and operations. The process ensures that new risks, which might arise, or the impact of existing risks which might have increased, are identified and a strategy is put in place for mitigating such risks.

The major risks identified by the management are regulatory, competition, supply chain disruption, cyber & data security along with economic and political risks.

Recent announcement by US President to discontinue the US Aid is likely to affect the funding of Malaria/HIV treatments. This may affect the working of the company in the short run.

Internal Controls

The internal control system at Mangalam Drugs is aligned with globally recognised standards and practices, ensuring compliance with regulatory requirements and internal policies. It includes rigorous processes for financial reporting, risk management and compliance monitoring. Regular internal audits are conducted to assess the effectiveness of controls and identify areas for improvement. These audits are complemented by third-party reviews to ensure objectivity and enhance the credibility of the findings.

A key component of the internal control framework is the segregation of duties, which minimises the risk of errors and fraud. Additionally, automated systems and controls are implemented to streamline operations and reduce manual intervention, thereby increasing accuracy and efficiency. The framework also emphasises continuous training and awareness programmes for employees to ensure that they are well-versed in compliance and control practices

Human Resources:

Human resources play 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 processes, 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. In consideration of employee well-being, HR implemented engagement strategies with top managements support to foster a positive work environment.

These initiatives include: a. Disseminating major business updates throughout the organization, promoting inclusivity among employees b. Celebrating various festivities as well as acknowledging both big and small wins together c. Organizing the Mangalam Cricket Premier League , where teams from different departments represented , competing for the trophy The Total employees strength of the company during the financial year 2024-25 is 414.

State of the Affairs of the Company:

During the financial year under report the company registered a total revenue from operations of Rs. 31,823.02 Lakhs as against Rs. 36,859.47 n the previous Financial Year.

Financial Ratios:

S r . Particulars No.	2024-25	2023-24
1. Debtors Turnover Ratio	8.13	13.15
2. Inventory Turnover Ratio	1.28	1.87
3. Interest Coverage Ratio	1.33	0.21
4. Operating Margin Ratio	0.06	0.01
5. Net Profit Margin	0.02	(0.02)
6. Return on net worth	0.05	(0.06)
7. Current Ratio	1.08	1.10
8. Debt Equity Ratio	0.65	0.75
9. Net Capital Turnover Ratio	22.14	19.42
10. Return on Capital Employed	0.12	0.02

Growth in API business remained below expectation primarily due to inventory recalibration at the customers level owing to high API prices. Margins and profitability continued to remain affected as inflationary pressure weighed on raw materials, power and fuel costs, coupled with inflationary trends in the economy. The company has established client relationships with Formulators in the Malaria segment so as to enable the company to tap API supply opportunities in the Anti-retroviral and other segments.

Health & Safety Measures:

As the Companys manufacturing operations involve complex chemical reactions, risks exist on any issues relating to safe operations and environmental 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 optimize the resources and upgrade its processes 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 Actual results may differ materially from those expressed or implied. Significant factors that could influence the Companys 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
Place: Mumbai	Chairman & Managing Director
Date: 5th September, 2025	DIN: 01240086