Medicamen Organics Ltd Management Discussions

1. INDUSTRY STRUCTURE AND DEVELOPMENTS:

Global Overview of Pharmaceutical Industry:

The global economy continues to confront the challenges of inflation and low growth prospects. GDP growth has been stronger than expected so far in 2023-24 but is now moderating on the back of tighter financial conditions, weak trade growth, and lower business and consumer confidence. Risks to the near-term outlook remain tilted to the downside and include heightened geopolitical tensions, for example, due to the evolving conflict following Hamas terrorist attacks on Israel; and a larger-than-expected impact of monetary policy tightening.

On the upside, growth could also be stronger if households spend more of the excess savings accumulated during the pandemic. Global growth is projected to be 2.7% in 2024.

As inflation the world economy is projected to grow by 3% in 2025. Global growth remains highly dependent on fast-growing Asian economies:

Indian Pharmaceutical Industry: Overview

According to a recent EY FICCI report, there has been growing consensus over providing new innovative therapies to patients, Indian pharmaceutical market is estimated to touch US$ 130 billion in value by the end of 2030. Meanwhile, the global market size of pharmaceutical products is estimated to cross over the US$ 1 trillion mark in 2024. India is the largest provider of generic drugs globally and is known for its affordable vaccines and generic medications. The Indian Pharmaceutical industry is currently ranked third in pharmaceutical production by volume after evolving into a thriving industry growing at a CAGR of 9.43% in the past nine years. Generic drugs, over-the-counter medications, bulk drugs, vaccines, contract research & manufacturing, biosimilars, and biologics are some of the major segments of the Indian pharma industry. India has the most pharmaceutical manufacturing facilities that comply with the US Food and Drug Administration (USFDA) and has 500 API producers that makeup around 8% of the worldwide API market. 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. The domestic pharmaceutical industry includes a network of 3,000 drug companies and ~10,500 manufacturing units. India enjoys an important position in the global pharmaceuticals sector. The country also has a 97 large pool of scientists and engineers with the potential to steer industry ahead to greater heights. Presently, over 80% of the antiretroviral drugs used globally to combat AIDS (Acquired Immune Deficiency Syndrome) are supplied by Indian pharmaceutical firms. India is rightfully known as the "pharmacy of the world" due to the low cost and high quality of its medicines. Indian pharmaceutical industry is known for its generic medicines and low-cost vaccines globally. Transformed over the years as a vibrant sector, presently Indian Pharma ranks third in pharmaceutical production by volume. The Pharmaceutical industry in India is the third largest in the world in terms of volume and 14th largest in terms of value.

The Pharma sector currently contributes to around 1.72% of the countrys GDP.

Business over view

Our Company was originally incorporated as a Public Limited Company on March 15, 1995 under the Companies Act, 1956 in the name and style of "‘Panchdeep Pharmaceuticals Limited," pursuant to the Certificate of Incorporation dated March 15, 1995 issued by the Registrar of Companies, National Capital Territory (NCT) of Delhi and Haryana.

Subsequently, pursuant to a resolution passed by the Board of Directors in their meeting held on July 31, 1995 and by the Shareholders in their EGM held on October 14, 1995, the name of our Company was changed to ‘Medicamen Organics Limited and a fresh certificate of incorporation dated November 14, 1995 was issued by the Registrar of Companies, Delhi and Haryana at Delhi.

Our Company is engaged in developing, manufacturing and distribution of broad range of pharmaceutical dosage including generic dosage in form of Tablets, Capsules, Oral Liquids, Ointments, Gel, Syrups, Suspension and Dry powders for government (including both state and central governments) and private institutions as contract manufacturer / third party manufacturer.

We market our product to private pharma companies in domestic as well as international markets through third party distributors or on loan license basis. Further, our Company is also strategically focusing on establishing a direct presence in international market for an instance in fiscal2023 and 2024, we have directly exported our product in Burundi. We have a track record of operating B2B model which covers contract manufacturing model. Our products are marketed across India as well as African, CIS and south East Asian Countries like Congo, Benin, Cameg, Togo, Senegal, Burkina Faso, Philippines, Myanmar, Mozambique, Togo, Burundi, Kyrgyzstan and Kenya by our third-party distributor.

We have 2 WHO GMP approved manufacturing facilities located at 60 and 61, Sector 6A, I.I.E. SIDCUL, Ranipur, Haridwar249403, Uttarakhand spread across 21,536 Sq. Ft. Our manufacturing facilities are capable of producing pharmaceutical formulations and products and has fully equipped quality control department with experienced and qualified staff to facilitate smooth manufacturing process. We have in-house testing laboratory and necessary infrastructure to test our raw materials and finished products to match the quality standards. We are ISO 9001:2015 certified company. Our core strength lies in product development and documentation, we are regularly engaged in research and development and launching new products. This gives us an exhaustive product list as well as fair pricing in the market. Our product portfolio consists of 84 products and comprises of wide range of drugs like, Anti-Bacterial, Anti-Diarrheal, Anti-Fungal, Anti-Malarial, Anti Diabetic, Proton Pump Inhibitor, Anti Histamine, Anti-Hypertensive drugs, Anti Lipidemic Drug, Anti Parasitic, Multivitamin, Multi-mineral and Non-steroidal anti-inflammatory drug (NSAIDS).

Our Company is consistent in supplying of quality products round the year. Our products comply with requisite safety standards. We are a quality conscious company. We are constantly striving to expand our line of products and we are always looking for complementary products that will add to our range of products.

We have a professional and experienced management team. Our promoters and directors have a combined experience of nearly three decades in the pharmaceutical industry. We prioritize the implementation of total quality management techniques. Our operations are closely monitored through various quality control equipment and by qualified personnel. Our Promoter Mr. Bal Kishan

Gupta has been the pillar of our Companys growth and has built a strong value system for our Company, with his enriching experience and progressive thinking, we aim to continue to grow in the pharmaceutical industry.

Product portfolio

Our products offerings can be classified in following major categories:

1. Capsules: Various capsule formulation/compositions are being manufactured by us including but not limited to the following:

• Rabeprazole and Domperidone to treat with Hyperacidity.

• Tacrolimus Capsule belongs to a class of drugs known as immune suppressants.

• Ribavirin capsules is an antiviral medicine that is used in the treatment of chronic hepatitis C virus (HCV) infection. It prevents the multiplication of virus in human cells and clears up the infection.

2. Ointment/External Preparation: We are producing antifungal/anti-bacterial formulations like Miconazole,

Nystatin, Clotrimazole, Nadifloxacin, Mometasone in single as well as a composition form like cream and Gel.

Topical Diclofenac, Salicylic acid composition are also being manufactured.

3. Suspension: A variety of cough syrups, Multivitamin/Minerals, Calcium supplements, Antacid liquids, Iron supplements, Laxative liquids, Anthelmetic suspensions, anti-pyritic and anti-inflammatory suspensions are our key products.

4. Dry Powder Sachet: We are manufacturing sachets like pre and probiotic in granular form. Diclofenac Potassium and Sodium granules for oral administration.

5. Tablet: (also known as a pill): We are producing various composition of Ferrous and Folic Acid tablets. These tablets are widely used as an iron supplement to treat or prevent low blood levels of iron (such as those caused by anemia or pregnancy). Iron being an important mineral that the body needs to produce red blood cells keeps, an individual in good health. The formulation is developed in a manner to fulfil the deficiency quickly

Product Category wise revenue bifurcation

Our Competitive Strengths:

1. Experienced Promoter and Management Team: Our management team is experienced in the industry in which we are operating and has been responsible for the growth of our operations and financial performance. Our Promoter and Senior management team leads the company with their vision. They have an adequate experience in the line of the business undertaken by the Company and look after the strategic as well as day to day business operations. The strength and entrepreneurial vision of our Promoter and management have been instrumental in driving our growth and implementing our strategies. We believe that a motivated and experienced employee base is essential for maintaining a competitive advantage. Our motivated team of management and key managerial personnel complement each other to enable us to deliver high levels of client satisfaction.

2. Wide range of Products: We deal in Capsules, Tablets, Liquid Ointment, Gel, Syrups, Suspension and Dry powders. Our product portfolio comprises of vide range of drugs like Anti-Bacterial, Anti Diarrheal, Anti-Fungal, Anti-Malarial, Anti Diabetic, Dental Cure, Proton Pump Inhibitor, Anti Protozoal, Anti Histamine, Anti-Hypertensive drugs, Anti Lipidemic Drug, Multivitamin, Multimineral and Non-steroidal anti-inflammatory drug (NSAIDS). Our product portfolio consists of 84 products, as on March 31st 2024. We operate under different brand names across the globe. Our business is diversified in terms of geographies and therapeutic areas within the pharmaceutical industry. In terms of geographical diversity, we have marked our presence in India and we have registrations for manufacturing products as approved in international markets in countries like Congo, Benin, Cameg, Togo, Senegal, Burkina Faso, Philippines, Myanmar, Mozambique, Togo, Burundi, Kyrgyzstan, Kenya. Our products across various therapeutic areas in pharmaceuticals industry. Our diversified revenue base enables us to mitigate the risk of income concentration by spreading revenue across multiple sources and opens opportunities to new prospects of growth.

3. Scalable Business Model: Our business model is customer centric and order driven, and requires optimum utilisation of our existing resources, assuring quality supply and achieving consequent economies of scale. The business scale generation is basically due to development of new markets and products both domestic and international by exploring customer needs, marketing expertise and by maintaining the consistent quality output. We believe that our business model is scalable.

4. Quality assurance: We believe that quality is an ongoing process of building and sustaining relationships. We are approved by WHO GMP since 21/9/2011 for manufacturing facility 1 and 11/7/2018 for manufacturing facility 2. We have obtained ISO 9001:2015 Certification for the Quality Management System from ISC (Global), 11, 7th floor, Bay Square, Business Bay, Dubai, UAE.

2. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Medicamen Organics Limited and its Management have established robust Internal Control systems to ensure the accuracy of financial reporting and protect against potential losses or unauthorised use of assets. These controls help in the optimal utilisation of the Companys resources while also ensuring that transactions are properly authorised, recorded, and reported to the Management. The Company continually improves and tests its internal controls to ensure the effectiveness of Management and operating procedures. It adheres to accounting standards and guidelines for maintaining books of accounts and financial statement reporting. To assess the effectiveness of internal controls, independent internal auditors are appointed to conduct risk-based audits throughout the year. The Audit Committee of the Board of Directors receives a summary of the auditors observations, and thereon, the necessary corrective measures are undertaken on a prompt basis. Internal control systems are designed to keep a check on operational and the reliability of financial reporting.

3. FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE: Revenue / loss from Operations: REVENUE BREAK-UP

Following is our detailed revenue breakup of the preceding three fiscals.( in lakhs)

EBIDTA: EBIDTA stood at 475.56 Lakhs during the year as against 268.37 Lakhs during the previous year with considerably increase of 207.19 Lakhs compared to previous financial year.

Profits & ratios:The company has incurred a profit of 240.41 Lakhs during the financial year as against a profit of 96.93 Lakhs for the corresponding previous year. The basic earnings per share stood at 19 .90 for the current financial year as against 11.41 for the previous financial year.

Shareholders funds: There is change in the capital structure of the company during the year under review. There is allotment of 200000 equity shares through conversion of loan into equity and subsequently there is allotment of 600000 equity shares through Private Placement and the net worth of the company stands at a comfortable position of 1487.32 Lakhs.

4. CAUTIONARY STATEMENT:

The above management discussion and analysis contains certain forward looking statements within the meaning of applicable security laws and regulations. These pertain to the companys future business prospects and business profitability, which are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, competition, economic growth in India, ability to attract and retain highly skilled professionals time cost over runs on contracts, government policies and actions with respect to investments, fiscal deficits, regulations etc.