Medico Intercontinental Ltd Management Discussions

In terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 the Management Discussion and Analysis Report (MDAR) is structured as follows:

- Economic Outlook

- Industry structure and developments

- Opportunities

- Segment-wise or product-wise performance

- Outlook

- Threats, Risk and Concerns

- Internal Control System

- Financial and operational performance

- Material Development in Human Resources

- details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefore, including: (i) Debtors Turnover (ii) Inventory Turnover (iii) Interest Coverage Ratio (iv) Current Ratio (v) Debt Equity Ratio (vi) Operating Profit Margin (vii) Net Profit Margin or sector-specific equivalent ratios, as applicable.

- details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.

Some Statements in this discussion may be forward looking. The Companys actual results, performance or achievements can thus differ materially from those projected in any such forward-looking statements in the management discussion and analysis on account of various factors such as changes in Government regulations, tax regimes, impact of competition, etc.

?€“ Economic Outlook:

India stands resilient amid global economic challenges and geopolitical uncertainties. The First Advance Estimates of Gross Domestic Product 2024-25 projects GDP growth of 6.4% in FY 2024-25, lower than the 8.2% growth achieved in FY 2023-24, owing to demand slowdown, sharper deceleration in industrial activities, and inflationary pressures. (Source: pib.gov.in)

Notwithstanding the prevailing challenges, Indias economy is expected to remain buoyant, with a projected growth of 6.5% in FY 2025-26 and FY 2026-27, maintaining its status as the fastest growing economies. Key growth drivers include rapid infrastructure development and digitization, booming construction activity, and favorable policy reforms, among others. (Source: thehindubusinessline.com)

?€“ Industry Structure and Developments:

The Indian pharmaceutical industry has grown exponentially over the past few years and is ranked third in pharmaceutical production by volume. Currently contributing around 1.72% to Indias GDP, the pharmaceutical market is projected to reach a value of US$130 billion by 2030 and US$450 billion by 2047. The Indian pharmaceutical market grew by 7.6% in 2024, with a strong 8% CAGR from 2021 to 2024, signaling steady expansion. Growth has been primarily driven by price increases and new product introductions, with minimal contribution from volume. Chronic therapies account for 40% of the market, led by the Cardiac segment, which has grown at a 10% CAGR (2021?€“2024), alongside Gastrointestinal, Pain, and Neuro/CNS therapies. The Antidiabetic market recorded a 7.1% growth in 2024, with a 6.9% CAGR over the same period. India exports to more than 200 countries in the world, with the US being the key market. The pharmaceuticals export share increased to 6.4% in FY24 from 5.8% in FY19, with export values reaching $27.9 billion from $19.1 billion in FY19. The Strengthening of Pharmaceutical Industry (SPI) scheme aims to enhance existing infrastructure with a total outlay of Rs. 500 crores. (Source: IBEF) The Indian pharmaceutical industry is poised for substantial growth in the coming years, driven by a combination of favorable policies, rising incidences of chronic diseases, longer life expectancies, increasing foreign investments, accelerated adoption of innovation and technology, and a strong focus on domestic manufacturing of high-quality pharmaceutical products.

India advantages

Growth in partnerships and co-marketing agreements: Partnerships and co-marketing agreements between Indian and foreign companies are expected to increase, reflecting benefits for both originators and local partners. Such alliances will drive rapid and broader market penetration for new brands while increasing sales for more established products.

Expansion of e-pharmacy and chain businesses: E-pharmacy sales, which were already rising rapidly, saw a strong surge in demand during the second wave of the pandemic, registering more than 25% growth. The rapid growth of the sector is encouraging investments from large businesses, and consolidation of smaller players; however, it will lead to increased competition and pressure on drug prices.

Increase in health insurance coverage: The central governments Ayushman Bharat ?€“ Pradhan Mantri Jan Arogya Yojana (ABPMJAY) health insurance scheme will drive healthcare access, affordability and improve health outcomes over the forecast period. The Aap Ke Dwar Ayushman campaign, to facilitate door-to-door beneficiary mobilization, identified over 40 million people under the scheme.

Low cost of production: The presence of various generic drug companies is a major factor for India to establish a leadership position in the global pharmaceutical sector. Furthermore, India provided for ~40% of the generic demand in the United States and 25% of all medicine in the United Kingdom. India is the worlds largest supplier of generic medications, accounting for ~20% of the worldwide supply by volume and supplying about half of the global vaccination demand.

Company performance: During the current financial year, the overall business performance has been seen improving. The total Revenue during the current financial year stood at Rs. 6763.75 Lakhs as compared to Rs. 4445.34 Lakhs in the previous year. The Profit After tax in the current year stood at Rs. 256.58 Lakhs as compared to Rs. 189.70 Lakhs in previous year which is quite impressive. Your Board is looking more confident to increase revenue and profit in coming years.

Your company is engaged in trading of pharmaceutical products. Over the years, our company has built a strong presence in the market through its cumulative experience, strong distribution network as well as sound systems and processes. Your company shall be able to leverage its existing distribution network to introduce new products in the market.

?€“ Opportunities and Threats:

Being a Trading company, our company is exposed to specific risks that are particular to its business and the environment within which it operates including interest rate volatility, economic cycle, and market risk. Further, venturing into new verticals and products shall also expose your company to risk. However, these also give an opportunity to exponentially grow the business.

?€“ Business Performance:

During the current financial year, the overall business performance has been seen improving. The total Revenue during the current financial year stood at Rs. 6763.75 Lakhs as compared to Rs. 4445.34 Lakhs in the previous year. The Profit After tax in the current year stood at Rs. 256.58 Lakhs as compared to Rs. 189.70 Lakhs in previous year which is quite impressive. Your Board is looking more confident to increase revenue and profit in coming years.

?€“ Outlook

With the current promoters and management at the helm, your company is hopeful about the expansion of the business operations. Improving economic scenarios, growing consumption and demand shall create more opportunities.

It is expected that the economic conditions shall improve.

?€“ Risks and areas of concern:

Our strength is our determination and team work, weakness is the low equity base, opportunities are multiples and threats are the vibrations in the economy and government policies.

In any business, risks and prospects are inseparable. As a responsible management, the Companys principal Endeavour is to maximize returns. The Company continues to take all steps necessary to minimize its expenses through detailed studies and interaction with experts.

?€“ Internal control systems and their adequacy

The Company has carried out the internal audit and has ensure that recording and reporting are adequate and proper, the internal controls exist in the system and that sufficient measures are taken to update the internal control system. The system also ensures that all transactions are appropriately authorized, recorded and reported. Exercises for safeguarding assets and protection against unauthorized use are undertaken from time to time. The Companys audit Committee reviewed the internal control system. All efforts are being made to make the internal control systems more effective. All these measures are continuously reviewed by the management and as and when necessary, improvements are affected.

?€“ Material developments in human resources/industrial relations front, including number of people employed.

The company had sufficient numbers of employees at its registered office. The company recognizes the importance of human value and ensures that proper encouragement both moral and financial is extended to employees to motivate them. The company enjoyed excellent relationship with workers and staff during the year under review.

?€“ details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefore, including:

There were following changes in the below-mentioned ratios which may or may not be 25% or more as compared to the immediately previous financial year:

(i) Debtors Turnover \u2013	3.56:1 as compared to 2.21:1 of previous year.
(ii) Inventory Turnover \u2013	14.93:1 as compared to 8.86:1 of previous year.
(iii) Interest Coverage Ratio \u2013	6.32:1 as compared to 12.77:1 of previous year.
(iv) Current Ratio \u2013	5.31:1 as compared to 8.89:1 of previous year.
(v) Debt Equity Ratio \u2013	0.52:1 as compared to 0.09:1 of previous year.
(vi) Operating Profit Margin (%) \u2013	16.47% as compared to 16.93% of previous year.
(vii) Net Profit Margin (%) \u2013	3.82% as compared to 4.31% of previous year.

or sector-specific equivalent ratios, as applicable.

?€“ details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof ?€“ 0.08:1 as compared to 0.08:1 of previous year.