The pharma industry has been pivotal during the pandemic and this focus looks set to
continue into 2022. The coronavirus pandemic has not only boosted many pharmaceutical
companies revenues, it has also bolstered their reputations.
Global spending on medicines is projected to grow at a compound annual growth rate
(CAGR) of 3-6% in the next five years, reaching over US$ 1.5 Trillion by 2023. Growth in
the global pharmaceutical market will continue to be led by the US and pharmerging
markets. The pharmaceutical industry globally, has been impacted in an unseen way due to
the outbreak of the COVID-19 pandemic leading to material impact around consumer
requirements and preferences accompanied by macroeconomic, structural and microeconomic
changes in the end -to-end value chain. The pharmaceutical landscape has undergone a
massive transformation with the emergence of new technologies, cost-effective, and more
efficient manufacturing approaches
While new product launches, especially specialty products, will be the key growth
catalyst in developed markets, pharmerging market expansion will be driven by multiple
factors. These factors comprise improving per capita income, increasing healthcare
awareness, ageing population and rising incidence of chronic ailments. The product mix in
the developed world will continue to shift towards specialty and orphan products. Emerging
technologies are enabling healthcare providers to innovate and engage better with key
stakeholders.
a. Industry structure and developments
Indias pharma exports grew by 103 percent to Rs 1,83,422 crore since 2013 -14, the
commerce ministry said that 2021-22 had been the best export performance ever. Union
Minister Piyush Goyal highlighted that India has been serving as the pharmacy of the
world. "Indian pharma companies enabled by their price competitiveness and good
quality, have made a global mark, with 60 percent of the worlds vaccines and 20 percent
of generic medicines coming from India," the commerce ministry said. India ranks
third worldwide for production in terms of volume and 14th by value. The
current market size of the domestic pharmaceutical industry is around $50 billion. The
share of pharmaceuticals and drugs in global exports is 5.92 percent.
While generic drugs still account for about 70% of output, the pandemic has spurred
Indian drug producers to substantially increase their R&D spending. Due to a serious
supply disruption in 2020, Indian drug producers intend to increase local production of
Active Pharmaceutical Ingredients (APIs) in order to reduce their reliance on Chinese
deliveries. Those imports have meanwhile rebounded, but are not yet back to pre-pandemic
levels. The Indian government has taken a slew of initiatives to support the Indian
pharmaceutical industry. Initiatives such as the production linked incentive (PLI)
schemes, medical device and bulk drug parks are likely to boost domestic production of
active pharmaceutical ingredients (APIs), biopharmaceuticals, complex generics, patented
drugs, and various medical devices and transform India as the global manufacturing hub.
This is a major step towards realizing its vision of "Aatmanirbhar Bharat".
The Covid-19 pandemic has been a major disruptor for different industries across the
country including the pharmaceutical industry. While the pandemic exposed numerous
infrastructural vulnerabilities and gaps, it also proved to be a catalyst for change. The
challenges and adve rsities posed by Covid-19 provided the opportunity to modernise and
transform the pharma industry to better cater to the needs of the population.
In the 2020-30 period, it is expected that the Indian pharmaceutical industry will grow
at a CAGR of 12.3 per cent to reach at USD130 billion18. To achieve this ambitious target,
a collaborative effort is required from all the industry stakeholders the healthcare
providers, physicians, payers, policymakers, pharma companies, academic institutions and a
range of service providers offering solutions pertaining to logistics and distribution,
packaging, and other ancillary services.
b. Opportunities and Threats
The Board of your company comprises of highly qualified technocrats with experience of
industry for more than 1 decade and hence can assure secured growth. Company is planning
to increase capacities in existing plant as well as take over some existing units to cater
the need of additional manufacturing capabilities to execute orders in time.
Strategic Location of Manufacturing Units:
Our Company has two (2) manufacturing units in the States of Maharashtra. Both our
Units are strategically located with the following benefits:
Raw materials sourced domestically are easily available from the manufacturers located
in Maharashtra.
Procurement of raw materials is less time consuming and comparatively cheaper.
Skilled and semi-skilled workers are easily available in Palghar, Maharashtra in viewof
the large number of industries located in these areas.
Government has created various infrastructural facilities conducive for growth of
Manufacturing Companies.
The major threats, risks and concerns which may have impact on Companys business are
as follows:
Fresh outbreaks of the pandemic across the world and subsequent disruption in economic
activities may impact economic growth across countries and indirectly also impact
pharmaceutical consumption.
Given the additional spending on battling the pandemic, governments across the world
may try to control pricing of certain products, which may lead to government-mandated
price controls on pharmaceutical products.
Unforeseen circumstances like natural calamities- floods, earthquakes, closure due to
violence, war etc
Keeping Up with Technology
Easy availability of Counterfeit Drugs
Challenging US generics pricing environment, driven by customer consolidation and
higher competitive intensity, on account of faster pace of generic drug approvals by the
USFDA.
Significant volatility in the forex market, especially for emerging market currencies,
may adversely impact reported growth of these markets, even though they may be recordin g
growth in local currency terms.
Developing a specialty pipeline entails high upfront investments for long-term
benefits, and may impact short-term profitability
Interest rate fluctuations and high rates on inflation
Intellectual Property (IP) infringement and leakage
Delay in the government spending on infrastructure
Talent risk due to huge demand for talent globally and attrition
Further, Pharmaceutical manufacturing industry is competitive industry and reflects
with demand-supply chain, trusted quality, and customer confidence is directly linked with
economic factors like consumer reliance, technology and its upgradation etc.
c. Segment wise or product-wise performance
The Company operates in single segment of manufacturing medicines including Diuretics,
Antimalarials, NSAIDS Tablets, Antireterovirals, Anti-Ulcer Drugs and Antacids Tablets.
d. Outlook
With rising export share, CARE Ratings has projected Indias pharma industry to grow at
about
11% in next two years to reach a size of over $60 billon. The main factors that are
expected to drive the growth of industry are (a) ability to leverage the opportunity
available for Indian pharma companies due to expiry of the patent drugs across the globe,
(b) ebbing of regulatory risks, (c) adoption of various strategies to de-risk from
dependency on China for key raw materials, (d) increasing trend in PE investments, and (e)
solid fundamentals of the industry.
Indias pharmaceuticals market (IPM) is expected to grow between 6 and 8 per cent on a
year-on-year (YoY) basis in FY23. In a research note, India Ratings and Research (Ind-Ra)
said it has maintained a neutral outlook for the Indian pharmaceutical sector for FY23.
Large players are adequately capitalised to make bigger investments to adjust for the
ongoing fundamental shift in market opportunities. Cost-cutting measures remain a priority
for Indian companies. However, interim disruptions such as high raw material costs and
logistic expenses will put pressure on the level of free cash flow generated. With the
significant improvement in the free cash flow generated in the near term, M&A
activities will continue to provide inorganic push in FY23.
e.Internal control systems and their adequacy
The Company has built adequate systems of internal controls towards achieving
efficiency and effectiveness in operation, optimum utilization of resources, and effective
monitoring thereof as well as compliance with all applicable laws. The internal control
mechanism comprises of well-defined organization structure, documented policy guidelines,
pre- determined authority levels and processes commensurate with the level of
responsibility. Needless to mention, that ensuring maintenance of proper accounting
records, safeguarding assets against loss and misappropriation, compliance of applicable
laws, rules and regulationsand providing reasonable assurance against fraud and errors
will continue to remain central point of the entire control systems.
g. Discussion on financial performance with respect to operational performance.
The highlight of financial performance is discussed in the Directors Report. The Audit
Committee also reviews financial performance of the Company from time to time
f. Material developments in Human Resources / Industrial Relations front, including
number ofpeople employed
The companys belief in trust, transparency and teamwork has yielded improvement
inemployee efficiency at all levels. The Companys commitment to harmonious
industrialrelations resulted in enhancing effectiveness of operations and enabled the
achievement of benchmarks in industry.
The Companys ongoing objective is to create an inspirational work climate where
talented employees engage in creating sustained value for the stakeholders. The Company
has developed an environment of harmonious and cordial relations with its employees. Due
to the presence of such a culture, there is no communication gap between the employees and
the Management. Loyalty also flows out giving the Company comfortable space to explore new
opportunities in the International markets and tap the sectors untouched
g. details of significant changes (i.e. change of 25% or more as compared to the
immediately previous financial year) in key financial ratios
| Ratios |
For FY 2021-22 |
For FY 2020-21 |
| Debtors Turnover |
4.12 |
4.77 |
| Inventory Turnover |
7.41 |
7.46 |
| Interest Coverage Ratio |
21.43 |
7.76 |
| Current Ratio |
1.55 |
1.54 |
| Debt Equity Ratio |
0.02 |
0.15 |
| Operating Profit Margin (%) |
0.07 |
0.05 |
| Net Profit Margin (%) |
0.05 |
0.03 |
| Return on Net Worth |
0.13 |
0.08 |
Explanations for variation of 25% or more in Key Financial Ratios:
Interest Coverage Ratio: The interest coverage ratio is healthier at 21.43 in FY
2021-22 as against 7.76 in the previous year primarily due to decrease in finance cost
resulting from repayment of borrowings during the year.
Debt Equity Ratio: The Debt Equity Ratio decreased to 0.02 in FY 2021 -22 as
against 0.15 in previous year due to issue of Bonus Shares resulting in increase in the
owned capital of the Company as well as decrease in Borrowings on account of repayment of
term loans .
Operating Profit Margin: The Operating Profit Margin has improved from 0.05% in the
previous year to 0.07% in the current year primarily due to improved inventory management.
Net Profit Margin: The net profit margin improved to 0.05% in FY 2021 -22 as
against 0.03% in the previous year primarily on account of increase in operation
performance, lower impairment losses on investments, higher gain on sale of long-term
investment, lower tax expenses for the year.
Return on Net Worth: The Return on Net Worth has improved from 0.08% in the
previous year to 0.13% in the current year on the base of higher profit for the year.
h. Caution Statement
Statements in this Management Discussion and Analysis Report describing the Companys
objectives, estimates etc. may be "Forward looking statements" within the
applicable laws and regulations. Actual results may vary from these expressed or implied;
several factors that may affect Companys operations include Dependency on
telecommunication and information technology system, Government policy and several other
factors. The Company takes noresponsibility f or any consequences of the decisions made,
based on such statement and holds no obligation to update these in future.
For and on behalf of the Board
Sd/-
Haresh Mehta
Chairman & Whole-Time Director
DIN: 01080289
Date: 12th August, 2022
Place: Mumbai
+91-9892691696
