Norris Medicines Ltd Management Discussions

(A) Industry Structure and Development:

The Company is engaged in the Health Care Industry and has two plants situated at GIDC, Ankleshwar, Gujarat. Both the plants of the Company are WHO GMP approved. The Company is primarily engaged in carrying out contract manufacturing and Loan License Manufacturing for large Multinational and big Indian Pharma Companies. The Company has now renovated its sterile injectable plant and with this the plant is now as per international standards. The Company now expects the order flow from other major companies and the volumes would improve.

The pharmaceutical industry continues to remain an essential and steadily evolving sector, supported by increasing healthcare awareness, growing demand for quality medicines, expansion of healthcare infrastructure and increasing pharmaceutical consumption in both domestic and international markets. India continues to maintain a significant position in the global pharmaceutical supply chain and remains one of the leading suppliers of generic medicines and pharmaceutical formulations. Indias pharmaceutical exports have continued to demonstrate resilience, with exports of drugs and pharmaceuticals remaining strong during FY 2025-26. The industry is also witnessing increasing opportunities in contract manufacturing, complex formulations, specialty products and exports to regulated and semi-regulated markets.

The Company has renovated and upgraded its sterile injectable manufacturing facility with the objective of bringing the facility in line with international standards and strengthening its manufacturing capabilities. The Company expects the upgraded facility to enable it to pursue additional business opportunities from established pharmaceutical companies and improve utilisation of its manufacturing infrastructure.

The pharmaceutical industry, however, continues to operate in a highly regulated environment. Increasing quality and regulatory requirements, compliance costs, raw material prices, energy costs and manpower costs remain important factors influencing the profitability of pharmaceutical manufacturers. The Company continues to focus on maintaining quality standards, improving operational efficiency and strengthening its customer base in order to participate in the growth opportunities available in the sector.

(B) Opportunities, Threats, Risks, Concerns:

The healthcare and pharmaceutical sector continues to offer long-term growth opportunities on account of increasing healthcare expenditure, growing demand for medicines, expansion of healthcare access and increasing demand for quality and cost-effective pharmaceutical products.

For the Company, opportunities exist in contract manufacturing and loan licence manufacturing, particularly from established pharmaceutical companies seeking reliable manufacturing partners. The upgraded sterile injectable facility is expected to provide an opportunity to increase the Companys engagement with existing as well as prospective customers, subject to receipt of appropriate orders and regulatory/customer approvals.

The Company also intends to explore opportunities in export markets and diversify its customer and geographical base. Indias pharmaceutical exports have continued to grow, with the countrys pharmaceutical industry increasingly serving markets across the United States, Europe, Africa and other emerging markets. This provides opportunities for Indian pharmaceutical manufacturers with appropriate quality systems and manufacturing capabilities. Indias pharmaceutical exports crossed US$ 30 billion and continued to grow during FY 2025-26, demonstrating sustained international demand for Indian pharmaceutical products.

At the same time, the Company faces various business and operational risks, including pricing pressures, increasing regulatory and compliance requirements, fluctuations in the cost of raw materials, energy and manpower, customer concentration, competitive pressures, changes in government policies and pharmaceutical pricing regulations, and risks associated with entering new domestic and international markets.

The pharmaceutical manufacturing industry is also required to continuously upgrade its facilities, quality systems and processes in line with evolving regulatory requirements. Such compliance may require additional capital expenditure and operating expenditure and may affect margins in the short to medium term.

The Company seeks to mitigate these risks through continuous improvement in manufacturing and quality systems, cost optimisation, efficient procurement, customer diversification, development of export opportunities and better utilisation of its manufacturing facilities.

The Company continues to focus, inter alia, on the following measures:

1. Reduction in raw material costs through efficient procurement, regular negotiations with key suppliers and optimisation of procurement quantities.

2. Improvement in manufacturing efficiency and capacity utilisation.

3. Strengthening of quality systems and compliance standards.

4. Development of new customers and diversification of the customer base.

5. Exploring export opportunities and entering new geographical markets.

6. Effective control over energy, manpower and other operating costs.

7. Better utilisation of the Companys upgraded sterile injectable manufacturing facility.

(C) Segment wise performance:

The Company operates in a single business segment, namely the pharmaceutical/healthcare manufacturing segment. Accordingly, separate segment-wise reporting is not applicable to the Company. During the Financial Year 2025-26, the Companys turnover including other income stood at 588.15 Lakhs as compared with 566.40 Lakhs during the previous financial year, representing an increase of approximately 3.84%.

The Companys operations continued to remain under pressure during the year, and the Company recorded a net loss of 125.15 Lakhs during FY 2025-26 as compared with a net loss of 118.68

Lakhs during FY 2024-25. While the Company has recorded an improvement in turnover, profitability continues to be affected by the overall cost structure, including manufacturing, compliance, manpower and other operating costs. The Company is focused on improving capacity utilisation, increasing business volumes and implementing cost optimisation measures with a view to improving operating performance and profitability.

(D) Outlook:

The Company remains focused on improving its business volumes, strengthening its manufacturing capabilities and improving operational efficiency. The renovation and upgradation of the sterile injectable manufacturing facility is expected to strengthen the Companys ability to cater to the requirements of established pharmaceutical companies and pursue new business opportunities.

The Company intends to focus on increasing capacity utilisation, strengthening customer relationships, developing new customers, exploring export opportunities and improving its product and service capabilities.

The Company will continue to implement cost reduction measures, including efficient procurement, optimisation of manufacturing processes, better utilisation of resources and control over operating expenses. At the same time, the Company will continue to place emphasis on maintaining the required quality and regulatory standards.

The Indian pharmaceutical sector continues to present opportunities for growth, particularly in generic formulations, contract manufacturing and exports. Indias pharmaceutical exports have continued to show resilience, while the domestic pharmaceutical market is also expected to maintain a growth trajectory.

The Company believes that its manufacturing infrastructure, WHO-GMP-approved facilities, experience in contract manufacturing and upgraded sterile injectable facility provide a foundation for pursuing future growth opportunities. However, the actual performance of the Company will depend upon market conditions, receipt of orders, capacity utilisation, regulatory requirements, pricing conditions and other factors affecting the pharmaceutical industry.

(E) Financial Performance:

The turnover including other income of the Company for the Financial Year 2025-26 amounted to Rs. 588.15 Lakhs as against last year s Rs. 566.4 Lakhs. The Net Loss is Rs. 125.15 Lakhs as against

Rs. 118.68 Lakhs of last year.

Despite the improvement in turnover, the Company reported a net loss of 125.15 Lakhs during FY

2025-26 as against a net loss of 118.68 Lakhs in the previous year. The Companys profitability continues to be affected by the cost of operations and the relatively low level of business volumes and capacity utilisation.

The management continues to focus on improving business volumes, increasing capacity utilisation, controlling procurement and operating costs and improving overall operational efficiency. The Company expects that increased utilisation of its manufacturing facilities and development of additional business opportunities may contribute towards improvement in financial performance over the medium to long term.

(F) Internal Control Systems and Adequacy:

The Company maintains a system of established policies and procedures for internal control over its operations and activities. The Company has appointed M/s. Dhiren Y Parikh & Co., Chartered Accountants, Vadodara, as the Internal Auditors to assist in reviewing the internal control systems and their adequacy.

The Company has appropriate internal control systems commensurate with the size and nature of its operations. These controls are designed to safeguard the Companys assets, prevent and detect unauthorised use or disposition of assets, ensure that transactions are appropriately authorised and recorded, and ensure that financial and operational information is reported accurately and on a timely basis.

The internal control framework covers, inter alia, financial and operational controls, procurement, inventory, production, sales, accounting and reporting processes. The internal audit programme is approved by the Audit Committee, and the findings and observations arising from internal audits are placed before the Audit Committee for review and appropriate action.

The Companys internal control systems are periodically reviewed to identify areas for improvement and to ensure that controls remain appropriate in relation to the Companys operations. The Company also uses Pharmasuite as its ERP platform, which supports timely recording, monitoring and control of various business transactions.

Based on the information available to the management, the Company considers its internal control systems to be adequate and commensurate with the size and nature of its business.

(G) Developments on Human Resources/Industrial Relations Front:

Human resources continue to remain an important component of the Companys operations, particularly considering the technical, manufacturing and quality requirements of the pharmaceutical industry.

The Company continuously reviews its manpower requirements to ensure availability of appropriate human resources commensurate with its operational requirements. The Company places emphasis on employee training, skill development and updating of technical and regulatory knowledge to support operational efficiency and compliance with applicable quality standards.

The industrial relations of the Company continued to remain cordial during the year. The Company continues to maintain a work environment conducive to employee development, productivity and operational efficiency.

(H) Global Pharmaceutical Industry:

The Indian pharmaceutical industry continues to occupy an important position in the global pharmaceutical ecosystem. India is one of the worlds leading suppliers of generic medicines and has a significant presence in pharmaceutical formulations, vaccines, APIs, biosimilars and contract manufacturing.

The sector has continued to benefit from increasing healthcare demand, growing pharmaceutical consumption, expansion of healthcare access and increasing export opportunities. Indias pharmaceutical exports have demonstrated resilience despite global economic and geopolitical uncertainties, with FY 2025-26 exports of drugs and pharmaceuticals reported at approximately US$31 billion.

The industry is also witnessing increasing emphasis on quality, regulatory compliance, advanced manufacturing capabilities and supply-chain resilience. Contract manufacturing and specialised manufacturing capabilities provide opportunities for pharmaceutical companies that are able to meet stringent quality and regulatory requirements.

At the same time, the industry faces challenges arising from pricing pressures, regulatory scrutiny, increasing compliance expenditure, raw material and energy costs, geopolitical uncertainties and competition in domestic as well as international markets. Pharmaceutical manufacturers are therefore required to continuously improve efficiency, quality systems and cost competitiveness.

Against this backdrop, the Company intends to leverage its manufacturing infrastructure, WHO-GMP-approved facilities and upgraded sterile injectable manufacturing facility to pursue additional business opportunities in contract manufacturing and loan licence manufacturing. The Company also proposes to continue exploring export opportunities and customer diversification as part of its strategy for improving business volumes and reducing dependence on individual markets or customers.

The management remains cautiously optimistic about the long-term prospects of the pharmaceutical sector and will continue to focus on sustainable business growth, operational efficiency, quality and regulatory compliance.