Novelix Pharmaceuticals Ltd Management Discussions

FORWARD-LOOKING STATEMENTS

The Management Discussion and Analysis Report has been prepared in compliance with the applicable requirements of the Listing Regulations and other applicable laws and regulations. This report contains statements relating to the Companys objectives, strategies, plans, expectations and projections concerning its business and financial performance.

Certain statements contained herein may constitute forward-looking statements within the meaning of applicable securities laws and regulations. Such statements are based on the Companys current expectations, estimates, assumptions and projections and are subject to various risks and uncertainties. Actual results, performance or achievements may differ materially from those expressed or implied in such statements due to various factors, including changes in economic conditions, market demand, competition, regulatory environment, government policies, raw material availability, foreign exchange fluctuations and other factors beyond the Companys control.

The Company assumes no responsibility to publicly update or revise any forward-looking statements on the basis of subsequent developments, information or events.

INDUSTRY OVERVIEW

The Indian pharmaceutical industry continues to play a pivotal role in the global healthcare ecosystem and remains one of the worlds leading suppliers of generic medicines by volume. The sector is witnessing a gradual shift from conventional pharmaceutical products towards specialty drugs, biologics, complex generics, active pharmaceutical ingredients (APIs), pharmaceutical intermediates and research-driven healthcare solutions.

Growing healthcare expenditure, increasing life expectancy, ageing populations, rising prevalence of chronic and lifestyle-related diseases and increasing awareness regarding healthcare are expected to support long-term demand for pharmaceutical products globally.

India continues to strengthen its position as a strategic pharmaceutical manufacturing and export hub.

Government initiatives, including Production Linked Incentive (PLI) schemes and measures aimed at strengthening domestic manufacturing capabilities and reducing dependence on imports, are expected to provide opportunities for companies operating in APIs, key starting materials (KSMs), pharmaceutical intermediates and related areas.

The Indian pharmaceutical industry also benefits from its established manufacturing ecosystem, skilled scientific manpower, cost competitiveness and increasing acceptance of Indian pharmaceutical products in international markets.

Hyderabad / Telangana Pharmaceutical Ecosystem Hyderabad and Telangana continue to hold a strategically important position in Indias pharmaceutical and life sciences ecosystem. The region has a strong concentration of pharmaceutical companies, API manufacturers, research institutions, clinical research organisations and supporting infrastructure.

The presence of Genome Valley and other life-sciences infrastructure provides a favourable environment for research, product development, pharmaceutical manufacturing and allied activities.

For Novelix Pharmaceuticals Limited, the Companys presence in Hyderabad provides access to a well-developed pharmaceutical ecosystem, skilled manpower, research capabilities, suppliers, customers and supporting service providers.

OPPORTUNITIES AND EXISTING THREATS AND RISKS FACED BY THE INDUSTRY Opportunities 1. Growing Global Healthcare Demand

The increasing global population, ageing demographics and rising incidence of chronic and lifestyle-related diseases are expected to result in sustained demand for pharmaceutical products.

2. Increasing Demand for APIs and Pharmaceutical Intermediates

The global pharmaceutical supply chain is increasingly focused on supply-chain resilience and diversification of manufacturing sources. This creates opportunities for Indian manufacturers of APIs, KSMs and pharmaceutical intermediates.

3. Shift Towards Specialty and Complex Products

Pharmaceutical companies are increasingly focusing on specialty products, complex generics, biologics, advanced intermediates and innovative therapeutic modalities. This shift creates opportunities for companies with research, technology and manufacturing capabilities.

4. Growth in Healthcare Research and Technology

Increasing adoption of technology, data analytics, artificial intelligence and digital tools in healthcare and pharmaceutical research is creating new opportunities in Healthcare Research, Analytics & Technology.

5. Export Growth Potential

The continued demand for cost-effective pharmaceutical products in developed as well as emerging markets provides significant opportunities for Indian pharmaceutical companies to expand their export footprint.

6. Government Initiatives

Government initiatives such as PLI schemes and policies aimed at strengthening domestic pharmaceutical manufacturing and reducing import dependence provide a supportive environment for the development of the Indian pharmaceutical ecosystem.

7. Hyderabads Strategic Position

Hyderabads established pharmaceutical and life-sciences ecosystem, research infrastructure and availability of skilled manpower provide a strong platform for the Companys proposed business activities.

8. Research and Development Infrastructure

During the year, the Company continued to leverage the opportunities available through the pharmaceutical and life-sciences ecosystem in Telangana. The Companys research-oriented approach is expected to support its long-term business strategy.

EXISTING THREATS AND RISKS FACED BY THE INDUSTRY

1. Regulatory Stringency in Global Markets

The pharmaceutical industry is subject to stringent regulatory requirements. Compliance with applicable standards and requirements of regulatory authorities in various jurisdictions is essential. Any regulatory non-compliance may result in financial, operational and reputational consequences.

2. Dependence on Raw Materials and Imports

The pharmaceutical industry remains exposed to risks relating to the availability and pricing of APIs, KSMs, intermediates and other raw materials. Geopolitical developments, supply-chain disruptions and fluctuations in international prices may affect operating costs.

3. Price Competition and Margin Pressure

The pharmaceutical industry is highly competitive. Pricing pressure, particularly in generic and regulated markets, may adversely affect margins and profitability.

4. Environmental and Compliance Requirements

Pharmaceutical and bulk-drug activities are subject to environmental, safety and other statutory requirements. Compliance with applicable environmental norms may require continued investment in systems, infrastructure and processes.

5. Global Market Volatility

Changes in exchange rates, international trade policies, geopolitical conditions, interest rates and global economic conditions may affect the Companys business and financial performance.

6. Technology and Product Development Risk

The pharmaceutical and healthcare research sector is technology intensive. Changes in technology, product development requirements and customer expectations may require continuous investment in research, development and technical capabilities.

7. Talent Retention

The availability and retention of qualified scientists, technical professionals, regulatory specialists and other skilled personnel remain important factors for growth in the pharmaceutical and life-sciences sector.

OUTLOOK

The outlook of the Company remains positive. During FY 2025 26, Novelix Pharmaceuticals Limited continued to focus on strengthening its presence in the pharmaceutical sector and developing its capabilities in pharmaceutical intermediates and allied healthcare research activities.

The Company remains cautiously optimistic about its future prospects and intends to build a sustainable business model based on quality, innovation, research capabilities and customer focus.

The Company will continue to evaluate opportunities in the pharmaceutical, pharmaceutical intermediates and Healthcare Research, Analytics & Technology segments while maintaining a prudent approach towards capital deployment, regulatory compliance and operational risk management.

The Companys presence in Hyderabad and access to the established pharmaceutical and life-sciences ecosystem are expected to provide a suitable platform for future growth.

BUSINESS OPERATIONS

The Companys objects were altered during 2024 to enable it to venture into the pharmaceutical bulk-drug business and Healthcare Research, Analytics & Technology. The name of the Company was also changed to Novelix Pharmaceuticals Limited in line with its revised business objectives.

During FY 2025 26, the Company continued its transition towards its pharmaceutical-oriented business model and focused on strengthening its presence in the pharmaceutical intermediates and related segments.

The Company is engaged in to undertake activities relating to the manufacturing and trading of pharmaceuticals and pharmaceutical intermediates (bulk drugs), together with activities in Healthcare Research, Analytics & Technology, in accordance with its corporate objectives and applicable regulatory requirements.

The Company continued to assess business opportunities, establish appropriate infrastructure and develop relationships within the pharmaceutical and life-sciences ecosystem.

REVENUE AND NET PROFITS

(i) Revenue

During the financial year ended March 31, 2026, the Company recorded revenue of 13,233.88 Lakhs, as against revenue of 3,073.44 Lakhs during the previous financial year ended March 31, 2025.

The Companys revenue performance during FY 2025 26 reflects the Companys continued focus on developing its pharmaceutical business and expanding its presence in the pharmaceutical intermediates and allied sectors.

(ii) Net Profit

The Company recorded Profit After Tax (PAT) of 340.43 thousand during FY 2025 26, as compared with PAT of 12.33 Lakhs during FY 2024 25.

The Companys management continues to focus on improving operational efficiency, developing sustainable revenue streams and strengthening the Companys long-term profitability.

(iii) Earnings Per Share

Earnings per share (EPS) for FY 2025 26 stood at 1.21, as compared with 0.08 during FY 2024 25.

OPERATIONAL HIGHLIGHTS

During FY 2025 26, the Company continued its strategic initiatives towards strengthening its pharmaceutical business.

The Company focused on:

1. Development of its pharmaceutical intermediates business;

2. Strengthening its presence within the Hyderabad / Telangana pharmaceutical ecosystem;

3. Developing research and technical capabilities;

4. Exploring opportunities in pharmaceutical manufacturing and trading;

5. Building relationships with customers, suppliers and technical partners;

6. Strengthening systems and processes required for future business expansion; and

7. Evaluating opportunities in Healthcare Research, Analytics & Technology.

The Company will continue to focus on developing its business operations in a measured and sustainable manner.

HUMAN RESOURCE STRATEGY

Strategic human resource management remains an important foundation for the Companys growth.

Novelix Pharmaceuticals Limited seeks to develop a young, dynamic and competent team capable of supporting the Companys pharmaceutical and healthcare research objectives. The Company focuses on attracting, developing and retaining talented professionals with relevant technical, scientific, managerial and regulatory expertise.

The Companys human-resource approach is aligned with the values of innovation, initiative, passion, integrity and humility.

The Company continues to focus on employee development, performance management, learning and development and employee engagement while seeking to provide an inclusive and professional working environment.

INTERNAL CONTROLS

The Company has established internal control systems commensurate with the nature, size and complexity of its operations.

The Companys internal control framework is designed to safeguard its assets, maintain proper accounting records, ensure authenticity and accuracy of transactions and support compliance with applicable laws, regulations and internal policies.

The adequacy and effectiveness of internal controls are reviewed periodically by the management and the Audit Committee.

The Audit Committee and the Board of Directors review the Companys financial performance, internal control environment and other relevant matters to ensure that the Companys operations remain aligned with approved policies, objectives and applicable statutory requirements.

RISK AND CONCERNS

Novelix Pharmaceuticals Limited operates in an industry characterised by regulatory, technological, operational and market-related risks.

The Company faces risks and uncertainties that are typical of the pharmaceutical and healthcare industries and which may have a material impact on its earnings, operations and future growth.

The principal areas of risk include regulatory compliance, market competition, availability and cost of raw materials, supply-chain disruptions, environmental compliance, technology changes, foreign exchange fluctuations, customer concentration, talent availability and changes in government policies.

The Company regularly evaluates these risks and seeks to implement appropriate mitigation measures. The Board of Directors, with inputs from the management and relevant committees, periodically reviews the Companys risk environment and is satisfied that the identified risks are being appropriately monitored and managed.

CAUTIONARY STATEMENT

The Management Discussion and Analysis Report contains statements describing the Companys objectives, strategies, plans, projections, estimates and expectations which may constitute forward-looking statements within the meaning of applicable securities laws and regulations.

Actual results may differ materially from those expressed or implied in such statements.

Important factors that could make a difference to the Companys operations and financial performance include changes in economic conditions, demand and supply conditions, market competition, pricing, availability and cost of raw materials, domestic and international market conditions, foreign exchange fluctuations, changes in government policies and regulations, taxation laws, environmental requirements, technological developments and other incidental factors.

The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of future events, new information or otherwise.