Parenteral Drugs India Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

Global economy is emerging from the collapse triggered by the pandemic, the recovery is projected to be subdued. The COVID-19 outbreak forced many countries into months of lockdown in 2020 and 2021, significantly bringing down economic activity.This had grave bearing across markets, even as several countries observed a second and third wave of the infections that disrupted normal living and working conditions. However, following support from governments and banks there has been steady economic recovery in many countries.According to the International Monetary Fund (IMF), the global economy is projected to grow at 6% in 2021 and 4.4% in 2022. Access to medical supplies, effectiveness of monetary policy support, and exposure to cross-country spillovers will become crucial in driving the recovery.

Overview of Indian Pharmaceutical Industry:-

Over the past several decades, there has been rapid globalisation in the development, manufacture, marketing and distribution of medical products. The growth of Indian pharmaceutical sector will depend on the ability of Companies to align their product portfolio towards therapies of chronic disease that are on the rise due to COVID-19. The economic impact of the COVID-19 pandemic in India has been largely disruptive.Governments and central banks across the country deployed a range of policies to support their economy such as huge and sustained vaccination drive; phased lifting of lockdown; tax reforms; labor and land reforms; lowering key policy rates and various other fiscal stimulus measures.The recovery has been a V-shaped one across all key economic indicators. However, the second wave of COVID-19 is currently sweeping the country, rising input prices, stress in the Micro, Small and Medium-sized Enterprises sector, and a weak labour market are some of the headwinds facing the Indias economic revival. Monetary and fiscal support will remain crucial growth factors.

OPPORTUNITIES AND THREATS

OPPORTUNITIES:-

The Indian pharmaceutical market has exhibited a strong growth trajectory and is fundamentally poised to remain a double-digit growth market owing to several demand levers over the coming years. With rising prevalence of chronic diseases, a significant push towards increasing healthcare coverage towards a large set of the population coupled with government support and insurance coverage, volume growth in all therapies is more than likely to sustain this momentum in the near term, and even increase over the medium term.

The COVID-19 induced pandemic which started in year 2019 and its ongoing effects have opened up opportunities for pharmaceutical companies with nearly almost all major companies leveraging either their R&D capabilities or manufacturing strengths.

THREATS:-

The last year witnessed volatility on macro-economic parameters globally. The Novel Coronavirus (COVID-19) has infected millions of people in more than 150 countries impacting lifestyles, businesses, economies, and the notion of common well-being. The events of economic activity halts and lockdowns in many parts across the globe has created shock, both on demand side and supply side, and has led to imbalances in almost each and every corner, which has a huge cost associated with it. The biggest challenge is to ensure that economies get back on track and operations resume normally while keeping a robust check and implementing a slew of measures to prevent relapses of new waves of COVID-19 infections.

It would not be wrong to mention that customer expectations are rising and scientific productivity is lacklustre and stagnant, which poses a bigger challenge as to how the mismatch would be addressed. The ongoing pandemic is a perfect example of how unpreparedness for the worst could be disastrous in todays world.

SEGMENT AND PRODUCT WISE PERFORMANCE

The Company is dealing in only one segment i.e Pharmaceutical. The company is majorly engaged in job work and manufacturing products for its group company(s).

OUTLOOK

The Companys long-term outlook continues to be promising given the following:

Continued efforts to reduce costs and strengthening competitiveness.

Adapting Good manufacturing practices.

Improve capacity utilization at production units.

Access to new technologies.

Adoption of changing trends that are shaping and changing the industry.

RISKS AND CONCERNS

Operational Risk

Risks are aggregated at the unit, function and organization levels and are categorized by risk groups. Covid-19 pandemic and its after effects adversely affect business position and liquidity of the Company.

Any significant disruption at any of such in-house facilities or third party locations due to internal, third party lapses even on the short term basis due to economic, political & social unrest or by any event which is force majeure, may lead to impair the ability to produce, procure and supply products to the market on a timely basis.

Compliance Risk

Pharmaceutical industry is one of the most dynamic industries across the globe. Changes in regulations by leading regulatory bodies to ensure the quality of the products have compelled the pharmaceutical Companies to modify their compliance practices. The Company is committed to compliance with Good Manufacturing Practices and independent quality assurance system and other applicable compliances.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The company has internal control procedures commensurate with its size and nature of the business. These business procedures strive to optimum use and protection of the available resources and compliance to the policies and procedures. The internal control systems provide for well-defined policies, guidelines and authorizations and approval procedures. Internal and statutory audits were performed to test the adequacy and effectiveness of the internal controls laid down by management and their observations were discussed with the Audit committee of the Board.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The income from operations for the year under report was Rs. 12.16 crores as against Rs. 31.87 crores in the previous year. The company recorded a loss before interest, depreciation and tax of Rs.11.70 crores during the year as against loss before interest, depreciation and tax of Rs. 14.43 crores in the previous year and recorded a loss after interest, depreciation and tax of Rs. 121.71 crores during the year as against a loss of Rs. 114.06 crores during the previous year. The loss was due to overall liquidity crunch being faced by the company resulting in low turnover and productivity and there by higher costs.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES

There has been no material development on human resources and industrial relations front. The relationship with employees and workers continued to be cordial at all levels.

As on 31 March, 2021, there were 909 permanent employees on the rolls of the company.

DISCLOSURE IN ACCOUNTING TREATMENT

In the preparation of financial statements, no different treatment from that prescribed in applicable Accounting Standard has been followed.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

The key financial ratios for the year under review cannot be arrived at since some of the relevant line items of financial statements are not available for fair calculation of requisite ratios. Further, the net worth of the company is negative for preceding financial years. Also, there are no significant changes as compared to immediately previous financial year in key financial ratios. For the period under review, Current Ratio of the Company is 0.06 and Inventory turnover Ratio was 4.91.

CAUTIONARY STATEMENT

Statements in the "Management Discussion & Analysis Report" describing Companys strategy, business and financial analysis are in the nature of judgments and forward looking statements. Actual results may differ materially from those expressed in the statement.