Parmax Pharma Ltd Management Discussions

Global Economy:

The IMFs January 2025 World Economic Outlook reports that global growth is expected to remain steady but subdued at 3.3% in both 2025 and 2026, below the 2000-2019 historical average of 3.7%. The forecast for 2025 is broadly unchanged from October 2024, with stronger growth in the United States offsetting weaker projections for other major economies. Global headline inflation is anticipated to decline to 4.2% in 2025 and 3.5% in 2026, with advanced economies expected to reach their inflation targets earlier than emerging markets.

The global economic outlook is shaped by diverging national trends and significant uncertainty. While the U.S. economy remains resilient, expanding by 2.7% in late 2024 due to strong consumer spending and favourable financial conditions, other advanced economies like the Euro area and Japan have struggled with weak manufacturing and temporary disruptions. Chinas growth slowed to 4.7% amid sluggish consumer demand and a slow property sector recovery, while Indias growth decelerated due to declining industrial activity.

Disinflation continues globally, although unevenly. While core goods inflation has stabilised, services inflation in the U.S. and Europe particularly remains elevated. Central banks are responding differently, with some continuing to tighten policy amid persistent inflation and others easing as pressures subside. Financial conditions remain generally accommodative, though tighter in emerging markets due to a strong U.S. dollar and geopolitical uncertainties.

Trade policy uncertainty, political instability in parts of Asia and Europe, and ongoing geopolitical tensions (especially in the Middle East and Ukraine) weigh on global sentiment. Oil prices are projected to fall due to weak Chinese demand and robust non-OPEC and supply, while gas prices may rise due to weather-related disruptions.

Risks to the global outlook are tilted to the downside over the medium term, though the near term presents a mixed picture. While U.S. growth could exceed expectations due to deregulation and expansionary fiscal policy, other regions face risks from inflation stickiness, weak investment and potential tariff escalations. These divergent conditions may lead to broader policy and monetary divergences, heightening volatility in capital flows and exchange rates.

Policy priorities include keeping inflation under check, maintaining fiscal discipline, and implementing structural reforms to boost long-term growth. The IMF emphasises the need for multilateral cooperation, particularly in trade, to reduce fragmentation and build resilience within the global economy

Indian Economy:

Overall, the outlook for the Indian economy remains positive. The Reserve Bank of India has projected Indias real GDP growth for FY 2025-26 at 6.5%, with macroeconomic fundamentals stable and risks broadly balanced. The global economic environment remained subdued during FY 2024-25, particularly affecting Indias major trade partners, leading to weaker demand for merchandise exports. At the same time, falling international commodity prices brought down import values, resulting in a narrower merchandise trade deficit. This trend, coupled with robust remittance inflows, helped contain the Current Account Deficit at 1.5% of GDP, indicating external sector stability.

On the demand side, household consumption is projected to gain momentum, aided by improving rural incomes, moderation in inflation, and enhanced consumer confidence. Prospects for fixed investment remain encouraging, supported by rising private sector capex, stronger corporate balance sheets, and continued public sector investment. The rebound in global trade and greater participation in global value chains are also expected to boost external demand, adding to the growth momentum. Inflationary pressures, particularly food inflation, showed signs of easing toward the end of FY 2024 25.

The Reserve Bank of India, in its April 2025 monetary policy statement, projected headline inflation to remain around 4.0% for 2025-26, with quarterly estimates ranging from 3.6% in Q1 to 4.4% in Q4. This revision was driven by declining core inflation, record wheat and pulse output, and stabilisation in food prices. The policy repo rate was reduced by 25 basis points to 6.0%, marking a shift towards a more accommodative stance to support growth amid global volatility. Additionally, the Cash Reserve Ratio remains at 4%, continuing to ensure liquidity support in the system.

However, several headwinds warrant attention. Geopolitical tensions, including volatility in the Middle East and supply chain disruptions, remain a risk to trade flows and energy prices. Persistent inflation in developed markets, fluctuation in global financial markets, and the potential for further geo-economic fragmentation could introduce external shocks. Nevertheless, Indias robust macroeconomic framework, improved financial sector resilience, and policy space for counter-cyclical measures provide confidence in the economys ability to navigate these uncertainties.

Indian Pharma Market

The Indian pharmaceutical industry is the third largest globally by volume, eleventh in terms of medicine spending, and fourteenth by value. India is the worlds leading supplier of generic medicines, recognised for its cost-effective and high-quality pharmaceutical products.

The country hosts the highest number of pharmaceutical manufacturing facilities approved by the U.S. Food and Drug Administration (USFDA). These facilities cater to a diverse range of segments, including generic drugs, over-the-counter (OTC) medications, active pharmaceutical ingredients (APIs), vaccines, contract research and manufacturing services (CRAMS), biosimilars and biologics. The Indian pharmaceutical market is projected to reach US$ 130 billion by 2030 and US$ 450 billion by 2047. This growth will be driven by a combination of factors including increased affordability and accessibility, a growing burden of lifestyle-related diseases, cost-effective production capabilities, and proactive government policies.

Medicine spending in India is expected to grow at a CAGR of 7-10% through 2028, propelled by an ageing population, expanding healthcare access and a rising prevalence of chronic conditions.

Industry Overview

The Indian pharmaceutical industry continues to be one of the largest globally by volume and plays a critical role in supplying affordable medicines, both domestically and globally. Within this, the API manufacturing sector is gaining increased attention due to the governments emphasis on self-reliance through the PLI (Production Linked Incentive) scheme and the reduction of dependency on imports, especially from China.

Domestic demand for APIs remains strong, driven by:

? Growth in formulation manufacturing ? Increasing prevalence of chronic diseases

? Government healthcare schemes expanding access to essential medicines

? Price control regulations (DPCO) affecting formulations, boosting API sales indirectly

Company Overview

Your Company is engaged in the manufacture and supply of bulk drugs (APIs) and selected formulations catering primarily to the Indian pharmaceutical industry. The company has manufacturing facilities approved by Indian regulatory bodies such as CDSCO, State FDA, and operates under GMP-compliant systems.

Core Segments:

? Anti-infectives

? Analgesics & anti-inflammatory

? Cardiovascular APIs

? General oral formulations (tablets, capsules)

Key Highlights:

? Stable growth in API volumes due to consistent domestic demand

? Marginal increase in pricing due to higher input costs passed on

? Improved plant utilization, especially in Q3 and Q4

? Minor exports to neighboring countries (e.g., Bangladesh)

R&D and Process Improvement

Though the company does not have a large R&D division, it has focused on:

? Process optimization for existing APIs to improve yield and reduce cost

? Stability studies for APIs under ICH guidelines

Key Challenges and Risk Factors:

Risk	Impact/Concern	Mitigation
Raw Material Price Volatility	Continued fluctuations in solvents, intermediates	Entered long-term agreements with suppliers
Regulatory Changes (India)	DPCO, environmental norms affecting pricing	Continuous tracking and compliance
Environmental Compliance	ETP norms becoming stricter	Invested in upgrading effluent systems
Competition	Pressure from larger API players	Focused on quality, timely delivery

Human Resources

? Total employee strength as of March 31, 2025: 82 Excluding contractual employees ? Introduced skill development training for QA/QC teams ? Maintained harmonious industrial relations throughout the year

Internal Control Systems

The Company has in place an adequate internal control system commensurate with the size and nature of its operations. These systems ensure proper authorization and recording of transactions, regulatory compliance, and the safeguarding of assets.

Regular internal audits and SOP reviews are conducted, and findings are addressed in a time-bound manner.

Future Outlook (FY 2025 26)

Looking ahead, the company aims to:

? Increase its market share in select APIs through domestic B2B partnerships ? Launch 2 3 new products targeting high-volume therapeutic areas ? Invest in energy-efficient utilities to reduce operational costs ? Explore PLI scheme incentives if eligible

Expected growth: Moderate revenue growth of 8 10%, with stable profitability, subject to raw material price stability and regulatory environment.

Key Financial Ratios:

Sr. No.	Particulars	As at 31.03.2025	As at 31.03.2024	Reason for variation
		(Audited)	(Audited)
1	Debtors Turnover Ratio
	Ratio ( in Months)	0.54	1.97	Variation is due to the Change in sales volume
2	Inventory Turnover ratio
	Ratio ( in Months)	1.48	3.46	Variation is due to the Change in sales volume
3	Interest Coverage Ratio
	Ratio = (a)/(b) (No. of Times)	-1.33	-5.34	Variation is due to the profit during financial year
4	Current Ratio
	Ratio = (CA/ CL)	0.77	0.63	NA
5	Debt Equity Ratio
	Ratio	-4.07	56.07	Variation is due to the Negative netwoth
6	Operating Profit Margin (%)
	Ratio	-0.03	-0.30	Variation is due to the profit during financial year
7	Net Profit Margin (%)
	Ratio	-7.42	-52.03	Variation is due to the profit during financial year
8	Debt Service Coverage Ratio
	Ratio	-0.09	-0.51	Variation is due to the profit during financial year
9	Return on Equity
	Ratio	0.39	-31.54	Variation is due to the profit during financial year
10	Trade Receivable Ratio
	Ratio	0.54	1.97	Variation is due to the Credit terms of the customers of Company
11	Trade Payable Ratio
	Ratio	0.21	8.22	Variation is due to the Credit terms of the vendors
12	Return on Capital employed
	Ratio	0.91	-47.79	Variation is due to the profit during financial year
13	Net capital turnover ratio
	Ratio	-9.29	-3.21	Variation is due to the profit during financial year
14	Debt Service Coverage Ratio
	Ratio	-1.33	-5.34	Variation is due to the profit during financial year

Cautionary Statement

This report contains forward-looking statements, which are based on certain assumptions and expectations of future events. Actual results may differ materially due to various factors including changes in the regulatory environment, raw material pricing, and overall market demand.