Patron Exim Ltd Management Discussions

ECONOMIC OVERVIEW:

Global Economy

Market Size: The global API market was valued at approximately $255 billion in 2024 and is projected to reach $359 billion by 2030, growing at a CAGR of 5.8%. Growth Forecast: The global API market is expected to continue its growth trajectory through 2025-26 and beyond, supported by sustained demand for pharmaceutical products, increasing healthcare expenditure and the growing requirement for active pharmaceutical ingredients across therapeutic segments.

Key Growth Drivers

a) Chronic Disease Prevalence: Rising incidence of chronic diseases such as cancer, diabetes and cardiovascular conditions continues to fuel demand for APIs and pharmaceutical products.

b) Aging Population: The increasing elderly population across various regions is contributing to higher pharmaceutical consumption and consequently supporting demand for APIs.

c) Biotech and Biosimilars: Advancements in biotechnology, biologic drugs and biosimilar development are creating new opportunities for API manufacturers and suppliers.

d) Generic Drug Demand: Growing demand for cost-effective generic medicines, particularly in emerging markets, continues to support the requirement for APIs and pharmaceutical raw materials.

Source: Grand View Research - Active Pharmaceutical Ingredients Market

INDIAN ECONOMY OUTLOOK:

The Indian pharmaceutical industry continues to maintain its position as one of the key sectors of the Indian economy, supported by strong domestic demand, increasing healthcare expenditure, export opportunities, skilled manpower and continued Government support for domestic pharmaceutical manufacturing. Market Size (2025): The Indian Active Pharmaceutical Ingredients (API) market was valued at approximately USD 19.21 billion in 2025.

Projected Market Size (2034): The Indian API market is projected to reach approximately USD 41.60 billion by 2034, registering a CAGR of around 7.78% during 2026-2034. India continues to strengthen its position as a global pharmaceutical manufacturing hub, supported by its cost-competitive manufacturing capabilities, skilled workforce, established pharmaceutical ecosystem and increasing investments in domestic manufacturing capacity. The growth of generic medicines, biosimilars, contract manufacturing and increasing diversification of global pharmaceutical supply chains are expected to provide further opportunities for the Indian API industry.

Government Initiatives:

- Production Linked Incentive (PLI) Scheme: The Government of India has implemented the PLI Scheme for promotion of domestic manufacturing of critical Key Starting Materials (KSMs), Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs), with a financial outlay of 6,940 crore. The scheme is aimed at strengthening domestic manufacturing capabilities and reducing dependence on imports.

- Promotion of Bulk Drug Parks: The Government has undertaken initiatives to develop Bulk Drug Parks with common infrastructure facilities, thereby strengthening the domestic pharmaceutical manufacturing ecosystem and improving cost competitiveness.

- Strengthening Domestic Manufacturing: Government policies continue to focus on increasing self-reliance in critical pharmaceutical raw materials and reducing dependence on imports, particularly for APIs, KSMs and drug intermediates. The PLI scheme has supported investments and capacity creation in critical bulk drugs.

- Support for Pharmaceutical Research and Development: Various Government initiatives continue to encourage pharmaceutical innovation, technology upgradation and research and development, with particular emphasis on strengthening Indias capabilities in complex medicines, biologics and other high-value pharmaceutical products. Overall Outlook:

The Indian pharmaceutical sector is expected to remain on a growth trajectory during FY 2025-26 and beyond. Increasing healthcare requirements, growth in generic medicines, expanding export opportunities, development of complex APIs and biosimilars, and Government initiatives aimed at strengthening domestic manufacturing are expected to create favourable opportunities for companies operating in the pharmaceutical supply chain.

BUSINESS OPERATIONS:

The Company is engaged in the trading and distribution of a wide range of pharmaceutical raw materials, including APIs (Active Pharmaceutical Ingredients), industrial chemicals, excipients and solvents. During FY 2025-26, the Companys product portfolio comprised approximately 150 APIs, excipients, pharmaceutical chemicals and intermediates. The Company is also engaged in the trading of various chemicals, including petrochemicals, dyes and pigment chemicals, paints and speciality chemicals, agro chemicals, oil and refinery chemicals, foam and adhesive chemicals, plywood and laminate chemicals. The Companys product portfolio also includes chemicals used in the food industry and water treatment, as well as resins, plastics chemicals, polymers and additives. The Companys operations are primarily concentrated in Ahmedabad and the surrounding areas of Gujarat. The Company has obtained certifications including ISO 9001:2015 for Quality Management Systems, ISO 22000:2018 for Food Safety Management Systems and ISO 45001:2018 for Occupational Health & Safety Management Systems. The Company is also certified by International Quality Certification Services UK Ltd. under HACCP (Hazard Analysis & Critical Control Point System) and HALAL requirements and holds WHO-GMP certification for compliance with Good Manufacturing Practices.

OUR PRODUCTS:

APIs (Active Pharmaceutical Ingredients), also known as bulk drugs or bulk actives, are the principal ingredients used in the manufacture of finished pharmaceutical dosage forms such as capsules, tablets, liquids and other forms of medicines, along with other APIs or inactive ingredients, as applicable. The Company believes that timely delivery, consistent quality and commitment to customer requirements are key factors in building and sustaining long-term business relationships. The Companys strength lies in understanding customer requirements and effectively executing orders in a timely and efficient manner. This approach has enabled the Company to receive repeat orders from existing customers and develop relationships with new customers. An active ingredient is the ingredient in a pharmaceutical drug or pesticide that is biologically active and contributes to the intended effect of the product. Terms such as Active Pharmaceutical Ingredient (API), bulk active and active substance are also commonly used in the pharmaceutical industry, depending upon the nature and application of the product.

The Company remains focused on maintaining quality, timely delivery and customer satisfaction, which are important to sustaining its existing customer relationships and supporting future business growth during FY 2025-26.

SWOT ANALYSIS

STRENGTHS

A. Diversified Product Portfolio

The Company has a diversified product portfolio across various segments to fulfil the requirements of its customers. Its offerings include a wide range of pharmaceutical raw materials, including APIs (Active Pharmaceutical Ingredients), excipients, pharmaceutical chemicals, intermediates and other chemical products. The Company supplies products based on market requirements and customer needs. Its diversified product range enables existing customers to source a substantial portion of their requirements from the Company and also provides opportunities to expand business with existing customers as well as cater to a wider base of potential new customers.

B. Experienced Promoter

The Promoter of the Company, Mr. Narendrakumar Gangaramdas Patel, possesses significant in-depth knowledge and experience in the various products traded by the Company and has been instrumental in the consistent development of the Companys business. He has more than two decades of experience in the pharmaceutical trading segment. The Company believes that the Promoters experience and understanding of the pharmaceutical and chemical business will enable the Company to take advantage of existing and emerging market opportunities. The Promoter remains actively involved in the business and provides continuous personal attention and guidance.

C. Quality Service

The Company believes in providing quality products and timely services to its customers. It has established procedures for monitoring customer orders at various stages, from receipt of the customer order through procurement and delivery. The Companys focus on quality, timely delivery and efficient execution has helped it establish goodwill and maintain long-standing relationships with its customers. This has also contributed to customer retention, repeat orders and expansion of its customer base.

D. High Level of Customer Satisfaction

Customer satisfaction continues to be an important strength of the Company. The Company focuses on understanding customer requirements, maintaining product quality, ensuring timely deliveries and providing effective customer support and grievance redressal. The Companys ability to cater to customers across various categories, including retailers, semi-wholesalers and other customers, has helped it develop and maintain a diversified customer base and long-term business relationships.

WEAKNESSES

The Companys business is primarily dependent on the pharmaceutical and chemical industries and is therefore subject to changes in market conditions, demand, pricing and regulatory requirements applicable to these sectors. The Company operates primarily in Ahmedabad and surrounding areas of Gujarat, which provides an established regional customer base but also presents an opportunity for further geographical expansion and diversification of its customer base.

The Companys trading operations are dependent on the availability of products from suppliers and prevailing market prices. Any significant fluctuation in procurement costs or disruption in the supply chain may affect operating margins and working capital requirements.

OPPORTUNITIES

A. Developing Cordial Relationships with Suppliers, Customers and Employees

The Company believes that maintaining strong and mutually beneficial relationships with suppliers, customers and employees is important for sustainable business growth. Its dedicated approach, efficient service and timely delivery have helped it establish strong business relationships over the years. The Company intends to further strengthen its relationships with existing customers and suppliers while developing new relationships and exploring opportunities for business expansion.

B. Building a Professional Organisation

The Company believes in transparency, commitment and coordination in its dealings with suppliers, customers, government authorities, banks and financial institutions. The Company has a blend of experienced personnel to manage its day-to-day operations and may consult external agencies, wherever required, for specialised technical, financial and other matters. The Company continues to focus on strengthening its organisational capabilities and operational systems.

C. Leveraging Marketing Skills and Relationships

The Company continues to focus on strengthening its marketing capabilities and customer relationships. It aims to expand its customer base by ensuring timely execution of orders, maintaining relationships with existing customers and identifying new business opportunities.

D. Focus on Quality Standard Products

Quality of products is an important factor from both the customers perspective and the Companys growth perspective. The Company remains focused on dealing in products that meet the requisite quality standards and applicable regulatory requirements. Providing quality products and reliable services helps the Company strengthen its market reputation and maintain long-term relationships with customers.

E. Government Support

Government initiatives aimed at strengthening domestic pharmaceutical manufacturing, promoting domestic production of APIs, Key Starting Materials (KSMs) and drug intermediates, and reducing dependence on imports provide opportunities for companies operating in the pharmaceutical supply chain.

F. Growing Healthcare Demand

Increasing healthcare awareness, rising healthcare expenditure, growth in chronic diseases and increasing demand for pharmaceutical products provide favourable opportunities for the pharmaceutical raw material and API industry.

G. Growth in Generic Medicines and APIs

The growing demand for affordable generic medicines in domestic and international markets is expected to support demand for APIs, pharmaceutical intermediates, excipients and other pharmaceutical raw materials.

H. Strengthening Domestic Pharmaceutical Manufacturing

Indias continued focus on strengthening domestic pharmaceutical manufacturing and developing a reliable supply chain for critical pharmaceutical raw materials provides opportunities for companies engaged in the trading and distribution of APIs, excipients, intermediates and other pharmaceutical chemicals.

I. Strong Domestic Demand

Indias large population, increasing healthcare requirements and growing consumption of pharmaceutical products provide a strong domestic market for pharmaceutical raw materials, APIs and related products.

THREATS

The Companys future results of operations could potentially be affected by the following factors:

1. Changes in laws, regulations and regulatory requirements applicable to the pharmaceutical and chemical industries.

2. Changes in fiscal, economic or political conditions in India and other relevant markets.

3. Intense competition from existing players as well as new entrants in the pharmaceutical and chemical trading industry.

4. Fluctuations in prices and availability of pharmaceutical raw materials and chemicals, which may affect margins and working capital requirements.

5. Supply-chain disruptions or dependence on particular suppliers for the availability of products.

6. The Companys inability to retain experienced personnel or attract suitably qualified manpower.

7. Changes in technology and business practices requiring continuous adaptation by the Company.

8. Failure to comply with applicable regulatory requirements may adversely affect the Companys operations and reputation.

9. Changes in customer demand and market conditions may adversely affect sales and profitability. 10. Reduction in business from major customers or contracting companies may adversely affect the Companys overall business performance.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has in place an adequate system of internal financial controls and operational controls, commensurate with the size, scale and nature of its business. The internal control systems are designed to provide reasonable assurance regarding the reliability of financial reporting, safeguarding of assets, compliance with applicable laws and regulations, and effectiveness and efficiency of operations. The Company has an Audit Committee headed by an Independent Director, which, inter alia, oversees the financial reporting process, disclosure of financial information and adequacy and effectiveness of the internal financial controls. The internal control systems are periodically reviewed by the management and strengthened, wherever necessary, to ensure that they remain adequate and effective in view of the Companys business operations and requirements.

FINANCIAL POSITION AND RESULTS OF OPERATIONS:

The Company has robust growth and improvement in top line and bottom line on Standalone basis in the Current and previous financial years which is explained below:

(Rs. in lakh)

PARTICULARS	STANDALONE - FINANCIAL STATEMENTS - YEAR ENDED MARCH 31, 2026	STANDALONE - FINANCIAL STATEMENTS - YEAR ENDED MARCH 31, 2025
Revenue from Operations	2420.85	2436.42
Other Income	8.67	31.52
Total Revenue	2429.52	2467.94
Profit / (Loss) before exceptional and extra-ordinary	(108.46)	10.60
Items and tax
Add/(Less): Extra-Ordinary Item	NIL	NIL
Profit / (Loss) after Extra Ordinary Items and before tax	(108.46)	10.60
Tax Expense:
A) Current Income Tax	0.50	3.5
B) Deferred Tax (Assets)/Liabilities	NIL	NIL
Profit / (Loss) After Tax	(108.96)	7.10

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS:

The Company considers employees as its vital and most valuable assets. Your Company considers manpower as its assets and understands that people have been driving force for growth and expansion of the Company. As on March 31, 2026, there were 8 permanent employees employed by the Company. The Company will continue to create opportunity and ensure recruitment of diverse candidates without compromising on meritocracy.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS:

The Company considers its employees as its vital and most valuable assets. The Company recognises that its human resources play an important role in driving its growth and expansion. The Company continues to focus on maintaining a motivated and productive workforce and providing opportunities for professional development and growth. As on March 31, 2026, there were 8 permanent employees employed by the Company. The Company continues to encourage a positive work environment and is committed to providing equal opportunities for recruitment and career development, while ensuring that selection and recruitment are based on merit, skills and suitability. The industrial relations of the Company remained cordial during FY 2025-26.

KEY FINANCIAL RATIOS:

Sr No Ratio	Numerator	Denominator	FY 2025- 26	FY 2024- 25	% of Change	Reason For Movement
1 Current Ratio	Current Assets	Current Liabilities	4.69	7.37	-36.36%	Increase in current liabilities (creditors/advances given)
2 Debt- Equity Ratio	Total Debt	Shareholders Equity	0.05	0.13	-61.53%	Decrease in overall loan borrowings
3 Debt Service Coverage Ratio	Earnings available for debt service	Debt Service	NA	NA	NA	Not Applicable / No Borrowings from Banks
4 Return on Equity (ROE)	Net Profit after taxes	Average Shareholders Equity	-2.86%	0.18%	-1688%	Due to massive Net Loss in the current year
5 Inventory Turnover Ratio	Cost of Goods Sold	Average Inventory	14.71	8.66	69.86%	High recorded COGS with substantially lowered average inventory holding
6 Trade Receivables Turnover Ratio	Net Credit Sales	Average Trade Receivables	4.70	3.04	54.60%	Overall reduction in trade receivable balances pending
7 Trade Payables Turnover Ratio	Net Credit Purchases	Average Trade Payables	4.56	NA	NA
8 Net Capital Turnover Ratio	Net Sales	Working Capital	0.77	NA	NA
9 Net Profit Ratio	Net Profit	Net Sales	-4.50%	0.29%	-1651%	Massive reduction due to Net Loss incurred in the current year
10 Return on Capital Employed (ROCE)	Earnings before interest and taxes	Capital Employed	-2.71%	0.27%	-1103%	Due to significant Net Loss resulting in negative earnings
11 Return on Investment (ROI)	Income generated from invest	Average Invested Funds	0.98%	NA	NA

CAUTIONARY STATEMENT:

The content of this Management Discussion and Analysis may contain certain Forward-Looking Statements, including, but not limited to, statements relating to the implementation of strategic initiatives, future business developments, growth prospects and economic performance of the Company. These forward-looking statements reflect the Companys current assessment, expectations and assumptions regarding future developments and performance. However, actual results and developments may differ materially from those expressed or implied in such statements due to various risks, uncertainties and other factors beyond the Companys control. These factors may include, but are not limited to, general market and macroeconomic conditions, governmental and regulatory developments, changes in currency exchange rates and interest rates, competitive pressures, technological developments, changes in the financial condition of third parties dealing with the Company, legislative developments, as well as other factors that may affect the Companys business operations and financial performance. The Company does not undertake any obligation to publicly update, revise or otherwise modify any forward-looking statements to reflect subsequent events, developments or circumstances, except as may be required under applicable laws and regulations.

For and on behalf of Board of Directors
PATRON EXIM LIMITED

Sd/-
NARENDRAKUMAR
GANGARAMDAS PATEL
Managing Director
(DIN: 07017438)

Date: September 08, 2026
Place: Ahmedabad
Registered office:
A-1106, Empire Business Hub,
Science City Road, Sola,
Ahmedabad - 380060, Gujarat