Patron Exim Ltd Management Discussions

"Annexure E"

ECONOMIC OVERVIEW:

Global Economy

Since recent past years, the world economy is facing various challenges such as initially spread of Covid-19 pandemic, lock down, disruption of supply chain, ongoing war in Ukraine, climate change conditions, higher inflation rate etc. The global inflationis projected at 7.00 % in 2023 which is set to fall from 8.7 % in the 2022 due to interest rates raised by the central banks and lower commodity prices. The baseline forecast is for global growth to fall from 3.4 percent in 2022 to 2.8 percent in 2023, before settling at 3.0 percent in 2024. For Advance economies, it is expected to growth slowdown by declining from 2.7% in 2022 to 1.3 % in 2023.

(Source: IMF, World Economic Outlook, April 2023)

The developing Asia forecasts the Inflation to moderate in year 2023 and year 2024, from 4.4% in 2022 to 4.2% in 2023 and 3.3% in 2024, gradually moving closer to pre-pandemic averages.

(Source: ASB -Asia Development Bank –April, 2023)

Indian Economy Outlook

As per Deloitte Insights for the month of July 2023, The Indian economy will likely grow steadily over FY2023–24, but uncertainties around the activities of central banks globally and oil price movements pose downside risks. The Indian economy GDP growth for FY 2022-23 is 7.2% which is higher than the projected GDP by 7% for the year 2022-23. During the Q3 (ending Dec-2022) of FY 2022-23, DGP growth accelerated to 6.1%.

The Indian economy is expected to remain robust growth in a range of 6.5 - 6.7 % in the FY 2023-24. The India is forecasted to be one of the fastest growing economy in FY 2023-24 by robust growth in private consumption and private investment. The Asian Development Bank projects Indias GDP to moderate to 6.4% in FY 2023 and rise to 6.7% in FY 2024, driven by private consumption and private investment on the back of government policies to improve transport infrastructure, logistics, and the business ecosystem.

Outlook for Industry

Indian pharmaceutical industry is known for its generic medicines and low-cost vaccines globally. Transformed over the years as a vibrant sector, presently Indian Pharma ranks third in pharmaceutical production by volume. In the last nine years, Indian Pharma sector has grown steadily by CAGR of 9.43%. Pharma sector has been consistently earning trade surplus. During 2020-21, total pharma export was 180555 crore (USD 24.35 Bn) against the total pharma import of 49436 crore (USD 6.66 Bn), thereby generating trade surplus of USD 17.68 Bn. Till end September 2021, total pharma export has been 87864 crore (USD 11.88 Bn) as against total import of Rs.33636 crore (USD 4.66 Bn), thereby generating a trade surplus of 54228 crore (USD 7.22 Bn). Major segments of Indian Pharmaceutical Industry include generic drugs, OTC medicines, bulk drugs, vaccines, contract research & manufacturing, biosimilars and biologics.

Indian pharmaceutical industry also plays significant role globally. India has the highest number of United States Food and Drug Administration (USFDA) compliant Pharma plants outside of USA. There are 500 API manufacturers contributing about 8% in the global API Industry. India is the largest supplier of generic medicines with 20% share in the global supply by manufacturing 60000 different generic brands across 60 therapeutic categories. Access to affordable HIV treatment from India is one of the greatest success stories in medicine. India is one of the biggest suppliers of low-cost vaccines in the world. Because of the low price and high quality, Indian medicines are preferred worldwide, thereby rightly making the country the "pharmacy of the world".

The Indian Pharmaceuticals industry plays a prominent role in the global pharmaceuticals industry. India ranks 3rd worldwide for production by volume and 14th by value. The nation is the largest provider of generic medicines globally, occupying a 20% sharein global supply by volume, and is the leading vaccine manufacturer globally. India also has the highest number of US-FDA compliant Pharma plants outside of USA and is home to more than 3,000 pharma companies with a strong network of over 10,500 manufacturing facilities as well as a highly skilled resource pool.

The pharmaceutical industry in India offers 60,000 generic brands across 60 therapeutic categories. Major segments include generic drugs, OTC Medicines, API/Bulk Drugs, Vaccines, Contract Research & Manufacturing, Biosimilars and Biologics.

• Incentives worth INR 21,940 Crore ($3 Mn) are approved

• Expected to reach $65 bn by 2024, and

$120-130 bn by 2030

• Growth rate 10-12%

• Cost of manufacturing

33% lower than western markets

• 18.7% year on year export growth

India is the 4th largest Asian medical devices market after Japan, China, and South Korea and among the top 20 global medical devices markets in the world. Indian pharma companies enabled by their price competitiveness and good quality, have made global mark, with 60 per cent of the worlds vaccines and 20% of generic medicines coming from India. (Source: www.investindia.gov)

The Indian pharma industry has also played an important role in meeting the challenges for mitigation of the infection in COVID pandemic. The industry worked in close collaboration with the government and academic institutes etc., to quickly develop and refine manufacturing processes which helped to ensure a consistent supply of medicines needed for the management of COVID-19 (e.g. Remdesivir, Ivermectin, Hydroxychloroquine, Dexamethasone, Tocilizumab, Favipiravir etc.). Indian drug supplies throughout the COVID-19 pandemic period have provided relief to over 120 countries for Hydroxychloroquine (HCQ), 20 countries for paracetamol and about 96 countries for vaccines across the world.

Major Credentials of Pharma Industry:

• India provides generic medicines to more than 200 countries

• 8 out of 20 Global Generic companies are from India

• Over 55% Exports to Highly Regulated Markets

• 90% of WHO Pre-Qualified APIs are sourced from India

• 65-70% of WHOs vaccine requirements are sourced from India

• No. of USFDA approved sites: 741 (as of August 2021)

• No. of ANDA Market Authorizations secured by Indian companies: 4,346 (as on December 2020)

Foreign Direct Investment (FDI)

Pharmaceutical is one of the top ten attractive sectors for foreign investment in India. 100% foreign investment is allowed under automatic route in Medical Devices. Foreign investments in pharmaceuticals in greenfield projects are allowed up to 100% under the automatic route and for brownfield pharmaceutical projects, foreign investment beyond 74% to up to 100%, Government approval is required.

After abolition of Foreign Investment Promotion Board (FIPB) in May 2017, the Department of Pharmaceutical has been assigned the role to consider the foreign investment proposals under the Government approval route.

Apart from this, the Department considers all FDI proposals of pharmaceutical sector and medical devices sector arising out of Press Note 3 dated 17.04.2020 wherein investors/ultimate beneficiaries of the proposals are from the countries sharing land border with India.

The Department of Pharmaceuticals has approved 10 FDI proposals worth 7,860 crore inflows under the brownfield pharmaceutical projects during the financial year 2021-22 (till December 2021). The FDI inflows in pharmaceutical sector (pharmaceuticals and medical devices activities) in the last three years under both the routes, government and automatic are as follows:

Industry Scenario:

1) The pharmaceutical industry in India is expected to reach $65 bn by 2024 and to $120 bn by 2030

2) The pharmaceutical industry in India is currently valued at $41.7 bn.

3) India is a major exporter of Pharmaceuticals, with over 200+ countries served by Indian pharma exports. India supplies over 50% of Africas requirement for generics, ~40% of generic demand in the US and ~25% of all medicine in the UK,

4) India also accounts for ~60% of global vaccine demand, and is a leading supplier of DPT, BCG and Measles vaccines. 70% of WHOs vaccines (as per the essential Immunization schedule) are sourced from India.

5) Drugs and Pharmaceuticals shares 5.15% of the total exports of the country in the month of April.

6) Indian pharma exports witnessed a growth of 103% since 2013-14, from INR 90, 415 Crores in 2013-14 to INR 1,83,422 Crores in 2021-22. Exports achieved in 2021-22 is the Pharma Sectors best export performance ever. It is a remarkable growth with exports growing by almost $10 bn in 8 years.

BUSINESS OPERATIONS:

The Company is currently engaged in the trading and distribution of wide range of pharmaceutical raw material which is also known as APIs (Active Pharmaceutical Ingredients), industrial, excipient and solvents. Presently our product portfolio comprises of around 150 AIPs, Excipient, Pharma Chemical & Intermediates. We are also in the trading of variety of chemicals, such as, Petrochemicals, Dyes & Pigment Chemicals, Paints & Speciality Chemical, Agro Chemicals, Oil & Refinery Chemicals, Foam & Adhesive, Plywood & Laminates Chemical. The range of Chemicals also includes food industry & water treatment chemicals, resins & plastics chemicals, polymers and additives etc. The geographical territory in which your Company operates is Ahmedabad and the surrounding area of Gujarat.

The Company got certification of ISO 9001:2015 in Quality Management System, ISO 22000:2018 in The Food Safety Management System, ISO 45001:2018 in Occupational Health & Safety Management System, we are also certified by "INTERNATIONAL QUALITY CERTIFICATION SERVICES UK LTD" as a "HACCP" in "Hazard Analysis & Critical Control Point System", as a "HALAL" in Compliance with the requirements of Islamic Law and "WHO-GMP" to adopt a Good Manufacturing Practice.

OUR PRODUCTS:

APIs is known as bulk drugs or bulk actives are the principle ingredients used in making finished dosages in the form of capsules, tablets, liquid or other forms of dosage, with the addition of other APIs or inactive ingredients. We believe that timely and committed delivery is an ongoing process of building and sustaining relationships. Our strength lies in understanding the requirements of the customer and our execution capabilities. This has enabled us to get repeated orders from our existing customers and attract new customers.

An active ingredient is the ingredient in a pharmaceutical drug or pesticide that is biologically active. The similar terms active pharmaceutical ingredient and bulk active are also used in medicine, and the term active substancemay be used for natural products.

SWOT ANALYSIS:

Strength

A. Diversified Product Portfolio

The Company has diverse product portfolio across various segments to fulfil customers requirements. offerings include wide range of pharmaceutical raw material which is also known as APIs (Active Pharmaceutical Ingredients) and chemical formulation products. We supply products on the basis of needs and requirements in the market. The product range in formulations allows existing customers to source majority of their product requirements from the Company and also enables it to expand business from existing customers as well as address a larger base of potential new customers.

B. Experienced Promoter

The Promoter of the Company, Mr. Narendrakumar Gangaramdas Patel has significant in depth knowledge of the various products traded by the Company and has been instrumental in the consistent growth of Companys performance. He has an overall experience of more than 2 decade in the trading segments of pharmaceutical business. The Company believes that our promoters experience and their understanding of the pharmaceutical business will enable it to continue to take advantage of both current and future market opportunities. The promoter is actively involved in the business with continuous personal attention.

C. Quality Service

The Company believes in providing quality and timely service to customers. It has set very high standards when it comes to timeliness and quality of service we provide to customers. The stringent systems ensure that all the products reach customers on stipulated time and there are minimum errors to ensure reduced product rejection. It believes that quality service for the last 2 decades has earned us a goodwill from customers, which has resulted in customer retention and order repetition. It has also helped us to add to existing customer base. The Company have developed internal procedure of checking the client orders at each stage from customer order to delivery. The Company focuses on maintaining the level of consistently in our service, thereby building customer loyalty for Companys Brand.

D. High level of customer satisfaction

The Companys customers are highly satisfied with services from purchase order to quality to delivery to customer complain redressal mechanism. It has been able to achieve this customer satisfaction with the help on timely deliveries, ease of placing orders, and stellar customer services.; this has helped in creating a customer base from various categories such as retailers, semi-wholesalers, etc

Weakness

The Company is in the business of supplying raw materials to pharmaceutical industries and pharmaceutical industry falls under the essential business list declared by the Government. Therefore, even during the time of the pandemic, the Company continued its business operation during lock down period and the business was not affected during the pandemic.

Opportunity

A. Develop cordial relationship with our Suppliers, Customer and employees

The Company believes in maintaining good relationship with our Suppliers and Customers which is the most important factor to keep our company growing. Our dedicated and focused approach and efficient and timely delivery of products has helped us build strong relationships over number of years. We bag and place repetitive order with our customers as well as with our suppliers respectively. For us, establishing strong, mutually beneficial long-term relationships and strategic supplier relationship management are critical steps in improving performance across the supply chain, generating greater cost efficiency and enabling the business to grow and develop.

B. To build-up a professional organization

The Company believe in transparency, commitment and coordination in our work, with our suppliers, customers, government authorities, banks, financial institutions etc. We have a blend of experienced and sufficient staff for taking care of our day to day operations. We also consult with external agencies on a case to case basis on technical and financial aspects of our business. We wish to make it sounder and stronger in times to come.

C. Leveraging our Marketing skills and Relationships

This is a continuous process in our organization and the skills that we impart in our people to give prime importance to customers. We aim to do this by leveraging our marketing skills and relationships and further enhancing customer satisfaction. We plan to increase our customers base by supplying orders in hand on time, maintaining and renewing our relationship with existing clients.

D. Focus on dealing in quality standard products

Quality of the product is very important for the company from both customer point of view and growth point of view. Our Company is focused on dealing in the products which meets with the requisite quality standards as per the applicable regulatory norms. Providing the desired and good quality products help us in enhancing our Companys image and maintaining long term relationships with customers.

E. Government Support

Government incentives including an outlay of INR 21940 for PLI 1.0 and PLI 2.0

F. Medical tourism

Quality services at marginal costs compared to US, Europe, and South Asia

G. Infrastructure development

India has the highest number of US-FDA compliant plants outside the US

H. Strong drug manufacturing

Expertise in low cost generic patented drugs as well as end-to-end manufacturing

I. Strong domestic demand

Launch of the largest National Health Protection Scheme globally

Further, recognizing the potential for growth, the Government of India took up the initiative of developing the Indian Pharmaceuticals sector by creating a separate Department in July 2008. The Department is entrusted with the responsibility of policy, planning, development and regulation of Pharmaceutical Industries. An assessment of the Indian Pharmaceutical Industrys strength reveals the following key features:

a) Strong export market- India exported drugs worth US$ 15 billion to more than 200 countries including highly regulated markets in the US, Europe, Japan and Australia. Large Indian pharma 66 companies have emerged as among the most competitive in the evolving generic space in North America and have created an unmatched platform in this space. Indian companies are also making their presence felt in the emerging markets around the world, particularly with a strong portfolio in antiinfective and antiretroviral.

b) Large domestic pharma companies have continued to grow, assuming leadership position in many therapies and segments in the Indian market as well as creating a strong international exports backbone.

c) Competitive market with the emergence of a number of second-tier Indian companies with new and innovative business modules.

d) Indian players have also developed expertise in significant biologics capabilities.

e) Biologic portfolios while still nascent in India are being built with an eye on the future.

f) Multinational companies have continued to invest significantly in India and are making their presence felt across most segments of the Indian pharma market. Companies have also begun to invest in increasing their presence in tier II cities and rural areas and making medical care more accessible to a large section of the Indian population.

g) Low cost of production and low R&D costs.

h) Innovative Scientific manpower.

i) Excellent and world-class national laboratories specializing in process development and development of cost-effective technologies.

j) Increasing balance of trade in Pharma sector.

k) An efficient and cost effective source for procuring generic drugs, especially the drugs going off patent in the next few years.

l) An excellent center for clinical trials in view of the diversity in population

Threats

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

1. Changes in Laws and Regulations that apply to our Industry.

2. Changes in Fiscal, Economic or Political conditions in India

3. Companys inability to retain the experienced staff

4. Failure to adapt the changing technology in our industry of operation may adversely affect our business

5. Failure to comply with regulations prescribed by authorities of the jurisdiction in which we operate

6. Competition with existing and new entrants

7. Reduction of the sub contact from the big contracting Company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has in place proper system of internal control which is commensurate with size and nature of business. The Company has an Audit Committee headed by the Independent Director, inter-alia, to oversee companys reporting process, disclosure of information.

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 Lakhs)

PARTICULARS	STANDALONE - FINANCIAL STATEMENTS-YEAR ENDED MARCH 31, 2024	STANDALONE - FINANCIAL STATEMENTS-YEAR ENDED MARCH 31, 2023
Revenue from Operations	657.65	1295.19
Other Income	364.64	593.47
Total Revenue	1022.29	1888.66
Profit / (Loss) before exceptional and extra- ordinary Items and tax	90.00	195.36
Add/(Less): Extra-Ordinary Item	Nil	Nil
Profit / (Loss) after Extra Ordinary Items and before tax	90.00	195.36
Tax Expense:
A) Current Income Tax	23.4	56.89
B) Deferred Tax (Assets)/Liabilities	Nil	Nil
Profit / (Loss) After Tax	66.60	138.47

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, 2024, there were 4 permanent employees employed by the Company. The Company will continue to create opportunity and ensure recruitment of diverse candidates without compromising on meritocracy.

KEY FINANCIAL RATIOS:

Sr. No. Ratio	As at March 31, 2024	As at March 31, 2023	% Change	Reason for variance
1 Debtors Turnover (Trade Receivable Ratio) (In times)	0.55	1.2	-54.16	In the Year FY 2024, the Trade receivable Ratio is redusing significantly since the company has improve it credit policy which reduces level of Trade Receivable outstanding at the end of the year.
2 Inventory Turnover ratio (In times)	0.36	0.26	38.46	In the FY 2024 the Inventory turnover ratio increased as the company has Lowered turnover and control the Inventory level
3 Interest Coverage Ratio	NA	NA	NA	NA
4 Current ratio (In times)	7.32	2,982.19	-99.75	Working capital cycle of the company increased in the FY 2024.
5 Debt- Equity ratio (In times)	0.16	0.00	100	Total Long term debt of the company has increased in the Current FY due to which there is a significant difference in the Debt Equity ratio.
6 Return on Equity Ratio	0.02	0.04	-50	Return on Equity Ratio is Decreased as the turnover and the profit of the company has Decreased.
7 Net Profit Ratio	0.10	0.11	-9.09	Net Profit Ratio is Maintained significantly.
8 Return on Capital employed (%)	0.02	0.04	-50	Return on Capital employed Decreased significantly because Revenue & Net Profit are Decreased.

CAUTIONARY STATEMENT:

The content in this Management Discussion and Analysis may contain "Forward Looking Statements" including, but without limitation, statements relating to the implementation of strategic initiatives, and other statements relating to Companys future business developments and economic performance. While these forward-looking statements indicate our assessment and future expectations concerning the development of our business, several risks, uncertainties, and other unknown factors could cause actual developments and results to differ materially from our expectations. These factors include, but are not limited to, general market, macroeconomic, governmental and regulatory trends, movements in currency exchange and interest rates, competitive pressures, technological developments, changes in the financial conditions of third parties dealing with us, legislative developments, and other key factors that could affect our business and financial performance. The Company undertakes no obligation to publicly revise any forward- looking statements to reflect future/ likely events or circumstances.

Date: September 07, 2024	For and on behalf of Board of Directors
		PATRON EXIM LIMITED
Place: Ahmedabad
	Sd/-	Sd/-
Registered office:
A-1106, Empire Business Hub,	Payal Patel	Bhumishth Patel
Science City Road, Sola,	Managing Director	Non-Executive Director
Ahmedabad – 380060, Gujarat	(DIN: 05300011)	(DIN: 02516641)
	INDEPENDENT AUDITORS REPORT
TO
THE BOARD OF DIRECTORS OF
PATRON EXIM LIMITED
CIN : U24100GJ2022PLC134939