Phaarmasia Ltd Management Discussions

INTRODUCTION

This Management Discussion & Analysis (MD&A) report provides an overview of our performance for FY 202324, highlighting financial results, strategic initiatives, and future plans. It also addresses the risks and opportunities that affect our business.

India, a leading global provider of generic drugs, is renowned for its cost-effective vaccines and medications. The Indian pharmaceutical industry, now the third largest in pharmaceutical production by volume, has grown at a CAGR of 9.43% over the past nine years. This sector includes a diverse range of segments such as generic drugs, over-the-counter medications, bulk drugs, vaccines, contract research & manufacturing, dissimilar, and biologics. With the highest number of USFDA-compliant manufacturing facilities and approximately 500 API producers, India contributes around 8% to the global API market.

COMPANY PERSPECTIVE

Phaarmasia is dedicated to advancing healthcare through innovation and quality. We emphasize state-of-the-art solutions, taking calculated risks to explore new business opportunities and meet customer needs. Over the decades, our WHO-GMP and ISO 9001 certified facility has consistently produced high-quality pharmaceutical formulations, particularly in hormonal and steroidal products.

Our core values center on ethical practices, transparency, and a commitment to exceed stakeholder expectations. We prioritize quality and adhere to our motto, "DO IT RIGHT FIRST TIME, EVERY TIME," fostering a culture where our people are central to our success.

Phaarmasia, part of Maneesh Pharmaceutical Limited, operates from Mumbai and has been manufacturing and marketing oral contraceptives and iron tablets since 1993-94. Our state-of-the-art facility, free from contaminants, has an annual capacity of over 30 million units. Despite a challenging environment in FY 2023-24, we have made substantial progress in revenue and operations, driven by strategic investments and ongoing innovation.

ROAD AHEAD

The EPS for FY 2023-24 Increase to ?(0.76) from ^(1.84) in the previous year. While still negative, the reduction in the loss per share indicates our efforts to stabilize financial performance. We are committed to enhancing shareholder value through strategic initiatives aimed at returning to positive EPS.

FINANCIAL PERFORMANCE

Revenues

Company has recorded the revenue of Rs. 3059.33 Lakhs during 2023-24 as compared to Rs. 2748.95 Lakhs in 2022-23.

Other Incomes

The Other incomes for 2023-24 of Rs. 66.15 Lakhs has increased, compared to Rs. 51.61 Lakhs in 2022-23.

Expenditure

The expenses for 2023-24 of Rs. 3180.08 Lakhs has Increased, compared to Rs. 2,943.77 Lakhs in 2022-23.

Profit before Tax

There is Loss before Tax for 2023-24 of Rs. 54.60 Lakhs compared to Profit before Tax of Rs. 143.20 Lakhs in 2022-23.

Profits after Tax

The Loss After Tax for 2023-24 of Rs. 51.82 Lakhs as against Profit After Tax of Rs. 125.92 Lakhs in the previous year 2022-23.

Earnings per Share

The EPS for 2023-24 Increased to Rs. (0.76) as compared to Rs. (1.84) in Previous Year.

RISK MANAGEMENT

Effective risk management remains a cornerstone of our strategy. We continuously monitor and assess various risk factors, including regulatory changes, market volatility, and operational challenges. Our risk management framework is designed to identify potential risks early and implement mitigation strategies to safeguard our business.

INTERNAL CONTROLS AND ADEQUACY

Your Company has a robust and reliable system of internal controls commensurate with the nature of the business, and the scale and complexity of operations. The Company has adopted policies and procedures covering all financial, operating and compliance functions. These controls have been designed to provide a reasonable assurance over:

1. Effectiveness and efficiency of operations

2. Safeguarding of assets from unauthorised use or losses

3. Compliance with applicable laws and regulations

4. Prevention and detection of frauds and errors

5. Accuracy and completeness of the accounting records

6. Timely preparation of reliable financial information.

The current system of Internal Financial Controls (IFC) is aligned with the requirement of the Companies Act 2013, The Internal Audit (IA) function of the Company functionally reports to the Chairperson of the Audit Committee, thereby maintaining its objectivity.

FORWARD-LOOKING STATEMENTS

Your directors are focusing to strengths its Domestic Market through expansion of its activities and will make the necessary investment when attractive opportunities arise.

OPPORTUNITIES & THREATS Opportunities:

• Market Expansion: Growing demand for pharmaceutical products in emerging markets presents significant growth opportunities.

• Product Innovation: Advancements in R&D can lead to the development of new products and therapies, enhancing our competitive edge.

• Strategic Partnerships: Collaborations and partnerships can open new avenues for growth and revenue generation.

Threats:

• Regulatory Challenges: Stringent regulatory requirements and compliance issues can impact our operational efficiency.

• Cost Fluctuations: Rising raw material and production costs could affect profitability.

• Competitive Pressure: Increased competition in the pharmaceutical sector may impact market share and pricing power.

OUTLOOK

Despite the challenges faced in FY 2023-24, we remain optimistic about the future. Our strategic initiatives are designed to address current challenges and capitalize on growth opportunities. We anticipate gradual improvements in financial performance as we implement our growth strategies and enhance operational efficiencies.

HUMAN RESOURCES

Phaarmasia Limited believes in creating an environment, wherein human resources derive a sense of purpose, passion and personal growth at work, leading to organizational performance. Towards realizing this, the company relies on the four pillars, namely, performance management, talent engagement, Capability development and maintaining cordial industrial relations. It also believes in review of its HR processes and systems on an ongoing basis to optimize costs, time and labour.

CAUTIONARY STATEMENT

This report contains forward-looking statements that involve risks and uncertainties. Actual results may differ materially from those projected due to various factors, including changes in market conditions, regulatory developments, and other unforeseen events. We undertake no obligation to update or revise any forward-looking statements based on new information or future events.

CONCLUSION

The financial year 2023-24 has been a period of significant transformation for our company. While we faced challenges, our commitment to growth, innovation, and operational excellence positions us well for future success. We are dedicated to driving long-term value for our stakeholders and look forward to achieving our strategic objectives in the coming years.