Piramal Phytocare Ltd Merged Management Discussions

Performance Highlights:

Net Sales:

Piramal Phytocare Limited (PPL) is engaged in globally marketing novel healthcare solutions from natural resources and supplying over-the-counter products to Piramal Enterprises Limited. During the year, PPLs sales (including Other Income) increased 5% to Rs. 2,517.26 lakhs as against Rs. 2,403.32 lakhs in FY2018.

Operating Expenditure:

Operating expenditure was reduced to Rs. 3,261.40 lakhs as compared to Rs. 4,644.15 lakhs in FY2018.

Profit / Loss for the year:

Improved Gross Margins and Lower employee costs resulted in a reduction of losses to Rs. 823.71 lakhs for the current year from

Rs. 2,246.59 lakhs in FY2018.

Industry Overview:

Global herbal market is growing at about 6% CAGR and is estimated to reach USD 129 Billion by 2023. The rising popularity of herbal medicines compared to conventional drugs is the main driver for growth. Increasing use of synthetic chemicals in medicine has annoyed many consumers, who are increasingly demanding all-natural alternatives to conventional medicine. The increasing number of consumers opting for natural alternatives to conventional medicine is likely to remain the strongest driver for the global herbal medicine market. Less side effects and low toxicity compared to allopathy products, acceptance of herbal products over other medicines, absence of allopathic medicines especially for some chronic conditions are all key factors for growth.

Furthermore, the Indian government has been supporting herbal sector through various schemes. More than 30,000 branded and 1,500 traditional AYUSH (Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homoeopathy) products are available in India, which is the worlds second largest exporter of medicinal plants after China.

Business and Strategy:

PPL is engaged in developing and marketing standardized healthcare solutions derived from natural sources such as plants. The Company leverages Indias biodiversity and vast pool of knowledge in traditional medicinal systems as a source for new medications. It offers proprietary medicinal products that are made from standardized herbal extracts. The intrinsic benefits of herbal products include greater efficacy, little or no side effects and availability at affordable prices. PPL follows stringent norms for standardization, validation and product development ensuring world class quality and consistent performance Polyherbal formulations, finds its roots in the classical wisdom of Ayurveda and are being consumed in many countries across the globe such as Georgia, Algeria, Moldova, UAE, Singapore, Ukraine, Kazakhstan, Sri Lanka and India. The phyto-active constituents used in these products are well known and are already available in the industry, but the formulations have been designed, developed, and standardized for specific use by PPL.

In India, these products are licensed under the department of AYUSH as Proprietary Ayurvedic Medicine. The Company is registered with Pharmaceutical Export Promotion Council (PHARMEXIL), Government of India and is actively engaged in promoting the cause of Scientific, safe and effective herbal products through participation in relevant events and conferences in India and Abroad. Quality is the most important issue in this segment like formulation development process & manufacturing. This is a great opportunity for Piramal Phytocare Products.

During the year, the company rolled out the following initiatives –

• Appointed marketing experts to strengthen its business and improve its presence in various countries, specifically in CIS and CEE countries

• Identified ten potential Indian companies /distributors with a presence in French African, UAE and ASEAN countries to explore business opportunities in these countries

• Listed product portfolio on "1mg", one of Indias largest online pharmacy

• Strengthened product range, developing Cosmeceutical products such as Anti-dandruff herbal shampoo and herbal hair oil/s

• Improved systems and processes by institutionalising Standard Operating Processes for carrying out business activities

Merger:

The Board of Directors on May 28, 2018 had approved a "Scheme of Amalgamation" ("Scheme") of Piramal Enterprises Limited, with the Company and its respective shareholders. The Scheme has been approved by the equity shareholders of the Company in their meeting convened as per the directions of the National Company Law Tribunal on April 2, 2019. The Scheme is subject to approval of regulatory authorities.