Sandu Pharmaceuticals Ltd Management Discussions.
Pursuant to Regulation 34(2) (e) of the SEBI (Listing Obligations and Disclosure Requirements ) Regulations 2015, your Directors wish to report as follows:-
i. Industry Structure & Development:
The Ayurvedic medicines industry has remained a highly fragmented industry with many cottage industry players. A large part of the medicine manufacture process has been passed on through traditions. The propagation of the industry has been without any significant governmental support for a long time.
The economic policies of the Government and political situation in the country are quite favorable to the present business of your Company. The launch of the National Ayush Mission has in the current year can be expected to boost awareness and usage of Ayurvedic medicines in the country.
As one of the first companies to have instituted scientific methods to establish large scale manufacturing practices, Sandu Pharmaceuticals is well poised to take advantage of these developments.
There is also a gradual shift towards Ayurveda and more and more people are opting for Ayurvedic medicines. This is expected to benefit your Company in the long run.
ii. Opportunities and Threats :
There are opportunities in the Ayurvedic Industry to develop new products through proper research and development and there is no doubt that the industry will thrive. At Sandu Pharmaceuticals, we have been at the forefront of establishing scientific product development, resulting in superior product quality and efficacy.
Your Company also has good opportunities in the export markets. Your Company has been making concerted efforts to reach out to the export markets through active participation in Exports Industry Trade Shows. The results of these efforts are now beginning to bear fruit, and we expect more success in the coming years.
The industry continues to be plagued by low quality, unorganised players who continue to sell their medicines without quality standards.
The lack of minimum quality standards has affected the perception of Ayurveda as a viable healthcare product.
Another challenge is the continuous increase in the raw material input costs which increases the pressure on the profitability of your Company. As a result, we are forced to increase price of our products although the price increases are not as high as the cost increases, resulting in greater pressures for process efficiency on your Company.
iii. Segment wise performance:
Segment wise analysis of performance is not applicable to your Company under Accounting Standards 17 because there is only one segment i.e. Pharmaceutical.
The outlook for the industry and consequently for your Company during the current financial year is reasonably good subject however to the effects of government policies, inflationary pressure and general global slowdown which is bound to affect your company.
v. GST (Goods and Service Tax)
The Government of India introduced a new law Goods and Service Tax, thereby repealing Central Excise Law & also the Sales Tax and all other Indirect Tax Laws.In this long run the company expects a favourable response from the trade but in the immediate short run lot of apprehension are exposed by various channel partners.
The Company expects that the input credits which it was not getting in the earlier Central Excise Law and also various set offs in the Sales Tax and Central Sales Tax will be available thereby this will be cash flow reduction and helps the company in the long run.
vi. Bio-Diversity Act
The Central Government has promulgated a Bio Diversity vested all the State Bio-Diversity Boards with the Task of collecting the access benefits sharing from the Companys which are buying their natural resources from the forest or forest producers.
The Company fees that this is a Act whereby unnecessary tax is being levied on the Companys and the guise of access benefit sharing (ABS). The industry with their Association is in process to protect the interest of Member Companies to represent before Government and even take appropriate steps to file proceedings before higher judiciary.
vii. Risk and concerns:
Domestic and international market conditions would be the only risk which may be faced by your Company apart from input costs which are causing adverse impact on your Companys profitability. Other risks and concerns related to finance, production, stocks, insurance etc. are being managed adequately and efficiently by your Company.
viii. Internal Control Systems and their adequacy:
Your Company has put effective internal control systems into operation and is having adequate Internal Audit mechanism to monitor and review the same under the overall control and supervision of the Internal Auditor and the Audit Committee of the Independent Directors. Continuous improvements as suggested by our Internal Auditors are being implemented.
ix. Discussion of Financial performance with respect to operational Performance:
The financial performance with respect to the operational performance during the year under review was satisfactory Your Company was successful in maintaining the profit level only because of the higher volumes and higher sales realization in spite of increased raw material prices.
x. Material Development in Human Resource / Industrial Relations:
Your Company is constantly endeavoring to introduce Human Resource Development activities for overall improvement of its team and induction of professional manpower. Your Company has good industrial relations. Your Company has continued to maintain good relationship with all employees at all the levels which also resulted to achieve higher production and sales.
xi. Material Financial and Commercial Transaction:
There are no material significant financial and commercial transactions with related parties viz. Promoters, Directors or the Management, their companies / firms or relatives conflicting with the interest of your Company. The promoters and the Directors are not dealing in the shares of your Company.