Sequent Scientific Ltd Management Discussions

Macro-Economic Overview

In 2024, the global economy grew at a modest rate of 3.3%, reflecting a phase of relative stability, although growth was restrained. As we progress through 2025, the global environment is seeing a substantial transformation, prompted by nations realigning their policy priorities in reaction to escalating geopolitical tensions and increasing economic difficulties.

The United States has proposed implementing a series of additional tariff measures, eliciting immediate and vigorous responses from significant trading partners. Consequently, effective tariff rates could escalate, which could have a severe and detrimental impact on global GDP.

The issue has been exacerbated by the rapid and erratic nature of these policy shifts, which ha ve ma rked ly intensified economic uncertainty and rendered the short-term outlook volatile.

Considering this uncertainty, worldwide headline inflation is projected to decrease at a slower rate than previously planned. The projection indicates a decline to 4.3% in 2025 and thereafter to 3.6% in 2026. The revision indicates increased inflation projections for advanced economies, somewhat counterbalanced by slight downward revisions in emerging markets and developing nations.

GDP growth projections

	2024	2025	2026
Global Economy	3.3	2.8	3.0
Advanced Economies	1.8	1.4	1.5
Emerging Markets and Developing Economies	4.3	3.7	3.9

(Source: World Economic Outlook, April 2025)

Despite the ongoing challenges facing the global economy, this moment offers a unique opportunity to build resilience and initiate transformational actions. Several economies under strain have shown remarkable adaptability, underscoring that recovery is attainable through proactive reforms and coordinated policy efforts.

Animal Healthcare: A sector of expanding horizons and evolving innovation

The animal healthcare sector is a dynamic and rapidly evolving industry, encompassing pharmaceuticals, veterinary services, and medical devices aimed at safeguarding the health of both companion and production animals. Valued at USD 63.0 billion in 2024, the global animal healthcare market is projected to

grow at a robust CAGR of 9.0 - 10.0 % between 2025 and 2030, propelled by rising animal health expenditures, increasing humanization of pets, evolving regulatory frameworks, and heightened awareness around zoonotic diseases.

Animal health monitoring has become critical not just for improving animal welfare but also for ensuring secure food supplies, preventing disease outbreaks, and maintaining price stability. The sectors resilience has been strengthened through successful management of diseases like avian flu and continuous vaccine innovations. Major mergers and acquisitions, especially in veterinary division consolidated the industry, unlocking scale benefits and new avenues for innovation. In developed economies, the expanding penetration of pet insurance provides vital financial support for research and advanced treatments.

Technological advancements are reshaping the landscape, with mobile health platforms, smart wearables, vaccine banks, and predictive analytics transforming disease management, enhancing traceability, and boosting productivity. Digital technologies are increasingly integrated into veterinary care, offering greater precision, sustainability, and prevention capabilities across livestock and companion animal segments.

Despite the sectors strong momentum, challenges still persist. Stringent regulatory restrictions on antibiotic usage, rising costs of animal testing, and low awareness levels in emerging markets continue to pose hurdles. Vaccine development remains a critical growth lever to address major livestock diseases, although gaps in vaccine availability and stringent regulatory pathways continue to slow progress.

The markets dynamics are further shaped by rising demand for animal-derived products, the growing trend of pet adoption, and the increasing focus on animal welfare. Government initiatives and partnerships with animal welfare organizations play a pivotal role in driving sustainable growth, while efficient information management systems and mobile technologies for pet owners are enhancing service accessibility and user engagement.

In a highly competitive and fast-evolving ecosystem, the future of animal healthcare will be defined by innovation, digitalization, cross-sector collaboration, and an enduring commitment to animal welfare and food security worldwide.

Strategic initiatives by leading companies and the surge in sales of pharmaceuticals and healthcare products are acting as major catalysts, reinforcing the sectors positive outlook for the future.

Production Animals

With rising global demand for meat, dairy, and animal-based food products, ensuring the health and wellbeing of farm animals has become increasingly vital. Production animal healthcare services play a key role in proactively identifying and managing diseases, thereby minimizing instances of illness, injury, and mortality among livestock. This growing demand has also contributed to the steady expansion of livestock populations across the world, reinforcing the positive momentum in the animal products market.

The global livestock healthcare market was valued at approximately $27.9 billion in 2024, growing at a CAGR of 10.6% during the forecast period.

The sector is witnessing strong growth, fueled by greater consumer focus on health and wellness, advancements in precision farming and smart agriculture, tighter regulatory standards, rapid urbanization, and an urgent push towards climate- resilient practices. Spanning live animals, meat, milk, eggs, skin and hide, wool, and honey, the market is evolving to cater to both organic and conventional categories.

To succeed in this dynamic environment, companies must continue innovating and adapting to changing consumer preferences and regulatory frameworks.

Companion Animals

The global companion animal health market has reached approximately $20.5 billion by 2025, with expectations to grow at 10.5% CAGR till 2032. This strong growth trajectory is supported by several factors, including the increasing adoption of pets, greater awareness about pet health, and a surge in spending on preventive care, diagnostics, and wellness products. Technological advancements such as AI- powered diagnostic tools, wearable health monitoring devices, and telehealth platforms are transforming veterinary care by enabling early disease detection, real-time health tracking, and personalized treatment plans. Rising incidences of chronic conditions like obesity, diabetes, and cancer among pets are further fuelling the demand for specialized treatments and premium healthcare services.

The presence of prominent market players, advanced healthcare infrastructure, high healthcare expenditure, and a strong propensity to adopt pets, particularly in developed markets, are driving the sectors rapid expansion. Developed markets of North America and Europe continue to lead the global companion animal health market, supported by a large pet population and a well-established veterinary ecosystem. Meanwhile, emerging economies are witnessing significant improvements in veterinary infrastructure and increasing investments in pet healthcare. Innovations such as stem cell therapies, precision medicine, and personalized nutrition solutions are opening new frontiers, while hospital pharmacies are playing an increasingly important role in delivering specialized veterinary care. However, financial barriers and the under-penetration of pet insurance in certain regions remain challenges to the widespread adoption of pharmaceutical treatments.

About Sequent Scientific Limited

Sequent Scientific Limited ("SeQuent" or "the Company") is Indias leading animal health company, with a strong global footprint spanning over 100 countries across five continents. The Company operates seven state-of- the-art manufacturing facilities located in India, Spain, Brazil, and Turkey, all of which have been accredited by leading global regulatory authorities, including the USFDA, EUGMP and WHO, among others. SeQuent offers an extensive portfolio of animal health solutions, encompassing Finished Dosage Formulations (FDFs), Active Pharmaceutical Ingredients (APIs), and a range of analytical services for the pharmaceutical and life sciences industries.

During FY25, Sequent Scientific Limited and Viyash Lifesciences Private Limited have announced a strategic merger aimed at creating a global player with fully integrated capabilities across animal health and APIs. This transformational move will combine SeQuents strong global presence and expertise in animal health with Viyashs robust manufacturing excellence and R&D capabilities, significantly enhancing the scale, innovation pipeline, and operational efficiencies of the merged entity. With operations spanning over 150 countries and 9 manufacturing facilities including 9 USFDA-approved sites the combined platform will be better positioned to expand its product offerings, diversify its revenue streams, and strengthen its ability to serve a widening global customer base. The merger is subject to customary statutory and regulatory approvals.

Business Performance Review Active Pharmaceutical Ingredients (APIs)

Key Highlights, FY25

Particulars	FY25 Updates/ Developments	Total Products
US VMF Filing	2	33
EU CEP Approvals	1	17

Key Highlights Formulations Focus Markets

The Company is dedicated to supporting global food security amid a growing world population, with a focused ambition to emerge as a leading value provider in the animal healthcare sector. With a strong presence in countries with substantial animal populations, it recognizes the vast opportunities these markets offer.

Europe

The European Union is a major animal health market, valued at USD 16.5 billion in 2024. Market dynamics are shaped by proactive regulatory frameworks and a strong pet ownership culture, with around 90 million households (46% of the EU population) owning pets, including 110 million cats and 90 million dogs. The companion animal segment in Europe was valued at USD 9.0 billion in 2024 with a projected CAGR of 8.4%, while the livestock segment, valued at USD 7.5 billion, is expected to grow at 4.5%. Strategic initiatives around animal welfare, disease control, and sustainable livestock practices are key drivers.

• Entry into vaccine distribution business: As part of our efforts to build-up this segment, we are pleased to share that we started distributing vaccines for a leading European company in Benelux and the team is actively evaluating other similar opportunities.

• Our Spanish plant received the Turkish GMP approval, and we believe this will go a long way to develop a long-term sustainable business by cross-leveraging portfolio across countries.

• The phased shutdown of our Bremer Pharma manufacturing facility in Warburg in 2023 required us to transfer major brands from Bremer-Pharma to our facility in Turkey.

India

Within APAC, India stands out with an animal healthcare market size of USD 1.9 billion in 2024, forecasted to grow at a robust CAGR of 12.4% between 2025 and 2030. Indias pet population was estimated at 40 million in 2024, with dogs comprising 90% and cats 10%. The sector is crucial to Indias economy, supporting the livelihoods of around 20.5 million people and contributing approximately 16% to the income of small farm households, while sustaining two-thirds of the rural population. As one of the largest producers and consumers of milk globally, India plays a pivotal role in the regional animal health market. The Indian animal healthcare sector has made significant strides in supporting the countrys expanding animal husbandry sector, with a rising focus on food security, increased awareness of zoonotic diseases, and steady improvements in veterinary infrastructure aligning the countrys market trajectory with global trends.

India is a priority market for SeQuent, we plan to continue investing in the expansion of our current portfolio and exploring inorganic growth opportunities.

We boast a robust product pipeline sourced internally as well as from a set of quality CMOs. Additionally, the Company ramped-up field presence for enhanced penetration.

Turkey

The animal health market in Turkey is experiencing steady growth, driven by increased awareness of animal welfare, rising pet ownership, and a growing demand for livestock productivity. This expansion is further supported by advancements in veterinary pharmaceuticals, diagnostics, and feed additives. These factors collectively indicate a positive outlook for animal health market in Turkey in the coming years.

LATAM

Latin Americas animal healthcare market has expanded steadily, with Brazil emerging as the dominant contributor. Growth in Brazil has been fuelled by rising exports of veterinary products, supportive government policies, and greater focus on livestock health management. Pharmaceuticals lead the Brazilian market, supported by growing poultry and swine production and an expanding pet care segment. Brazils adherence to international standards and the strong uptake of bovine vaccines have further strengthened its position in the regional market.

• In addition to strengthening our existing operations in Brazil, we have set up an independent business in Mexico with a dedicated team.

• The Company entered the Brazilian companion animal health market a couple of years back with the acquisition of Nourrie, a domestic company operating in the segment.

Emerging Markets

The Middle East & Africa veterinary healthcare market is witnessing strong growth, driven by rising pet ownership, greater awareness of animal health, and expanding livestock production. Increased demand for veterinary services, the emergence of advanced clinics, and supportive government initiatives are strengthening the sector. However, high service costs, limited veterinary infrastructure, and regulatory challenges continue to pose hurdles. Countries like Saudi Arabia, the UAE, and South Africa are leading the regional expansion, supported by their progressive healthcare frameworks and growing focus on animal welfare.

In emerging markets, we distribute our products across the Middle East, Africa, the Indian subcontinent, and Southeast Asia through a network of distributors. These regions are supplied from our facilities in Spain, Turkey, and India, where we are focused on streamlining and accelerating product registrations.

Global presence and marketing

In our core markets, we engage local sales teams comprising technical veterinary experts and sales professionals. These teams are supported by a central marketing division that leverages global insights to craft impactful local strategies. Through a combination of direct sales and distributor partnerships, we have expanded our product reach to over 100 countries.

Global manufacturing footprint

Globally, the Company operates world-class manufacturing facilities as mentioned below:

Business vertical	Location	Highlights
Animal Health	Vizag, India	Approvals: USFDA, WHO-Geneva and EU GMP
APIs		Capabilities: API facility with reactor capacity of 300+ KL with ten clean rooms
	Mahad, India	Approvals: EU GMP, COFEPRIS Mexico and WHO
		Capabilities: 23 reactors having a cumulative capacity of 80 KL
Formulations	Spain	Approvals: EU GMP and Turkish GMP
		Capabilities: Dedicated beta-lactam powder block and nutritional
	Turkey	Approvals: EU GMP and Turkish GMP
		Capabilities: Beta-lactam, Non Beta-lactam, hormones
	RIGHT>Brazil	Approvals: MAPA (Ministry of Agriculture, Livestock and Supply)
		Capabilities: Powders and premixes
		Approvals: MAPA (Ministry of Agriculture, Livestock and Supply)
		Capabilities: Premixes, tablets, pastes, suspensions and solutions
	Ambernath, India	Approvals: India, Uganda, Ethiopia, and Kenya
		Capabilities: Oral solutions/suspensions, powders, and premixes

Analytical Services

SeQuent Research Limited (SRL), the Companys wholly owned subsidiary, is a Contract Research Organisation (CRO) focusing on analytical services. The USFDA- approved analytical division is in Mangaluru. With approximately 39 scientists, 16,600 Sq. ft facility SRL has robust capabilities in instrument, wet, trace elements, genotoxic, nitrosamine, and stability analysis. The division is using a Laboratory Information Management System (LIMS). The Analytical division is engaged with numerous global clients.

Employees

Our workforce of over 1,600 employees are key to our operations, and we provide them with opportunities and support, to achieve their career aspirations. We place a strong emphasis on their well-being. Given the critical and complex nature of our manufacturing processes, ensuring the health and safety of our employees remains a top priority.

Employee Stock Option Plan (ESOP)

The Company currently has 2 (Two) ESOP Schemes as under:

1) SeQuent Scientific Employee Stock Option Plan 2010 and

2) SeQuent Scientific Limited Employees Stock Option Plan 2020

The accounting for the said scheme is being done as per the fair value method determined by the Black Scholes model for option valuation. During the year, the accounting impact of the said ESOP issuance was 324 Mn.

Governance

The Company has established governance through its committees for overseeing key policies, including AntiMoney Laundering, Anti-Bribery and Corruption (ABAC), Counter-Terrorist Financing, Whistleblower Protection, Prevention of Sexual Harassment (POSH), and Insider Trading. To strengthen compliance and awareness, regular training programs are conducted across the organization. During the year, employees participated in the following sessions:

• SeQuent Values and Whistleblower Policy

• Prevention of Sexual Harassment at the Workplace

• Awareness of Unpublished Price Sensitive Information and Structured Digital Database

• Anti-Corruption Compliance Policy

• Economic Sanctions Compliance Policy

• Anti-Money Laundering and Counter-Terrorist Financing Compliance Policy

Prevention of Harassment and Discrimination

The Company remains committed to maintaining a workplace free from discrimination, harassment, and intimidation. A POSH Committee has been set up at each location to address complaints in a confidential and timely manner. Regular training sessions on POSH are also conducted throughout the year to reinforce awareness.

Whistleblower Policy

The Company has instituted a Whistleblower Policy to encourage the reporting of improper or unethical behavior, violations of the Code of Conduct or applicable laws, fraud, bribery, corruption, misconduct, health, safety, and environmental issues, or misappropriation of assets. The policy safeguards whistleblowers against retaliation, wrongful termination, or discriminatory practices, ensuring prompt and effective resolution of concerns.

Anti-Corruption Compliance Policy

The Company has adopted an Anti-Corruption Compliance Policy covering all directors, officers, and employees across its operating jurisdictions. The policy reinforces a zero-tolerance approach to bribery and unethical practices, supported by internal controls designed to prevent and detect corrupt activities.

Anti-Money Laundering and Counter-Terrorist Financing Compliance Policy

To prevent money laundering and terrorist financing, the Company has implemented a dedicated compliance policy aligned with all relevant laws and regulations within its operating jurisdictions.

Economic Sanctions Compliance Policy

The Company maintains strict adherence to economic sanctions regulations across its areas of operation. Through its Economic Sanctions Compliance Policy, the Company ensures compliance and communicates its expectations to all associated parties, including third-party entities and individuals acting on its behalf.

Environment, Health and Safety (EHS)

We remain committed to fostering a safe and secure working environment by continuously strengthening our infrastructure, operational practices, and workplace culture. In line with this commitment, we have implemented a range of measures focused on safeguarding our people and operations.

Aligned with our ESG principles, we actively pursue initiatives such as waste minimization, emissions reduction, and the increased use of renewable energy to drive sustainable and responsible growth.

Environment

Environmental sustainability is embedded at the heart of our operations. Through research, innovation, and responsible manufacturing, we strive to minimize greenhouse gas emissions, conserve water resources, protect biodiversity, and enhance soil health. By seamlessly integrating sustainable practices into every stage of our operations, we aim to drive lasting environmental impact and contribute to a healthier planet.

Water Management

In FY25, we successfully reduced freshwater consumption by 5.23% to 1,01,441 KL, building on our ongoing efforts around sustainable water management. This achievement was driven by initiatives such as rainwater harvesting, enhanced water recycling, improved recovery of steam condensate, and greater reuse of treated effluent water.

During the year, the Mahad site reduced water consumption using recycling water after treatment for cooling towers, ETP chemical dosing, reflecting steady progress in our resource conservation efforts. Notably, our Mahad site maintained a strong performance, recycling over 95% of treated water and setting a benchmark for our other facilities.

Waste Management

In FY25, we reduced the waste intensity from 2.25 to 2.19 MT/employee compared to previous year, through continuous process optimization and waste minimization initiatives. During the year, 375 tons of incinerable hazardous waste were repurposed for coprocessing in the cement industry, helping us lower our environmental footprint and contribute to circular economy practices. These efforts also supported a meaningful reduction in our overall greenhouse gas (GHG) emissions.

Certifications

Our Mahad unit has earned ISO 14001 and ISO 45001 certifications, underscoring our commitment to maintaining the highest environmental, health, and safety standards. In parallel, our Ambernath unit has secured WHO-GMP certification, valid until May 2026, reinforcing our focus on quality and regulatory compliance.

In FY25, the Mahad facility was awarded a Silver Medal with a score of 63 by EcoVadis, reflecting strong sustainability practices and continuous improvement in environmental, labor, ethics, and procurement standards.

To further strengthen operational resilience, we have developed and implemented new standards and guidelines across all manufacturing sites. A Risk Management Committee has been established to oversee and drive ongoing progress in risk mitigation efforts.

Social

People safety and culture transformation: We place strong emphasis on developing competencies through continuous training and assessments to build a proactive safety culture. To minimize incidents arising from human error and behavior, we have partnered with DuPont Sustainable Solutions to drive cultural transformation and risk reduction initiatives.

Key highlights for FY25 include:

• Lost Time Injury Frequency Rate (LTIFR): 0

• 100% EHS training coverage for all plant employees

• Enhanced people productivity

• Improved talent management and retention

Sustainable vendor management: We have implemented a Sustainability Procurement Policy aimed at encouraging our suppliers and vendors to integrate social and environmental considerations into their operations. As part of this approach, we conduct regular CSR audits to assess vendors on parameters such as environmental practices, health and safety standards, and training and competency development, fostering a responsible and resilient supply chain.

Threats, Risks and Concerns

The Company faces a range of operational risks, each carefully identified and addressed through targeted mitigation measures outlined below.

Key Risks	Mitigation Measures
Regulatory Risks Adverse facility inspections by regulatory bodies could restrict sales in certain geographies or to specific customers.	We have established robust systems for continuous compliance monitoring. Employees undergo regular training to stay updated on evolving regulatory requirements, ensuring a culture of proactive and sustained compliance.
Environment, Health, and Safety (EHS) Risks Risks linked to operational safety and environmental compliance due to sophisticated chemical processes at manufacturing sites.	We uphold stringent environmental, health, and safety standards, with regular reviews to identify improvement areas. We continuously optimize resource usage and enhance our processes to minimize environmental impact across operations, products, and services.
Currency Volatility Risks Fluctuations in foreign exchange rates may impact the fair value or future cash flows of exposures.	We actively hedge transactions conducted in foreign currencies across operational geographies, mitigating the adverse impact of exchange rate movements on financial performance.
Interest Rate Risks Borrowings linked to floating interest rates may impact the Companys financial performance with rate fluctuations.	Each local entity borrows in its domestic currency, aligned with respective base rates, ensuring better management of interest rate variability in local operations.
Credit Risks Exposure to financial asset risks due to fluctuating customer credit terms and counterparty risks.	We conduct regular analysis of receivables aging across geographies. Credit restrictions are applied using a standardized model, and a Delegation of Authority (DOA) matrix governs the release of credit blocks to strengthen credit discipline.
Liquidity Risks Potential challenges in meeting financial obligations that require cash settlements.	We maintain a prudent approach to leverage, targeting low leverage ratios to strengthen liquidity resilience and ensure timely fulfilment of financial obligations.
Information Technology and Cybersecurity Risks Reliance on IT systems exposes operations to potential failures or cyber threats.	We localize IT infrastructure monitoring, database management, cybersecurity measures, and IT compliance processes, enabling effective threat detection and risk mitigation at the site level.
Market Risks Potential losses driven by price fluctuations, geopolitical events, currency volatility, pandemics, or other macro disruptions.	The Board assesses investments with a long-term strategic lens, while geopolitical risks and market developments are closely monitored to ensure responsive and resilient decisionmaking.

Financial Review

Consolidated financial performance

Ratios	FY25	FY24
Revenue from Operations	15,514	13,697
EBITDAA	1,993	1,068
%	12.8%	7.8%
Earnings Before Tax	443	(546)
Earnings After Tax (Post Minority)	219	(359)

AEBITDA Adjustment for ESOP and foreign currency fluctuation

Revenue performance by geography

Revenue Distribution	FY25	FY24	YoY Gr%
Formulations	11,858	9,997	19%
Europe	5,565	4,868	14%
Emerging Markets	5,138	4,091	26%
India	1,155	1,038	11%
APIs	3,378	3,260	4%
Other Sales	155	133	17%
Global Sales	15,392	13,390	15%
One Offs #	(74)
Adjustment* - Ind AS 29*	196	307
Reported Sales	15,514	13,697	13%

*Adjustment on account of hyperinflation in Turkey as per Ind AS 29 # Provision for customer claim on shipments in prior years

Key Ratios

Ratios	FY25	FY24
Debtors Turnover Ratio (Days)	82	85
Inventory Turnover Ratio (Days)	87	88
Interest Coverage Ratio	1.81	0.23
Current Ratio	1.73	1.29
Debt Equity Ratio	0.54	0.58
Operating Margin Ratio	10%	5%
Net Profit Margin	2%	(2%)
Net Debt to EBITDAA	2.26	4.48
Cash Flow from Operations - in Mn	1,110	447
Return on net worth (RONW)	3%	(5%)

AEBITDA Adjustment for ESOP and foreign currency fluctuation

Internal Control

The Company has adequate internal controls and systems in place which provide reasonable assurance about the integrity and reliability of financial statements.

Additionally, Grant Thornton, a leading global audit firm performs periodic internal audits to provide reasonable assurance over internal control effectiveness and advises on industry-wide best practices. The Audit Committee consisting of Independent Directors review important issues raised by the Internal and Statutory Auditors, thereby ensuring that the risk is mitigated appropriately with necessary rectification measures on a periodic basis.