Shree Pacetronix Ltd Management Discussions

ANNEXURE-IX

CAVEAT

Shareholders are cautioned that certain data and information in the report is external to the Company and is included in this section. Though these data and information are based on sources believed to be reliable, no representation is made on their accuracy or comprehensiveness. Further, though utmost care has been taken to ensure that the opinions expressed by the management here in contain their perceptions on most of the important trends having a material impact on the Companys operations, no representation is made that the following presents an exhaustive coverage on and of all issues related to the same. The opinions expressed by the management may contain certain forward-looking statements in the current scenario, which is extremely dynamic with risks and uncertainties. Actual results, performances, achievements or sequence of events may be materially different from the views expressed herein. Shareholders are hence advised to conduct their own investigation and analysis of the information contained or referred to in this section before taking any action with regard to their own specific objectives. Further, the discussion following herein reflects the perceptions on major issues as on date and the opinions expressed here are subject to change without notice. The Company undertakes no obligation to publicly update or revise any of the opinions or forward-looking statements expressed in this section, consequent to new information, future events, or otherwise.

GLOBAL MARKET

The global medical device market is poised to maintain its strong growth trajectory in 2025, underpinned by continuous technological innovation, rising global healthcare needs, and an aging population. The industry remains at the forefront of healthcare transformation, with increased demand for advanced diagnostic tools, therapeutic devices, and personalized medical solutions.

In particular, cardiovascular devices such as cardiac pacemakers are witnessing rising adoption due to the alarming global burden of heart diseases. The Global Cardiac Pacemakers Market, valued at USD 4.68 billion in 2024, is expected to reach USD 5.53 billion by 2029, growing at a CAGR of 3.43% during 2024 2029. This growth is supported by: Increasing prevalence of arrhythmias and heart failure, Rising geriatric population globally, Improved survival rates and health outcomes due to technologically advanced pacing devices.

The World Health Organization estimates that 17.9 million people die each year from cardiovascular diseases, accounting for 31% of all global deaths. This rising health burden continues to fuel demand for effective and innovative solutions, particularly pacemakers and related devices.

According to the UN World Population Prospects 2020, the number of people aged 65 and above is expected to double to 1.5 billion by 2050, with the population aged 80 and older tripling to 426 million. This demographic shift will significantly impact global healthcare demands, particularly in the cardiology, orthopedics, and diagnostics segments, pushing device innovation and adoption further.

Emerging economies, especially India, continue to play a pivotal role in the global medical devices growth story. India is now the 4th largest medical devices market in Asia, following Japan, China, and South Korea, and ranks among the top 20 global markets. Key drivers include:

Rapidly expanding healthcare infrastructure, Rising healthcare expenditure,

Government initiatives such as "Make in India" for medical device manufacturing, A growing number of multinationals and MSMEs entering the space.

These trends are creating substantial opportunities for global companies and domestic manufacturers alike.

As we move through 2025, the global medical device market is expected to continue its robust growth, with focus areas including:

Minimally invasive and robotic-assisted surgeries, Wearable health technologies and remote patient monitoring, AI-powered diagnostics and data-driven solutions, Next-generation cardiac devices and implants.

With continued investment in R&D, strategic collaborations, and supportive regulatory frameworks in several countries, the industry is well-positioned to deliver both healthcare impact and commercial success in the years ahead.

GROWTH DRIVERS / OPPORTUNITIES

The global cardiac pacemaker market is poised for robust growth, driven by multiple medical, demographic, and economic factors. As the incidence of cardiovascular diseases (CVDs) continues to rise across the world, so does the demand for life-saving cardiac devices like pacemakers. These devices, which help regulate abnormal heart rhythms through electrical impulses, are becoming increasingly vital in the treatment of conditions such as arrhythmias and heart failure. The combination of medical need, technological advancement, and increasing accessibility makes this an opportune time for companies operating in the pacemaker segment.

One of the most significant growth drivers is the aging global population. According to the United Nations World Population Prospects 2020, the number of individuals aged 65 and above is expected to more than double from 727 million in 2020 to 1.5 billion by 2050. Particularly in Europe and North America, one in four people will be over 65 by that time. Furthermore, the population aged 80 and above is projected to triple, reaching 426 million by 2050. As people age, they become more susceptible to heart rhythm disorders, leading to a greater need for pacemaker implants.

Technological innovation is also transforming the pacemaker landscape. Todays devices are far more advanced than their predecessors, offering features such as MRI compatibility, remote monitoring, longer battery life, leadless designs, and Bluetooth connectivity. These advancements not only improve patient outcomes but also enhance ease of use and reduce the risk of complications. Newer models are compact, minimally invasive, and increasingly affordable, thereby expanding their potential user base.

In India, the pacemaker market is particularly promising due to growing health awareness, better access to healthcare services, and falling device costs. While the Indian market has historically had lower penetration of cardiac pacemakers compared to Western countries, this gap represents a significant opportunity for growth. Rising awareness among patients and clinicians, combined with improved hospital infrastructure, is expected to increase implant rates across the country, especially in tier-2 and tier-3 cities.

The broader Indian healthcare sector also supports this growth. Valued at around $180 billion in FY 2023, the healthcare market is expected to grow at a CAGR of approximately 12% to reach $320 billion by FY 2028. Within this, the cardiac care segment is gaining prominence, aided by increased health insurance coverage and the rise of private healthcare providers offering specialized cardiac services. These developments further strengthen the foundation for pacemaker adoption.

Government support and favorable policy initiatives are accelerating this momentum. Under the Union Budget 2023 2024, the Government of India allocated 89,155 crore to the pharmaceutical and healthcare sectors. Strategic initiatives such as the Atmanirbhar Bharat (Self-Reliant India) mission aim to establish India as a global manufacturing hub for medical devices. Programs like the Production Linked Incentive (PLI) Scheme and the Promotion of Medical Device Parks Scheme are further encouraging domestic production and innovation in the medtech space.

Another promising trend is the increasing investment in research and development. With backing from government grants and tax incentives, Indias medical technology ecosystem is witnessing growing collaboration between academia, startups, and established healthcare companies. These synergies are fostering innovation in cost-effective pacemaker technology tailored for Indian and emerging markets.

In conclusion, the global and Indian cardiac pacemaker markets are well-positioned for significant expansion in 2025 and beyond. Aging populations, technological innovation, increasing healthcare expenditure, and favorable policy frameworks are aligning to create a fertile environment for growth. For manufacturers and healthcare providers, particularly in India, these trends offer a unique opportunity to scale operations, serve unmet medical needs, and contribute to improving cardiac health outcomes across populations.

RESTRAINTS, THREATS, RISK AND CONCERNS:

In 2025, the global medical device industry while poised for growth continues to face a range of restraints, threats, risks, and concerns that could impact its trajectory. One of the most pressing restraints remains the high cost of cardiac pacemaker implantation, which includes expenses related to the device itself, surgical procedures, hospital stays, and post-operative care. This creates a significant affordability barrier, particularly in low- and middle-income countries or for patients lacking robust health insurance coverage. Such cost-related challenges limit market penetration and delay the adoption of life-saving devices.

Additionally, the industry faces increasing regulatory complexities. Governments around the world are tightening safety standards, quality controls, and post-market surveillance requirements. Evolving legislation and heightened regulatory scrutiny especially around data privacy, cybersecurity of connected devices, and product recalls add substantial compliance burdens for manufacturers. These factors not only increase the time and cost of bringing products to market but also elevate legal and reputational risks.

From a strategic perspective, geopolitical tensions and supply chain disruptions exacerbated by global conflicts, trade restrictions, and lingering post-pandemic effects pose significant operational risks. Shortages in raw materials, delays in component sourcing, and rising transportation costs can affect manufacturing timelines and product availability.

Moreover, the rapid pace of technological advancement presents a double-edged sword. While innovation drives growth, it also accelerates product obsolescence and intensifies competitive pressure. Smaller players and even mid-sized firms may struggle to keep pace with continuous R&D investments, particularly as software integration, artificial intelligence, and remote connectivity become core differentiators in modern medical devices.

In markets like India, while infrastructure is improving, challenges persist in quality control, regulatory harmonization, and workforce skill development. Inconsistent enforcement of standards and variability in healthcare delivery infrastructure can slow down the adoption of advanced medical devices.

Overall, while 2025 offers strong growth opportunities for the cardiac pacemaker and broader medical device market, the industry must navigate a complex landscape of cost pressures, regulatory demands, technological disruption, and systemic healthcare inequalities, all of which could impact both access and profitability if not addressed proactively.

RISK FACTORS:

The cardiac pacemaker industry, while demonstrating significant growth potential, operates within a complex ecosystem marked by stringent regulatory requirements, rapid technological evolution, and heightened stakeholder expectations. In 2025, companies in this sector face a variety of risk factors that could materially affect their operations, market access, and financial performance. Key risks are outlined below: Pacemaker industry in terms of current risks to business objectives:

1. Political and Economic Risk:

The global economic environment remains volatile, with inflationary pressures, currency fluctuations, and uneven post-pandemic recovery affecting healthcare budgets and patient affordability. Economic slowdowns can delay elective procedures, including pacemaker implantations. In addition:

o Trade Policies and Tariffs: Shifts in international trade policies, introduction of tariffs, or trade disputes may disrupt supply chains and escalate the cost of imported components. o Geopolitical Instability: Political unrest or instability in regions hosting key manufacturing or supplier operations could significantly impact production schedules and distribution networks.

2. Regulatory and Compliance Risks:

Pacemaker manufacturing and distribution are subject to strict regulatory oversight across all major markets. These requirements are continually evolving, increasing both the cost and complexity of compliance.

o Product Approval Delays: Gaining regulatory approval from authorities such as the U.S. FDA, the European Medicines Agency (EMA), or Indias CDSCO can be a time-intensive process. Delays or rejections may hinder market entry and product launch timelines.

o Data Protection and Privacy Regulations: With increasing integration of software and connectivity in pacemaker systems, compliance with global data protection laws (e.g., GDPR, HIPAA) has become a critical concern, requiring significant investment in cybersecurity and data governance protocols.

3. Operational and Supply Chain Risks:

The pacemaker industry is highly dependent on a global and complex supply chain for raw materials, electronic components, and precision manufacturing.

o Supply Chain Disruptions: Shortages of specialized components, delays in shipping, or supplier non-compliance can severely impact production schedules and cost structures.

o Quality Assurance: The highly sensitive nature of pacemakers necessitates stringent quality control. Any lapse can lead to regulatory penalties, product recalls, and reputational damage.

o Workforce Availability: The industry faces increasing competition for qualified professionals, particularly in biomedical engineering, clinical research, and regulatory affairs.

4. Innovation and Market Risks:

Innovation is central to maintaining competitiveness, yet it carries inherent risks:

o Technological Obsolescence: Failure to keep pace with emerging technologies, such as leadless pacemakers, AI-enabled diagnostics, or remote monitoring capabilities, could result in loss of market relevance.

o R&D and Commercialization Costs: The development and regulatory approval of new pacemaker models involve substantial investment and time, with no guaranteed market success.

o Competitive Intensity: Market dynamics are increasingly shaped by aggressive competition from established multinational corporations and emerging tech-focused startups, pressuring margins and market share.

5. Cyber security and Data Risks:

As pacemakers become more digitally connected, they are increasingly exposed to cybersecurity threats.

o Cybersecurity Breaches: Unauthorized access to pacemaker systems or related infrastructure could pose serious risks to patient safety and data integrity.

o Data Security: Ensuring robust cyber security measures to protect patient data stored and transmitted by pacemakers.

6. Ethical Legal and Social Considerations:

The industry is subject to growing ethical and social scrutiny, particularly with respect to patient safety, data usage, and corporate responsibility.

o Patient Safety and Liability: Any adverse event linked to device malfunction can have serious clinical and legal consequences. Manufacturers must ensure robust safety protocols and post-market surveillance.

o Societal Expectations: Increased demand for transparency, ethical conduct, and sustainability requires companies to demonstrate social responsibility and adhere to evolving stakeholder standards.

7. Market Access and Post-Market Risks:

o Regulatory Maintenance: Post-approval requirements, such as continued quality assurance audits, adverse event reporting, and product re-certifications, demand ongoing vigilance and resources.

o Market Access Delays: Differing regulatory frameworks across countries can delay entry into emerging markets or require costly adaptation of product specifications.

The Global pacemaker industry presents significant growth opportunities driven by aging populations, rising cardiovascular disease rates, and technological advancements, it also faces a complex array of risks. These include high costs of implantation, strict and varying regulatory requirements, supply chain vulnerabilities, cybersecurity threats, and intense market competition. Pacemaker manufacturing is particularly challenging due to the need for stringent regulatory approvals based on safety, efficacy, and quality, with each country imposing its own set of compliance standards. The inability to secure or maintain such approvals can delay market entry or disrupt operations. Furthermore, operational risks such as talent shortages, product recalls, and ethical concerns surrounding patient safety and data privacy add layers of complexity. To thrive in this environment, companies must adopt strong risk management strategies, ensure continuous regulatory compliance, and invest in innovation and quality systems to remain competitive and trusted in this life-critical medical segment.

SEGMENT- WISE OR PRODUCT WISE PERFORMANCE:

Shree Pacetronix Ltd. maintained its strategic focus on its core business segment the design, development, and manufacturing of cardiac pacemakers. As a specialized manufacturer in this critical area of medical technology, the company continued to strengthen its product portfolio and operational footprint.

The company currently manufactures a diverse range of pacemakers to meet varying clinical requirements:

Single chamber pacemaker: Designed to deliver electrical impulses to the lower right chamber of the heart, typically used for patients with atrial fibrillation or sinus node dysfunction.

Dual chamber pacemaker: These regulate both the upper and lower chambers of the heart, promoting better synchronization and improving cardiac efficiency.

Biventricular pacemaker: Specifically used in heart failure patients, these devices stimulate both ventricles simultaneously to restore optimal heart rhythm and improve heart function.

In FY 2025, Shree Pacetronix Ltd. achieved a total revenue of 2,204.05 Lakhs, underscoring its steady performance in a competitive and highly regulated market. The company focused on enhancing operational efficiency, maintaining high-quality manufacturing standards, and strengthening its presence in both domestic and select international markets. Strategic initiatives aimed at expanding geographic reach, upgrading technology, and reinforcing regulatory compliance have further positioned the company as a trusted player in the cardiac care segment.

With its deep expertise, cost-effective manufacturing capabilities, and ongoing commitment to innovation, Shree Pacetronix Ltd. continues to play a vital role in providing accessible, life-saving cardiac solutions to patients worldwide.

OUTLOOK

The Company continued to build on its strong legacy in cardiac care, achieving important milestones and reinforcing its position as one of Indias leading indigenous pacemaker manufacturers. The global pacemaker market maintained its upward trajectory, driven by demographic shifts, rising incidences of cardiac diseases, and sustained healthcare investment. Amidst this evolving landscape, the Company successfully capitalized on emerging opportunities through targeted innovation, strategic expansion, and a sharp focus on operational excellence.

During the year, the Company crossed the significant milestone of over 1,00,000 pacemaker implants, both in India and overseas a testament to its growing trust among healthcare professionals and patients. Supported by a robust R&D foundation, Shree Pacetronix continued to upgrade its product offerings to meet international standards, while remaining cost-competitive and accessible to underserved regions.

Domestically, the Company strengthened its presence by leveraging the Indian governments "Vocal for Local" and "Make in India" initiatives, which promote self-reliance and support indigenous medical device manufacturing. The rollout of production-linked incentive (PLI) schemes and policies aimed at boosting local capabilities further supported the Companys expansion efforts.

Despite facing stiff competition from multinational players, Shree Pacetronix remained committed to enhancing market share in India while steadily growing its international footprint. Strategic efforts were directed toward revenue growth, cost efficiency, and improving margins, enabling the Company to deliver sustained value to stakeholders.

With over three decades of specialized expertise, a patient-first approach, and a strong alignment with national priorities, Shree Pacetronix Ltd. concluded FY 2024- 2025 on a positive note, well-positioned to scale new heights in the years ahead both as a key player in the global pacemaker market and as a proud contributor to Indias self-reliant healthcare future.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company continued to maintain a robust and well-structured internal control system, designed to ensure the integrity of financial reporting, operational efficiency, regulatory compliance, and the safeguarding of assets. The internal control framework is aligned with the nature, size, and complexity of the Companys operations and is regularly evaluated and enhanced to meet evolving business requirements.

The Company has established comprehensive internal financial controls across all key operational and financial processes, including the preparation and reporting of financial statements. These controls are designed to provide reasonable assurance regarding the accuracy and reliability of financial information, adherence to applicable laws and regulations, and the prevention and detection of fraud or irregularities.

An independent internal auditor has been appointed to conduct audits throughout the year, covering various functional areas and compliance requirements. The Audit Committee of the Board plays a critical oversight role by regularly reviewing the internal audit reports, monitoring the implementation of corrective actions, and recommending improvements where necessary.

Additionally, the statutory auditors, as part of their annual audit, review and assess the adequacy and effectiveness of the internal control systems. Their observations and suggestions are discussed in detail with the Audit Committee to ensure continuous enhancement of internal processes.

The internal control system also enables the management to access timely and accurate data on key operational and financial parameters, supporting effective decision-making and performance monitoring. It ensures optimal utilization of resources, proper asset management, and adherence to the Companys policies and procedures.

Overall, the internal control systems in place during FY 2024 25 were found to be adequate, effective, and commensurate with the operational scale and complexity of the business. The Company remains committed to further strengthening its internal controls through ongoing evaluation, process improvements, and the adoption of best practices in governance and risk management.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the financial year 2024 25, Shree Pacetronix Ltd. demonstrated consistent growth in both operational and financial performance, reflecting the Companys continued focus on quality manufacturing, market expansion, and strategic execution. The Company achieved an operational revenue of 2,204.05 Lakhs, maintaining a stable top-line performance compared to the previous fiscal year. This steady revenue generation was supported by the sustained demand for pacemaker devices across domestic and international markets, driven by increasing awareness, improved access to cardiac care, and the Companys strong distribution network.

The net profit for FY 2024 25 stood at 335.83 Lakhs, marking a modest improvement over the previous years profit of 324.76 Lakhs. This growth in profitability reflects the Companys emphasis on cost control, operational efficiency, and effective resource utilization, despite industry-wide challenges such as inflationary pressures and global supply chain constraints.

Operationally, the Company focused on enhancing its production efficiency, streamlining internal processes, and investing in technology upgrades, all of which contributed to maintaining healthy margins. Continued efforts in research and development, as well as quality assurance, enabled

Shree Pacetronix to deliver high-standard medical devices aligned with global regulatory expectations.

Overall, the financial performance during FY 2024 25 aligns positively with operational achievements, reinforcing the Companys resilience and commitment to long-term value creation. Management remains focused on strengthening core operations, expanding into new geographies, and enhancing stakeholder returns in the years ahead.

HUMAN RESOURCES / INDUSTRIAL RELATIONS

Company continued to place strong emphasis on its human capital as a core driver of organizational performance and long-term sustainability. The Company recognizes that its employees are integral to achieving strategic and operational goals, and has therefore maintained its commitment to cultivating a highly skilled, motivated, and collaborative workforce.

As of March 31, 2025, the Company employed 122 permanent staff members across various functions. These employees form a cohesive team that consistently demonstrates the capability to address complex technical and operational challenges while upholding the Companys standards of excellence and integrity.

Throughout the year, industrial relations remained cordial and constructive at all locations. The Company maintained transparent communication channels and proactive engagement with its workforce, which contributed to a harmonious and collaborative work environment. This positive industrial climate supported seamless operations and strengthened collective accountability toward achieving productivity targets.

The Company also continued to invest in the training and development of its human resources to align with evolving business needs and technological advancements. Initiatives undertaken included skill enhancement programs, technical workshops, and performance-based evaluations aimed at fostering continuous professional growth. These efforts helped improve not only technical competencies but also employee engagement and retention.

In line with its growth strategy, Shree Pacetronix is committed to nurturing talent, promoting cross-functional collaboration, and creating a culture of continuous improvement. The shared vision between management and employees to drive efficiency and innovation has played a vital role in maintaining operational excellence.

Overall, the Companys human resource strategy during FY 2024 25 remained focused on building a future-ready workforce, upholding strong industrial relations, and fostering a workplace culture that supports high performance, innovation, and mutual respect.

SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

Details of significant changes (i.e. change of 25% or more as compared to immediately previous financial year) in key financial ratios, along with detailed explanations are as follows:

S. NO	PARTICULARS	RATIO IN F.Y. 2024- 2025	RATIO IN F.Y. 2023-2024	% OF CHANGE	EXPLANATIONS FORMATERIAL CHANGE (CHANGE OF 25% ORMORE)
1.	Debtors Turnover Ratio	2.69	3.73	-27.83%	Due to decrease in Sales
2.	Inventory Turnover Ratio	1.88	3.01	-37.44%	Due to Increase in average inventory
3.	Interest Cover age Ratio	2.80	13.71	-79.58%	Due to decrease in Profit
4.	Current Ratio	1.96	1.98	-1.01	Not Applicable
5.	Debt Equity Ratio	0.03	0.04	-36.70%	Due to decrease in Long term borrowings
6.	Operating Profit Margin	9.63	22.49	-57.18%	Not Applicable
7.	Net Profit Margin	4.48%	15.24%	70.59%	Due to decrease in Profit
	Return on Net worth	5.57%	29.26%	-80.98%	Due to decrease in Profit

CHANGES IN RETURN ON NETWORTH

The Return on Net Worth (RoNW) for the financial year 2024 25 stood at 28.83%, as compared to 29.26% in FY 2023 24. The marginal decline in RoNW is primarily attributed to a rise in the Companys average net worth during the year, resulting from the retention of profits and stronger reserves. While net profit improved modestly during the year, the proportional increase in shareholders equity led to a slight moderation in the return ratio.

Despite this decline, the Company continues to maintain a healthy RoNW, reflecting efficient use of capital and sustained profitability. Management remains focused on optimizing returns through strategic growth initiatives, cost management, and prudent financial planning to enhance shareholder value in the long term.

DISCLOSURE IN ACCOUNTING TREATMENT

During the financial year 2024 25, the Company has followed all applicable Indian Accounting Standards (Ind AS) as notified under the Companies (Indian Accounting Standards) Rules, 2015, as amended from time to time. The financial statements have been prepared in accordance with the prescribed accounting principles, standards, and policies, and there has been no deviation in the accounting treatment from that prescribed under the applicable accounting standards.

This ensures transparency, consistency, and comparability in financial reporting, and reflects the Companys continued commitment to maintaining the highest standards of financial integrity and statutory compliance.

	For and on behalf of the Board of
	Shree Pacetronix Limited
Date: 07/08/2025
Place: Pithampur
Atul Kumar Sethi	Akash Sethi
Managing Director	Joint Managing Director
(DIN:00245685)	(DIN: 08176396)