strides shasun ltd Management discussions

Global economy

In 2022, the global economy witnessed a slowdown, marked by a significant surge in inflation. This slowdown stemmed from a combination of factors, including geopolitical uncertainties, supply chain disruptions, and the enduring effects of the COVID-19 pandemic. The cumulative impact of these challenges had far-reaching consequences, creating a complex economic landscape characterised by mounting concerns over dwindling demand, recessionary anxieties, a heightened cost of living, economic stress with weaker currencies, vulnerabilities within the banking sector, and uncertainties surrounding Western sanctions on Russian crude oil exports.

According to the International Monetary Fund (IMF) global economic outlook report, the global GDP growth declined from 6.0% in 2021 to an estimated 3.2% in 2022. Advanced Economies (AE) witnessed a growth of 2.7% in 2022, while Emerging Market and Developing Economies (EMDE) registered a growth rate of 4.0%.

The global economic outlook is cautiously optimistic as positive signs of recovery emerge and challenges faced in 2022 gradually diminish. The IMF foresees a gradual rebound, with a slowdown in global GDP growth from 3.4% in 2022 to 2.8% in 2023, followed by a moderate increase to 3.0% in 2024. Advanced economies may experience a decline in growth in 2023 but are expected to rebound slightly in 2024. Global headline inflation is expected to decrease from 8.7% in 2022 to 7.0% in 2023 due to the gradual improvement in energy and food prices.

EMDEs are forecasted to exhibit stronger growth on average. However, challenges related to inflation, currency depreciation, and insufficient investment may impede living standards in emerging economies. Chinas recovering economy, absorbing significant exports from Asia and other regions, is anticipated to contribute positively to global market dynamics.

While challenges remain, the global economy is expected to recover gradually. The resolution of disruptions, successful monetary policies to address inflation, and the growth potential of emerging economies contribute to the cautiously optimistic outlook. Proactive measures and vigilance will be vital to navigating potential risks and uncertainties going forward.

Source: IMF World Economic Outlook, April 2023, World Bank, OECD

India

Indian economy demonstrated remarkable resilience amidst global headwinds, with an estimated GDP growth of 6.9% in FY 2022-23. The growth was driven by a combination of factors, including strong consumption, increased investment activity supported by government policies, and a push to enhance transport infrastructure, logistics, and the overall business ecosystem. These measures stimulated demand and private consumption, contributing to the countrys economic growth. Despite global economic challenges, India achieved a significant milestone by becoming the worlds fifth-largest economy with a nominal GDP of US$ 3.5 Trillion.

Inflation remained elevated during the year due to the uncertain global environment. Although the Indian economy faced the challenge of reining in inflation, it made significant progress in managing this issue. The RBIs tightening policy measures and easing global commodity prices have relieved retail inflation.

Looking ahead, Indias economic outlook remains promising. According to the Economic Survey, the country is projected to achieve a real GDP growth rate of 6.5% in FY 2023-24. This estimation aligns with the recognition by IMF Chief Kristalina Georgieva, who has highlighted Indias potential to contribute approximately 15% of the global growth in 2023. This acknowledgment underscores Indias position as a bright spot in the world economy, poised to significantly and positively impact the global economic landscape.

Indias sustained growth is supported by various factors, including its demographic advantage, digital transformation, supportive policies, and strong macroeconomic fundamentals. Efforts to boost the agricultural sector and prioritise infrastructure development will enhance industrial competitiveness and drive future growth. The financial sector has demonstrated strength, with improvements in asset quality and robust credit growth in the private sector. Furthermore, the services sector is expected to experience strong growth, supported by the recovery of tourism and contact-based services as the impact of the COVID-19 pandemic subsides.

Notable progress has been made in the pharmaceutical and healthcare sector. Initiatives such as Ayushman Bharat and the National Health Stack have improved healthcare access for Millions. Additionally, the Atmanirbhar Bharat Production-Linked Incentive (PLI) Scheme has played a crucial role in promoting self-reliance, particularly in healthcare, by encouraging local production of medical devices and reducing reliance on imports.

Addressing inflationary pressures is essential for sustaining economic stability. Recent improvements in food and energy prices, coupled with interest rate hikes by the RBI are expected to contribute to a decline in inflation from 5.66% in FY 2022-23 to 5.2% in FY 2023-24. The proactive measures by the RBI demonstrate its commitment to maintaining price stability and supporting sustainable economic growth. Overall, Indias economic outlook for FY 2023-24 is promising, with a favourable environment for growth driven by multiple sectors and proactive measures taken to address inflationary concerns.

Source: NSO, Asian Development Outlook, World Bank, IMF, Economic Survey, RBI MPC

Industry developments

Global pharmaceutical industry

The pharmaceutical industry is currently navigating a landscape of opportunities and increasing complexity. It is amid the transformative changes driven by emerging markets, advancements in specialty medicines and biotech, and the need to address challenges such as biosimilars and patent expiries.

In 2022, global spending on medicines experienced a slight increase, rising from US$1.42 Trillion to US$1.48 Trillion. This reflects the industrys ability to adapt and overcome challenges, particularly in an operating environment shaped by inflationary pressures, geopolitical uncertainty, and the after-effects of the pandemic.

The industry is expected to continue its growth trajectory with a CAGR of 3-6% between 2023 and 2027, reaching a market size of approximately US$1.9 Trillion. Factors driving this growth include improved healthcare access, the increasing demand for chronic and sub-chronic therapies (especially driven by ongoing efforts in COVID-19 vaccination), and the introduction of innovative medicines. However, it is important to note that this expansion will be moderated by factors such as the loss of exclusivity and the lower costs associated with generics and biosimilars.

Regional trends indicate diverging growth rates. Developed markets are expected to grow slower than emerging markets, known as Pharmerging markets. In the US, pharmaceutical spending is projected to increase at a CAGR of 2.5%-5.5% through 2027, driven by investments in existing medicines and the introduction of new treatments. However, the recently implemented Inflation Reduction Act may impact the net price basis growth rate in the US market.

In the Asia-Pacific region, steady growth is anticipated post-pandemic, while China may face pricing pressures that could hinder its growth. On the other hand, India is poised to witness significant growth in pharmaceutical spending, with an annual CAGR of 7.5-10.5%, reaching a range of US$35-39 Billion by 2027. Additionally, Latin America and Eastern Europe are emerging as fast-growing regions in terms of global medicine spending.

The rise of specialty medicines and biotech characterises the pharmaceutical landscape. Specialty medicines are expected to account for a considerable portion of global spending in 2027, marking a shift away from traditional medicines. Biotech, in particular, plays a key role, constituting a substantial portion of global spending. The utilisation of biosimilars is projected to generate significant savings, exceeding US$290 Billion by 2027, promoting their wider adoption and helping to alleviate budgetary pressures.

Within therapy areas, oncology is expected to experience remarkable growth with a CAGR of 13-16% through 2027, driven by the introduction of innovative treatments. This surge in oncology spending is anticipated to reach over US$370 Billion by 2027, representing a significant increase. However, the field of immunology may witness slower growth due to increased competition from biosimilars, resulting in projected global spending of US$177 Billion by 2027.

The US

The US pharmaceutical market demonstrated a strong performance with a CAGR of 4.9% from 2018 to 2022. The industry is expected to grow with a slightly slower CAGR of 2.5% to 5.5% in the next five years. Net spending growth is expected to be -1% to 2% due to rising discounts and rebates, influenced by the provisions of the Inflation Reduction Act (IRA), along with ongoing market dynamics, the adoption of newer treatments, and the presence of generic and biosimilar competition, contributing to historically slow market growth in the US pharmaceutical industry over the next five years.

European Union (EU5)

Over the next five years, the top five Western European pharmaceutical markets, including the UK, are poised for growth while it will face multiple challenges. Medicine spending is expected to increase by US$59 Billion, surpassing the previous periods growth of US$53 Billion. Generics and biosimilars will contribute to market growth, while payer actions will be influenced by economic recovery and inflation concerns. In terms of therapeutic areas, oncology and neurology are expected to experience significant growth, accompanied by the emergence of next-generation biotherapeutics. These dynamics present opportunities and complexities for stakeholders in the Western European pharmaceutical markets.

Japan

The Japanese market is expected to exhibit sluggish or limited spending on medicines, with a CAGR ranging from -2% to 1% over the next five years. The ongoing COVID-19 recovery and long-term trends affecting established brands influence the projection. In addition, pricing revisions are anticipated to occur annually during the forecast period. However, the impact of these revisions may vary from year to year, with a lower impact during off-years than the established biennial price cut years.

Australia

The Australian market had a minimal pandemic impact and effective containment measures. It is projected to grow at 2-5% from 2023 to 2027 before accounting for discounts and rebates.

China

The Chinese market is expected to stabilise with a 2-5% CAGR over the next five years through 2027. IN the past five years, the market witnessed substantial growth driven by original branded products, which accounted for 28% of spending in 2022 compared to 22% five years earlier. Government policies to update the National Reimbursement Drug List (NRDL) annually have contributed to a higher share of new original medicines reimbursed, resulting in increased spending, although at lower negotiated net prices. Over the next five years, original brands are expected to grow by more than 5% annually, while non-original brands, including versions of medicines from multinational companies, are projected to have minimal growth, partly due to the governments focus on controlling hospital spending.

Africa

The pharmaceutical industry in Africa is projected to achieve a Compound Annual Growth Rate (CAGR) of 5.13% from 2022 to 2027. This growth can be attributed to several factors, including Africas increasing expenditure on healthcare, a maturing business environment, and a trend towards generalisation. During the forecast period, population-driven volume growth and a shift in the market towards more expensive products will shape the pharmaceutical industry in Africa.

Company overview

Strides Pharma Science Limited (Strides), a global pharmaceutical company headquartered in Bengaluru, India, specialises in developing and manufacturing niche finished dosage formulations. With a major emphasis on intellectual property-led products, the company has established itself as one of the worlds largest manufacturers of soft gelatin capsules. Operating in over 100 countries, Strides has a robust global manufacturing footprint spanning eight facilities across four continents, including five US FDA-approved sites.

The Companys product portfolio encompasses a range of technically complex pharmaceutical products, including liquids, creams, ointments, soft gels, sachets, tablets, and modified-release dosage formats. Its expertise lies in the production of ‘difficult to manufacture products. In addition, Strides boasts a dedicated research and development facility in India with global filing capabilities, enabling continuous innovation and growth.

With a strong commitment to quality, the Company has gained a significant competitive advantage in an evolving regulatory landscape. By implementing advanced quality standards supported by an IT-driven platform, the company ensures consistent and stringent adherence to the highest quality measures across all manufacturing locations.

Regulated markets

Strides Pharma strongly emphasises the regulated markets business vertical, encompassing the United States, Europe, Australia, South Africa, and Canada.

In FY 2022-23, our revenue from this business segment witnessed a 36% year-on-year growth, reaching 30,950 Million compared to 22,830 Million in FY 2021-22. This segment remains a crucial focus area for us, contributing to over 83.5 of our consolidated revenues.

US market

US business in FY 2022-23

18,447 280+

Million Revenue Cumulative ANDAs filed

260+

Cumulative ANDAs approved

The US continues to hold its position as the largest and most appealing pharmaceutical market worldwide. Strides Pharma Inc. operates as the face of our business in the US, delivering high-quality healthcare products through prescription medications. We will capitalise on our robust research and development capabilities, targeting 15-20 filings annually. Additionally, we will leverage our established front-end presence to drive the expansion of the business.

In FY 2022-23, our US business demonstrated solid performance, with revenue growth of 58% to 18,447 Million from 11,650 Million in FY 2021-22. Our strategic focus on niche products, the successful integration of the Endo portfolio, and the strong performance of our leading products drove the growth.

Through our targeted approach, we have captured market demand and maintained steady market shares without significant pricing pressures. The acquisition of the Endo portfolio and its manufacturing at our New York facility has further bolstered our sales and expanded our market presence.

Among our comprehensive portfolio of approximately 60 commercial products, Strides has secured a leadership position in 19 products and achieved second or third positions in 15. These top-performing products have driven our revenue, contributing over 75% of our total US revenue.

We remain committed to our innovation strategy, expanding our product offerings and strengthening our market position. We will continue prioritising customer needs and delivering high-quality products to sustain our growth in the US market.

FY 2022-23 highlights

• Achieved highest-ever annual revenue milestone of US$232 Million (18,447 Million)

• Emerged as a leader in 19 products and secured second or third positions in 15, driving over 75% of the US revenue

Strategy for the future

As we move forward, our future strategy for the US business is centred on capitalising on our achievements and reaching pre-COVID levels of revenue and profitability. We will focus on fast-tracked launches from our extensive portfolio of approved ANDAs, encompassing over 280 ANDAs with 260+ approvals, to introduce a diverse range of acute and chronic products, including controlled substances, hormones, and nasal sprays. This approach will drive our growth and expand our market presence.

Our strategy involves a calibrated portfolio expansion with yearly 15-20 new launches. Prioritising customer advocacy and superior supply execution, we will ensure we remain a reliable channel for our partners. With a strong foundation, unwavering commitment to customer satisfaction, and diligent monitoring of growth metrics, we are confident that our future-focused strategy will further solidify our position in the US pharmaceutical market.

Other regulated markets

Our presence extends beyond the US to encompass other regulated markets worldwide. We have established a strong presence in Canada, the UK, Europe, South Africa, and Australia, leveraging our extensive portfolio in these highly regulated markets.

FY 2021-23 was marked by notable progress and growth in our other regulated markets (ORM). We achieved a significant increase in revenue, with revenue growth of ~12% to 12,503 Million in FY 2022-23 from 11,180 Million in FY 2021-22. Our strong market presence and strategic initiatives played a pivotal role in driving this success. One of the years key highlights was the remarkable recovery of the UK and other front-end markets, as they surpassed expectations and returned to previous levels of growth and profitability. This resurgence solidified our position in these markets and fuelled our overall growth. Furthermore, our strategic focus on expanding into new regions yielded positive outcomes, with improved volume traction and the addition of new customers. This expansion allowed us to strengthen our market presence and tap into new growth opportunities. In addition, our newly launched B2B platform, synergICE, proved to be a significant milestone, exceeding expectations and delivering promising results. It catalysed business growth, fostering strong partnerships and driving customer satisfaction. As we move forward, we remain committed to capitalising on these achievements, leveraging emerging market trends, and maintaining our customer-centric approach to drive sustained growth and success in other regulated markets.

UK

Strides Pharma UK Limited, our subsidiary, maintains a strong presence in the UK market. We leverage multiple distribution channels for prescription (Rx) and over-the-counter (OTC) products to maximise growth opportunities. These channels include direct wholesalers, NHS supplies, and Clinical Commissioning Groups (CCG). We have established ourselves as a trusted supplier of high-quality generic medications to Tier-1 and Tier-2 wholesalers in the retail sector. Additionally, we supply to the National Health Service (NHS) through tenders conducted by the Commercial Medicines Unit (CMU).

Europe

The Company has experienced steady growth in the European pharmaceutical market. We have achieved healthy traction through our partnership businesses.p>

Australia

We have established a strong and valued partnership with Arrotex, the leading pharmaceutical company in the country, holding a significant market share. As their preferred long-term strategic supplier, our collaboration spans a diverse range of products. We have a dedicated manufacturing plant in India to cater to this market.

FY 2022-23 highlights

• The order book visibility continues to be healthy for mature businesses

• Successful launch and performance of the B2B platform, synergICE

Strategy for future

Moving forward, our Other Regulated Markets (ORM) business remains vital to our growth strategy. To drive growth, firstly, we focus on scaling up our partnership business and strengthening our front-end presence through new channel additions and portfolio expansion. This will allow us to cultivate strategic alliances and better serve our customers in Europe, Australia, and other expansion regions.

Secondly, we aim to expand our product offerings to new geographies by enhancing our portfolio. This strategic move will enable us to tap into untapped markets and capitalise on emerging opportunities. Finally, we will continue to allocate focused investments in research and development (R&D) to enhance our product portfolio and drive additional growth.

Emerging markets

This segment includes our operations in Africa and institutional business, representing over 16% of our consolidated revenues.

In FY 2022-23, our Emerging Markets Business demonstrated resilience in a dynamic market scenario. We recorded revenue of 6,092 Million (US$77 Million) for the year, reflecting steady progress and strategic execution in emerging markets. While there was a decrease compared to the previous year, we remained focused on capturing market opportunities and delivering value to our customers.

Our strategic focus on expanding our presence and market share in emerging markets paid off. We successfully executed our plans, which included new product launches and strategic partnerships.

Brands Africa, one of our key markets, delivered a successful performance in line with our plans. This achievement can be attributed to effective strategies, new product launches, and enhanced operational efficiencies. We remain committed to further strengthening our presence in this market.

Growth in Access Markets: As the new tender off-take for antiretrovirals commenced, we witnessed a return to growth in the access markets. While these markets can exhibit fluctuations due to donor-funded purchases, we are focused on sustaining growth through effective market strategies and customer-centric approaches.

FY 2022-23 highlights

• Successful execution in brands Africa

• Return to growth in access markets

Strategy for future

Our future strategy for African businesses revolves around three key pillars. Firstly, we aim to expand our market share by strengthening our presence in key African countries. We will position ourselves for growth and maximise our market potential through targeted market penetration strategies, enhanced distribution networks, and strategic partnerships.

Secondly, we will optimise the performance of our field force to drive operational efficiency and effectiveness. Investing in comprehensive training programmes, implementing performance evaluation mechanisms, and refining sales processes will empower our team to engage customers effectively, seize sales opportunities, and achieve greater operational leverage.

Finally, we recognise the importance of cost competitiveness, particularly in the access market segment. Through vigilant cost management, streamlined processes, and leveraging economies of scale, we will enhance our cost structure and improve our competitive positioning. This strategic focus will enable us to increase our wallet share, attract a broader customer base, and drive sustainable revenue growth.

Financial progress

Consolidated financial performance

		( in Mn)
Particulars	FY 2022-23	FY 2021-22
Revenue	37,042	30,946
EBITDA	4,460	43
Adjusted PAT/Loss	714	(3,550)

Key ratios

Particulars	FY 2022-23	FY 2021-22
Debtors turnover	2.94	2.65
Inventory turnover	1.40	1.27
Interest coverage	2.39	0.06
Current ratio	1.21	1.14
Debt equity	1.25	1.18
EBITDA margin (%)	12%	0.10%
Net profit margin (%)	-6%	-15%

Focus on R&D

Our expertise in Research and Development (R&D) is evident through our success in creating a distinctive and specialised portfolio of products. Our integrated centre in Bengaluru is at the heart of our R&D capabilities, equipped to develop and file products for regulated and emerging markets. With a dedicated team of ~150 professionals, our Bengaluru R&D centre is focused on building a global portfolio by leveraging the latest technologies available in the pharmaceutical industry.

At Strides, our R&D philosophy revolves around continuous learning and innovation. We are actively involved in developing various dosage forms, particularly on novel drug delivery systems for solid orals such as modified-release tablets, capsules, and soft gelatin capsules. These advancements cater to the needs of both regulated and emerging markets.

To ensure sustainable growth, we have strategically aligned our product selection with niche offerings characterised by complex formulations across diverse therapeutic segments. This approach allows us to deliver innovative solutions that address specific market demands and contribute to the overall advancement of healthcare.

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Ensuring the highest standards of quality

Strides has consistently placed a strong emphasis on adhering to compliance standards. Our commitment to quality excellence is evident through our well-defined initiatives focusing on people, processes, products, and technologies. Through targeted training programmes, we equip our employees with advanced quality management skills, enabling them to effectively identify, report, and address any quality concerns within the organisation. Our quality excellence programme ensures that we maintain high benchmarks in compliance and continuously strive for improvement.

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Strengthening the IT infrastructure

A significant percentage of our volumes are manufactured using the programme for Manufacturing Execution System (MES), a typically multi-year initiative. MES system empowers our whole manufacturing operations to be GMP-compliant along with automatic capturing of data from different machines and instruments. We can generate electronic ‘Batch Manufacturing Records enabling us to quickly release the batches with ‘Review by Exception using MES. Electronic logbooks have enabled us to avoid documentation mistakes and ensure concurrent entries of all activities.

Constant endeavours to improve our R&D and the strong formulation our R&D capabilities, along with the knowledge of the regulatory environment in regulated markets have resulted in successful product registrations in several markets.

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Our people. Our strength.

At Strides, we take pride in maintaining a global workforce of approximately 4,600 individuals who collaborate in a diverse and harmonious work environment fostered by an open and transparent culture. Our recruitment, reward, and recognition policies are merit-based, enabling us to attract and retain top-tier talent. We place great emphasis on fostering growth through continuous learning, motivating our employees to align their personal goals with the organisations objectives.

To ensure effective communication and engagement, our top management actively connects with our global workforce through regular communication sessions conducted throughout the year. These sessions exemplify our commitment to transparency within our organisational culture.

In addition, we promote two-way communication across the organisation through our employee feedback and governance app, encouraging valuable input from all members of our workforce.

At Strides, we adhere unwaveringly to the highest standards of ethical, moral, and legal conduct in our business operations. We have implemented a Whistle Blower Policy, providing a platform for directors, employees, and stakeholders to raise concerns about any potential violations of legal or regulatory requirements, misrepresentation of financial statements, or other pertinent matters.

Furthermore, we prioritise the safety and well-being of our employees by conducting adequate trainings, workshops, and awareness programmes to prevent sexual harassment in the workplace. We have implemented a gender-neutral Prevention of Sexual Harassment (POSH) policy, promoting a safe and inclusive environment for all members of our organisation.

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Focusing on risk intelligence and resilience for sustainable growth

At Strides, we acknowledge that having a robust risk intelligent culture is core to the Companys stated objectives and builds resilience for the future. Our risk management process strives to mitigate familiar business risks that impact our strategic objectives and financial performance, while being conscious of increasing Environment, Social and Governance (ESG) risks and stakeholder expectations.

Dealing with risks and managing uncertainties is a key mantra and an essential skill for any organisation today. As a company with a global footprint, the efficacy of our risk management and mitigation systems is critical for operational resilience. Strides is committed to optimising its risk management and business continuity management systems, to achieve risk-intelligence for operational excellence, resilience, and long-term success."

Sormistha Ghosh

Group General Counsel & Chief Risk Officer

Our robust risk management framework and processes aligns the risk management activities to the changing business and risk landscape. Our approach to risk management is holistic and provides an integrated view of risks spanning domains, including Financial, Operational, Regulatory, Reputational, Extended Enterprise, Strategic, Sectoral, Sustainability-ESG, Talent and Technological areas, builds resilience, and drives stakeholder confidence.

Integrated risk management

The business landscape is rapidly evolving, with new uncertainties challenging well-established business orthodoxies. This requires us to shift towards a more integrated and agile risk management process, that helps navigate and respond to challenges impacting strategic intent.

Risk management has been an integral aspect of our organisational activities and control systems, especially in the areas of manufacturing, quality, Environment, Health, and Safety (EHS), and compliance aspects. The risk management process covers functions, and operating locations across the organisation. Our endeavour is to foster a risk-enabled decision-making process based on the strategic and business objectives defined for the short, medium, and long term.

Our governance framework facilitates an integrated approach to risk management, with roles and responsibilities defined in a manner that ensures a comprehensive coverage and creates accountability across the organisation.

• The Board has constituted a Risk Management Committee (RMC). The RMC and its Steering Committee provide stewardship and oversight to the risk management process.

• The Steering Committee and the executive level committees assists the Board and RMC to deliberate on key risks and review effectiveness of controls to mitigate risk exposure

• A Sustainability Council has also been formed to provide a distinct view on sustainability across our strategy, objectives, and operations, that complements and is integrated with our risk management process. The Sustainability Council will facilitate collaboration to implement strategies that address ESG-related risks and opportunities. It encompasses representation from functions including Legal and Compliance, Quality, Manufacturing and EHS leaders to oversee organisational preparedness to risks that may impact long-term continuity or sustainability.

The Chief Risk Officer (CRO) leads Enterprise Risk Management (ERM) initiatives across the Company and assists RMC and Group Level Steering Committee in monitoring and reporting of key enterprise risks and associated mitigation plans. Employees are kept abreast with leading risk management practices through training programmes and workshops.

Our risk management process is aligned with leading international standards such as COSO ERM 2017 and ISO 31000:2018 and facilitates a combination of a bottom-up and top-down approach to facilitate strategic oversight and timely escalation of risks and issues.

• The leadership team identifies and assesses long-term and strategic risks for the Company. Emerging risks are identified and consolidated under major risk themes including ESG

• Assessment and prioritisation of risks based on a uniform risk rating criteria helps identify key risks that require focused mitigation strategies and management action.

• Periodic updates to the committees constituted by the Board, including Risk Management Committee, ensure there is adequate monitoring and provide a forum to deliberate on further enhancement of the risk management process.

• Risk owners are assigned for monitoring of risks on an ongoing basis, and risks are assessed for changes in associated risk rating.

The risk management framework is also reviewed periodically to ensure compliance with regulatory requirements and to factor the changes in the business environment.

Enablers to integrated risk management

Risk management process is embedded through periodic measures to effect, enhance and sustain risk culture. Risk mitigation and management is a responsibility that is shared by employees throughout the organisation, that is enabled by timely interventions for trends and emerging risks identified across the business landscape.

Our integrated risk management process is tech-enabled to provide an enterprise level view and enables seamless monitoring of risks, associated contributory factors, mitigation plans and their status thereof with dashboards, for management reviews.

Our business is driven by a strong commitment to operating with the highest standards of corporate governance, ethics, and integrity. We understand that adherence to regulations and compliance is a key aspect to holistic risk management process. To facilitate a robust compliance process, we have a compliance tool, that provides periodic updates and enables management oversight over compliance practices for an efficacious approach to risk management.

Key risks in the business:

We regularly review our key risk areas, and the leadership retains the responsibility for determining the nature and extent of significant risks and drawing out commensurate mitigation response plans. We set out below our principal risks, which are prioritised, and periodically monitor associated mitigation plans which we believe help us to manage our risks.

The Steering Committee shall continue to monitor the key risks and adequacy of mitigation plans on a periodic basis, while reviewing the risk landscape for emerging risks, including sustainability. Our comprehensive approach to risk management shall enable risk-informed decisions, manage crisis scenarios, and build a risk-intelligent culture across the organisation.

Resilience in action–Framework for building organisational resilience

Our constant focus is to ensure our business processes and functions are resilient to the uncertainties in our operating environment. Our risk management framework is integrated with crisis management, that equips the organisation with the ways and means of dealing with various crisis scenarios, to ensure effective response and recovery.

The executive level committees shall assess the varying business scenarios that may impact the business continuity of the organisation (‘crisis events or risks that have high impact and velocity) to assess the Companys readiness to respond to such scenarios and robustness of controls.

To ensure uninterrupted operations for critical functions and interdependencies, Strides is in the process of strengthening its business continuity framework based on leading standards and industry practices. The approach strives to ensure a broad coverage of possible critical business continuity risks including natural disasters, improve our capability to prepare, respond and recover, focused on existing risk mitigation plans built across critical business units/services/applications/processes.

As the organisation focuses on sustainable business growth, we are committed to step up our investments in resources, tools and technologies to make our risk management, compliance and business continuity processes more data driven and objective. We believe our integrated risk approach will help us build and equip our business with capabilities to sense and respond to risks across our organisational ecosystem in a co-ordinated, timely and effective manner.

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Internal control systems and adequacy

The Companys advanced IT infrastructure ensures adequate internal controls over business processes and practices. This internal control system provides reasonable assurance about the integrity and reliability of financial statements. Moreover, the Company has an active in-system audit programme, supported by Grant Thornton, which regularly encompasses various operations consistently. The Audit Committee reviews the Companys internal audit observations regularly.