Sudarshan Pharma Industries Ltd Management Discussions

Industry Structure and Developments

At the beginning of 2025, the chemical industry anticipated a gradual recovery, with global chemical production projected to grow 3.5%. Instead, the industry entered a prolonged downcycle, with forecasts dropping to 1.9% for 2025 and 2% for 2026.

Instead of stability, 2025 ushered in uncertainty and volatility, driven by three key factors.

While industry trade organizations have projected 3.5% growth for global chemicals production, the industry faces challenges, including high energy prices and structural costs, especially in Europe, low utilization indicative of weak demand and overcapacity, geopolitical tensions, and disruptive trade policies. Yet there is still hope for some rebound from the severe down-cycle of the past two years, with brighter outlooks for specialty chemicals and those segments capitalizing on clean technology and artificial intelligence.

Ultimately, to ensure long-term strength, the industry must focus on strategies that promote performance transformation through the reduction of structural costs, stronger margin recovery, and supply chain resilience — all with a strong leverage of technology. Despite being temporarily out of favour, the transition toward sustainable products and green technology along with increased circularity will eventually reappear as a dominant investment and growth theme for the industry beyond 2026 and into the 2030s.

In the meantime, advancements in technology, along with resilience and agility, will reshape competitiveness and determine which players best weather current trade, regulatory, and geopolitical uncertainty.

Asias chemicals market, led by China, India, and Southeast Asia, is driving global demand. The region is working through the tail end of destocking trends, with production and restocking expected to gain pace into 2026.

Asian players are poised to benefit from robust consumer demand, economies of scale in manufacturing, competitive labour costs, and prudent monetary policies. In contrast, advanced economies may experience slower growth due to an aging population, high debt levels and continued weaknesses in property markets. Moreover,

Opportunities and Threats

In 2025 and 2026, growth is projected at 2.8% and 3% respectively, led by the swift escalation of trade tensions and extremely high levels of policy uncertainty. A series of new tariff measures have been announced and implemented by the United States with countermeasures by its trading partners, especially China. However, the US announced a 90-day pause on import duties for most of the countries, and both US and China have agreed to a tariff reduction thereby easing trade tensions between both the countries for the said period. These tariff measures have raised concerns over a global trade war. As prices become volatile, global commodity market is grappling with new challenges. The uncertainty created by trade wars impacts supply chains and global economic growth. Easing tensions in the Middle East and a ceasefire among nations are expected to have a positive impact on the global economy.

The Tariff revisions and geopolitical tensions may temper w easing the growth rate for advanced economies from 4.3% (2019– 2024) to 3.8% (2024–2029). In contrast, emerging markets and developing economies are set to accelerate from 5.2% to 5.4%, driven by domestic demand and broader trade ties.

Advanced Economies remain central to the growth trajectory since they represented 58.5% of the global output in 2024. With a projected

3.8% growth over the next five years, they are expected to maintain a dominant share that will continue to exceed 56% through 2029, reinforcing their enduring influence on global economic dynamics.

Nonetheless, the rising importance of emerging markets and developing economies cannot be overlooked. Marked by rapid industrialization, urbanization, and demographic shifts, these regions are becoming substantial contributors to global GDP growth, consumption patterns, and investment inflows. Forecasts indicate a CAGR of 5.4% between

2024 and 2029, with significant prominence in emerging economies across Asia, particularly India.

Indian Economy Outlook

Indian economy has emerged as one of the fastest growing major economies in the recent past. This robust growth amidst weak global economic growth is attributable to strong domestic demand, structural reforms and policy support. As per the Second Advance Estimates of GDP, Indias GDP growth is expected at 6.5% in FY2025, much lower than 9.2% GDP growth in FY2024. Manufacturing, services and infrastructure investment sectors witnessed good traction. Slower GDP growth in the first half of the year is attributable to lower industrial activity. A modest activity in construction and manufacturing in the subsequent quarter due to weather related disruptions led to weaker-than-expected gross fixed capital formation. Strong export growth was seen in pharmaceuticals, textiles and engineering goods.

Economic growth has received major boost by the governments push for digital transformation, financial inclusion and ease of doing business.

There has been substantial rise in foreign direct investment (FDI) due to the production-linked incentive (PLI) schemes aimed at boosting domestic manufacturing. Building on this positive momentum, the RBI has estimated the Indian economic growth rate of 6.7% in FY2026. However, the rising cross border tensions stands out as a key concern.

The allocation for the PLI schemes in FY26, rising sawasignificant by over 108% to Rs.19,482 Crores in the budget estimates. This represents a substantial increase from Rs.9,360 Crores allocated in the revised estimates in FY 2025. This significant the Governments strong commitment to bolstering domestic manufacturing across key sectors, with particular notable allocations for textiles, battery cell and storage technology and automobiles.

India ranks as the sixth largest producer of chemicals globally and third in Asia, contributing 7% to Indias GDP and 14% to the overall Index of Industrial Production (IIP). India holds a strong position in global chemicals trade, ranking 14th in exports and 8th in imports (excluding pharmaceuticals).

The India oncology market size is valued to increase by USD 2.36 billion, at a CAGR of 20% from2025to2030.TheoncologymarketinIndia is undergoing a significanttransformation, characterized by advancements in diagnostics and therapeutics aimed at improving patient outcomes. A key driver is the increasing adoption of precision medicine, which tailors treatment to the individual genetic characteristics of a patients tumour. This approach moves beyond traditional one-size-fits-all regimens toward more effective, targeted interventions. Rising cancer incidence and growing disease awareness will drive the India oncology market.

Concurrently, the market is shaped by the growing availability of biosimilars, which offer clinically comparable alternatives to expensive biologic drugs, thereby expanding access to advanced therapies for a larger patient population. This decision-making process involves a complex analysis of treatment efficacy, procurement costs, and reimbursement policies to ensure both financial sustainability and high-quality patient care. The interplay between these trends and challenges, including infrastructure disparities and affordability, defines the strategic landscape for all stakeholders involved in cancer care.

The cancer treatment segment is evolving from a reliance on conventional chemotherapy and radiation therapy toward more sophisticated interventions. Pharmaceutical innovation is driving the adoption of targeted biologics and immunotherapy, which are becoming central to modern cancer care pathways. This shift reflects a move toward evidence-based oncology and a more patient-centric care model. Oncologic surgery remains a cornerstone of multidisciplinary treatment, while the integration of palliative care is improving quality of life. As treatment accessibility expands, providers are focusing on comprehensive therapeutic regimens.

Company Overview

SudarshanPharmaIndustriesLimited(the‘Company)operatesinpharmaceuticalandchemicalindustries, focusing on specialty chemicals and intermediates used in pharmaceuticals, paints, food products, and adhesives. The Company has a strong presence domestically and internationally, participating regularly in trade fairs and exhibitions. The Company exports primarily to South East Asia, Middle East, and North Africa. The Companys services include contract manufacturing and supplying generic pharmaceutical formulations to healthcare institutions through its distribution network.

The Company offer services of Quality Control‘QC ( ) and Formulation Development to provide customised solutions to customers and assist them in sourcing the innovative products as per their needs. The Companys pharma and specialty chemical business operations are supported by various manufacturers having facilities which are approved by the Food & Drug Administration (‘FDA), World Health Organization (‘WHO) and other relevant authorities. Presently, the Company has a Contract Manufacturing Agreement with some prominent pharmaceutical companies and has also joined hands with regular suppliers having FDA and WHO approved plant to supply pharma formulation and more than 100 generic pharma products.

The Company also supplies generic pharmaceutical formulation as ‘Make to order for bulk supply to hospitals and related healthcare organisations. The Company has launched some of the best performing unique products such as Jivan Kit, Setdown, Pulmo relief, Fix Pollen, Flupimac and many more. In domestic pharmaceuticals markets, currently, the Company has its presence in

5 States and further offering customised solutions to its customers for their requirement of Drug Intermediates and Specialty Chemicals. To boost export business, the Company is in the process of applying for some formulation registrations in some African as well Asian countries. With its longstanding operations and quality products, the Company has built a strong relationship with customers for Specialty Chemicals, Active Pharmaceutical Ingredients (‘APIs) and Finished Dosage Form (‘FDFs).

The Company was initially incorporated as ‘Sudarshan Speciality Chemsolve Private Limited under the provisions of the Companies Act, 1956. On 17th December 2016, the Companys name was changed from ‘Sudarshan Specialty Chemsolve Private Limited to ‘Sudarshan Pharma Industries Private Limited. On 5th January 2017, the Company was converted from a private limited company to a public limited company, changing its name to ‘Sudarshan Pharma Industries Limited. The Company successfully completed its Initial Public Offering in the financial

The Company has developed extensive expertise in specialty chemicals, bulk drugs, Active Pharmaceutical Ingredients (APIs), and pharmaceutical formulations. It actively supports the Government of Indias initiatives, such as the ‘Make in India campaign and aligns with the vision of self-sufficiency

Minister.

Considering the Companys historical achievements, strategic future plans, strong commitment of its promoters, and robust financial performance, it potentialdemonstrates for sustainable significant growth and value creation for stakeholders.

Under the Aatmanirbhar Bharat Rojgar Yojana through the Production-Linked Incentive (PLI) scheme, the Company successfully achieved its initial milestone by developing a laboratory-scale sample of Vitamin B1 (Thiamine Hydrochloride). This development covered the complete process, from basic raw materials to the finished product, including the successful manufacturing of all necessary intermediates for producing the final API, Vitamin B1.

The Company successfully achieved its first milestone of developing the sample for the molecule VITAMIN B1 (Thiamine Hydrochloride) from the Base Root and have filed an application for the registering a patent for the

Manufacturing of “VITAMIN B1”.

TheCompanyhassuccessfullyachievedthedevelopmentofthemoleculeVITAMINB6(PyridoxineHydrochloride) from base root till the finishedproduct and also successfully manufactured all the intermediary products required to manufacture the finished API products of “VITAMIN B6”.

These products have been developed through our dedicated R&D division, establishing our leadership in this segment. Patent applications have been filed covering both the manufacturing processes and intermediates for Vitamin B1, Vitamin B6 and other related APIs.

The Company operates with a strategy of upward integration within the pharmaceutical industry, encompassing specialty chemicals, intermediates, APIs, and finished products. Currently, for at least the next two years, our primary focus will remain on APIs and intermediates, after which we plan to gradually transition toward formulation and branding. Our long-term vision involves strengthening our brand presence and intensifying innovative research activities through our extensive in-house R&D facilities. Ultimately, we aim to address significant such as heart disease, cancer, AIDS, and other critical medical conditions.

In line with this strategy, we have developed two innovative products designed to significantly contribute to human health:

Heart Kit Loading Dose: An emergency cardiac formulation intended as a first-aid treatment during heart attacks. Developed based on the guidance of our mentor, Padma Vibhushan Dr. Bhaktavatsalam—renowned for performing over 7,700 heart surgeries at minimal or no cost—this unique formulation is currently in the patent application process. The Company intends to reintroduce this product to the market on a substantial scale upon securing the patent.

Jivan Kit: An Ayurvedic immunity-enhancement product consisting of Jivan Sudha, Jivan Sat, and Jivan Prash. Based on Ayurvedic principles, Jivan Kit aims to maintain balance among the fundamental bodily elements (‘Vaat, ‘Pitt, and ‘Cough), boosting immunity, facilitating cell regeneration, detoxification, and enhancing overall vitality.

In addition to the products mentioned earlier, the Company has developed ‘Set Down, an innovative formulation combining principles from both Ayurveda and Allopathy. This unique product is specifically designed to effectively address constipation and related digestive issues. It has received positive market feedback, with increasing numbers of medical practitioners recommending it to their patients.

Our primary focus remains on the manufacturing of APIs and intermediates, with an emphasis on advanced research, innovation, and new product development. To enhance our research capabilities, we place significant emphasis on our R&D activities and maintain strategic collaborations with leading experts and institutions. Among our notable partnerships is an association with Dr. William Selvamurthy at Amity University, a pioneer in setting global educational benchmarks and best practices. Under his guidance, the Company collaborates in pharmaceutical and healthcare research, including areas such as nanotechnology, patent drafting and submission, and the commercialization of innovative technologies and products.

Key Financial Ratios

Current Ratio:

The Current Ratio measures a companys ability to meet short-term obligations or liabilities due within one year. It is calculated by dividing current assets by current liabilities. During the Financial Year 2025-26, the Company availed working capital financing from various banks and NBFCs to facilitate working capital requirements.

This led to an increase in current liabilities, resulting in a decrease in the Companys Current Ratio.

Debt-Equity Ratio:

The Debt-Equity Ratio assesses the financial leverage of a company, indicating the proportion of financing derived from debt relative to shareholders equity. It is calculated by dividing total liabilities by shareholders equity. In Financial Year 2025-26, the Companys borrowings increased substantially due to higher working capital requirements compared to the previous year. Consequently, this resulted in an increased Debt-Equity Ratio.

Inventory Turnover Ratio:

The Inventory Turnover Ratio indicates how frequently a company sells and replaces its inventory within a specific period. It is computed by dividing the cost of goods sold by the average inventory during the period.

During the Financial Year 2025-26, Companys inventories increased substantially as compare with previous year due to which inventory turnover ratio decreased as compared to previous year.

Trade Receivables Turnover Ratio:

The Trade Receivables Turnover Ratio measures the efficiency of a company in collecting outstanding payments from customers, indicating how effectively credit is managed. It is calculated by dividing turnover by average trade receivables. In Financial Year 2025-26, the Company successfully improved its Trade Receivables Turnover Ratio compared to the previous year.

Net Capital Turnover Ratio:

The Net Capital Turnover Ratio evaluates the efficiency with which a generate revenue. It is computed by dividing revenue from operations by average working capital. In Financial

Year 2025-26, the Companys average working capital increased significantly compared to the previous leading to a decrease in the Net Capital Turnover Ratio.

Net Profit Ratio:

The Net Profit Ratio reflects the proportion of net profit generated from revenue and is calculated by dividing net profit by turnover. During Financial Year 2025-26, the Company improved its operational efficiency, resulting in a higher netprofit the previous year. margincomparedto

Cautionary Statement

This document contains statements about expected future events and the financial and operating results of the Company, which are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties.significantrisk that the There assumptions, predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause assumptions,actualfutureresultsandeventstodiffer materially from those expressed in the forward-looking statements. Accordingly, this document is subject to the disclaimer and qualified in its entirety by the assumptions, qualifications and risk factors referred to in the Management.