Sunil Healthcare Ltd Management Discussions

1. OVERVIEW:

Sunil Healthcare limited, having plant at Alwar; Rajasthan for manufacture of Empty Hard Gelatin capsules shell and HPMC Capsules shell. The company has commenced its manufacturing operation in the year 1976 with installed capacity of 200 million Hard Gelatin Capsule Shell, with gradual expansion, in the financial year 2017-18, the total installed capacity is raised to 13 billion capsules p.a.. In the first quarter of Financial year 2021-22, the Company increased its production capacity to 13.80 billion capsules p.a. and in 2^nd quarter the installed capacity was increased to 15 billion capsules p.a. from 13.80 billion capsules p.a. Your Company has navigated through Challenging Industrial landscape over the past few years and through several Operational Excellence initiatives, has strived towards increasing its market share in India and Overseas. We are hopeful of improving performance in the coming years.

The real growth in GDP during 2024-25 is estimated at a rate of 6.5 % only as compared to real GDP growth of 8.2% in 2023-24.

Amidst several challenges like inclement Raw material pricing, coupled with demand side uncertainity is a deterrent on the earnings of the Company, however, the company has taken various steps to curb the cost and make its product more qualitative, affordable and competitive.

2. INDUSTRY OUTLOOK:

The product of the Company Hard Capsule Shell is used by Pharmaceutical and Food supplement Companies as a container for administering medicines and food supplements. Therefore, the growth of the industry is dependent on the growth of pharmaceutical and food supplement companies domestically and globally.

Indias drugs and pharmaceutical market for FY 2023-24 was valued at USD 50 billion with domestic consumption valued at USD 23.5 billion and export valued at USD 27.82 billion. In FY 2024-25 Indias pharmaceutical market is estimated to be valued at USD 65 billion and is considered to be the worlds third largest by volume and 14th in terms of value of production. With an extremely diversified product base covering generic drugs, bulk drugs, over-the-counter drugs, vaccines, biosimilars, and biologics, the Indian pharmaceutical industry has a strong presence at the global level producing more than 60,000 generic drugs across 60 therapeutic categories. The Pharma sector currently contributes to around 1.72% of the countrys GDP.

India is the 3rd largest producer of API accounting for an 8% share of the Global API Industry. About 500+ different APIs are manufactured in India, and it contributes 57% of APIs to prequalified list of the WHO._ Over the next five years, Indias medical spending is expected to increase by 9–12%_placing it among the top 10 nations worldwide._The pharmaceutical industry in India is expected to reach $130 Billion by 2030 and US$450 billion by 2047. The Huge opportunity for jobs in pharma sector is visible due to positive and upward forecast of the Pharma industry in India as stated above not only during the short term but also during medium to long term. The drugs and pharmaceutical exports from the country have seen a growth of 9% per cent year on year at $30 billion during the year 2024-25, as compared to previous fiscal year. Pharmaceutical exports include bulk drugs, intermediates, drug formulations, biologicals, Ayush & herbal products, surgical and Vaccines.

India accounts for_60% of global vaccine production, contributing up to 70% of the WHO demand for_Diphtheria, Tetanus and Pertussis (DPT)_and_Bacillus Calmette–Gu?rin (BCG) vaccines, and 90% of the WHO demand for the measles vaccine. India supplies over_50%_of Africas requirement for generics,_~40%_of generic demand in the US and_~25%_of all medicine in the UK.

The Indian nation is the_largest provider of generic medicines_globally, occupying a_20% share_in global supply by volume, and is the leading vaccine manufacturer globally. India is known as the "pharmacy of the world"_due to the low cost and high quality of its medicines.

It was no surprise that the Indian companies dominating the ANDA approvals, with near about 50 percent of total ANDA approvals. India was followed by the US, China, Europe, and Israel, in that order, in the number of ANDA approvals. India is the largest provider of generic drugs globally. India exports Pharmaceuticals to over 200 countries. Over 50% of Africas requirement for generics, nearly 40% of generic demand in the US and_approximately 25% of all medicine in the UK is supplied by India.

Indias biotechnology industry comprises biopharmaceuticals, bio-services, bio-agriculture, bio-industry, and bioinformatics. Indias biotechnology sector is witnessing remarkable growth, with the countrys bioeconomy now valued at USD 150 billion but there is still significant untapped potential in innovation and product development, which could further elevate Indias global standing in the sector. The growth of the industry would be driven by the increasing demand for vaccines and biopharmaceuticals in the domestic and international markets. The industry is expecting to reach a market value of USD 270-300 billion by 2030. With a highly skilled workforce, technological advancements and Sales affected by the pandemic normalizing, Indian pharma industry is expected to grow at CAGR 10.70% in the forecast period of 2024-2029. Globally as well as in India, the pharmaceutical industry is rapidly undergoing changes. The Indian pharmaceuticals market is the third largest in terms of volume and fourteenth largest in terms of value. India has the largest number of USFDA-compliant pharmaceutical plants outside the US and over 2000 WHO-GMP approved facilities, serving demand from 150+ counties worldwide, with 10500+ manufacturing facilities. India enjoys an important position in the global pharmaceuticals sector.

Installed capacity of Empty Hard Gelatin Capsule in India is 100 billion capsule p.a.

The global empty capsules market, valued at US$3.0 billion in 2023, is forecasted to grow at a robust CAGR of 6.3%, reaching US$3.1 billion in 2024 and an impressive US$4.2 billion by 2029._India has been traditionally quite resourceful in the pharma sector, with a low cost of manufacturing (30-35% lower than in the US and Europe), cost-e_cient R&D (about 87% less than in developed markets), and efficient and cost effective skilled labor. The advantage to Indian Pharmaceutical Industry is shown as per the Objectives, vision and roadmap_of Indian Pharma Vision 2030 and 2047 and with the help of chart as mentioned below:

Objectives, vision and roadmap_of Indian Pharma Vision 2030:

Accelerate the goal of universal health care across India and the world by providing access to high-quality affordable drugs:

Emerge as an innovation leader to build a globally recognized position for India:

Become the worlds largest and most reliable drug supplier and reach USD ~120-130 billion by 2030:

Contribute significantly to the growth of the Indian economy

Objectives, vision and roadmap_of Indian Pharma Vision 2047:

Global leader_in manufacturing of affordable, innovative & quality pharmaceuticals & medical devices for the goal of ‘Vasudhaiva Kutumbakam

‘Vishwaguruin innovation & Research_ for delivering health care products to future generations in a sustainable manner, introducing natural products

Ensure accessibility & a_ordability_of patient-centric products for better healthcare outcomes for universal health coverage, by building upon partnerships across industry, science and governments

Contribute to Health System to attain union of equity, e_cacy, and efficiency towards developing holistic products profile, with focus on NCDs, AMR, and rare & neglected diseases

Create equilibrium between social, economic, & governance aspects through facilitative, balanced & progressive policy and regulatory framework

Reduce Indias carbon footprint in Pharma-MedTech to align with Honble PMs vision of "Panchamrita"

Identifying critical suppliers, de-risking & decarbonising the supply chain, and_ promoting local sourcing

Medical Devices to be an integral part of global supply chains for raw material, components, spare parts, assemblies/subassemblies etc

Digitization and technology upgradation_in delivery of services & products under Jan Aushadhi Pariyojana.

The country also has a large pool of scientists and engineers who have the potential to steer the industry ahead to an even higher level. Presently over 80 per cent of the antiretroviral drugs used globally to combat AIDS (Acquired Immuno De_ciency Syndrome) are supplied by Indian pharmaceutical firms. The UN-backed Medicines Patent Pool (MPP) exists to help people in low- and middle-income countries (LMICs) live longer and healthier lives. This being done by driving down the costs of vital medicines and technology through licensing and technology transfer, and working closely with others in public health to ensure better access to the products and technologies that people in LMICs need. To date MPP has signed 34 licences for different health technologies, established partnership with 58 manufacturing partners across 16 countries and 23 products have developed or supplied/distributed by MPP licences in more than 100 developing Countries. As per the MPP strategy for 2023-25, expecting 30 Million people have the access of MPP-licensed products each year up from 15 million annually by 2025. MPP will continue to target its historic set of diseases – HIV, viral Hepatitis and TB

Market Size

India is one of the biggest global suppliers of low-cost vaccines. 60 % of global vaccines are produced in India. India is a global leader in supply of DPT, BCG and Measles vaccines. We contribute up to 70 % of the WHO demand for Diphtheria, Tetanus and Pertussis (DPT) and Bacillus Calmette–Gu?rin (BCG) vaccines, and 90% of WHO demand for the measles vaccine.

India is also the largest provider of generic medicines globally, occupying a 20% share in global supply by volume. The industry manufactures about 60,000 different generic brands across 60 therapeutic categories.

India exports Pharmaceuticals to over 200 countries. Over 50% of Africas requirement for generics, nearly 40% of generic demand in the US and_approximately 25% of all medicine in the UK is supplied by India.

Additionally, India has the highest number of US-FDA compliant Pharma plants outside of USA. India is home to more than 3,000 pharma companies with a strong network of over 10,500 manufacturing facilities as well as a highly skilled resource pool.

Indias domestic pharmaceutical market was at US$ 42 billion in 2021, currently estimated value at US$ 65 billion. The total market size of the Indian pharma industry is expected to reach US$ 130 billion by 2030 and US$ 450 billion market by 2047.

Indias biotechnology industry comprises biopharmaceuticals, bio-services, bio-agriculture, bio-industry, and bioinformatics. Indias bio-economy industry has grown from Rs. 86,880 crore (US$ 10 billion) in 2015 to Rs. 11,29,440 crore (US$ 130 billion) in 2024. The Indian biotechnology industry is expected to reach US$ 150 billion by 2025 and has the potential to reach US$ 270-300 billion by the year 2030. By 2025, the contribution of the Indian biotechnology industry to the global biotechnology market is expected to grow to 19%. The Indian biologics market is forecasted to reach US$ 12 billion by 2025, at a CAGR of 22%.

Indias drugs and pharmaceuticals exports stood at US$27.9 billion in FY24 and US$30 billion in FY 2025.

India enjoys an important position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers with the potential to steer the industry ahead to greater heights. Presently, over 80% of the antiretroviral drugs used globally to combat AIDS (Acquired Immune De_ciency Syndrome) are supplied by Indian pharmaceutical firms.

FDI in Pharmaceuticals

Pharmaceutical is one of the top ten attractive sectors for foreign investment In India. 100% foreign investment is allowed under automatic route in Medical Devices. Foreign investments in pharmaceutical greenfield projects are allowed upto 100% under the automatic route and for brownfield pharmaceutical projects, foreign investment beyond 74% to upto 100% Government approval is required. The cumulative FDI equity inflow_in the Drugs and Pharmaceuticals industry is_US$ 22.52 billion_during the period 2000-2024, almost_3.4%_of the total inflow received across sectors. During financial year of 2023-24, FDI inflows was US$1.06 billion._The Indian pharmaceutical sector and Medical devices sector saw a significant FDI inflow of 11,888 crore rupees from April to December in the financial year ending March 31, 2025._ Further, apart from this, 13 FDI proposals worth 7,246.40 crore rupees for brown field projects during 2024-25 have been approved, taking the total FDI to 19,134.40 Crore rupees according to figures compiled by the Department of Pharmaceuticals.

Some of the recent developments/investments in the Indian pharmaceutical sector are as follows:

The Union Budget 2025-26 proposes to allocate Rs. 5,268.72 crore (US$ 602.90 million) for the Department of Pharmaceuticals (DoP), around 28.8% higher than the Rs. 4,089.95 crore (US$ 468.01 million) Budget Estimates (BE) for the FY25.

In the interim budget 2024-25, the Government earmarked Rs. 1,000 crores (US$120 million) for the promotion of bulk dug parks for FY 25, as significant increase from the previous year. In this regard the sector has seen a lot of investments and developments in the recent past.

According to an offcial statement, the governments production Linked Incentive (PLI) Scheme has turned out to be a transformative initiative for boosting domestic manufacturing, attracting investments, reducing reliance on imports and increasing exports. One of the significant achievements under the PLI Scheme has been the surpassing of target investments. While the initial commitment was of Rs. 3938.57 Crores, the actual realized investment has already reached Rs. 4253.92 Crores as of December 2024. Under the PLI Scheme for Bulk Frugs, a total of 48 projects have been selected under the Scheme, of which 34 projects have been commissioned for 25 bulk drugs as of December 2024.

Indian pharmaceutical companies are projected to achieve a revenue growth of 9-11% in FY25. This growth is expected to be fuelled by better performances in key markets, including the United States, Europe, and emerging regions.

Indias healthcare sector is projected to reach US$ 320 billion (Rs. 27,28,320 crore) by 2028, according to the latest report by Great Place to Work. The pharmaceutical sector targets Rs. 11,08,380 crore (US$ 130 billion) by 2030, while biotechnology aims for Rs. 25,57,800 crore (US$ 300 billion) by the same year.

The Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) has reached a noteworthy milestone, achieving sales of Rs. 1,000 crore (US$ 119 million) in October 2024.

Sano_ announced its plans to invest US$ 435 million over the next six years to expand its global capability center (GCC) in Hyderabad, India by increasing the headcount and further developing the facility.

In the Indian pharmaceutical industry, there were 24 M&A deals announced in Q1 2024, worth a total value of US$ 456.3 million.

As of 30th June 2024, the Department for Promotion of Industry and Internal Trade (DPIIT) has recognized a total of 1,40,803 entities as startups, of which 2,127 are from the pharmaceutical sector.

MedGenome has acquired a stake in GenX Diagnostics, a diagnostic lab chain in Odisha. This strategic move combines MedGenomes advanced science and technological capabilities with GenXs diagnostics leadership in the East, empowering clinicians in Odisha.

In March 2024, Union Minister for Chemicals & Fertilizers and Health & Family Welfare Dr. Mansukh Mandaviya inaugurated 27 greenfield bulk drug park projects and 13 greenfield manufacturing plants for medical devices.

The Department of Pharmaceuticals will soon launch the Scheme for the Promotion of Research and Innovation in Pharma (PRIP) MedTech Sector. The scheme has been approved by the Union Cabinet for a period of five years starting from 2023-24 to 2027-28 with a total outlay of Rs. 5,000 crore (US$ 604.5 million).

Government Initiatives

Some of the initiatives taken by the Government to promote the pharmaceutical sector in India are as follows:

(i) Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP)

Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) is a flagship scheme of the Department whereby quality generic medicines are made available at affordable prices to all through dedicated outlets known as Pradhan Mantri Bhartiya Janaushadhi Kendras (PMBJK). The Scheme is being implemented through the Pharmaceuticals & Medical Devices Bureau of India (PMBI), an autonomous society under the Department of Pharmaceuticals

(ii) Production Linked Incentive (PLI) scheme for promotion of domestic manufacturing of critical Key Starting Materials (KSMs), Drug Intermediates (DIs) and Active Pharmaceutical Ingredients (APIs) in India

The objective of Production Linked Incentive (PLI) scheme for promotion of domestic manufacturing ofcritical Key Starting Materials (KSMs)/ Drug Intermediates and Active Pharmaceutical Ingredients (APIs) in India is to promote domestic manufacturing of 41 identified bulk drugs to address their high import dependence. The total outlay of the scheme is Rs 6,940 crore and the scheme duration is from 2020-21 to 2029- 30.

(iii) Production Linked Incentive Scheme for Promoting Domestic Manufacturing of Medical Devices:

Production Linked Incentive (PLI) scheme for promoting domestic manufacturing of medical devices hasa financial outlay of Rs.3420 crore. The tenure of the scheme is from 2020-21 to 2027-28. The objective of the scheme is to boost domestic manufacturing and attract large investments in the Medical Device sector.

(iv) Production Linked Incentive Scheme for Pharmaceuticals:

PLI Scheme for pharmaceuticals is being implemented with an objective of enhancing Indias manufacturing capabilities by increasing investment and production in the sector and contributing to product diversification to high value goods in the pharmaceutical sector. The total outlay of the scheme is Rs.15,000 crore and the scheme duration is from 2020-2021 to 2028-29.

(v) Strengthening of Pharmaceutical Industry (SPI):

Department of Pharmaceuticals, implements the scheme "Strengthening of Pharmaceutical Industry"(SPI), with a total financial outlay of Rs.500 crore. The implementation period of the scheme is from FY21-22 to FY 25-26. The scheme aims to provide support to existing Pharma clusters and MSMEs across the country to improve their productivity, quality and sustainability to strengthen the existing infrastructure facilities in the Pharma MSME clusters. SIDBI has been appointed as the Project Management Consultant (PMC) for the SPI scheme. This Scheme is a Central Sector Scheme and comprises the following sub-schemes: i. Assistance to Pharmaceutical Industry for Common Facilities (API-CF) ii. Pharmaceutical Technology Upgradation Assistance Scheme (PTUAS) iii. Pharmaceutical & Medical Devices Promotion and Development Scheme (PMPDS)

(vi) Assistance to Medical Device Clusters for Common Facilities (AMD-CF):

The Standing Finance Committee on 20.03.2022 approved the scheme Assistance to Medical Device Clusters for Common Facilities (AMD-CF) scheme. The Scheme has provision for assistance to 12 clusters and 12 testing labs. The total financial outlay of the scheme is Rs.300 crore. The tenure of the scheme is from FY 2023-24 to FY 2025-26.

(vii) Scheme for Promotion of Bulk Drug Parks:

To promote setting up of bulk drug parks in the country, a scheme called "Promotion of Bulk Drug Parks" has been approved by Union Cabinet on 20^th March, 2020. The objective is to provide world class common infrastructure facilities to units located in the parks which will help in significantly bringing down the manufacturing cost of bulk drugs and thereby make India self-reliant. This will increase the competitiveness of the domestic bulk drug industry as well as help to minimize countrys dependence on imports. Under the scheme, financial assistance would be provided for creation of Common Infrastructure Facilities (CIF) in any upcoming Bulk Drug Park promoted by State Government/State Corporation. The total financial outlay of the scheme is Rs.3000 crore. The tenure of the scheme is from FY 2020-2021to FY 2024-2025.

(viii) Research linked incentive scheme for Pharma and MedTech sector

Total Outlay of INR 5,000 crore over a period of five years (2023-24 to 2027-28). Component A: Setting up of Centres of Excellence at National Institute of Pharmaceutical Education & Research (NIPERs) (7 Institutes, INR700 Crore) Component B: Funding which is to be paid back later as royalty percentage on net sales after commercialization.

Road Ahead

The pharmaceutical industry in India is a significant part of the nations foreign trade and offers lucrative potential for investors. Millions of people around the world receive affordable and inexpensive generic medicines from India, which also runs a sizable number of plants that adhere to food Manufacturing practices standards set by the WHO and USFDA. Among nations that produce pharmaceuticals, India has long held the top post.

Medicine spending in India is growing at the rate of 9-12 per cent per annum, leading India to become one of the top 10 countries in terms of medicine spending.

Going forward, better growth in domestic sales would also depend on the ability of companies to align their product portfolio towards chronic therapies for diseases such as such as cardiovascular, anti-diabetes, anti-depressants and anti-cancers that are on the rise.

Indian Government has taken many steps to reduce costs and bring down healthcare expenses.

The National Health Protection Scheme which aims to offer universal healthcare, the ageing population, the rise in chronic diseases and other government programmes, including the opening of pharmacies that offer generic medications, should all contribute to boost the Indian pharmaceutical industry. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian Pharmaceutical companies. In addition, the thrust on rural heath programmes, life saving drugs and preventive vaccines also augurs well for the pharmaceutical companies. Indias domestic pharmaceutical market was at US$ 42 billion in 2021 currently valued at US$ 50 billion and would likely to reach US$ 57 billion by 2025 and see an increase in operating margins of 100-150 basis points(bps). The total market size of the Indian pharma industry is expected to reach US$ 130 billion by 2030 and US$ 450 billion market by 2047.

Formulation exports typically contribute about half of the total revenue of domestic pharmaceutical players, with sales to the US and rest of world contributing almost equally having lot of potential to grow as per the above-said future projection of Indian pharmaceutical market. The Indian government has taken many steps to reduce costs and bring down healthcare expenses. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies. In addition, the thrust on rural health programs, lifesaving drugs and preventive vaccines also augurs well for the pharmaceutical companies.

3. OPPORTUNITIES:

In meeting the global health challenge, the role of the pharmaceutical industry_is of prime importance. With the current state of affairs, its a harsh reminder of whats at stake and its responsibility.

Domestic pharmaceutical companies which were largely recognized for their affordable manufacturing of generic medicines are now being recognized for its high-quality research and development ecosystem post Covid-19, a remarkable perception shift from being a volume manufacturer to value creator. India is ranked third worldwide for production by volume, accounting for 20% of the global volume supply.

Indias domestic pharmaceutical market currently valued at US$ 50 billion and would likely to reach US$ 57 billion by 2025 and see an increase in operating margins of 100-150 basis points(bps). According to EY FICCI report, as there has been a growing consensus over providing new innovative therapies to patients, Indian pharmaceutical market is estimated to touch $130 billion in value by the end of 2030. The total market size of the Indian pharma industry is expected to reach US$ 450 billion market by 2047 to become the leading provider of medicines to the world. The global pharmaceutical market has experienced significant growth in recent years. The pharmaceutical market has witnessed significant growth, reaching a valuation of over USD 1.7 trillion in 2024, with a steady CAGR of 5.79%. The global pharmaceutical market size is estimated to be USD 1.7 trillion in 2025.

The year 2025 holds a positive outlook for Indias pharmaceutical industry, with a deeper focus on quality manufacturing, a_ordability of drugs and adoption of innovation and technology.

Indian Pharmaceutical Alliance, several initiatives and forward-looking policies were introduced to streamline processes, allowing the pharmaceutical sector to leapfrog to a stronger growth trajectory. "Despite geopolitical issues, India continued to supply medicines to over 200 countries, living up to its reputation as the ‘pharmacy of the world. The sector also faced challenges this year, however, as the industry expands its footprint around the world, it will need to continuously invest in upgrading manufacturing standards to keep its promise of being a high-quality, reliable supplier of medicines to the world," In the 2020-2030 period, it is expected that Indian pharma industry to grow at a compounded annual growth rate (CAGR) of ~12% to reach at US$130 bn by 2030 from US$41.7 bn in 2020. Though the pharmaceutical industry has grown at a CAGR of approx. 13% over the two decades, on the domestic front, the ambition translates into a growth rate of 10-11% over the coming decade.

The main reason for growth are i) India has most US-FDA compliant plant outside US._ii) Government support in Innovation and R&D iii) strong drugs manufacturing experts at lower cost of manufacturing in India i.e. about 33% lower than US and iv) Lauch of National Health Programme Ayushman Bharat has potential to grow Indian Pharma Sector etc.

In recent years, India has seen increasing competition from China, which it has been able to leverage due to its inherent cost advantage, manufacturing intermediates and APIs at a cost much lower than those in India. Prime Minister for promoting ‘make in India movement announced to the people become to vocal for local products. In response to the COVID-19 crisis, Indias Union Cabinet approved investment package to boost the countrys Pharma and API production and cut dependence on China. This was a major step in the creation of a self-sufficient healthcare ecosystem in the country.

It is expected that due to patent off of many companies, the export from India will grow, new affordable pharmaceutical product will be invented for sustainable growth of Indian Pharmaceutical industry. It is also expected Indias formulation exports to increase at 13-14% CAGR from fiscals 2020-25.

"The key to success, going forward, will depend on regulatory simpli_cation, increased industry-academia collaboration, and strengthening innovation mindset. This will pave the way for the industry to transition from "Volume" to "Value" leadership in the years to come,".

4. CHALLENGES:

Competition in the global market is a common phenomenon for any industry. The company is also facing the same but is quite competent to handle the competition successfully. In the domestic the numbers of players are increasing and the capacity is also increasing, but market demand is also gradually increasing. The main challenges is to cope up with price war situation and the policies decision of Importing Countries from India, especially the recent tari_ decision of US on India and other Countries. Further, Regulatory framework w.r.t. import restriction from China, on which Indian Pharmaceutical Sector majorly dependent on it is one of the great challenges, and combating with the same your Company is already in process of developing supplier of its Raw material from other Countries and also at domestic level.

5. COMPANY OUTLOOK:

Your company is the one of the leading Hard shell capsule manufacturer in India and Pioneer in double lock and triple lock technology for capsules in India. The Company had started production of HPMC Capsule in August 2018 and in short span of time the sales brought in from HPMC have led to better performance. The Company has also started production of Pullulan Capsules.

Your Company is a_Certified Empty Hard Gelatin capsules shell and HPMC Capsules shell Manufacturer_in India providing the premium quality capsules to the clients. Your Company was WHO-GMP, ISO 9001:2015,

ISO 14001:2015, ISO 45001:2018, ISO 22000:2018, Halal, and Kosher & USFDA for our quality standards. We manufacture the capsules at our state-of-the-art manufacturing unit under the observation of the scientific experts. The materials that we employ in the production obtained from the authorized vendors of the industry. Our capsules are 100% natural and safe as we have tested them on the predefined industrial international norms. Our quality experts ensure the best locking attributes which make the capsules perfect for any use.

The company is WHO-GMP certified Company and recognized Star Export House. With four decades of experience, and a strong brand equity "Sunloc", the company is a preferred vendor for large pharmaceutical companies. The company was the pioneer of double lock and Triple lock technology in India. With a strong focus on R &D, the company is constantly innovating its product line to cater to the industry requirements. The management is optimistic about the future outlook of the company in short, medium and long-term. The Company deals in Business segment of Manufacturing Empty Hard Capsule Shells and in nine sizes, which are 00, 0SEL, 0EL, 0,1,2,3, 4, 5. In this segment the company has reached to installed capacity of 15 billion capsules p.a. at the existing facility. The company enjoys immense credibility in various Global Market. The management of the company Continued focus on achieving cost optimization and yield improvements through Economies of Scale. The company also renewed interest in the business with an aim to become the one of the leading Hard Shell Capsule manufacturer in the world.

6. RISK CONCERNS:

The Board of Directors of the Company and the Audit Committee shall periodically review and evaluate the risk management system of the Company so that the management controls the risks through properly defined network. Head of Departments shall be responsible for implementation of the risk management system as may be applicable to their respective areas of functioning and report to the Board and Audit Committee. Detailed report on Risk Analysis is a part of this Annual Report. The details of the Risk management policy are available on the website of the company i.e. www.sunilhealthcare.com and can be accessed at weblink, https://www. sunilhealthcare.com/uploads/filemanager/6741q-5.pdf.

7. INTERNAL CONTROL SYSTEM AND ADEQUACY:

The Company maintains adequate internal control system and procedures commensurate with its size and nature of operations. The internal control systems are designed to provide a reasonable assurance over reliability in financial reporting, ensure appropriate authorization of transactions, safeguarding the assets of the Company and prevent misuse/ losses and legal compliances.

The internal control system includes a well-defined delegation of authority and a comprehensive Management Information System coupled with quarterly reviews of operational and financial performance, a well-structured budgeting process with regular monitoring of expenses and Internal audit. The Internal Audit reports are periodically reviewed by the management and the Audit Committee and necessary improvements are undertaken, if required.

8. FINANCIAL PERFORMANCE:

Sunil Healthcare reported Revenues from operation of Rs 8342.11 lakhs, EBITDA of Rs 1322.14 lakhs, Profit before Tax of Rs 40.60 Lakhs and Profit after Tax of Rs 20.51 Lakhs and Other Comprehensive Loss of Rs 59.35 Lakhs Lakh in the FY 2024-25.

The comparative financial analysis with previous financial year are as under: Sales: - The revenue from operation in the current year decreased by 6.99 %.

Earning Before Interest, Depreciation and Tax: - EBIDT increased by 48.33 % as compared to previous financial year. Finance Cost: - Finance cost increased by 11.83 % as compared to previous financial year.

Net Profit: - There is Profit after Tax of Rs 20.51 Lakhs during FY 2024-25 as against Loss after Tax of Rs 210.78 Lakhs in previous financial year.

Other comprehensive Income (OCI): During FY 2024-25 OCI is of Rs (59.35) Lakhs as against OCI of Rs 1442.61 Lakhs in previous F.Y. 2023-24.

EPS: The EPS for FY 2024-25 is Rs 0.20 as compared to EPS of Rs (2.06) in previous F.Y. 2023-24.

9. HUMAN RESOURCES:

The well-disciplined workforce which has served the company for 51 years lies at the very foundation of the companys major achievements and shall well continue for the years to come. The management has always carried out systematic appraisal of performance and imparted training at periodic intervals. The company has always recognized talent and has judiciously followed the principle of rewarding performance. The Company maintained healthy, cordial and harmonious industrial relations at all levels. Despite severe competition, the enthusiasm and unstinting efforts of the employee have enabled the Company to remain at the forefront of the industry.

In todays comparative world where creativity and innovation are increasingly becoming important, development of Human Resource is the call of the day. The Company is taking various steps to develop the skills and enhance the knowledge of the human resource which include the following: a. Comprehensive and user friendly Performance Management System has been implemented to create a result oriented culture. b. Development needs have been identified through Performance Management System. These needs are being fulfilled through various training programs and lectures by internal as well as external faculty. c. Regular Training programs are conducted comprising behavioral and technical programme. Total 161 numbers of Employees are on roll of the company as on March 31, 2025.

10. DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONGWITH EXPLANATIONS:

Ratios	Variation as compared to previous years with reason
Debtors Turnover	During the financial year 2024-25 Debtor Turnover Ratio is decreased by 9.50 %
	as compared to financial year 2023-24, due to decrease in Sales and marginal
	increase in Trade Receivables.
Inventory Turnover	During the Financial year 2024-25, Inventory Turnover Ratio is decreased by
	29.70 % as compared to Previous financial year 2023-24 due to decrease in Sales
	and increase in inventory.
Interest Coverage Ratio	During the Financial year 2024-25, Interest coverage Ratio is increased by 181.60
	% as compared to Previous financial year 2023-24 due to higher Earnings Before
	Interest and Tax (EBIT).
Current Ratio	No significant changes in Current Ratio in FY 2024-25 as compared to FY 2023-24.
Debt Equity Ratio	No significant changes in Debt Equity Ratio during the Financial year 2024-25.
Operating Profit Margin (%)	During the Financial year 2024-25, Operating Profit Margin is increased by
	277.50 % as compared to Previous financial year 2023-24 due to increase in EBIT.
Net Profit Margin (%)	During the Financial year 2024-25, Net Profit Margin is increased by 110.80 % as
	comparedtoPreviousfinancialyear2023-24duetoincreaseinProfitAfterTax(PAT).
Return on Net worth (Equity)	During the Financial year 2024-25, Return on Net worth (Equity) is increased
	by 109.80 % as compared to Previous financial year 2023-24 due to increase in
	Profit After Tax (PAT) and increase in Net worth.

11. QUALITY INITIATIVE A) Our Quality policy is:

"We shall produce capsules for customers delight by continual focused improvement plans"

We maintain a consistent quality of our product as per the norms of WHO-GMP. To maintain the stringent quality norms, we have modern quality Control Laboratory equipped with latest equipments and qualified persons to operate them. Our Quality Assurance works hand in hand with our production to ensure products of customers requirement.

The Company is registered with US FDA, which reflects standard of its quality. The Company has received the following certification in quality, which shows further, its quality standards:

12. INFORMATION TECHNOLOGY

We are using modern technology available for improvement of Business processes across the functions by automating the routine administration tasks and creating various knowledge management databases. The Company also has its web site www.sunilhealthcare.com to provide all the details about the Company and its product. The Company has successfully migrated its operations on the SAP. Through strict vigilance aided by controls and alerts, the Company aims to further improve its operations, bring in greater efficiencies, and further tighten internal controls and systems

13. CAUTIONARY STATEMENT:

Statement in this Report, particularly those which relate to Management Discussion and Analysis, describing the Companys objectives, projections, estimates and expectations may constitute "forward looking statement" within the meaning of applicable laws and regulations. Actual results might differ materially from those either.

On the behalf of Board	SUNIL HEALTHCARE LIMITED
	Regd. Office:
	38E/252A,VijayTower,ShahpurJat,NewDelhi-110049
Anil Kumar Khaitan	CIN No: L24302DL1973PLC189662
Chairman cum Managing Director & CEO	Phone No: +91-11-49435555/00
DIN-00759951	Fax no 011-43850087
	Email ID: info@sunilhealthcare.com
Place – New Delhi	Web; www.sunilhealthcare.com
Dated- May 29, 2025

References:

1.https://pharma-dept.gov.in/sites/default/files/Final%20English%202024-25%20AR%20%281%29.pdf 2. https://pib.gov.in/PressReleasePage.aspx?PRID=2121425 3. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=2085345 4. https://www.ibef.org/industry/pharmaceutical-india

5. https://www.india-briefing.com/news/why-indias-pharmaceutical-industry-remains-poised-for-growth-in-2025-35988.html/

6. https://www.brickworkratings.com/Research/Drugsand%20Pharmaceuticals%20Industry-India-Nov2024.pdf

7. https://www.statista.com/outlook/hmo/pharmaceuticals/worldwide

8. https://www.thehindu.com/business/Industry/fy25-india-pharma-exports-cross-30-billion-surge-31-in-march/ article69465333.ece

9. https://www.marketsandmarkets.com/Market-Reports/empty-capsules-market-218018190.html

10. https://www.newsonair.gov.in/fdi-in-pharma-sector-crosses-11-cr-last-fiscal/

11. https://www.nextias.com/ca/current-affairs/24-12-2024/india-pharmaceutical-market-fy-2023-24-valued-at-usd-50-billion

12. https://www.ibef.org/industry/pharmaceutical-india

13. https://www.biospace.com/press-releases/pharmaceutical-market-size-to-surpass-usd-2-82-trillion-by-2033