Supriya Lifescience Ltd Management Discussions

Global economic review

Overview

Global economic growth declined marginally from 3.3% in 2023 to an estimated 3.2% in 2024. This was marked by a slowdown in global manufacturing, particularly in Europe and parts of Asia coupled with supply chain disruption and weak consumer sentiment. In contrast, the services sector performed more creditably.

The growth in advanced economies remained steady at 1.7% from 2023 to 2024 as the emerging cum developing economies witnessed a growth decline at 4.2% in 2024 (4.4% in 2023).

On the positive side, global inflation was expected to decline from 6.1% in 2023 to 4.5% in 2024 (projected

at 3.5% and 3.2% in 2025 and 2026 respectively). This decline was attributed to the declining impact of erstwhile economic shocks, and labour supply improvements. The monetary policies announced by governments the world over helped keep inflation in check as well.

Outlook

The global economy has entered a period of uncertainty following the imposition of tariffs of products imported into the USA and some countries announcing reciprocal

tariffs on US exports to their countries. This is likely to stagger global economic growth, the full outcome of which cannot be currently estimated. This risk is supplemented by risks related to conflicts, geopolitical tensions, trade

restrictions and climate risks. In view of this, World Bank projected global economic growth at 2.7% for 2025 and 2026, factoring the various economic uncertainties. (Source: IMF, United Nations)

Overview

The Indian economy grew at 6.5% in 2024-25, compared to a revised 9.2% in 2023-24. This represented a four- year low due to a moderate slowdown within the Indian economy (marked by slower manufacturing growth and a decline in net investments). Despite the slowdown, India retained its position as the worlds fifth-largest economy.

Indias nominal GDP (at current prices) was RS.330.68 trillion in 2024-25 (RS.301.23 trillion in 2023-24). The nominal GDP per capita increased from RS.2,15,936 in 2023-24 to RS.2,35,108 in 2024-25, reflecting the impact of an economic expansion.

The Indian rupee weakened 2.12% against the US dollar in 2024-25, closing at RS.85.47 on the last trading day of 2024-25. In March 2025, the rupee recorded the highest monthly appreciation since November 2018, rising 2.39% (arising out a weakening US dollar).

Inflationary pressures eased, with CPI inflation averaging 4.63% in 2024-25, driven by moderating food inflation and stable global commodity prices. Retail inflation at 4.6% in 2024-25, was the lowest since the pandemic, catalysing savings creation.

Indias foreign exchange reserves stood at a high of USD 676 billion as of April 4, 2025. This was the

fourth consecutive year when rating upgrades outpaced downgrades on account of strong domestic growth, rural consumption, increased infrastructure investments and low corporate leverage (annualized rating upgrade rate 14.5% exceeded the decade-long average of 11%; downgrade rate was 5.3%, lower than the 10-year average of 6.5%).

Gross foreign direct investment (FDI) into India rose by 13.6% to USD 81 billion during the last financial year, the fastest pace of expansion since 2019-20. The increase in the year was despite a contraction during the fourth quarter of 2024-25 when inflows on a gross basis declined 6% to USD 17.9 billion.

Growth of the Indian economy

	FY22	FY23	FY24	FY25
Real GDP growth (%)	8.7	7.2	9.2	6.5

(Source: MoSPI, Financial Express)

Growth of the Indian economy quarter by quarter, 2024-25

	Q1FY25	Q2 FY25	Q3 FY25	Q4 FY25
Real GDP growth (%)	6.5	5.6	6.2	7.4

The banking sector continued its improvement, with gross nonperforming assets (NPA) for scheduled commercial banks (SCBs) declining to 2.6% as of September 2024, down from 2.7% in March 2024. The capital-to-risk-weighted assets ratio for SCBs stood at 16.7% as of September 2024, reflecting a strong capital position.

Indias exports of goods and services reached USD 824.9 billion in 2024-25, up from USD 778 billion in the previous fiscal year. The Red Sea crisis impacted shipping costs, affecting price-sensitive exports. Merchandise exports grew 6% YoY, reaching USD 374.1 billion.

Indias net GST collections increased 8.6%, totalling RS.19.56 lac cr in 2024-25. Gross GST collections in 2024-25 stood at RS.22.08 lac cr, a 9.4% increase YoY.

On the supply side, real gross value added (GVA) was estimated to expand 6.4% in 2024-25. The industrial sector grew by 6.5%, supported by growth in construction activities, electricity, gas, water supply and other utility services.

Indias services sector grew at 8.9% in 2024-25 (9.0% in 2023-24), driven by public administration, defence and other services (expanded at 8.8% as in the previous year). In the infrastructure and utilities sector, electricity, gas, water supply and other utility services grew a projected 6.0% in 2024-25, compared to 8.6% in 2023-24. Meanwhile, the construction sector expanded at 9.4% in 2024-25, slowing from 10.4% in the previous year.

Manufacturing activity was subdued in 2024-25, with growth at 4.5%, which was lower than 12.3% in 2023-24. Moreover, due to lower public spending in the early part of the year, government final consumption expenditure (GFCE) is

anticipated to have slowed to 3.8% in 2024-25, compared to 8.1% in 2023-24.

The agriculture sector grew at 4.6% in 2024-25 (1.4% in 2023-24). Trade, hotel, transport, communication and services related to broadcasting segment were estimated to grow at 6.4% in 2024- 25 (6.3% in 2023-24).

From a demand perspective, the private final consumption expenditure (PFCE) exhibited robust growth, achieving 7.2% in 2024-25, surpassing the previous financial years rate of 5.6%.

The Nifty 50 and SENSEX recorded their weakest annual performances in 2024-25 in two years, rising 5.3% and 7.5% during the year under review respectively. Gold rose 37.7% to a peak of USD 3,070 per ounce, the highest increase since 2007-08, indicating global uncertainties.

Total assets managed by the mutual fund (MF) industry jumped 23% or RS.12.3 lac cr in fiscal 2025 to settle at RS.65.7 lac cr. At close of 2024-25, the total number of folios had jumped to nearly 23.5 cr, an all-time peak. During last fiscal, average monthly systematic investment plan (SIP) contribution jumped 45% to RS.24,113 cr.

Foreign portfolio investments (FPIs) in India experienced high volatility throughout 2024, with total inflows into capital markets reaching approximately USD 20 billion by year- end. However, there was significant selling pressure in the last quarter, influenced by new tariffs announced by the new US government on most countries (including India).

Outlook

India is expected to remain the fastest-growing major economy.

Initial Reserve Bank of India estimates have forecast Indias GDP growth downwards from 6.7% to 6.5%

based on risks arising from US tariff levies on India and other countries. The following are some key growth catalysts for India in 2025-26.

Union Budget 2025-26: The Union Budget 2025-26 laid a strong foundation for Indias economic trajectory, emphasizing agriculture, MSMEs, investment, and exports as the four primary growth engines. With a fiscal deficit target of 4.4% of GDP, the government reinforced fiscal prudence while allocating RS.11.21 lac cr for capital expenditure (3.1% of GDP) to drive infrastructure development. The February 2025 Budget marked a shift in approach, with the government proposing substantial personal tax cuts. Effective April 1, 2025, individuals earning up to RS.12 lac annually will be fully exempt from income tax. Economists estimate that the resulting RS.1 lac cr in tax savings could boost consumption by RS.3-3.5 lac cr, potentially increasing the nominal private final consumption Expenditure (PFCE) by 1.5-2% of its current RS.200 lac cr.

Free trade agreement: In a postBalance Sheet development, India and the United Kingdom announced a free trade agreement to boost strategic and economic ties. This could lead to a significant increase in the export competitiveness of Indian shipments in the UK across the textiles, toys, leather, marine products, footwear, and gems & jewellery sectors. About 99% of Indian exports to UK will enjoy zero- duty access tariff cuts; India will cut tariffs on 90% of tariff lines and 85% could become fully duty-free within 10 years.

Pay Commission impact: The 8 ^th

Pay Commissions awards could lead to a significant salary revision for nearly ten million central government employees. Historically, Pay Commissions have granted substantial pay hikes along with

generous arrears. For instance, the 7^th Pay Commission more than tripled its monthly salaries, raising the range from RS.7,000 to RS.90,000 to RS.18,000 to RS.12.5 lac, triggering a widespread ripple effect.

Monsoons: The India Meteorological Department predicted an above normal monsoon in 2025. This augurs well for the countrys farm sector and a moderated food inflation outlook.

Easing inflation: Indias consumer price index-based retail inflation in March 2025 eased to 3.34%, the lowest since August 2019, raising

hopes of further repo rate cuts by the Reserve Bank of India.

Deeper rate cuts: Since the start of 2025, the Monetary Policy Committee (MPC) reduced policy rates by a total of 50 basis points, reducing it to 5.5. Besides, Indias CPI inflation is forecasted at 4% for the fiscal year 2025-26.

Lifting credit restrictions: In

November 2023, the RBI increased risk weights on bank loans to retail borrowers and NBFCs, significantly tightening credit availability. This led to a sharp slowdown in retail

credit growth from 20-30% to 9-13% between September 2023 and 2024. However, under its new leadership, the RBI has prioritized restoring credit flow. Recent policy shifts have removed restrictions on consumer credit, postponed higher liquidity requirements for banks, and are expected to rejuvenate retail lending.

(Source: CNBC, Press Information Bureau, Business Standard, Economic Times, World Gold Council, Indian Express, Ministry of External Affairs, Times of India, Business Today, Hindustan Times, Statistics Times)

Global pharmaceutical industry

The global pharmaceutical market is expected to reach USD 1,207.00 bn in 2025 growing at a CAGR of 4.76% in 2025-2029, resulting in a market value of USD 2384.53 bn by 2029. The United States of America is expected to generate the highest revenue of USD 660.00bn in 2025. Among the various markets that are present, oncology drugs are expected to be the largest, with a projected market value of USD 208.90 bn in 2025. The United States remains at the forefront of pharmaceutical innovation worldwide due to its

advanced healthcare infrastructure and strong research and development capabilities.

The pharmaceuticals market has been growing steadily in recent years, which is mainly driven by innovative drugs and an increasing demand for drugs and treatments worldwide. The growth in the estimated period can be attributed to increasing government support, increase in healthcare access, increase in investments etc.

The global use of medicines grew by 14% over the past five years and

a further 12% increase is expected through 2028, bringing annual use to 3.8 trillion defined daily doses. Global spending on medicine using list prices grew by 35% over the past five years and is expected to increase by 38% through 2028. The underlying growth rate of pharmaceutical spending, estimated being raised by 3 percentage points to 2-5% CAGR through 2028, reflecting higher recent growth and expected further increased patient use of higher value therapies.

(Source: IQVIA, Statista)

The global active pharmaceutical ingredients (API) market was estimated at USD 240.8 billion in 2024 and is expected to record a CAGR of 6.2% during2024-2030 period and reach USD 345.5 billion by 2030.

The active pharmaceutical ingredient (API) is a vital, biologically active compound in pharmaceutical products driving therapeutic effects. Whether chemically synthesized or sourced from nature, APIs play a vital role in the global pharmaceutical supply chain, serving as the foundation for drug development and manufacturing. As the pharmaceutical industry evolves towards cutting- edge therapeutics and innovative delivery systems, the demand

for sophisticated APIs is likely to increase.

Over the past two decades, the pharmaceutical supply chain has evolved, witnessing increased complexity and fragmentation as companies turn to overseas production and contract manufacturers. The outsourcing of API manufacturing has become prevalent, with major industry player who opt to source a significant portion of their manufacturing activities to leverage economies of scale and cost advantages.

This trend extends to emerging biopharmaceutical and virtual pharmaceutical firms relying heavily on outsourcing providers.

The pandemic has affected the API market drastically due

to which many countries faced disruptions in worldwide supply chains and logistical hurdles, including transportation restrictions and delays, impeded the timely acquisition of raw materials and the distribution of finished dosage forms. Moreover, due to inflexible regulatory measures and increased scrutiny of the pharmaceutical supply chain introduced complexities, resulting in delays in production and approval processes. These collective challenges not only impacted production capacity but also highlighted the need for resilience and adaptability in the API market, but there are vulnerabilities due to the regional dominance and lack of global spread.

(Source: IQVIA, business wire)

Indian pharmaceutical industry

India is the largest provider of generic drugs globally and is known for its affordable vaccines and generic medications. The Indian pharmaceutical industry is currently ranked third in pharmaceutical production by volume after evolving over time into a thriving industry growing at a CAGR of 9.43%. Generic drugs, over-the-counter medications, bulk drugs, vaccines, contract research & manufacturing, biosimilars, and biologics are some of the major segments of the Indian pharma industry.

Indian pharmaceutical sector supplies over 50% of global demand for various vaccines, 40% of generic

demand in the US and 25% of all medicine in the UK. The domestic pharmaceutical industry includes a network of 3,000 drug companies and more than 10,500 manufacturing units. India enjoys a prestigious position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers with a potential to steer the industry ahead to greater heights. Moreover, India is also capable of manufacturing low-cost generic alternatives due to a number of economic factors favouring the industry. Some of these include the competitive land rates, the availability of cheap labour, lower cost of production, machinery, etc.

Indian pharmaceutical companies have a wide variety of experience in manufacturing as per global standards. Indian companies are experienced in the manufacturing of a variety of formulations that makes them efficient and competitive in their operations. The Indian pharma market is mature with decades of experience in generics manufacturing, catering to the needs of the general population. These companies have the experience and know-how to produce quality drugs in an efficient, high-quality and cost-effective manner without compromising on any aspect.

(Source: IBEF, Department of Pharmaceuticals)

Indian API industry overview

API is an important segment of the Indian pharmaceutical industry, contributing to around 35% of the market. The India active pharmaceutical ingredients market size is estimated at USD 14.77 billion in 2025, and is expected to reach USD 22.02 billion by 2030, at a CAGR of 8.31% during the estimated period (2025-2030).

India is the third largest producer of API accounting for an 8% share of the

global API industry and more than 500 different APIs are manufactured in India, and it contributes 57% of APIs to prequalified list of the WHO. The Indian API market is anticipated to increase at a CAGR of 13.7% during the first four years - about 8% higher than the generic API industry. The Indian API space has become lucrative for several investors and venture capitalists. Indias robust domestic market, advanced chemical industry, skilled workforce, stringent

quality and manufacturing standards, and low costs about 40% less than that in the West for setting up and operating a modern plant.

The growing antagonism between the West and China has also pushed the global pharma majors to source more from countries other than China. Indias emergence as the alternate source of bulk drugs.

(Source: Invest India, Mordor intelligence)

The government of India allocated a total of RS.99,858.56 cr for the countrys healthcare system, a 9.78% increased from RS.90,958.63 cr in 2024-25. In the union budget 2025, RS.99,858.56 cr had been allocated to the Ministry of Health and Family Welfare, RS.95,957.87 cr had been earmarked for the Department of Health and Family Welfare and RS.3,900.69 cr had been allocation to the Department

of Health Research. The government had allocated RS.2,445 cr for production-linked incentive scheme for the pharmaceutical industry. The sector had witnessed a 191% increase in budgetary allocation from RS.34,286 cr in FY15.

The government plans to establish 200 day-care cancer centres in 2025-26. The government will facilitate the setting up of day-care

cancer centres in all district hospitals in the next three years.

By streamlining visa processes and enhancing infrastructure in the top 50 tourist destinations, the government is making it easier for international patients to access world-class treatment while exploring Indias rich cultural heritage.

(Source: CNBC)

Growth drivers for Indian pharmaceutical market

Customer preferences: As the

majority of the population is middle class and cannot afford expensive healthcare products. Indian pharmaceutical companies are focusing on creating products that are affordable for the masses.

Trends in the market: The growth of the biopharmaceutical sector are

drugs made from living organisms. This sector is growing rapidly in India due to the availability of skilled labour and low production costs.

Outsourcing: The pharmaceutical market in India is the rise of contract manufacturing. Many pharmaceutical companies in developed countries are outsourcing the manufacturing of

their drugs to India. This is because labour and production costs are lower in India

Underlying macroeconomic factors:

Indias per capita disposable income increased from USD 2110 in 2019 to USD 2,690 in 2023, with projections indicating it will reach USD 4.34 thousand by 2029. Meanwhile, the

Indian healthcare market was valued at approximately USD 180 billion in 2022-23 and is expected to grow to about USD 320 billion by 2027-28. The government has also allocated INR 95,957.87 cr to the healthcare sector for 2025-26, marking a 9.46% increase compared to the 2024-25 budget estimates. As the Indian economy grows rapidly, disposable income is rising, leading to greater demand for healthcare products. Additionally, the governments substantial investments in the

healthcare sector are contributing to the continued expansion of Indias pharmaceutical industry.

Ageing population: By 2061, it is estimated that one in every four individuals will be over the age of 61, a shift that is expected to contribute to a rising incidence of cardiovascular and other age-related diseases.

This demographic transformation is likely to place significant strain on healthcare systems. Medical inflation is anticipated to intensify

the challenges, driving up the cost of healthcare services and treatments. Such escalating costs could restrict access to essential care, particularly for the elderly, who may require long-term management of chronic conditions. Therefore, it will be imperative to address both the healthcare demands of an aging population and the pressures of medical inflation to ensure the sustainability and accessibility of healthcare in the coming decades.

(Source: Statista, India briefing)

Company overview

Established in 2008, Supriya Lifescience Limited. has a well- established presence in API manufacturing focusing on products of various therapeutic segments like - Anti-Histamine, Anti-Allergic, Vitamins, Anaesthetics, AntiAsthmatics etc.

The company has a global footprint that extends across 86 countries. The companys diverse repertoire of active pharmaceutical ingredients includes over 38 products that enjoy the implicit trust of a loyal global clientele.

Its focus is on developing APIs and intermediates for both innovators and generic companies.

Product-wise performance

Analgesic: During the year under review, the company reported RS.52.24 cr in this segment, growing by 172.53% y-o-y.

Anti-histamine: During the year under review, the company reported RS.72.54 cr in this segment, de-growing by 15.64% y-o-y.

Vitamins: During the year under review, the company reported RS.73.57 cr in this segment, growing by 1.77% y-o-y.

Anti-asthmatic: During the year under review, the company reported RS.44.87 cr in this segment, growing by 12.86% y-o-y.

Anti-allergic: During the year under review, the company reported RS.28.03

cr in this segment, de-growing by 8.04% y-o-y.

Outlook

Supriya Lifescience Ltd is poised for robust growth in 2025-26, driven by expanded manufacturing capacity, strong traction in regulated markets and a deepening CDMO/ CMO pipeline. With a focus on commercializing newly scaled-up products, enhancing operational efficiency through automation and leveraging its R&D capabilities, the company aims to sustain its momentum while strengthening its global footprint. Continued emphasis on ESG, quality systems, and customer engagement positions Supriya for long-term value creation and resilience.

Analysis of the profit and loss statement

Revenues: Revenues from operations reported a 22.12% growth from RS.570 cr in 2023-24 to RS.696 cr in 202425. Other Income of the company reported a 7.72% decline and accounted for a 1.39% share of the companys revenues, reflecting the companys dependence on its core business operations.

Expenses: Total expenses increased by 9.64% from RS.397.36 cr in 2023-24 to RS.435.69 cr due to business growth and inflation. Raw material costs, accounting for a 33.37% share of the companys revenues, increased by 21.42% due to change in product and region mix. Employee expenses, accounting for an 11.56% share of the companys revenues, increased by 19.04% from RS.67.63 cr in 2023-24 to

RS.80.52 cr in 2024-25 due to addition and increments.

Analysis of the Balance Sheet Sources of funds: The capital employed by the company increased 22.01% from RS.844.34 cr as on March 31, 2024 to RS.1,030.12 cr as on March 31, 2025 due to profits. Return on capital employed, a measurement of returns derived from every rupee invested in the business, increased by 441 basis points from 19.87% in 2023-24 to 24.28% in 2024-25 due to increase in profit. The net worth of the company increased 22.25% from RS.815.36 cr as on March 31, 2024 to RS.996.76 cr as on March 31, 2025 owing to current year profit. As on March 31, 2025, the company has no long-term debt, except lease liability. Finance costs of the company decreased by 20.07% from RS.2.11 cr in 2023-24 to RS.1.69 cr in 2024-25 due

to lower utilization of working capital funds. The companys net debt/equity ratio stood at a comfortable 0.01x at the close of 2024-25 (0.01x at the close of 2023-24).

Applications of funds: Fixed assets (gross) of the company increased by 45.18% from RS.360.09 cr as on March 31, 2024 to RS.522.79 cr as on March 31, 2025 due to E Block, Solar project capitalization and other capitalization. Depreciation on tangible assets increased by 30.79% from RS.14.95 cr in 2023-24 to RS.19.56 cr in 2024-25 owing to increased capitalization during the year.

Investments: Non-current investments of the company were RS.64 cr in 2023-24, which decreased by RS.63.24 cr in 2024-25 mainly on account of selling of investment during the year.

Working capital management:

Current assets of the company increased by 9.80% from RS.398 cr as on March 31, 2024 to RS.437 cr as on March 31, 2025 due to increase in inventory and trade receivables. The current and quick ratios of the company stood at 5.32 and 3.88, respectively, at the close of 202425 compared to 5.17 and 4.06, respectively, at the close of 2023-24. Inventories including raw materials, work-in-progress and finished goods among others increased by 38.83% from RS.85.25 cr as on March 31, 2024

to RS.118.35 cr as on March 31, 2025. The inventory cycle increased from 165 days of turnover equivalent in 2023-24 to 176 days of turnover equivalent in 2024-25. Trade receivables increased by 20.31% from RS.111.68 cr as on March 31, 2024 to RS.134.36 cr as on March 31, 2025 due to increase in revenue during the year. 100% of the receivables were considered good. The company contained its debtor turnover cycle within 66 days of turnover equivalent in 2024-25 compared to 64 days in 2023-24. Loans and advances made

by the company increased by 3.31% from RS.0.90 cr as on March 31, 2024 to RS.0.93 cr as on March 31, 2025. Cash and bank balances of the company increased by 5.60% from RS.749.56 cr as on March 31, 2024 to RS.791.54 cr as on March 31, 2025.

Margins: The EBITDA margin of the company for 2024-25 was 38.85% as against 32% in 2023-24, while the net profit for 2024-25 was 26.61% as against 20.50% in 2023-24. Typically, it takes three years for any new manufacturing block to reach peak capacity.

Key ratios

Particulars	2024-25	2023-24
EBITDA/Turnover (%)	38.85	32
EBITDA/Net interest ratio (x)	154.66	81.99
Debt-equity ratio (x)	0.01	0.01
Return on equity (%)	20.74	15
Book value per share (H)	123.85	101.31
Earnings per share (H)	23.35	14.80
Debtors Turnover (days)	66	64
Inventory Turnover (days)	176	165
Interest Coverage Ratio (x)	148.36	79.54
Current Ratio (x)	5.32	5.17
RMC Margin (%)	70	62
Operating Profit Margin (%)	35.42	29
Net Profit Margin (%)	26.61	20.5

Internal control systems and their adequacy

The internal control and risk management system is organized and employed accordingly with the principles and criteria set up in the corporate governance code of the organization. It is an inherent part of the general organizational structure of the company and group and involves a various person to work and coordinate amongst each other to complete their respective duties. The board of directors provides various guidelines and supervises the strategy to the executive directors and management, monitoring and support committees. The risk management committee and the head of the audit department are supervised by the board appointed statutory auditors.

The organization holds the belief that its workforce plays a pivotal role in propelling business expansion. Throughout 2024-25, competitive compensation packages were offered, along with efforts to cultivate a positive work atmosphere and recognize employee achievements through a formal rewards system. The objective is to establish an environment where every employee can discover and maximize their capabilities. Alongside regular duties, participation in voluntary initiatives fostering learning and fostering creative thought is encouraged. The companys employee strength stood at 545 as on March 31, 2025.

This statement made in this section describes the companys objectives, projections, expectation and estimations which may be forward looking statements within the meaning of applicable securities laws and regulations. Forward- looking statements are based on certain assumptions and expectations of future events. The company cannot guarantee that these assumptions and expectations are accurate or will be realized by the company. Actual result could differ materially from those expressed in the statement or implied due to the influence of external factors which are beyond the control of the company. The company assumes no responsibility to publicly amend, modify or revise any forwardlooking statements on the basis of any subsequent development, information or events.