Syschem (India) Ltd Management Discussions

ANNEXURE D-3 TO THE DIRECTORS REPORT

ECONOMIC OVERVIEW

Over the past year, the pharmacy industry has witnessed greater collaboration, adapted quickly, and adopted innovative approach to deliver high quality medicines continuously during the pandemic and beyond. The industry has shown unwavering commitment to support the countrys healthcare needs as well as enhance its footprint across the world. According to a recent EY FICCI analysis, with a rising consensus on offering new breakthrough cures to patients, the Indian pharmaceutical market is expected to reach $130 billion in value by the end of 2030.

BUSINESS REVIEW AND PRODUCTS

Syschem (India) Limited is engaged in the business of manufacturing of API / Intermediates. It has its manufacturing facility at Village Bargodam, Tehsil Kalka, Distt. Panchkula (Haryana).

• Amoxycillin Trihydrate

• Ampicillin Trihydrate

• Cloxacillin Sodium

• Dicloxacillin Sodium

• Flucloxacillin Sodium (For export only)

• Cephalexin

• Cefadroxil

• Distillation of Specialist Solvents - methonel, Acetonitrile, Ethyl Acetate and THF SWOT Analysis

STRENGTHS

(i) Promoters have worked for a good period of time in same industry. They have sufficient product knowledge and is thus beneficial for the industry. We have huge capacities to cater to the market.

(ii) Lean manufacturing practices being followed by the Company ensure better and stable margins and a cushion to sustain input price pressures and output price competition. Our products quality is well accepted in the market.

Existing relations with agents and potential customers due to past working experience of promoters.

The location of plant is suitable for such type of Industry.

The plant is located near to Baddi area where more than 720 pharma/formulations manufacturing units are located

WEAKNESSES

Working Capital

OPPORTUNITIES

(i) Increased usage of contract manufacturing services by large Pharmaceutical Companies / Pharmaceutical Traders.

(ii) Demand of antibiotics is high in unorganized market for branded as well us unbranded products.

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(iii) Positive outlook for Indian generic business in general due to a lot many products going off patent in near future.

(iv) Low per capita consumption of medicines in Indian subcontinent offers opportunities for growth.

(v) Increasing income levels and health awareness in Asia is expected to result in increased spending power and usage of medicines.

Further Govt. of India is also promoting investment in Bulk Drug Industries so as to curtail the imports from China as more than 85% of the API Inputs are imported from China.

THREATS

(i) Dont see any big threat until unless we have funds to run the show and to grow.

(ii) Increasing regulation in US and other major pharmaceutical markets.

Emergence of new fully integrated generic firms which are less reliant on Indian “back-end” (iii) businesses.

INDUSTRY STRUCTURE & DEVELOPMENT

India is the largest provider of generic drugs globally. Indian pharmaceutical sector supplies over 50 per cent of global demand for various vaccines, 40 per cent of generic demand in the US and 25 per cent of all medicine in the UK. India enjoys an important 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. Presently, over 80 per cent of the antiretroviral drugs used globally to combat AIDS (Acquired Immune Deficiency Syndrome) are supplied by Indian pharmaceutical firms.

Indian pharmaceutical sector is expected to grow to US$ 100 billion, while medical device market is expected to grow US$ 66.7 billion by 2025. Pharmaceuticals export from India stood at US$ 58 billion in FY24.

Government is also taking several steps to promote the pharmaceutical sector in India.

EXPANSION PLANS

Company has long term program to increase the production of the pharma products so that meet the market demand and increase the sales of the Company for this, the Company has set up a new plant which is in process and will start generating the revenue soon.

RISK & CONCERNS

In a politically and economically turbulent environment, the risks pharma companies face, especially in clinical-trial design and execution, drug approval, product quality, and global commercial practices, are increasing in both frequency and magnitude.

SEGMENT WISE/PRODUCT WISE REPORTING

The Company is operating in the single segment and engaged in the manufacture and sales of active Pharma ingredients

i.e Amoxycillin Trihydrate, Ampicillin Trihydrate, Cloxacillin Sodium etc. Therefore, segment wise information has not been disclosed.

INTERNAL CONTROL SYSCHEM

The Company conducts its affairs within the framework of well-defined business plans, which provides appropriate guidance and direction to its employees. The Annual Business Plan for each fiscal year is formulated based on well- defined processes and is approved by the Board of Directors. Finance & Accounts function is adequately staffed by professionally qualified and experienced personnel. The Company has an effective reporting and monitoring system, which is regularly reviewed at the meetings of the Audit Committee and the Board while considering quarterly business performance. Business projections are revised in relation to market expectations, and appropriate actions are taken by the Management to offset adverse changes to the extent possible. Policies and procedures have been laid down to provide reasonable assurance that assets are safeguarded from risks of un-authorized use/disposition and that transactions are recorded and reported with propriety, accuracy and speed. These aspects of operations are regularly reviewed and verified by the Internal Auditors and the Statutory Auditors. The Internal Auditor has carried out an audit based on the Internal Audit Plan, as approved by the Audit Committee which also covers testing of established internal controls and standard operating procedures. Significant observations of the Auditors are presented to the Audit Committee for its consideration and guidance. The Audit Committee also reviews the adequacy and effectiveness of the Companys internal financial controls

FINANCIAL PERFORMANCE

Financial performance of the Company has been given separately in the Directors Report.

OUTLOOK

Medicine spending in India is projected to grow 9-12 Per cent over the next five, year, leading India to become one of the Top 10 Countries in terms of medicine spending. Going forward, better growth in domestic sale will 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.

ROAD AHEAD

Medicine spending in India is projected to grow 9-12 per cent over the next five years, 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.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

Our Company has built adequate systems of internal controls towards achieving efficiency and effectiveness in operations, optimum utilization of resources, and effective monitoring thereof as well as compliance with all applicable laws The internal control mechanism comprises a well-defined organization structure, documented policy guidelines, predetermined authority levels and processes commensurate with the level of responsibility.

RISK AND CONCERNS

The Company continues to operate in the challenging and dynamic environment. The Nature of the Pharma business exposes the Company to various competitive and regulatory risks in Long Term:

• Evolving pressures on commoditization in India led by disruptive business models and potential impact on the branded generics business.

• Consolidated customer base, high competition, regulatory requirements impacting product approvals and continued pricing pressure.

• Shifts in drug usage and healthcare delivery in developed and developing markets, on account of Covid-19 However, in spite of the challenges our Company is trying to recover the loss and increase sale.

RESPONSIBILITY FOR THE MANAGEMENT DISCUSSION AND ANALYSIS REPORT

The Board of Directors have reviewed the Management Discussion and Analysis prepared by the Management. Statement in this report of the Companys objective, projections, estimates, exceptions, and predictions are forward looking statements subject to the applicable laws and regulations. The statements may be subjected to certain risks and uncertainties.

The Company assumes no responsibility in respect of forward-looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.

KEY INDICATORS

Ratios	2023-24	2024-25	% Increase/ (Decrease)	Reason for change
Debtors Turnover (No. of days)	86.28	84.61	Decrease	As the company is involved in the expansion of Business.
Inventory Turnover (No. of days)	64.94	80.16	Increase	Due to better inventory management
Interest Coverage Ratio	2571.69	18.06	Decrease	-
Current Ratio	1.31	1.30	-	-
Debt Equity ratio	0.01	0.00	-	Due to repayment of unsecured loans
Operating Profit Margin	1.76	0.26	Decrease	Due to decrease in profit after tax
Net Profit Margin (%)	1.18	00.1191	Decrease	Due to reduction in profitability
Change in Net Worth ratio (%)	155.36	3433.15	Increase	As company paid up capital increased

DISCLAIMER STATEMENT

Statement made in the report describing the current industry structure, development, development are based on certain assumptions and expectations. The Company cannot guarantee that these assumptions and expectations are accurate.

For and on behalf of the Board

Place: Chandigarh

Date: 04-08-2025