Syschem India Ltd Management Discussions

MANAGEMENT DISCUSSION & ANALYSIS 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 - methanol, 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.

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 as unbranded products.

(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. Volatility in raw material prices.

iii. Dependence on imported intermediates iv Foreign Exchange fluctuations

INDUSTRY STRUCTURE & DEVELOPMENT

The pharmaceutical industry globally continues to remain a critical component of healthcare systems, driven by increasing life expectancy, rising prevalence of chronic diseases, healthcare awareness, and technological advancement. The Indian pharmaceutical sector has established itself as one of the leading global suppliers of generic medicines and vaccines, supported by robust manufacturing capabilities and skilled scientific resources.

India is among the largest providers of generic medicines globally and has developed strong capabilities in formulations, active pharmaceutical ingredients (APIs), biotechnology, and contract manufacturing. The domestic market continued to witness stable growth, supported by rising healthcare expenditure, increasing demand for chronic therapies, and supportive government initiatives.

The industry also witnessed enhanced regulatory oversight, stricter quality standards, increasing digital integration, and supply chain diversification. The focus on domestic API manufacturing and import substitution remains a key strategic area.

EXPANSION PLANS

Company continues to evaluate growth opportunities with a focus on strengthening its market position and enhancing long- term shareholder value. During the year, the Company initiated to undertake expansion activities aimed at increasing operational efficiency, production capabilities, and business reach.

The proposed expansion initiatives may include:

- Enhancement of existing manufacturing capacities;

- Addition of new product unit;

- Expansion into new domestic and/or international markets, subject to applicable regulatory approvals;

Strengthening distribution networks and customer outreach initiatives; Evaluation of strategic partnerships, collaborations, and business opportunities within the pharmaceutical sector.

The expansion plans shall be implemented in a phased manner, subject to business requirements, financial viability, regulatory approvals, and market conditions. The Board believes that these initiatives will support sustainable growth and strengthen the Companys competitive position in the pharmaceutical industry.

RISK & CONCERNS

The pharmaceutical business is subject to various business risks including:

- Regulatory risks

- Regulatory risks

- Product quality risks

- Supply chain disruptions

- Raw material price fluctuations

- Currency volatility

- Technological obsolescence

- Competition risks

- Talent retention

- Cyber security threats

The Company has implemented appropriate risk management frameworks to identify, monitor and mitigate these risks effectively.

SEGMENT WISE/PRODUCT WISE REPORTING

The Company is operating in the single segment and engaged in the manufacture and sales of active Pharma ingredients namely i.e., Amoxycillin Trihydrate, Ampicillin Trihydrate, Cloxacillin Sodium etc. Therefore, segment wise information has not been disclosed.

INTERNAL CONTROL SYSCHEM

The Company has established adequate internal control systems commensurate with its size, nature, and complexity of operations.

The internal control framework ensures:

Safeguarding of assets Reliability of financial reporting Compliance with applicable laws Efficient operational controls Prevention and detection of fraud Authorization and monitoring of transactions

The internal audit function periodically reviews the effectiveness of internal controls and reports observations to the Audit Committee of the Board. Appropriate corrective actions are taken based on audit findings.

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 years, 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. The Company imports certain raw materials from overseas suppliers and is exposed to fluctuations in foreign exchange rates, particularly USD against INR, which may impact procurement costs and profitability. The Company continuously monitors currency movements and undertakes appropriate measures to manage such exposure.

Your Company continued its growth trajectory during the year and delivered a strong financial performance with profits. Supported by a resilient business model, prudent financial management and continued focus on operational excellence, the Company remains well positioned to pursue sustainable growth and create long- term value for all stakeholders.

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	2024-25	2025-26	% Increase/ (Decrease)	Reason for change
Debtors Turnover (No. of days)	84.61	80.55	-4.06	The decrease in debtor turnover days is mainly due to faster collection of trade receivables and improved working capital management during the period.
Inventory Turnover (No. of days)	80.16	41.80	-38.36	The decrease is mainly due to improved inventory management, faster movement of inventory and optimization of raw material and finished goods level during the period.
Interest Coverage Ratio	18.06	13.28	-4.78	Accordingly, the movement in the Interest Coverage Ratio is mainly due to changes in the finance cost and the corresponding earnings during the year, rather than any increase in the Companys debt burden.
Current Ratio	1.30	1.34	0.04	The slight change in the Current Ratio during the year primarily attributable to normal fluctuations in the Companys current assets and current liabilities arising from regular business operations.
Debt Equity ratio	0.00	0.01	0.01	The Debt-Equity Ratio increased marginally by 0.04 times during the year, primarily due to the Company availing an auto loan of ?40.16 lakh during the year.
Operating Profit Margin	0.26	2.60	2.34	The increase in profitability relative to revenue reflects improved margins from the Companys core business operations.
Net Profit Margin (%)	00.1191	1.67	1.56	The increase in net profit relative to revenue reflects improved cost management, operational efficiencies and better utilization of resources, resulting in higher earnings during the year.
Change in Net Worth ratio (%)	23.15	25.41	2.26	The marginal movement in net worth reflects the Companys improved profitability and strengthening of its financial position during the year

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: 01.09.2026