Syschem (India) Ltd Management Discussions.

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 Cefixime Cefadroxil

Distillation of Speciality Solvents DMF, 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. (iii) Existing relations with agents and potential customers due to past working experience of promoters. (iv) The location of plant is suitable for such type of Industry.

(v) The plant is located near to Baddi area where more than 600 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. (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$ 25 billion by 2025. Pharmaceuticals export from India stood at US$ 2.3 billion in FY21. Government is also taking several steps to promote the pharmaceutical sector in India.

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 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.

OUTLOOK

Combatting the Pandemic and driving continued growth across Key Market.

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.

HUMAN RESOURCES

Our Company continues to lay great stress on its most valuable resource people. Continuous training, both on the job and in an academic setting, is a critical input to ensure that employees at all levels are fully equipped to deliver a wide variety of products and services to the customer of the Company.

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.

FINANCIAL PERFORMANCE WITH RESPECT TO THE OPERATIONAL PERFORMANCE

During the Year 2020-21 Company incurred a loss of 556.59 lakhs as compared to previous year 2019-20 which was 185.31 lakhs, the loss increased. However the total revenue from operating activity is 7,441.48 lacs during 2020-21, which was 8,801.60 Lacs in 2019-20.

Conclusion: The loss increased by 373.28 Lacs and on the other hand the income from operations reduced by 1360.12 Lacs.

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 competititive 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 inspite of the challenges our Company is trying to recover the loss and increase sale.

KEY INDICATORS

Ratios 2019-20 2020-21 % Increase/ (Decrease) Reason for change
Debtors Turnover (No. of days) 40.89 28.13 -31% Due to covid-19 company did not achieved the targed sales and recovered outstanding amount.
Inventory Turnover (No. of days) 94.46 133.07 41% Due to slow down of sales and suddenly faced problem Pandemic COVID-19. Hence, increase in stock.
Interest Coverage Ratio - - - -
As above due to slowdown of sales due to
Current Ratio 0.81 1.03 28% Pandemic COVID-19. Could not payback to creditors
Debt Equity ratio 1.38 4.09 197%
Decline of sales due to COVID-19, the Company could not achieved the sales target
Operating Profit Margin -2.50% -9.83% 293%
Net Profit Margin (%) -2.50% -9.83% 293% Decline of sales due to COVID-19, the Company could not achieved the sales target
Change in Net Worth ratio (%) -0.17% 29% -273%

ANNEXURE D-4 TO THE DIRECTORSf REPORT

DETAILS UNDER SECTION 197 (12) OF THE COMPANIES ACT, 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

(i) Ratio of the remuneration of each Executive Director to the median remuneration of the Employees of the Company for the financial year 2020-21, the percentage increase in remuneration of Chief Executive Officer, Chief Financial Officer and other Executive Director and Company Secretary during the financial year 2020-2021.

Sr. No. Name of Director/KMP Designation The Ratio of the remuneration of each Director to the median remuneration of the employees The percentage increase in remuneration
1 Suninder Veer Singh Managing Director 5.71 6.66%
2 Ranjan Jain Whole time Director 5.71 33.33%
3 Naresh Batra CFO 3.71 18.18 %
4 Shikha Kataria CS 1.85 8.33%

ii. The percentage increase in the median remuneration of Employees for the financial year was 5.04%

iii. The Company has 97 permanent Employees on the rolls of Company as on 31st March, 2021. iv. Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year, its comparison with the percentile increase in the managerial remuneration, justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration:

Average percentage increase made in the salaries of Employees other than the managerial personnel in the financial year was Nil, due to Covid-19, the salaries of Employees does not increase.

v. Affirmation that the remuneration is as per the remuneration policy of the Company:

It is affirmed that the remuneration is as per the ‘Remuneration Policy for Directors, Key Managerial Personnel and other employees adopted by the Company.