ECONOMIC OVERVIEW
Global Economics
The global economy was roiled by volatile food and commodity prices and
elevated inflation. The Russia- Ukraine conflict, which caused supply chain disruptions
worldwide, exacted a heavy toll on the economy. The rising costs of living, inflated food
and commodity prices and tightened liquidity conditions also impeded global economic
growth.
At the end of Financial Year 2022-2023, the global economy recovered
gradually from the waning effects of the pandemic and geopolitical tensions. The global
economic output is expected to witness steady growth, driven by stabilizing inflationary
pressures, reviving consumer sentiment and investor confidence. Global growth is expected
to experience a temporary slowdown, reaching a growth rate of 2.9 % in 2023.
However, this is anticipated to be followed by a positive rebound, with
growth projected to rise to 3.1 % in 2024. Advanced economies are projected to expand by
1.3% in 2023. Moreover, there is optimistic anticipation of a decline in global headline
inflation from 8.7% in 2022 to 7.0% in 2023, This forecast is higher than that of January
2023 but nearly double the January 2022 forecast. Disinflation is expected in all major
country groups, with about 76 percent of economies expected to experience lower headline
inflation in 2023. Initial differences in the level of inflation between advanced
economies and emerging market and developing economies are, however, expected to persist.
The projected disinflation reflects declining fuel and nonfuel commodity prices as well as
the expected cooling effects of monetary tightening on economic activity. At the same
time, inflation excluding that for food and energy is expected to decline globally much
more gradually in 2023: by only 0.2 percentage point, to 6.2 percent, reflecting the
aforementioned stickiness of underlying inflation. This forecast is higher (by 0.5
percentage point) than that of January 2023. Overall, returning inflation to target is
expected to take until 2025 in most cases. A comparison of official inflation targets with
the latest forecasts for 72 inflation- targeting economies (34 advanced economies and 38
major emerging market and developing economies) suggests that annual average inflation
will exceed targets (or the midpoints of target ranges) in 97 percent of cases in 2023.
The median deviation from target is expected to be 3.3 percentage points. In 2024,
inflation is still expected to exceed targets in 91 percent of cases, with an expected
median deviation of about 1 percentage point. Among countries with an inflation target
range, however, inflation is expected to be in the target range in about 50 percent of
cases in 2024. By 2025, inflation is expected to be close to targets (or the midpoints of
target ranges), with a median deviation of only 0.2 percentage point.
Outlook
Indebtedness Staying High As a result of the pandemic and economic
upheaval over the past three years, private and public debt have reached levels not seen
in decades in most economies and remain high, despite their fall in 2021-22 on the back of
the economic rebound from COVID-19 and the rise in inflation. Monetary policy
tightening—particularly by major advanced economies—has led to sharp increases
in borrowing costs, raising concerns about the sustainability of some economies
debts. Among the group of emerging market and developing economies, the average level and
distribution of sovereign spreads increased markedly in the summer of 2022, before coming
down in early 2023. The effects of the latest financial market turmoil on emerging market
and developing economy sovereign spreads have been limited so far, but there is a tangible
risk of a surprise increase in coming months should global financial conditions tighten
further. The share of economies at high risk of debt distress remains high in historical
context, leaving many of them susceptible to unfavorable fiscal shocks in the absence of
policy actions.
A return of the world economy to the pace of economic growth that
prevailed before the bevy of shocks in 2022 and the recent financial sector turmoil is
increasingly elusive. More than a year after Russia and Ukraine war and the outbreak of
more contagious COVID-19 variants, many economies are still absorbing the shocks. The
recent tightening in global financial conditions is also hampering the recovery.
As a result, many economies are likely to experience slower growth in
incomes in 2023, amid rising joblessness. Moreover, even with central banks having driven
up interest rates to reduce inflation, the road back to price stability could be long.
Over the medium term, the prospects for growth now seem dimmer than in decades.
Domestic Economic
The Indian economy remained resilient in the face of global challenges
and has maintained its position as one of the fastest- growing major economies.
Indias GDP rose by 6.1 % in the fourth quarter of2022- 23 to
raise the yearly growth rate to 7.2% in FY232. Indias exceptional growth
rates of 7.2% in FY23 and 6.1% in Q4 show that its economic narrative continues to emerge.
However, the IMF kept the growth forecast for 2024 at 6.3%, the growth
rate it had predicted in April. Earlier in June, Fitch Ratings raised its FY24 (2023-24)
growth forecast for the Indian economy to 6.3%, from 6% predicted earlier, citing strong
growth in the April-June quarter so far and sustained near-term momentum. 2
Meanwhile, the Reserve Bank of India (RBI) has projected FY24 Indian
economic growth at 6.5%. In terms of quarterly breakups, the central bank expects 8%
growth in the June quarter, followed by 6.5%, 6% and 5.7% in the subsequent quarters, RBI
governor Shaktikanta Das said at the end of the Monetary Policy Committee (MPC) meeting
last month.
According to the IMF, most advanced economies are expected to see an
especially pronounced growth slowdown, from 2.7% in 2022 to 1.3% in 2023.
Outlook
Despite global challenges, Indias economic activity has remained
robust due to a favourable domestic policy environment and the Governments continued
emphasis on structural reforms Stabilizing inflation, narrowing the current account
deficit, improving consumer sentiments and a favourable policy environment are likely to
aid the Indian economy. Moreover, government initiatives like Atmanirbhar Bharat, PM Gati
Shakti and the Production-linked Incentive (PLI) scheme would contribute to economic
growth by increasing local output. A combination of rising disposable income, easy access
to credit and lowering interest rates in the wake of a stabilizing inflation trajectory
will bode well for economic growth going forward.
INDUSTRY STRUCTURE & DEVELOPMENT
Global Biotechnology Industry
The biotechnology market size is 2023 is USD 1,378.63 Billion. Asia
Pacific is the fast growing market in this sector.
2https://www.
livemint.com/news/india/imf-raises-india-s-gdp-growth-forecast-to-6-1-for-2023-due-to-stronger-domestic-invest-
ment-11690303674597.html
Several factors, including the existence of important competitors,
strong R&D initiatives, and high healthcare expenses, have contributed to the North
America region market growth. Furthermore, a growing number of businesses operating in the
region are gaining drug approvals, which is fueling market expansion.
The Asia-Pacific is estimated to hit growth rate of over 17% during the
forecast period. The improvement of healthcare infrastructure, clinical trial services,
and supportive government regulations are all contributing to the Asia-Pacific
biotechnology market growth. Moreover, the international market players are partnering
actively with local companies in order to accelerate the biotechnology markets
growth.
The global biotechnology market was estimated at USD 1,224.31 billion
in 2022 and is expected to be worth around USD 3,210.71 billion by 2030 and poised to grow
at a noteworthy CAGR of 12.8% from 2023 to 2030.
Indian Biotechnology Industry
The Indian biotechnology industry is built on entrepreneurship,
innovation, developing domestic talent and demonstrating value-based care. Given the long
history of diseases in India, the country has accumulated years of experience and
scientific knowledge to prevent and treat them. India is working to boost the
biotechnology sector under various flagship programmes such as ‘Make in India
and ‘Startup India. The Indian biotechnology industry, which stood at US$ 63
billion in 2019, is expected to reach US$ 150 billion by 2025, with a CAGR of 16.4%. By
2025, the contribution of the Indian biotechnology industry to the global biotechnology
market is expected to grow to 19%. In the Indian biotechnology market, biopharmaceuticals
are the largest segment, accounting for 62% share in 2020.
The Indian biologics market is forecasted to reach US$ 12 billion by
2025, at a CAGR of 22%.
In 2023, Indias Biotechnology industry has crossed an estimated
US$ 92 Billion, growing 15% from the previous year. The Indian Bioeconomy has witnessed a
manyfold increase in valuation in the past eleven years, with COVID-19 giving the industry
a much-needed push. Today, India is poised as one of the leading destinations for
bioinnovation and bio manufacturing, and hence is identified as a sunrise sector and a key
part of Indias vision of reaching a $5 Tn Economy by 2024. Indias
Biotechnology sector is categorised into Biopharmaceuticals, Bio agriculture, Bio IT and
Bio Services. (Source investindia.gov. in)
India is among the top 12 destinations for biotechnology worldwide. The
industry comprises around 5000 biotech companies, with 4,240 being start-ups and 760 being
core biotech companies, with the number of startups expected to touch 10,000 by 2024.
India is 3rd largest biotechnology destination in the Asia Pacific region.
Indias Biotech sector is categorised into Biopharmaceuticals,
BioIndustrial, Bioagriculture, BioIT & BioServices.
In August 2022, Minister of State (Independent Charge) Science &
Technology; Minister of State (Independent Charge) Earth Sciences; MoS PMO, Personnel,
Public Grievances, Pensions, Atomic Energy and Space, Dr. Jitendra Singh, announced 75
"Amrit" Grants worth Rs. 10-15 crore (US$ 1.22-1.83 million) for biotech
projects involving startups, industry, academia, and research organisations working
together.
On November 14, India and Finland agreed to advance bilateral
collaboration and expand cooperation in sectors like digital education, future mobile
technologies, biotechnology, and the digital partnership in ICT.
On June 9, 2022 Prime Minister Mr. Narendra Modi inaugurated the
Biotech Startup Expo - 2022. The event was being conducted to commemorate BIRACs
tenth anniversary since its foundation. The Expos theme was ‘Biotech Startup
Innovations: Towards Aatma Nirbhar Bharat. The Expo showcased 75 successful startups
supported by BIRAC, 75 Specialized Biotech Incubation Centres supported by BIRAC, 21 IITs/
universities, 50 successful startups supported by DPIIT and various national and
international programs of BIRAC. It was the India first Biotech Startup Expo.
In the Union Budget 2023-24, the Department of Biotechnology (DBT) was
allotted US$ 162.7 million (Rs. 1,345 crore) to promote research and development,
agriculture biotechnology, etc.
(Source IBEF)
Under the Union Budget 2023, the government announced - "500 new
‘waste to wealth plants under GOBARdhan (Galvanizing Organic Bio-Agro Resources
Dhan) scheme to be established for promoting circular economy". These will include
200 compressed biogas (CBG) plants, including 75 plants in urban areas, and 300 community
or cluster-based plants at total investment of INR 10,000 crore. Over the period from 2018
to 2022, a total of 22 mergers and acquisitions (M&A) deals have occurred in the life
sciences sector in India, with a combined value amounting to $4.6 billion. (Source
investindia.gov.in)
PRODUCT WISE PERFORMANCE/SEGMENT WISE
The Company has only one segment and primarily engaged in the business
of Biological Products. As the Companys business activity falls within a single
primary business segment.
The revenue break-up by Geography is provided below:
During the year, revenue from Domestic Operation has increased by 4.05
% and revenue from Overseas Operation has increased by 59.96 %.
The company has started exporting to some new countries during the
year.
Product Group Wise Contribution in Revenue
The main contribution of the products during the year and the previous
Financial Year in the revenue of company has been prescribed as per below chart:
OUTLOOK
The outlook of the Biotechnology sector is quite good in the last year
and continues to be good presently also. Biotech is among one of the sectors, which have
highlighted the profile of the country in the last decade. At the beginning of the decade
itself, this industry began to take shape with the sprouting of dozens of start-up
companies as well as diversification of major pharmacy players by setting up biotech
divisions to focus on this segment. With the country offering great comparative advantages
in terms of skills, knowledge, expertise, cost effectiveness, the Outlook of the Industry
looks very positive.
RISK AND CONCERN
Organizations can create sustainable value for its stakeholders by
effectively managing the risks they are willing to take, be it at a strategic, financial
or operational. Therefore, identifying, analyzing and promptly managing risks is critical
from a Corporate Governance standpoint to enable an organization to attain its strategic
objectives and protect the interest of its stakeholders.
Risks can be categorized as financial, customer concentration
operational, strategic, regulatory/statutory, reputational, geopolitical,
catastrophic/pandemic.
The major risk is frequent increase in price of few raw materials which
can increase cost of product and can make few products unprofitable unless the increase is
passed on to the user which may at times be difficult due to stiff competition. Further,
delay in grant of approvals can result in delay in launching of key products in the
market. In addition, significant competition in key products could also affect market
share and profitability of the Company.
OPPORTUNITIES
The increase in the population is driving the demand of product across
the world and as we all know a simple rule of economics, higher the population bigger the
opportunity. The Global Biotech Market is open and the opportunity to tap the global
market is immense. The Company has maintained its market share during 2022-2023 and is
regularly encashing on all opportunities. Your Company has maintained its quality
standards and always working towards improvements. New Technology Developments and New
Product Developments do take place and updating in terms of technology and quality is the
need of the hour.
THREATS
Stiff Competition both on domestic and International level poses some
threat to the market share of company but since the market is quite large, the same is
easily absorbed. Your Company has to abide by stringent regulations and specifications
pertaining to its products in its domestic and export markets. Your Company operates in a
highly competitive market. Some of the key factors driving competition in the industry
include product functionality and quality, pricing, customer service, product innovation
and effectiveness of marketing and distribution channels. To survive and succeed in a
stiff competitive environment, it is very important for the Company to distinguish its
product and service offerings through a clear and unique value proposition. Some of the
competitors of the Company have greater financial, marketing and other resources, which
enables them to pursue more vigorous marketing and expansion activities. Intense
competition may have a material adverse impact on the Companys operations.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
Titan Biotech Limited has well established internal control systems for
operations of the Company. All the departments of the company including the accounts &
finance department has experienced and trained staff capable of implementing and
monitoring internal control systems. The internal control system of the Company is
adequate to safeguard the Companys assets and to ensure that the transactions are
properly recorded. Further, the internal control system ensures that proper record is
being kept and all statutory and other laws, rules and regulations are being complied
with.
The Company has appointed an independent firm of chartered accountants
to monitor the internal audit of its activities, based on an internal audit plan, which is
reviewed each year in consultation with the statutory auditors and approved by the audit
committee. The Company has identified inherent reporting risks for major element in the
financial statements and established controls to prevent the same. These risks and the
prevention controls are revisited periodically considering the changes in business, IT
systems, regulations and internal policies, based on evaluations of the audit, as per
Section 177 of the Companies Act 2013 and Regulation 18 of SEBI Regulations, 2015, the
Audit Committee has concluded that as March 31, 2023, internal financial controls were
adequate and operating effectively.
Compliance of secretarial functions is ensured by way of secretarial
audit. Compliance relating to cost records of the company is ensured by way of cost audit.
FINANCIAL PERFORMANCE vis-a-vis
OPERATIONAL PERFORMANCE
Revenue
The revenue of the Company was better as compared to previous year
revenue increasing from Rs. 12,449.00 Lakhs to Rs. 14,594.24 Lakhs.
Selling and Distribution Expenses
The selling and distribution expenses increased by 50.95 %, primarily
because of the increase in Business Promotion after lifting of restriction of Covid-19
pandemic and other expense during the year ended March 31,2023.
Tax Expenses
Our income taxes decreased by Rs. 15.94 Lacs from Rs. 728.50 Lacs for
the year ended March 31, 2022 to Rs. 712.55 Lacs for the year ended March 31, 2023. Our
effective tax rate has not changed from the last year ended on March 31, 2022 to current
year ended on March 31, 2023 i.e. 25.17 %.
Finance Cost
Our finance cost decreased from Rs. 87.21 Lacs for the year ended March
31, 2022 to Rs. 74.59 Lacs for the year ended March 31,2023. The decrease and repayment in
borrowings during the year ended March 31,2023, primarily, resulted in lower finance
expense.
Employee benefits expenses
Employee benefits expenses account for 12.48% of our total revenue and
form a major part of our total expenses. The expenses include fixed as well as variable
components of employees salaries, along with contribution to provident fund and
gratuity. Share based payments to employees and staff welfare expenses are not a part of
that cost. Break-up of this head of expenses compared to the previous years numbers,
is given below:
(Standalone)
| Particulars |
FY 2022-23 |
FY 2021-22 |
|
|
Rs. (In Lacs) |
% of total revenue |
Rs. (In Lacs) |
% of total revenue |
Increase/ (Decrease) % |
| Salary, Wages & Bonus |
1,664.17 |
11.40 % |
1,289.83 |
8.84 % |
29.0%A |
| Contribution to Provident & Other Funds |
116.39 |
0.80 % |
100.69 |
0.69% |
15.6%A |
| Staff Welfare |
40.34 |
0.28 % |
33.66 |
0.23 % |
19.9%A |
Total employee benefits expenses has increased by 27.86%. As a
percentage of revenue, employee benefits expenses increased to 12.48% in FY23 from 9.67%
in FY22. Increase in salaries and wages and contribution to provident and other funds, is
in line with increase in revenue and headcount, taking into account cost optimization and
pyramid rebalancing measures.
Liquidity And Capital Resources/ Movement of Money (Cash)
The data given in Table A, Cash generated from operating activities in
FY 2023 was Rs. 2,117.81 Lacs. Investing activities net outflow amounting to Rs.
(2,072.51) Lacs in FY 2023 includes net investment in property, plant, equipment and
intangibles to build capacity and capabilities for future business growth. Cash outflow
from financing activities was Rs. (240.33) Lacs. Closing cash and cash equivalents as on
March 31,2023 was Rs. 486.37 Lacs.
Standalone Statement of Cash Flows
(Rs. In Lacs)
| PARTICULARS |
2023 |
2022 |
| Opening Cash and Cash Equivalents |
681.39 |
530.86 |
| Cash Flows from: |
|
|
| i. Operating Activities |
2,117.81 |
2,204.07 |
| i. Investing Activities |
(2,072.51) |
(1,643.65) |
| ii. Financing Activities |
(240.33) |
(409.88) |
| Closing Cash and Cash Equivalents |
486.37 |
681.39 |
MATERIAL DEVELOPMENT IN HUMAN RESOURCES
There has not been any major development on the human resources front.
The industrial relation continues to be cordial during the year 2022-2023. The number of
permanent employees on the rolls of Company as on 31st March, 2022 was 396.
Total Headcount was increased by 26.92% during the year.
SIGNIFICANT KEY FINANCIAL RATIOS
Details of significant changes (i.e. change of 25% or more as compared
to the immediately previous financial year) in key financial ratios, along with detailed
explanations therefor-
| Particulars |
Financial Year 2022-2023 |
Financial Year 2021-2022 |
Change |
| Debtors Turnover |
7.71 |
7.61 |
1.31 % |
| Inventory Turnover AA |
2.42 |
2.29 |
5.67 % |
| Interest Coverage Ratio |
42.18 |
40.98 |
2.92 % |
| Current Ratio |
3.36 |
3.85 |
85 % |
| Debt-equity Ratio |
0.09 |
0.12 |
-26.16 % |
| Operating Profit Margin # |
20.30 |
22.69 |
-2.90 % |
| Net Profit Margin |
14.60 |
17.50 |
-16.57 % |
| Return on Net Worth |
19.82 |
25.14 |
-5.33 % |
# Operating Margin is Defined as profit Before Taxes and Interest
" Inventory Turnover defined of Raw Material (A) Debt-Equity Ratio: -
Debt equity ratio falling which evaluate a low risk to shareholders.
High ratio indicates high risk.
CAUTIONARY STATEMENT
Statements in the Management Discussion and Analysis describing the
Companys objectives, expectations or predictions may be forward looking within the
meaning of applicable securities, laws and regulations. Actual results may differ
substantially or materially from those expressed or implied inter-lia due to risk and
uncertainties. These risks and uncertainties include the effect of economic and political
conditions in India and abroad, volatility in interest rates and in the securities market,
new regulations and Government policies that may impact the Companys businesses as
well as the ability to implement its strategies. Important factors that would influence
the Companys operations include cost of raw materials, tax laws, interest and power
cost and economic developments particularly in view of ongoing pandemic COVID 19 and such
other factors within the country and the international economic and financial
developments. The above discussion and analysis should be read in conjunction with the
Companys financial statements included in this report and the notes thereto.
Investors are also requested to note that this discussion is based on the consolidated
financial results of the Company.
| For Titan Biotech Limited |
for Titan Biotech Limited |
| Suresh Chand Singla |
Naresh Kumar Singla |
| Managing Director |
Managing Director |
| DIN: 00027706 |
DIN: 00027448 |
| Date: 01/09/2023 |
|
| Place: Delhi |
|
+91-9892691696
