Trident Lifeline Ltd Management Discussions

Management Discussion and Analysis

Global Economy

The global economy has shown remarkable resilience in 2024, navigating through a complex landscape of challenges and opportunities. According to the International Monetary Funds April 2024 World Economic Outlook, global growth is projected to maintain a steady pace of 3.2% for both 2024 and 2025, mirroring the growth rate of 2023. This steady growth is underpinned by a gradual decline in global inflation, which is forecasted to decrease from 6.8% in 2023 to 5.9% in 2024, and further to 4.5% in 2025. Advanced economies are expected to return to their inflation targets sooner than emerging markets, signalling a stabilisation in economic conditions.

Despite the headwinds posed by geopolitical tensions and elevated debt levels, the global economic outlook remains positive. This positive trend is supported by robust labour markets, strong household consumption, and business investment, which have collectively contributed to the economic stability observed in 2024. Emerging markets continue to play a significant role in global economic dynamics. As these economies account for a substantial portion of world GDP and trade, their growth prospects are crucial for sustaining global momentum. Notably, Chinas reopening has paved the way for a rapid rebound in activity, contributing to the overall positive outlook for emerging markets.

In advanced economies, the outlook is buoyed by a slight acceleration in growth, with projections indicating an increase from 1.6% in 2023 to 1.7% in 2024. This growth is expected to be driven by improvements in productivity and structural reforms aimed at enhancing resource allocation and boosting labour force participation.

Indian Economy

The Indian economy has demonstrated remarkable resilience and robust growth in 2024, positioning itself as one of the fastest-growing major economies globally. The International Monetary Fund (IMF) has revised Indias growth forecast for 2024-25 to 7%, citing improving private consumption, particularly in rural areas.

This growth is further supported by Indias robust performance in manufacturing and infrastructure development, as highlighted by a 7.8% year-on- year growth in the first quarter of 2024, exceeding earlier expectations. The governments focus on infrastructure spending and fiscal consolidation has played a crucial role in bolstering economic activity and investor confidence. Indias economic outlook remains positive, with the United Nations projecting a 6.9% growth for 2024, driven by strong public investment and resilient private consumption.

The countrys commitment to enhancing infrastructure and creating an enabling business environment is expected to boost manufacturing competitiveness and augment exports. Moreover, the anticipated normal monsoon is likely to support agricultural growth, contributing to overall economic stability. Despite global uncertainties, India continues to attract foreign investment, with expectations of improved capital flows and a rebound in exports as global growth picks up in 2025. Inflation is projected to moderate to 4.5% in 2024, providing room for less restrictive monetary policy and facilitating credit growth. The governments efforts to reduce the fiscal deficit and maintain economic reforms are expected to sustain growth momentum in the coming years.

Global Pharmaceutical Industry

According to Frost & Sullivans Global Pharmaceutical Industry Outlook 2024, the industry is projected to realign its growth trajectory, recording a compound annual growth rate (CAGR) of 5.9% between 2023 and 2028. This growth is driven by the increasing demand for innovative therapeutics, particularly in emerging markets across Asia-Pacific, Latin America, and other regions.

A key trend influencing the industry is the shift towards regional supply chains, which enhances reliability and reduces geopolitical risks. This strategic move is crucial in ensuring the steady supply of pharmaceuticals amidst global uncertainties. Additionally, the industry is witnessing a surge in mergers and acquisitions, fostering collaborations that enhance research capabilities and expand market reach.

Technological advancements continue to play a pivotal role in the pharmaceutical sector.

The integration of artificial intelligence and digitalisation in drug development and supply chain management is accelerating the pace of innovation. The focus on precision medicine and personalised healthcare is also gaining momentum, with companies investing in research to develop targeted therapies that address specific patient needs. Despite challenges such as inflation and economic recessions in some regions, the pharmaceutical industry remains optimistic about its growth prospects.

The emphasis on environmental, social, and governance (ESG) commitments is reshaping business strategies, with companies prioritising sustainable practices and ethical governance.

As the industry continues to evolve, its ability to adapt to changing market dynamics and leverage technological innovations will be key to sustaining growth and improving global healthcare outcomes.

Global Nutraceutical Industry

The global nutraceutical industry is poised for significant growth in 2024, driven by increasing consumer awareness of health and wellness. According to Mordor Intelligence, the nutraceutical market size is estimated at USD 488.41 billion in 2024, with a projected growth to USD 626.02 billion by 2029, reflecting a CAGR of 5.09%. This growth is fuelled by a convergence of factors, including an ageing population, rising health consciousness, and a shift towards preventive healthcare.

The demand for nutraceuticals is particularly strong among the ageing demographic, who seek products that offer health benefits beyond basic nutrition.

This trend is evident in the growing popularity of functional foods, dietary supplements, and herbal remedies that cater to specific health concerns such as joint health, cognitive function, and cardiovascular wellness. Manufacturers are responding by developing innovative formulations that combine traditional wisdom with cutting-edge scientific research.

The industrys economic impact is substantial, with companies navigating a competitive landscape shaped by market dynamics, regulatory compliance, and technological advancements. The digitalisation of commerce is reshaping how nutraceuticals are marketed and consumed, with e-commerce platforms providing new avenues for reaching consumers directly. This trend is expected to accelerate, as companies leverage data analytics and online platforms to engage with health-conscious consumers. As the nutraceutical industry continues to expand, research and innovation remain at the forefront, driving the development of personalised, sustainable, and evidence-based products.

Indian Pharmaceutical Industry

As one of the largest producers of generic medicines, India plays a pivotal role in the global pharmaceutical supply chain. The industry is projected to reach a market size of USD 65 billion by 2024 and USD 130 billion by 2030, according to the Indian Brand Equity Foundation (IBEF). This growth is driven by several key factors, including strong domestic demand, robust export performance, and significant investments in research and development (r&d).

Indian Pharmaceutical Market

(us$ billion)

Indias pharmaceutical sector is supported by a well-established infrastructure, including over 3,000 drug companies and 10,500 manufacturing units.

The country boasts the highest number of USFDA- compliant plants outside the United States, reflecting its commitment to quality and regulatory compliance. The governments Production Linked Incentive (PLl) schemes further bolster the industry by encouraging domestic manufacturing and reducing dependence on imports.

A major growth driver for the Indian pharmaceutical industry is the increasing focus on R&D, particularly in the development of biosimilars, complex generics, and new chemical entities (NCEs). Indian companies are investing in advanced technologies such as Artificial Intelligence (Al) and Machine Learning (ml) to enhance drug discovery and manufacturing processes.

This digital transformation is expected to improve efficiency, reduce costs, and accelerate time-to- market for new drugs.

The industrys export performance remains strong, with India supplying over 50% of Africas generic drug requirements and a significant portion of the generic demand in the US and UK. The focus on affordable healthcare solutions and the expansion into emerging markets like Africa, Latin America, and Southeast Asia are key trends driving export growth.

Indian Nutraceutical Industry

The Indian nutraceutical industry is experiencing robust growth, driven by increasing consumer awareness of health and wellness. According to TechSci Research, the market was valued at USD 6,113.20 million in 2024 and is anticipated to reach USD 11,552.72 million by 2030, growing at a CAGR of 11.39%. This growth is supported by a convergence of factors, including a large and diverse population, rising health consciousness, and a shift towards preventive healthcare.

The demand for nutraceuticals is particularly strong among the ageing population, who seek products that offer health benefits beyond basic nutrition. This trend is evident in the growing popularity of functional foods, dietary supplements, and herbal remedies that cater to specific health concerns such as joint health, cognitive function, and cardiovascular wellness. The governments initiatives to promote wellness and regulate the nutraceutical industry have also played a crucial role in its growth.

Key trends in the Indian nutraceutical market include the increasing demand for herbal and Ayurvedic products, which resonate with the cultural preferences of Indian consumers. The digitalisation of commerce is reshaping how nutraceuticals are marketed and consumed, with e-commerce platforms providing new avenues for reaching consumers directly. This trend is expected to accelerate as companies leverage data analytics and online platforms to engage with healthconscious consumers.

Company Overview

Trident Lifeline Limited has rapidly emerged as a significant player in the pharmaceutical landscape, renowned for its innovative approach and robust growth trajectory. Established in 2014, the Company has consistently expanded its operations, leveraging a strategic blend of third-party contract manufacturing and direct exports. This asset-light model enables Trident Lifeline to efficiently scale its operations and respond adeptly to market demands across diverse regions, including India, Africa, Latin America, and East Asia.

The Companys product portfolio is extensive, covering a wide array of therapeutic categories such as antibacterial, anti-diabetic, and nutraceuticals. This diversity allows Trident Lifeline to meet a broad spectrum of healthcare needs, delivering high-quality and affordable solutions to patients worldwide. The Companys commitment to quality and innovation is underscored by its focus on expanding its product registrations, a critical component of its growth strategy.

Trident Lifelines strategic investments in manufacturing capabilities and product registrations highlight its dedication to enhancing its global footprint. The Company actively seeks opportunities to broaden its product offerings, particularly in emerging markets where the demand for affordable healthcare solutions is burgeoning. By strengthening its supply chain and forging strategic partnerships, Trident Lifeline is well- positioned to capitalise on new opportunities and drive sustainable growth. With a clear vision to become a leading global pharmaceutical Company, Trident Lifeline remains steadfast in its mission to provide innovative and reliable healthcare solutions.

FY24 Performance Discussion and Outlook

Trident Lifeline Limited concluded FY24 with impressive growth in its Revenue from Operations. For FY24, the Companys revenue stood at E 4,685.52 Lakhs, reflecting a 42% growth over FY23s if 3,284.57 Lakhs. Despite the strong revenue performance, profitability margins experienced some compression. This was primarily due to lower gross margins and increased finance costs, as well as depreciation and amortisation expenses. These costs are associated with recent strategic investments in entities such as TNS Pharma, Tricorp Industries, and TLL Herbal. As these investments mature, they are expected to yield significant benefits, enhancing the Companys operational scale and profitability.

Furthermore, in Q4FY24, Trident Lifeline announced the acquisition of a 51% equity stake in TLL Parenterals Limited, a move that aligns with its strategic growth objectives. Additionally, the commissioning of TNS Pharmas facility in Sachin GIDC in April 2024 is set to ramp up manufacturing operations, contributing meaningfully to the Companys strategic goals.

Looking ahead, Trident Lifelines outlook for the coming financial year remains optimistic. The Company is poised to expand its business operations at both standalone and consolidated levels through a strategic mix of organic and inorganic growth initiatives. With continuous investments in product registrations, an expanding product portfolio, and a strengthened supply chain, Trident Lifeline is well-positioned to capitalise on emerging opportunities and drive sustainable growth in the global pharmaceutical landscape.

Key Financial Ratios

1 Particulars	FY24	FY23	% Change	Reasons
Current Ratio	3.13	4.63	-32.31%	Due to increase in current assets
Debt Equity Ratio	0.39	0.24	63.95%	Due to increase in shareholders funds
Debt Service Coverage Ratio	13.22	10.46	26.39%	Due to deferred tax provision, ratio has improved
Return of Equity Ratio	19.94	26.08	-23.57%	Due to increase in shareholders funds
Inventory Turnover Ratio	4.90	5.83	-15.90%	Due to increase in turnover during the year and lower inventory level in the year
Trade Receivable Turnover Ratio	3.45	3.70	-6.91%	Due to higher receivable level in the year
Trade Payable Turnover Ratio	5.40	4.72	14.52%	Due to decrease in business during the year
Net Capital Turnover Ratio	1.24	0.84	46.54%	Due to increase in average working capital
Net Profit Ratio	15.77	18.97	-16.85%	Due to deferred tax provision
Return of Capital Employed	0.18	0.15	20.35%	Due to high increase in capital employed
Return on Investment	19.94	26.08	-23.57%	Due to high increase in shareholders fund

Opportunities & Threats

Opportunities:

• Growing population base: India has become the most populous country globally, offering a vast market for pharmaceutical products.

• Government support: Various schemes and incentives, such as the Production Linked Incentive (PLl) scheme, are boosting domestic manufacturing.

• Improved healthcare access: Enhancements in healthcare infrastructure are increasing access to modern and innovative medicines.

• Expanding healthcare coverage: Steady improvements in healthcare and insurance coverage are making treatments more accessible.

• Demographic changes: Lifestyle shifts are leading to a higher incidence of chronic diseases like diabetes and hypertension, driving demand for pharmaceuticals.

Threats:

• Geopolitical tensions: Current geopolitical issues are causing uncertainties in supply chains, inflation, and economic growth.

• Pandemic risks: Potential new outbreaks could disrupt economic activities and impact growth.

• FOREX volatility: Significant fluctuations in the foreign exchange market, especially in emerging markets, could adversely affect growth in these regions where the Company has exposure.

Risks and Concerns

• Project execution risk: The Company faces risks related to executing projects, such as setting up new manufacturing facilities through subsidiaries, which may encounter cost overruns and delays.

• FOREX risk: With a significant portion of revenue derived from exports, the Company is exposed to risks associated with foreign exchange fluctuations.

• Intellectual property risk: Protecting intellectual property is crucial for the Companys business.

Any threats to its IP could harm its operations and market position.

Internal Control Systems and Their Adequacies

Trident Lifeline Limited is committed to maintaining robust and efficient internal control systems that ensure the seamless operation of its business activities. The Companys comprehensive framework encompasses a set of policies, procedures, and practices designed to safeguard assets, prevent fraudulent activities, and ensure accurate financial reporting. Compliance with regulatory requirements is a cornerstone of this framework. Regular risk assessments and internal audits are conducted to identify potential areas for improvement, fostering a culture of ethical conduct and accountability. By upholding these high standards. Trident Lifeline aims to instil confidence among its stakeholders and sustain its reputation as a reliable and trustworthy entity in the pharmaceutical industry.

Human Resources

At Trident Lifeline, the success of the Company is deeply rooted in the dedication and expertise of its skilled workforce. Recognising the value of its employees, the Company places significant emphasis on fostering a positive work environment that encourages growth and development. This approach ensures the retention of top talent and contributes to the overall excellence of the organisation. With a robust sales and marketing network spanning various countries, Trident effectively manages its export-oriented operations. As of March 31, 2024, the Company proudly employs a team of 40 highly motivated individuals, each playing a crucial role in driving the Companys growth and success. By investing in its people. Trident Lifeline continues to build a strong foundation for sustainable growth and innovation.

Cautionary Statement

Statements in the Management Discussion and Analysis and other parts of the report describing the Companys objectives, projections, estimates and expectations may be forward-looking statements. Actual results may differ materially from those expressed or implied due to various risks and uncertainties. Important factors that could make a difference to the Companys operations include economic and political conditions in India and other countries, in which the Company may operate. Other factors that may impact the Companys operations include volatility in interest rates, changes in government regulations and policies, tax laws, statutes, and other incidental factors.