Vaishali Pharma Ltd Management Discussions.

INDUSTRY STRUCTURE & DEVELOPMENTS

The Company is into pharmaceutical business, mainly dealing in Active Pharmaceutical Ingredient, pharmaceutical formulations, surgical products, Herbal & Nutraceutical

Products, veterinary supplements operating in domestic and export market.

The success of the Company depends significantly on ability to commercialize new pharmaceutical products in India and across various markets around the world.

OPPORTUNITIES AND THREATS

Due to specialized technology involved, the possibility of further competition is minimal. However, lack of large market is its limitation.

The Company believes that it has a competitive edge in the market as the Company delivers timely and quality products to its customers. The Company has long standing relationship with many of its customers and vendors. The Company also believes that the real strength of the Company lies with its employees and they are the assets of the Company.

SEGMENT WISE OR PRODUCT-WISE PERFORMANCE

The business of the company is trading (including exports) of pharmaceuticals products.

During the financial year 2019-20, revenue of operation is Rs. 60,08,56,905 /-

OUTLOOK

The Company is continuously working on strengthening the business. The Company has been successfully executing major orders from various customers and it has been enjoying the con dence of all customers with repeat orders. The Company has been making consistent efforts for improving margins in majority products by reducing the various costs. The results of these initiatives are expected to improve the overall pro tability of the Company further during the coming years.

RISKS & CONCERNS

Risk is a potential event or non-event, the occurrence or non-occurrence of which, can adversely affect the objectives or strategy of the Company or result in opportunities being missed. The global pharma industry due to the nature of business carried out is potentially exposed to inherent risks such as product safety & quality issues, intellectual property tangles, inappropriate marketing practices, volatility of exchange rates of rupee against US dollar, etc. thereby leading to penalties, product recalls, brand loss and revenue loss.

Although the comprehensive eradication of risks associated with the business of the Company is unfeasible, constant efforts are made to analyze their potential impact, assess the changes to risk environment and de ne actions to mitigate their adverse impact.

NOTE ON COVID-19 RELATED RISKS

During these unprecedented times, pharma companies are required to respond to the challenges or risks arising due to COVID-19 pandemic. If the current COVID-19 pandemic lasts for a medium/long span of time, it can potentially have a negative impact on operations resulting from reasons such as extended lockdown impacting manufacturing and R&D operations, forced shutdown in case our employees contact the disease, restrictions of inter-state and international logistics, non-availability of materials from other countries, inability to generate demands from our customers due to significantly reduced business development activities. Potential for critical data loss/ cyber-attacks also have increased, considering remote working option adopted by most of the companies. While Pharma industry is considered as essential services and allowed to have minimal number of personnel continue the operations, it is imperative to adhere to all precautionary measures to ensure safety of the employees attending operations and avoid any contamination. While the full impact of the global pandemic is still unknown, pharma companies need to respond, recover and thrive.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has strong and adequate internal control system suitable to its size and nature of business. The internal audit is done by an independent firm of Chartered Accountants. Internal audits are regularly carried out to review the internal control systems. The systems ensure protection of assets and proper recording of transactions. The internal audit reports along with recommendations contained therein are reviewed by the Audit Committee of the Board. It is a regular practice to review the same by the Audit Committee.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the year under review, the operating revenue including other income of the Company is Rs. 62,25,82,707 /- for current year as compared to Rs. 77,07,32,331/- in previous year. Your Directors are hopeful to improve the growth rate in turnover. The Company generated funds of Rs. 7,91,053/- as compared to Rs. 1,13,24,607/- in previous year.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONTS, INCLUDING NUMBER OF PEOPLE EMPLOYED

The Company had cordial relations with its employees and all problems were solved across the table in a very congenial atmosphere. Your Directors wish to place on record their appreciation to all its employees for their sustained efforts and valuable contribution.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS, ALONG WITH DETAILED EXPLANATIONS THEREOF (I.E. CHANGE OF 25% OR MORE AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR)

1. Debtors Turnover : 1.25
2. Inventory Turnover : 54.89
3. Interest Coverage Ratio : 1.03
4. Current Ratio : 1.52
5. Debt Equity Ratio : 0.84
6. Operating Pro t Margin : 0.04
7. Net Pro t Margin or sector-specific equivalent ratios, as applicable : 0.001

Due to the impact of Bad Debts written o to the extent of Rs.3,46,67,034/- (Three Cores Forty Six Lakhs Sixty Seven Thousand and Thirty Four) the following significant changes in key financial ratios was recorded:

The Interest Coverage Ratio significantly decreased to 1.03; and

The Net Pro t Margin or Sector Speci c equivalent ratios decreased to 0.001, Apart from above there is no changes in other Key Financial Ratios

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF.

The Return on Net Worth in current year is 0.002 and in the previous year was 0.04.

During the period under review the Return on Net Worth significantly decreased to 0.002.

NOTE

Certain statement in the management discussion and analysis may be forward looking within the meaning of applicable securities law and regulations and actual results may differ materially from those expressed or implied. Factors that would make differences to Companys operations include competition, price realization, forex market, changes in government policies and regulations, tax regimes, economic development within India and the countries in which the Company conducts business and other incidental factors.