Vanta Bioscience Ltd Management Discussions

1. Industry Structure and developments

Vanta Bioscience Limited ( Vanta or the Company ) is an emerging full-service preclinical contract research organization (CRO), operating out of Chennai, India. The Company is established as a center of excellence in GLP-compliant toxicology and safety assessment services.

Industry Overview

India continues to be one of the largest and fastest-growing economies in the world. Among the key contributors to this growth are the Food & Agriculture and Pharmaceutical industries. The Food & Agri sector is one of the top three pillars driving the Indian economy and is poised for continued robust growth. The pharmaceutical industry, a vital segment of the Indian economy, is currently experiencing challenges such as increased global regulatory scrutiny and a slowdown in key markets, including the United States. Despite these headwinds, the Indian pharmaceutical sector remains resilient, with rising investments in R&D and a growing trend of outsourcing compliance-related testing services.

Growing awareness around food safety and quality, driven by the Food Safety and Standards Authority of India (FSSAI), along with an increasingly quality-conscious consumer base, is also driving demand for advanced testing services. These trends are opening significant opportunities in the food and pharmaceutical testing and research services space, spanning both routine and specialized studies. However, these opportunities are accompanied by several challenges, including rising competition from both domestic and international players, a shortage of skilled and trained professionals in specialized domains, and an uneven playing field in terms of service quality and the perceived value of such services by customers.

Globally, healthcare spending is at an all-time high, particularly due to the growing demand for innovative and accessible medications in emerging markets. Pharmaceutical companies are under constant pressure to accelerate the drug development cycle and maximize returns on investment. This has led to a shift toward specialty healthcare segments and cost-effective R&D solutions. Although India is not yet among the top destinations for outsourcing new R&D activities, its cost advantages and technical capabilities present a compelling value proposition for the global pharmaceutical industry. With continued improvements in infrastructure, quality standards, and regulatory compliance, Indias position in the global clinical and preclinical research ecosystem is expected to strengthen in the years to come.

2. Opportunities and Threats / Risks and concerns Opportunities:

Our Company has strategically expanded its footprint through exclusive tie-ups in the preclinical services sector in Greater China, along with non-exclusive agreements covering Latin America (LATAM) and Asia Pacific (APAC) for the Chemical and Agrochemical business. The recent enhancement of our GLP scope, especially in physicochemical and toxicological studies, is expected to generate new revenue streams in the upcoming quarters. Strengthened regulatory oversight by bodies like FSSAI on food safety and quality, alongside global emphasis on GLP, NABL, and MHRL compliance, further bolster market prospects. The Indian healthcare sector is one of the fastest-growing industries, projected to grow at a CAGR of 22.87% (2015-20) to reach $280 billion. The pharmaceutical market is also expanding rapidly, estimated to reach $55 billion by 2020 at a CAGR of 12.89%. Additionally, approvals of Abbreviated New Drug Applications (ANDA) by the US

FDA to Indian companies have nearly doubled, highlighting growing global recognition.

Threats:

Our facilities are subject to client inspections and stringent quality audits, and any failure to meet contractual quality standards could lead to termination of contracts, adversely impacting business operations and financial performance. Significant disruptions in IT systems or breaches in data security pose risks to operational continuity. Foreign exchange fluctuations, political and economic uncertainties, and evolving laws and regulations in India including corporate and tax laws, also present ongoing risks.

Challenges, Risks, and Concerns:

Risks are inherent in any business, and the interplay between opportunities and challenges requires vigilant management. Our Company addresses these through a robust risk management framework encompassing identification, mitigation, and continuous monitoring of risks. We remain committed to maintaining a competitive edge by innovating new service offerings while upholding stringent quality standards, regulatory compliance, and exceptional customer service.

3. Segment Wise or Product Wise Performance

The Company is providing services of Testing and Contract Research in the fields of Clinical Research, Pre-Clinical Research, Biopharma services, Analytical Testing & Research and Environmental studies. Since the inherent nature of all these services are inter related and governed by similar set of risks and returns and operating in the same economic environment, segment reporting is not applicable. Accordingly, for reporting purposes, all these services are treated as single business and geographical segment. The said treatment is in accordance with Accounting Standard-17 Segment Reporting.

4. Business Outlook

Our Company is committed to delivering quality services while ensuring the safety of its employees and exercising business prudence. We will continue to dedicate our efforts toward achieving strong results within our scope of operations. The Company remains focused on enhancing productivity and efficiency, reducing costs, innovating service offerings, and developing profitable business streams. By optimizing resource utilization, we aim to steadily progress toward our strategic goals.

5. Internal Control system and their adequacy

The Company has established a well-defined internal control system that is adequate and commensurate with the size and nature of its business. An Internal Audit department is in place to ensure effective monitoring. Robust internal controls have been implemented to safeguard all assets against loss, misuse, or unauthorized disposal. Additionally, all transactions are duly authorized, accurately recorded, and properly reported. ERP-based controls further strengthen the reliability and integrity of the Companys financial and operational processes.

6. Discussion on financial performance with respect to operational performance

The Companys financial performance for the financial year ended March 31, 2025, the Company has a decline in revenue and reported a net loss both on a standalone and consolidated basis.

On a standalone basis, the revenue from operations was 11,274.22 thousand compared to 85,579.11 thousand in the previous year. The Company incurred a loss after tax of 26,594.08 thousand against a profit of 510.52 thousand in the prior year. Earnings per share stood at a loss of 4.21 compared to earnings of 0.08 per share.

On a consolidated basis, revenue from operations was 19,635.52 thousand, down from 97,228.54 thousand in the previous year. The net loss after tax for the year was 47,748.77 thousand compared to a loss of 23,158.83 thousand in the previous year. Earnings per share on a consolidated basis were 7.56 loss compared to 3.67 loss per share in the previous year.

The decline in financial performance is attributed to the challenging market conditions and operational factors during the year. The Company remains committed to strengthening its business and improving financial results through enhanced operational efficiencies and strategic initiatives.

7. Material developments in human resource/ industrial relations front, including number of people employed

At Vanta Bioscience Limited, we believe that people embody our most fundamental asset. It is our endeavour to offer a fair, transparent and merit-based working environment, which promotes constant learning, individual and organizational development. Human Resource is one of the key strengths of the Company. At the end of the financial year 31.03.2025, the Company had 36 employees. The dedication and expertise of our team has helped us chart a steady growth path.

8. Details of significant changes in key financial ratios, along with detailed explanation thereof

	Standalone basis		Consolidated basis
Particulars	FY 2024-25	FY 2023-24	FY 2024-25	FY 2023-24
Debtors turnover ratio	0.65	3.66	0.78	3.10
Inventory turnover ratio	NA	NA	NA	NA
Interest coverage ratio	(0.39)	0.79	(0.64)	0.05
Current ratio	0.56	0.85	0.58	0.75
Debt equity ratio	1.78	1.28	18.52	4.70
Operating profit margin (%)	(643.18)%	(90.77)%	(643.18)%	(90.77) %
Net Profit margin (%)	(235.88)%	0.60%	(676.83)%	(88.52)%
Return on Net worth (%)	(42.13)%	0.81%	(75.65)%	(36.69) %

Reason for more than 25% change in Inventory turnover ratio and Interest coverage ratio

Consolidated basis : The Interest Coverage Ratio has declined significantly from 0.05 in FY 2023-24 to -0.64 in FY 2024-25. This adverse change is primarily attributable to the substantial increase in operating losses during the current financial year, which has resulted in negative earnings before interest and taxes (EBIT). Consequently, the Companys ability to cover interest expenses from operating profits has deteriorated markedly. The higher interest burden combined with increased losses has led to the significant reduction in this ratio.

Standalone basis : The Interest Coverage Ratio has declined significantly from 0.79 in FY 2023-24 to (0.39) in FY 2024-25, representing a negative change of over 149%. This sharp decline is primarily due to increased operating losses during FY

2024-25, which resulted in insufficient earnings before interest and taxes to cover the interest expenses. The negative ratio indicates that the Company incurred losses large enough to not only cover interest costs but also impact overall profitability, reflecting increased financial stress during the year.

9. Details of any change in return on net worth as compared to the immediately previous financial year

The Return on Net Worth for the financial year 2024-25 is negative, reflecting the net loss incurred during the year. This change is primarily due to the increased losses, as explained earlier in the notes on Business Performance. The decline in profitability and erosion of net worth have contributed to this negative return as compared to the previous financial year.

10. Disclosure of Accounting Treatment

Accounting Treatment of the company is in compliance with existing accounting standards, applicable laws and regulations. The financial statements are prepared in compliance to the Accounting Standards as laid down under the provisions of section 133 of the Companies Act, 2013.

Cautionary Statement:

Statements in this Management Discussion and Analysis describing the Companys objective, projections, estimates and expectations may be forward looking statements within the meaning of applicable laws and regulations. Certain observations made on the industry and other players also reflect on opinion by the management and the management accepts no liability on such opinions. Actual results might differ materially from those either expressed or implied.

		For and on behalf of the Board
		Vanta Bioscience Limited
	Sd/-		Sd/-
	Dopesh Raja Mulakala	Padmanabhuni Venkata Appaji
	Managing Director	Director
	DIN: 01176660	DIN: 02614167
Place: Hyderabad
Date: 06.09.2025