The Companys operating and financial review is intended to convey the Managements perspective on the financial and operating performance of the Company during the period 2022-23, and outlook for the current financial year. This Report should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in the Annual Report. This report is an integral part of the Directors Report.
The global economy faced headwinds in FY 2022-23, as inflation rose due to energy price hikes and supply chain disruptions caused by the Russia-Ukraine war and COVID-19 related lockdowns in China. Key developed economies slowed down and central banks struggled to contain inflation despite raising interest rates. As a result, the global economy contracted. However, there were signs of recovery by the end of the year, with India leading the way by growing at a brisk pace and inflation easing to more comfortable levels.
As we move into FY 2023-24, many countries will likely continue to implement tight monetary policies to combat inflation while avoiding recession. However, in the postpandemic world, we do not expect governments to deprioritise their pharmaceutical budget allocations. We believe that medical spending in high-income countries such as those in Western Europe, North America and Japan will remain high, as these countries continue to see high per capita usage of prescription drugs. We expect per capita usage of prescription drugs to grow in low-income countries and that the pharmaceutical market will continue to grow at a steady pace, as new products offset the loss of revenue from expiring patents.
Indian Economy and Consumer sector overview
The Indian pharmaceutical industry has been experiencing steady growth with a focus on generic medicines. It is expected that spending on pharmaceuticals in India will continue to increase, with a CAGR of 7.5 10.5% between 2023-27 to reach US$ 35-39 Billion annually.
The industrys continued focus on generics is a key factor to its growth, as they are typically priced lower than branded medicines. The industrys low-cost structure and its ability to produce large quantities of medicines have also made it a key player in the global pharmaceutical market.
The consumer health industry has demonstrated impressive resilience throughout the past three years of the COVID-19 pandemic. Despite the challenges posed by the outbreak, the industry has maintained steady growth, with categories such as Vitamins, Minerals, and Supplements (VMS) stepping up to compensate for the shortfalls in Cold/flu and Pain categories during periods of lockdown and social distancing. The global consumer healthcare (CHC) market is currently valued at US$ 175 Billion (MAT Q2 2022) and is expected to continue growing at a rate of approximately 6% annually over the next five years.
Year 2022-23 for the Company:
The year 2022-23 has been very eventful and challenging with the pandemic induced setbacks impacting sales.
Profits and margins:
The total revenue of the Company for the financial year under review was Rs.41.93 lakhs as against Rs.198.30 lakhs for the previous financial year. The company has incurred a net profit of Rs.22.56 lakhs for the financial year 2022-23 as against the net profit of Rs.184.62 lakhs for the previous year.
Risk management and Internal Control Systems:
The Company has established a well-defined process of risk management, wherein the identification, analysis and assessment of the various risks, measuring the probable impact of such risks, formulation of risk mitigation strategy and implementation of the same takes place in a structured manner. Though the various risks associated with the business cannot be eliminated completely, all efforts are made to minimize the impact of such risks on the operations of the Company. Necessary internal control systems are also put in place by the Company on various activities across the board to ensure that business operations are directed towards attaining the stated organizational objectives with optimum utilization of resources.
In this testing times of the current ongoing pandemic, apart from the traditional responsibilities of the HR department, such as ensuring equitable benefits and compensation, overseeing employee engagement and retention, enhancing diversity, handling workplace issues, the Company has remained very committed to safety of all its employees and partners.