Windlas Biotech Ltd Management Discussions

ECONOMIC OVERVIEW

WORLD ECONOMY VIS-A-VIS INDIAN ECONOMY

Indias growth continues to be resilient despite some signs of moderation in growth, says the World Bank in its latest India Development Update, the World Bank Indias biannual flagship publication. The Update notes that although significant challenges remain in the global environment, India is one of the fastest growing economies in the world.

Many market analysts believe that this could well be Indias decade. This is despite the World Banks fear that the ongoing slump in global economic growth will likely result in a "lost decade". There are enough reasons and data to back this claim. Despite continuing global uncertainties, recent data revisions by India suggest that the economy has fared better than previously believed. The International Monetary Fund (IMF) expects India to grow by 5.9% in FY 2023-24 and by an average rate of 6.1% over the next five years.

The Reserve Bank of India has withdrawn accommodative measures to rein in inflation by hiking the policy interest rate. Indias financial sector also remains strong, buoyed by improvements in asset quality and robust private-sector credit growth. Increase in domestic consumption is another bright spot in the growth of Indian Economy.

With the impacts of the COVID-19 pandemic still reverberating worldwide, the war in Ukraine ignited a new crisis, disrupting food and energy markets, and worsening food insecurity and malnutrition in many developing countries. High inflation unleashed an erosion of real incomes and a global cost-of-living crisis that has pushed millions into poverty and economic hardship. Persistently high inflation,which averaged about 9 per cent in 2022, has prompted aggressive monetary tightening in many developed and developing countries.

The central government is likely to meet its fiscal deficit target of 5.9 percent of GDP in FY 2023-24 and combined with consolidation in state government deficits, the general government deficit is also projected to decline. As a result, the debt-to-GDP ratio is projected to stabilize. On the external front, the current account deficit is projected to narrow to

2.1 percent of GDP from an estimated 3 percent in FY 2022-23 on the back of robust service exports and a narrowing merchandisetradedeficit.1

INDUSTRY OVERVIEW

Indian Pharmaceutical Market in the context of Global Pharmaceutical Market

Global Pharmaceutical Market size was valued at

USD 209.85 billion in 2021 and is poised to grow from USD 222.4 billion in 2022 to USD 352.98 billion by 2030, growing at a CAGR of 5.9% during the period 2023-2030.The pharmaceutical sector has grown quickly in recent years, and by 2023 it is anticipated to reach USD 1.5 trillion².

In contrast, the India Pharmaceutical Market is expected to register a CAGR of 10.7% during Year 2023 to 2028, which is almost twice the global growth rates. India is the largest supplier of generic medicines. It manufactures about 60,000 different generic brands across 60 therapeutic categories and accounts for 20% of the global supply of generics. Because of the low price and high quality, Indian medicines are preferred worldwide, making it "pharmacy of the world".³ The Indian Pharmaceutical industry plays a prominent role in the global pharmaceutical industry. Major segments of Indian Pharmaceutical Industry include generic drugs, OTC medicines, bulk drugs, contract research & manufacturing, biosimilars and biologics.

India also is home to more than 3,000 pharma companies with a strong network of over 10,500 manufacturing facilities as well as a highly skilled resource pool.

Trend in Pharmaceutical Industry

After a shock in 2020, growth rates in Global Pharmaceutical markets are back to pre-pandemic levels in most segments.⁴ The growth is mainly driven by innovative drugs and an increasing demand for healthcare, especially in emerging countries. Compared to the revenue generated by prescription drugs, OTC pharmaceutical only play a minor role. The market for prescription drugs, for its part, is dominated by original products. This means that the larger number of OTC products, generics, and biosimilars sold cannot counterbalance the significantly higher prices of original products.

Compared to other countries, Indias pharmaceutical and healthcare industry has grown tremendously in the recent years, and overall outlook remains robust and positive. India has a large pool of scientists and engineers with a potential to steer the industry ahead to greater heights. India is rightfully known as the "pharmacy of the world" due to the low cost and high quality of its medicines.

Indian pharmaceutical industry is known for its generic medicines globally. Transformed over the years as a vibrant sector, presently Indian Pharma ranks third in pharmaceutical production by volume. The Pharma sector currently contributes to around 1.72% of the countrys GDP.

Major growth drivers in India Pharmaceutical market are under-served market, penetration, coverage, upcoming patent expiries and Government policies that promote generic acceptance and dependency for e.g., Ayushman Bharat and Jan Aushadhi Yojna.

The Pharma sector has seen a lot of investments and developments in the recent past:

X The cumulative FDI equity inflow in the Drugs and Pharmaceutical industry is US$ 21.22 billion during the period April 2000-December 2022. This constitutes almost 3% of the total FDI inflow received across sectors.

X The foreign direct investment (FDI) inflows in the Indian drugs and pharmaceutical sector reached US$ 1,414 million between in FY 2021-

22.

X The Indian pharmaceutical industry generated a trade surplus of US$ 15.81 billion in FY22

Some of the initiatives taken by the Government to promote the pharmaceutical sector in India are as follows:

X Ayushman Bharat Digital Mission (ABDM):

X Under the ABDM, citizens will be able to create their ABHA (Ayushman Bharat Health Account) numbers, to which their digital health records can be linked. This will enable creation of longitudinal health records for individuals across various healthcare providers and improve clinical decision making by healthcare providers.

X The pilot of ABDM is completed in the six Union

Territories of Ladakh, Chandigarh, Dadra & Nagar Haveli and Daman & Diu, Puducherry, Andaman and Nicobar Islands and Lakshadweep with successful demonstration of technology platform developed by the NHA.

X During the pilot, digital sandbox was created in which more than 774 partner solutions are undergoing integration. As on February 21, 2022, 173,369,087 Ayushman Bharat Health Accounts have been created and 10,114 doctors and 17,319 health facilities have been registered in ABDM.

X Scheme for Development of Pharma industry –

Umbrella Scheme:

X The Department of Pharmaceutical has prepared an Umbrella Scheme namely

‘Scheme for Development of Pharma industry. Which comprises of the following sub schemes:

X Assistance to Bulk Drug Industry for Common

Facilitation Centres

X Assistance to Medical Device Industry for

Common Facilitation Centres

X Assistance to Pharmaceutical Industry (CDP-PS)

X Pharmaceutical Promotion and Development

Scheme (PPDS)

X Pharmaceutical Technology Upgradation Assistance Scheme (PTUAS)

X As per the Union Budget 2022-23:

X Rs. 3,201 crore (US$ 419.2 million) has been set aside for research and Rs. 83,000 crore

(US$ 10.86 billion) has been allocated for the Ministry of Health and Family Welfare.

X Rs. 37,000 crore (US$ 4.83 billion) has been allocated to the ‘National Health Mission.

X Rs. 10,000 crore (US$ 1.28 billion) has been allocated to Pradhan Mantri Swasthya Suraksha Yojana.

X The Ministry of AYUSH has been allocated Rs. 3,050 crore (US$ 399.4 million), up from Rs. 2,970 crore (US$ 389 million).

X In May 2021, under Atmanirbhar Bharat 3.0, Mission COVID Suraksha was announced by the Government of India to accelerate development and production of indigenous COVID vaccines. To augment the capacity of indigenous production of Covaxin under the mission, the Department of Biotechnology, Government of India, provided financialsupport in the form of a grant to vaccine manufacturing facilities for enhanced production capacities, which is expected to reach >10 crore doses per month by September 2021.

X The Indian Government has taken many steps to reducecostsandbringdownhealthcareexpenses.

The National Health Protection Scheme, which aims to offer universal healthcare, the ageing population, the rise in chronic diseases, and other government programmes, including the opening of pharmacies that offer inexpensive generic medications, should all contribute to boost the Indian pharmaceutical industry. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies. In addition, the thrust on rural health programmes, lifesaving drugs and preventive vaccines also augurs well for the pharmaceutical companies.

The favorable growth conditions and support from the government are paving the way for exponential growth in the India Pharma Industry. With the Indian Economy becoming the 5th largest in the world, there is no better time for India to take the front seat as the global producer of quality pharmaceutical products.

GLOBAL PhARMACEUTICAL CDMO

MARKET ANALYSIS

Global Contract Development and Manufacturing

Organization (CDMO) market size was USD 217.6 billion in 2021 and is poised to grow from USD 237.62 billion in 2022 to USD 524.67 billion by

2023, growing at a CAGR of 9.2% during the period 2023 -2030.⁵

The Global CDMO Companies are managing both the discovery and invention of new pharmacological compounds as well as their outsourced manufacturing. In order to shorten the timetable involved in the drug development process, many Innovators Pharmaceutical companies are strategically partnering with CDMOs. Innovators have a very high margin profile which enables them to involve CDMOs right from drug discovery stage and share the margins.

INDIA CDMO MARKET ANALYSIS

The Pharmaceutical Contract Development and Manufacturing Organization (CDMO) Market revenue in India was valued at USD 15.63 billion in 2023. It is expected to reach USD 26.73 billion by 2028, growing at a CAGR of 11.34% during the forecast period (2023-2028).

The pharmaceutical sector in India produces a variety of bulk pharmaceutical, which are active pharmaceutical ingredients that serve as the basic raw materials for formulations. Formulations comprise the remaining four-fifths of the industrys output, with bulk pharmaceuticals making up about one-fifth.

With a CAGR of 11.34% over the course of the projected period, India is the CDMO markets largest and fastest-growing geographical region. This is because of the enormous and quickly expanding population, which is demanding better access to medications. Additionally, the emergence of low-cost generics has made pharmaceutical more accessible, which has contributed to the regions market growth. CDMOs are prospering because of an increase in the

GDP per capita, government healthcare initiatives, and an increase in the rate of urbanization, all of which have increased access to pharmacies and doctors for large segments of the population.⁶

Indian CDMOs are serving mainly to the Generic players as against Global CDMOs serving to Innovators. Windlas is the CDMO of choice for the Generic Players for Indian and overseas markets. Our core area of activity is developing and manufacturing generic medicines for Indian and overseas markets.

GLOBAL INJECTABLE DRUG MARKET

The injectable drugs market is expected to be valued at USD 510.32 billion in year 2022, with a CAGR of

7.88% over a period of year 2023-2028.

The rising prevalence of chronic diseases such as cancer, diabetes, cardiovascular diseases, and others is the key factor driving the market growth. Furthermore, the rising focus of companies on developing injectable drugs for new therapeutic classes is expected to increase their adoption by physicians and patients and their availability in the market, which in turn is anticipated to fuel market growth.

INDIAN INJECTABLE DRUG MARKET

The Government of India is extensively investing in research and development (R&D) activities to support the introduction of innovative generic injectables and provide effective drug administration, thereby enabling faster recovery of patients. This, along with the expanding healthcare industry, is contributing to the growth of the market in the country.

The Indian Market is expected to reach US$ 4.9

Billion by 2028, exhibiting a CAGR of 12.4% during the period (2023-2028).⁷

COMPANY OVERVIEW

Windlas is a homegrown Generic Formulations Contract Development and Manufacturing Organization (CDMO) player. Across the value chain it provides a comprehensive range of CDMO products ranging from product development, licensing and commercial manufacturing of generic products, including complex generics for its domestic customers i.e., Generic Formulations CDMO vertical and consumers around the world i.e., Exports vertical. Our foray into Trade Generics and Institutional vertical delivers on our strategy of providing accessible, affordable and authentic medicine to the under-served geographical areas of India situated in B & C class cities and small towns.

Across all three verticals we continue to own all intellectual property related to the formulation development, manufacturing process and technology and the regulatory permissions for almost all products.

As on March 31, 2023, we have license to manufacture 5,370 products across our plants with an installed annual capacity of 7438 million. As of now, the Company has four OSD/OLD manufacturing facilities located in Dehradun, Uttarakhand, India. We are also in the process of setting up our fifth

Injectables plant in Dehradun.

We are proud to say that during FY 2022-23, the Company has catered Generic Formulations CDMO products to seven of top ten and fifteen of top twenty Indian Pharmaceutical Formulations Companies. Over the years, we have been growing our Trade Generics and Institutional vertical through channel partners, enhancing product portfolio and expanding in new geographies.

Our mission

Windlas Biotech Limiteds mission is to serve the unmet healthcare needs of society by accelerating drug research of our customers, by manufacturing high-quality products and by creating innovative solutions that improve affordability of medicines.

The Company aims to accelerate the drug research of our clients, manufacture complex products at high volume and create innovative solutions that improve the affordability of medicines for all.

The Companys objective has been to serve the people at the bottom of the pyramid. We endeavor to serve this large market by providing quality products at affordable prices and making health benefits available to the most marginalized and remotely distant population. We have aligned synergies with the Govt. of Indias plans, programs and vision to take quality and affordable healthcare to all.

Our Expertise

Manufacturing

We have manufacturing capabilities for both solid and liquid pharmaceutical dosage forms. Our capabilities include:

X formulation development, X technology scale-up and

X full-scale commercial manufacturing.

At our state-of-the-art plants, we manufacture:

X Formulations,

X Solid Pharmaceutical Dosage Forms X Liquid Pharmaceutical Dosage Forms

Our product portfolio predominantly overlaps with Fast Growing Chronic segment and Complex Generic segment:

Research and Development (R&D) at its Core

X The Company is focused on developing and launching new complex generic products:

i) which are difficult to handle or formulate, ii) needs extended-release profile, iii) needs pairing with a device to make a drug-device combo primarily in solid and liquid pharmaceutical dosage forms to provide specialized capabilities to our customers especially for high potency, controlled substances, and low-solubility products.

X Our R&D laboratory is recognized as an in-house

R&D unit by the Department of Scientific and

Industrial Research, Ministry of Science and Technology, Government of India.

X We use our own R&D resources to develop, optimize and standardize our formulation and manufacturing process, and conduct the required stability testing as well as conduct clinical studies through qualified third- party contract research organizations to obtain the requisite regulatory licenses required to manufacture such complex generic products.

R&D highlights

X The main focus is on affordable, generic products. experienceX Significant helps us in development of Multi-Drug Products, backed -up by a strong medical affairs and regulatory affairs team,

X Consistent investment on R&D expenditure over the years has led to development of innovative products like:

o Chocolate flavored chewable tablets o Dispersible tablets o Sustained release products o Novel Formulations of Existing Molecules

During FY23, Windlas Biotech progressed with its operations with astute focus on growth and expansion having a commitment towards building sustainability in our operations and business growth for future.

During FY23, following have been the key highlights of our operations and strategic initiatives:

X Revenue Growth:

The company witnessed its highest ever revenue numbers during FY 2022-23. Overall revenue grew by 10% to Rs. 5131 million, Generic Formulation CDMO Vertical grew by 5%, Trade Generics and Institutional Vertical grew by 49% and Exports Vertical declined by 5%. first to launch

X Profitability Growth:

EBITDA of company grew by 14.9% from Rs. 524 million to Rs. 602 million, PBT grew by 25.2% from Rs. 456 million to Rs. 570 million and PAT grew by 11.9% from Rs. 381 million to Rs. 426 million as against FY 2021-22.

X Generation of healthy Net operating cash flows:

During the year, the Company generated a

Net operating cash flow of Rs. 610 million.

This has been one of the key focus areas of the management, which shows that the

Company has a strong and financially viable business model. It also proves beyond doubt that we are a strongly entrenched Company with a near perfect business model and vision to grow, simultaneously creating value for our stakeholders.

X Strong liquidity position:

The Company has a free cash balance of Rs. 1378 million as on March 31, 2023. It shows ability of the Company to have smooth business operations, counter any adversities and to invest and execute new any growth plans. To leverage the free liquidity, the company is also actively looking at prospective inorganic growth opportunities to obtain synergies, diversify its product line and achieve scale.

X Dividend:

In line with our dividend policy and our philosophy of sharing returns with stakeholders, the company paid 20% consolidated net profits of FY 2021-22 i.e., Rs. 76 million (Rs. 3.5 per share) to shareholders.

X Buy back of equity shares:

During the year, the Company successfully completed the buyback of 9,95,800 (Nine lacs ninety-five thousand eight hundred) equity shares during the period from November 21, 2022 to May 3, 2023. The promoters did not participate in Buyback program of the company. An amount of Rs. 250 million was utilised for completing the buy back. This buyback fulfilled the following objectives:

To return surplus funds to the equity shareholders of the Company.

To improve return on equity, by reducing in equity base, thereby leading to a long-term increase in the value of shareholders.

X Full utilisation of IPO proceeds:

We are pleased to inform that the entire IPO proceeds of Rs. 1650 million has been utilized towards the stated objectives.

X Injectables Facility:

The construction of the injectable plant is in full swing and we expect to achieve mechanical completion by end of Q2 of FY 2023-24. The Company has utilised the complete proceeds raised for injectables facility by March 2023.

Vertical-Wise Performance

FY 2022-23

The Generic Formulations CDMO Business Vertical – Growth, Features and Strategies

With increasing globalization and focus of large players on cutting costs and optimizing operations,

>CDMOs have seensignificantacceptance in the industry worldwide over the past few years. With the growing demand for generic medicines and biologics, focus on reducing time to market (TTM), the capital-intensive nature of the business, and the complex manufacturing requirements, many pharmaceutical companies have identified the potential benefits of contract manufacturing and outsourcing manufacturing activities. Pharmaceutical companies are also gradually outsourcing research and development (R&D) activities to academic and private Contract Research Organizations (CROs) to reduce drug-development timelines and costs.

For FY 2022-23 the revenue for CDMO vertical was Rs. 4028 million up 5% YoY.

Within India, we have been one of the leading Domestic Generic Formulations CDMO Companies. We have positioned the Company as an integrated Contract Development and Manufacturing Organization, providing development, and manufacturing of pharmaceutical products like

Fixed dosage, Fixed dosage plus modified release,

Customized generics, chewable/ dispersible and plain oral solids etc.

Over the years, we have been focusing on our multipronged Generic Formulations CDMO strategic priorities. These include identifying products with rising demand and expanding markets for them, customer acquisition and growing revenue pie from the existing customers. The company has also focused on de-risking its client concentration.

We firmly believe that the company will accelerate growth trajectory through these initiatives .

Trade Generics and Institutional Vertical – Growth, Features and Strategies:

The Company has been targeting remote, difficult but bigger markets by bypassing the large distributors and approaching direct markets through stockiest thereby saving channel cost, ensuring speed to market with quality. With this model, we are penetrating approx. 6.5 lakh villages where more than 60% of the population lives. They are unlike the 400 cities/ towns which have 1 Lakh plus population. The Company also serves various institutions i.e., Government institutions, Hospitals etc.

Companys Trade Generics and Institutional vertical grew by a whopping 49% in FY 2022-23. This vertical hold very high potential and great headroom for growth.

To keep our growth trajectory intact in this vertical, we continued to focus on our strategy of providing accessible, affordableand authentic medicine to the under-served geographical areas of India situated in B & C class cities and small towns.

Feature

X Distributed our products through approx. 700

Stockists & Distributors spread across 29 states. X Our products are generally low costs and qualitative compared to other branded generics. X Focussed customers are the people in rural areas who are less privileged to access the healthcare facilities in normal course.

X Trade generics uses are further encouraged by

Government of India push for schemes like Jan Aushadhi Yojana

Exports Business Vertical – Growth, Features and Strategies

The company continues to work towards initiatives in the export vertical, such as the filing of more dossiers and focusing on entering emerging and semi regulated markets through our own brand and our Customers/Partners brands.

During the year, we exported around 74 products in 10 countries, including Generic Medicines & Health Supplements to various countries.

For the export verticals, FY 2022-23 revenue for exports stood at Rs. 198 million.

Quality,health,SafetyandEnvironment

Windlas Biotech Limited has a well-definedelectronic

Quality Management System in place across all manufacturing facilities. Our Company ensures that all products manufactured are suitable for their intended use in terms of safety, identity, strength, quality and purity. We ensure that the end products are in conformity with the various regulatory directives and CGMP (Current Good Manufacturing Practices). Our Company is constantly working on innovative technologies to create efficient waste management, Wastes are collected in separate waste disposal area and disposed through authorized outer vendor within ninety days following norms of State Pollution Control Board. Our Companys primary focus has been around reducing emission and promoting cleaner environmental solutions.

Eco-friendly boiler Briquette fireboiler is used at site, along with other common utilities to adjacent plant to minimize environmental load. We have significantly reduced water consumption through our innovative production processes and introduced rainwater harvesting system at site.

Fuminghoodwith lab to control the volatile organic carbon. To reduce industrial emission at sites, air conditioning system and heat ventilation system were also installed. To optimize entire effluent stream, our Company continuously innovated several techniques to reduce effluent generation in the process, Additionally, introduced UF plant to treat effluent discharge water and recirculate into the system. Our Company is continuously innovating processes to reduce waste by maintaining higher yields. During the year, our Company conducted various training programs in all units regarding the use and value of personal protective equipment, safety awareness, and safety actions. To monitor the fire have fire hydrant smoke and heat detectors. Fire safety equipments are maintained and monitored as per specified frequency.

Material Developments in human Resources / Industrial Relations Front, Including Number Of People Employed.

Our employees contribute significantly to our business operations. As of March 31, 2023, we had 1049 permanent employees. In addition, we have entered into arrangements with third-party personnel companies for the supply of contract labour. The number of contract labourers varies from time-to-time based on the nature and extent of work contracted to independent contractors. We train our employees on a regular basis to increase the level of operational excellence, improve productivity and maintain compliance standards on quality and safety. We also conduct training workshops for our employees to develop a variety of skill sets and organize modules at regular intervals to promote teamwork and personal growth of employees. In addition, our Company has adopted the ESOP 2021 with the aim to attract, retain and motivate the key talents by way of rewarding their performance and motivate them to contribute to the overall corporate profitabilit Our employees are not growth and unionized into any labour or workers unions and we have not experienced any major work stoppages due to labour disputes or cessation of work in the last three years.

Information Technology

An appropriate Information Technology (IT) infrastructure is important in order to support the growth of our business. Our IT systems are vital to our business and we have adopted an IT policy to assist us in our operations. The key functions of our IT team include establishing and maintaining enterprise information systems and infrastructure services to support our business requirements, maintaining secure enterprise operations through, among others, risk assessment, planning and mitigation policies, and identifying emerging technologiesthreat, all our whichunits may be beneficial to our operations.fire We have implementedextinguishers, an enterpriseand resource planning solution system to handle purchase of goods, services, inventory, supply chain management, invoicing, accounting, payments, collections, reconciliation, taxation, regulatory compliance, human resources management and other business functions. We have also implemented a sales personnel management system which has the capability to record data at the headquarter-level as well as in relation to each employee, including presenting analysis and historical trends. It is capable of importing ERP data and generating reports which assist in effective management. The integration of our information technology systems with our sales and distribution infrastructure enables us to standardize our processes, reduce cost, enhance productivity, improve workflow and communications and improve our risk control mechanisms.

The company has also implemented automation tools for quality management, paperless documentation and reducing the possibility of manual errors. Compliance is also tracked, Managed and controlled through an automated tool.

Risks and Concerns

Meeting pharmaceutical-industry challenges will mean recalibrating four strategic responses.

Responses, by strategic domain	From	To
Network and resilience firefighting	Solving for cost: reactive and	Solving for multiple variables: resillient, proactive,agile, and fast to market
Digital	Targeted, single use cases	Fully scaled and ready for ecosystem leadership
Operating model and ecosystem	Traditional hub contiguration centered on originators	End-to-end ecosystem of partners
Talent	HR-driven recruiting and training effort	Strategic workforce planning: reskilling and automation

The pharmaceutical industry has been affected by broader global trends, such as supply chain pressures. While the pharma industry is considered somewhat protected by its high inventory levels and long-standing dual sourcing, over a given ten-year period, the likelihood of supply chain disruptions still represents a potential loss of EBITDA. Windlas follows cost plus model and has a very less percentage of purchase as imports. The risk for the company hence is limited to delay in transferring the increase in cost to the customers.

Inflation has risen in recent months, leading to increasing costs for labor, raw materials, and transportation. Since pharma customers are not expected to fully absorb these cost increases, profit margins are under pressure.

A few major trends point to an industry tailwind; one of them is the advancement of digital and analytics tools. Digital tools, robots, and sensors are becoming cheaper and easier to access, and they can be used to capture all manner of raw data.

These global trends have six major implications for pharma companies:

X Rising operational complexity, X Increasing risk,

X Shifting capability requirements,

X Higher capital expenditure requirements, X Variable-cost increases, and

X Opportunities for savings

From a cost perspective, the pharma industry may see significantly increased capital expenditure requirements related to the construction of new sites and new digital infrastructure. Increases are also likely in variable costs in areas such as raw materials, transportation, and employee attrition, reskilling, and salaries.⁸

Risk Management at Windlas

Our risk identification and management activities are continuous and ongoing. Each functional area is responsible for assessing, articulating and controlling relevant risks.

Industry Risk	Any negative impact on the industry can impact the prospects of our Company. Windlas has presence across various geographies, we periodically evaluates various developments across the countries and identifiesany risks and implements immediate action.
	Any manufacturing or quality control issues may damage our Companys reputation, adversely affecting business, results conditions.
Operational Risk	Windlass facilities are all as per GMP standards. We also have a Quality team which does rigorous checks to ensure the quality and efficacy of the products as per customer standards. We also have in-house Quality Control and Quality Assurance team. We have electronic tools like QMS, LIMS, ERP and eLMS which were installed and used. Competition from domestic and international players.
Competition Risk	Our Company is focused on building economies of scale, two decades into the business, WBL has strengthened our business longterm relation with marquee customers. Our Company undertook R&D initiatives which focuses on reducing costs, improving efficiency and turnaround time.
Suppliers Risk	Profitability and margins are directly impacted by the volatility in prices. In case of a significant change in the raw materials prices and operational cost among others, profitability, too, will shift.
	Our Company has developed alternative suppliers to safeguard the raw material supply chain.
Financial	The revenues are spread across various currencies, any drastic fluctuations will.
Risk	Our Company has robust hedging strategy and framework in place to safeguard against fluctuations.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY.

The Company has a well-established internal controls framework, which is designed to continuously assess the adequacy, effectiveness and of internal controls. At Windlas, we believe that internal controls are the prerequisite of good governance and the management is committed to ensuring an effective internal controls environment, commensurate with the size and complexity of the business, which provides an assurance on compliance with internal policies, applicable laws, regulations, ensures accuracy of records, promotes operational protects resources and assets and overall minimize the risks.

An automated compliance management tool is installed and used by the Company to manage the compliances applicable to the Company. The documents are uploaded for each compliance, verified by the management. Quarterly compliance certificates are presented to the Board, alongside an annual third-party audit conducted at the conclusion of the fiscal year.

The Audit Committee of the Board periodically reviews these systems, which record transactions, assets, and report on developments timely. Internal audit is carried out by an independent firm

Chartered Accountants, Grant Thornton LLP. The Audit Committee also regularly reviews the periodic reports of the Internal Auditors. Issues raised by Internal Auditors and Statutory Auditors are discussed and addressed by the Audit Committee.

INTERNAL FINANCIAL CONTROLS

The Company has a well-established internal financial controls framework, which is designed to continuously assess the adequacy, effectiveness and efficiency of internal financial controls. The management committed to ensuring an effective internal financial controls environment, commensurate with the size and complexity of the business, which provides an assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

Changes in Key Financial Ratios

Details of significant changes (i.e. or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefore, including:

S. No.	Ratio	Value in FY22	Value in FY23	Increase/ Decrease	Percentage Change	Reasons for
						Significant* Change
1	Debtors Turnover Ratio	4.90	4.51	(0.39)	-8%
2	Inventory Turnover	6.05	4.88	(1.17)	-19%	Decreased, due to purchase of more inventory at the year ended 31st March 2023 to meet upcoming demand
3	Interest Coverage Ratio	0.03	0.01	(0.02)		re-payment -47% Significant of Debt amount in the FY 2021-22 which improvise Ratio for FY 2022-23
4	Current Ratio	4.07	2.92	(1.15)	-28%	Decrease due to increase in Trade Payable Balance as there are more purchase in the last Quarter of FY 2022-23
5	Debt Equity Ratio	0.02	0.00	(0.02)	-93%	Improvise due to Payment of Outstanding Debt in the FY 2022-23.
6	Operating Profit Margin (%)	11.3	11.7	0.4	4%
7	Net Profit Margin (%) or sector-specific equivalent ratios, as applicable	8.3	8.3	0.00	0%
8	Return on Net Worth As compared to the immediately previous financial year along with a detailed explanation thereof	12.98	10.69	(2.29)	-18%	Reduced due to increase in Average Equity share capital, even though Profit after Tax for the FY 2022- 23 is higher as compared to FY 2021-22.

CAUTIONARY STATEMENT

The Management Discussion and Analysis contains

‘forward-looking statements, identified by words like ‘plans, ‘expects, ‘will, ‘anticipates, ‘ believes, ‘intends, ‘projects, ‘estimates and on within the meaning of applicable securities laws and regulations concerning WBLs future business prospectsandbusinessprofitability. All statements that address expectations or projections about the future, the Companys strategy for growth, product development, market position, expenditures and financial results, are forward-looking statements.

All these prospects are subject to a number of risks and uncertainties and the actual results could materially differ from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, ability to manage growth, competition (both domestic and international), economic growth in India and the target countries worldwide, ability to attract and retain highly skilled professionals, time and cost overruns on contracts, ability to manage international operations, Government policies and actions with respect to investments, fiscal deficits, regulations, interest and other fiscal costs generally prevailing in the economy, etc. Past performance may not be indicative of future performance. The Company does not undertake to make any announcement in case any of these forward-looking statements become materially incorrect in future nor shall the Company update any forward-looking statements made from time to time by or on its behalf.