Global Economic Overview

The global economy remained resilient through FY

2025 26, although growth continued to be shaped by geopolitical tensions, energy-market disruptions and evolving trade conditions. According to the International Monetary Fund (IMF), global growth is projected at 3.0% in 2026, followed by 3.4% in 2027. At the same time, global headline inflation is projected at 4.7% in 2026, reflecting the renewed inflationary pressures arising from the energy shock and geopolitical developments.

For businesses operating across global supply chains, the evolving trade environment, commodity-price movements and financing conditions continue to underscore the importance of cost discipline, operational resilience and prudent financial management.

Indian Economic Landscape

The Indian economy continued to demonstrate strong resilience during FY 2025-26, with real GDP growth estimated at 7.4%, maintaining Indian among the worlds fastest-growing major economies. Growth was broad-based, with services expanding by 9.1% and manufacturing by 7.0%, while construction grew by 7.0%, supported by continued economic activity and investment.

Looking ahead, the growth outlook remains positive, although global economic and geopolitical uncertainties continue to present risks. The International Monetary Fund (IMF) projects Indias real GDP growth at 6.4% in 2026, with growth expected to strengthen to 6.7% in 2027.

For the pharmaceutical industry, the broader economic environment remains supportive, with Indias expanding manufacturing base, growing healthcare requirements and increasing integration with global supply chains creating opportunities for pharmaceutical manufacturers. At the same time, businesses remain exposed to movements in input costs, energy prices, trade conditions and regulatory requirements.

Pharmaceutical Industry Overview

Indias pharmaceutical industry continued to strengthen its position as a major global supplier of medicines during FY 2025-26. Indias pharmaceutical exports reached US$31.11 billion, while drug formulations and biologicals remained the dominant segment, accounting for around 79% of the countrys pharmaceutical export basket. The sector continues to benefit from Indias established manufacturing capabilities, cost competitiveness and growing presence across domestic and international markets.

The industry continues to navigate evolving regulatory requirements, pricing pressures, fluctuations in the cost of APIs and other raw materials, and changing global trade conditions. At the same time, rising healthcare needs, broader access to medicines, and continued investment in domestic pharmaceutical manufacturing are supporting the sectors long-term growth prospects.

Within the formulations segment, demand spans multiple dosage forms and therapeutic applications, including tablets and capsules; oral powders, such as oral rehydration solutions (ORS); liquid oral preparations; and topical and external formulations, such as ointments, creams, gels, and lotions. These segments cater to a broad range of healthcare requirements and continue to provide opportunities for manufacturers with diversified formulation capabilities.

Against this backdrop, continued growth in healthcare demand, product diversification and the expansion of pharmaceutical manufacturing capabilities provide opportunities for Indian formulation manufacturers. Maintaining product quality, regulatory compliance, manufacturing efficiency and cost competitiveness remains critical to capturing these opportunities sustainably.

Company Overview

Zenith Drugs Limited is engaged in the manufacture of pharmaceutical formulations across dosage forms including tablets, capsules, ORS powders, liquid orals, ointments, creams, gels and liquid external preparations. The Company operates a WHO-GMP-certified manufacturing facility.

During FY 2025-26, the Company continued operations from its expanded manufacturing base, following the commencement of commercial production at its new facility in December 2024. The facility added manufacturing capabilities for tablets and liquid oral formulations.

The Companys manufacturing portfolio and capabilities provide a platform to serve diverse pharmaceutical requirements across its markets, with continued emphasis on quality and compliance.

39.7%, faster than the 28.4% growth in revenue), higher depreciation following capitalisation of the Companys new manufacturing facility, and increased finance costs on the additional borrowings availed to fund the facilitys expansion.

The Company recorded strong growth in revenue during FY 2025-26. Revenue from operations increased by 28.4% to 17,121.98 lakh from 13,332.00 lakh in FY 2024-25, while total income increased by 29.7% to 17,632.11 lakh from 13,592.57 lakh.

Total expenses increased by 35.0% to 17,071.84 lakh from 12,641.86 lakh, outpacing the growth in revenue. Consequently, EBITDA increased by 7.0% to 1,704.65 lakh from 1,593.78 lakh, while Profit Before Tax declined by 41.8% to 538.73 lakh from 926.07 lakh and Profit After Tax declined by 44.9% to 394.26 lakh from 716.06 lakh. Basic Earnings Per Share stood at 2.30, compared with 4.18 in the previous year. The decline in profitability, despite strong revenue growth, was primarily on account of a sharp rise in the cost of materials consumed (up

The Companys net worth increased by 5.7% to 7,332.18 lakh from 6,937.92 lakh. Overall, FY 2025-26 reflected healthy revenue growth alongside a higher expense base and a marked decline in profitability, highlighting the importance of continued focus on input-cost management and operational efficiency as the Companys new manufacturing capacity is scaled up.

Financial Ratio Analysis

The Companys key financial ratios provide a broader view of liquidity, leverage, operating efficiency and profitability during FY 2025-26.

Financial Performance - Standalone Results

(? in Lakhs)

Particulars	FY 2025-26	FY 2024-25	Change (%)
Revenue from Operations	17,121.98	13,332.00	+28.4%
Total Income	17,632.11	13,592.57	+29.7%
Total Expenses	17,071.84	12,641.86	+35.0%
EBITDA (PBT + Depreciation + Finance Cost)	1,704.65	1,593.78	+7.0%
Profit Before Tax	538.73	926.07	-41.8%
Profit After Tax	394.26	716.06	-44.9%
Earnings Per Share (Basic, \u20b91)	2.30	4.18	-44.9%
Net Worth (Shareholders\u2019 Funds)	7,332.18	6,937.92	+5.7%

Key Growth Drivers & Opportunities

Zenith Drugs is positioned to meet the ongoing demand for pharmaceutical products in domestic and export markets. Growth in healthcare needs, increasing access to medicines and the continued development of pharmaceutical manufacturing in India provide a supportive operating environment.

The Companys opportunities include strengthening its product portfolio, improving utilisation of manufacturing capabilities, enhancing operational productivity and maintaining a strong focus on quality and regulatory standards. Continued attention to working-capital management and cost discipline c0r support efficient growth as the business expands.

Key Risks & Challenges

Regulatory Risks: Evolving regulatory and quality requirements across pharmaceutical markets require continued compliance and robust quality systems.

Input Cost Volatility: Changes in the prices and availability of APIs, raw materials, packaging materials and other inputs may affect operating costs.

Supply Chain Disruptions: Logistics constraints, supplier dependencies and global disruptions may affect the availability and timely movement of critical inputs.

Geopolitical & Macroeconomic Risks: Changes in trade policies, currency movements, inflation, interest rates and geopolitical conditions may affect business conditions and export markets.

Competitive Pressures: Competition within the pharmaceutical industry, including pricing pressure in generic medicines, may affect margins and market positioning.

Operational Risks: Manufacturing interruptions, equipment-related issues, process inefficiencies and availability of skilled manpower may affect production and delivery.

Business Continuity Risks: Unforeseen operational, workforce, health, regulatory or other external disruptions may affect business continuity.

Mitigation Measures: The Company remains focused on strengthening sourcing and supplychain management, maintaining appropriate quality and compliance systems, improving operational efficiency, monitoring costs and managing working capital prudently. Portfolio diversification and continued attention to governance and risk management are expected to support business resilience.

Outlook & Future Strategy

The Company remains focused on building sustainable growth by strengthening its pharmaceutical manufacturing capabilities, expanding its product portfolio and improving operational efficiency. The continued growth of healthcare demand in India and international markets provides a favourable long-term opportunity for pharmaceutical manufacturers with a strong focus on quality and compliance.

Going forward, Zenith Drugs will continue to focus on disciplined execution, efficient utilisation of resources, working-capital management, cost optimisation and adherence to applicable regulatory and quality standards. The Company will seek to balance growth with financial discipline and operational efficiency, with the objective of creating sustainable value for its stakeholders.

Internal Control Systems and Their Adequacy

The Company has in place internal control systems commensurate with the size and nature of its operations, designed to provide reasonable assurance regarding the reliability of financial reporting, the safeguarding of assets, and compliance with applicable laws and regulations. These systems are supplemented by internal audit reviews conducted periodically, with findings and corrective action plans placed before the Audit Committee and the Board of Directors. The Audit Committee periodically reviews the adequacy and effectiveness of these controls, including in relation to key operating cycles such as procurement, sales, inventory and expenditure, and recommends improvements where required.

Human Resources and Industrial Relations

The Company recognises its employees as key to sustaining growth and operational efficiency, particularly as it scales up operations at its expanded manufacturing facility. During FY 2025-26, the Company continued to invest in strengthening its workforce, with employee benefits expense increasing to 911.07 lakh from 733.03 lakh in the previous year, reflecting the addition of manpower to support the new facility. The Company maintains a focus on workplace safety, skill development and employee welfare, and industrial relations remained cordial throughout the year, with no material disruption to operations.

Forward-Looking Statements

This Management Discussion and Analysis contains statements that may be considered forward-looking in nature. Such statements are based on the Companys current expectations, assumptions and assessments and are subject to various risks and uncertainties. Actual results may differ materially from those expressed or implied in such statements due to changes in economic conditions, market dynamics, regulatory requirements, input costs, business conditions and other factors beyond the Companys control. The Company undertakes no obligation to publicly update or revise any forward-looking statements, except as required under applicable laws and regulations.