Zim Laboratories Ltd Management Discussions

ECONOMIC REVIEW

World Economic Overview

The global economy stands at a critical juncture. After a prolonged and unprecedented period of shocks, it appeared to stabilise through much of 2024, marked by steady yet modest growth. Global GDP is projected to grow by 2.8% in 2025 and 3.0% in 2026, maintaining a pace similar to that of 2023. Despite substantial interest rate hikes by central banks aimed at restoring price stability, the global economy demonstrated resilience and withstood a series of mutually reinforcing shocks. However, growth remained subdued amid persistent uncertainty, weak investment, sluggish productivity, and elevated debt levels.

However, the global landscape has since shifted, as governments around the world have realigned their policy priorities in response to rising uncertainties. Geopolitical conflicts, escalating trade tensions, and elevated borrowing costs in several regions have emerged as significant risks. Further compounding these challenges, the ongoing war in Ukraine has pushed energy prices even higher, placing additional strain on energy-dependent economies.

World Economic Growth - An Overview

	Estimate	Projections
	2024	2025	2026
World output	3.3%	2.8%	3.0%
Advanced economies:	1.8%	1.4%	1.5%
United States	2.8%	1.8%	1.7%
Euro Area	0.9%	0.8%	1.2%
Emerging Markets and Developing Economies:	4.3%	3.7%	3.9%
Emerging and Developing Asia	5.3%	4.5%	4.6%
China	5.0%	4.0%	4.0%
India	6.5%	6.2%	6.3%
Middle East and Central Asia	2.4%	3.0%	3.5%

https://www.imf.org/en/Publications/WEO/lssues/2025/04/22/world-economic-outlook-april-2025

Future Outlook

Looking ahead, intensifying downside risks continue to dominate the global economic outlook, driven by escalating trade tensions and ongoing financial market adjustments. The global growth forecast has been significantly revised downward, reflecting an increasingly unpredictable environment. Divergent and rapidly shifting policy stances, coupled with deteriorating investor sentiment, are likely to result in tighter financial conditions. Both short- and long-term growth prospects are expected to be adversely affected by continued trade disputes and heightened uncertainty around trade policies.

The global growth forecast for the next five years stands at 3.1%, marking its lowest level in decades. However, moderating inflation and ongoing monetary easing in several economies could offer a modest boost to global economic activity in 2025. Advanced economies are expected to grow at a steady pace of 1.5% in 2024, with a marginal increase to 1.7% in 2025. In contrast, developing economies are projected to grow at an average rate of 4% across 2024 and 2025, slightly slower than in 2023.

At this critical juncture, it is imperative for nations to collaborate constructively to foster a stable and predictable global trade environment. Enhancing international cooperation and addressing structural imbalances and policy gaps will be crucial. Global headline inflation is projected to decline at a slightly slower pace, falling from 5.9% in 2024 to 4.5% in 2025. Advanced economies are expected to reach their inflation targets sooner than emerging and developing markets.

https://www.imf.org/en/Publications/WEO/

lssues/2025/04/22/world-economic-outlook-april-2025

India Economic Overview

Indias growth story remains a compelling narrative of ambition, innovation, and immense potential. According to the second advance estimates released by the National Statistics Office (NSO), under the Ministry of Statistics and Programme Implementation (MOSPI), Indias real GDP is projected to grow by 6.5% in FY25 . This follows a robust real GDP growth rate of 9.2% in FY24, the highest recorded in the past 12 years (excluding FY22). Headline inflation stood at 4.1% during the year under review, compared to 5.4% in the previous year, supported by strong, high - frequency macroeconomic indicators and reflecting a promising outlook for the years ahead.

The growth trajectory has been largely driven by a significant increase in government spending, a sharp rise in exports, higher capital expenditure, and strong growth in private consumption. These factors collectively reinforce the belief that Indias long-term growth story remains intact.

Despite the challenging global environment, India has emerged as a resilient economic powerhouse. The country is steadily moving up the global value chain and continues to hold its position as the worlds fifth-largest economy. This ascent is underpinned by solid economic fundamentals, ongoing structural reforms, robust domestic demand, prudent fiscal management, a high savings rate, and favourable demographic dynamics.

India GDP Current Growth and Future Projections (%)

	Estimate	Projections
	FY 2024-25	FY 2025-26	FY 2026-27
India	9.2	6.5	6.5

Future Outlook

India is well-positioned to take the lead in the global economic landscape, continuing to retain its status as the fastest- growing major economy. According to the World Banks Global Economic Prospects (GEP) report, Indias economy is projected to grow at a robust 6.7% in both FY26 and FY27— significantly outpacing global and regional counterparts. With global growth expected to remain at 2.7% in FY 2025- 26, Indias strong performance underscores its economic resilience and its growing influence in shaping the future of the global economy.

This sustained momentum is a testament to the countrys solid economic fundamentals and its capacity to navigate and thrive amid global uncertainties. Indias continued expansion reinforces its standing as a key driver of global growth and a critical contributor to the worlds economic stability and progress.

Industry Overview

Global Pharmaceutical Industry

The global pharmaceutical industry has surpassed prepandemic growth rates, demonstrating remarkable resilience in the face of inflation, geopolitical conflicts, and persistent supply chain disruptions. Novel therapies continue to be a major growth driver, with emerging markets such as China, India, and Latin America experiencing expansion rates exceeding 3%. Global medicine spending is projected to maintain this upward trajectory through 2028, underscoring sustained demand and innovation across the sector.

A key indicator of this recovery is the Eastern European Pharmaceutical market, where volume growth trends have reverted to pre-Ukraine conflict levels. Among the therapeutic areas, Immunology and Oncology are expected to witness robust growth in the coming years, with Compound Annual Growth Rates (CAGR) estimated at 1496-17% and 2%-5%, respectively. These projections highlight the industrys focus on advanced treatments and its adaptability in a rapidly evolving global landscape.

Key Growth Drivers in Therapeutic Medicine Usage:

• Immunology treatments have seen a 12% year-on-year (YoY) increase in usage. Even in developed markets, biosimilar competition has contributed to an incremental growth of 5%

• GLP-1 medicines continue to witness rapid adoption, particularly for the treatment of diabetes and obesity

• Usage of Anti-bacterial medicines, which was disrupted during the COVID-19 pandemic, is returning to normal; however, adult vaccination rates remain below the prepandemic trends

• Oncology treatments are expected to seethe launch of at least five new therapies over the next five years, with limited loss of exclusivity

• Auto - immune Disorders treatments growth is driven by a rising number of treated patients and the introduction of new therapies

Despite challenges such as manufacturer net sales declines due to confidential rebates, government discounts, and clawbacks, the global pharmaceutical market is projected to grow at a CAGR of 5%-8%, reaching USD 2.3 trillion by 2028. Global medicine spending is expected to increase by over USD 600 billion during this period.

While the five-year growth forecast for the U.S. Pharmaceutical market has been revised downward to 2%-5%, this still represents an improvement from earlier projections of-1% to 2%. The outlook for next-generation bio - therapeutics- including cell, gene, and RNA therapies - remains strong, with promising clinical and commercial prospects.

Indian Pharmaceutical Industry

The Indian Pharmaceutical Industry ranks as the third - largest globally in terms of Pharmaceutical production by volume and 14^th - largest by value. Valued at USD 65 billion in 2024, the industry is projected to reach USD 130 billion by 2030 and USD 450 billion by 2047. Contributing approximately 1.72% to Indias total GDP, the sector boasts a robust network of "3,500 manufacturing companies and "10,500 manufacturing units. (https://www.ibef.org/industry/pharmaceutical-india)

Indias Pharmaceutical sector has undergone massive expansion and is expected to capture "13% of the global pharmaceutical market, while continuously enhancing its quality, affordability, and innovation. According to IQVIA, the highest volume growth in the global pharmaceutical sector over the next five years is expected in India, China, and the Asia-Pacific region, with growth exceeding 3% CAGR.

The sector is growing at a CAGR of 9.43%, driven by strong domestic and international demand. This growth is supported by a large number of manufacturing plants adhering to Good

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Other References: Consolidated FDI Policy, Press Information Bureau (PIB), Media Reports, Pharmaceuticals Export Promotion Council, AIOCD-AWACS, IQVIA, Union Budget 2023-24, Interim Budget 2024-25.

Increasing Contribution to Global Pharmaceutical Market

India plays a crucial role in the Global Pharmaceutical Landscape:

• 50% of global vaccine demand

• 40% of generic medicines in the US

• 25% of all medicines in the UK

• 80% of global anti-retroviral drugs (for AIDS treatment), reinforcing its title as the "Pharmacy of the World"

India is also identified as a key "Pharmerging Market" (IQVIA).

Government Initiatives Supporting Growth

Recognising the sectors vast potential, the Government of India has implemented various initiatives to foster pharmaceutical industry growth:

1. Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP)

• Provides affordable, quality generic medicines

• "14,000 functional Jan Aushadhi stores as of H1 FY25

• Product range: 2,000+ drugs, 300+ surgical items

2. Production-Linked Incentive (PLI) Scheme

• Promotes domestic manufacturing of Key Starting Materials (KSMs)

• Supports the medical devices industry

3. Financial Support for Jan Aushadhi Kendras (JAK)

• In partnership with SIDBI, offers credit lines for store expansion

• Aims to strengthen the pharmaceutical ecosystem

(Source: Department of Pharmaceuticals & www. janaushadhi.qov.in)

Note: There is growing adoption of innovative products within government programmes, building on last years foundation and supporting the evolving needs of public healthcare initiatives.

Company Overview

ZIM Laboratories Limited ("ZIM" or "the Company"), established in 1989, specialises in the development, manufacturing, and supply of differentiated generic Pharmaceutical and Nutraceutical products in oral solid dosage forms. The Company offers both Pre-Formulation

Intermediates (PFI) and Finished Formulations (FF) across key therapeutic segments globally.

ZIMs innovative drug delivery solutions leverage cutting- edge technology platforms to enhance patient convenience and treatment adherence. With expertise in complex and differentiated generic products, ZIM employs advanced drug delivery techniques and diverse release patterns to provide effective and accessible healthcare solutions.

Key Therapy Areas

The key therapy focus areas include: Urology, Gastrointestinal, NSAIDs / Analgesics, Anti-infectives, Cardiovascular, Central Nervous System, and Vitamins & Supplements.

Dosage Offerings

The Companys dosage offerings include: Tablets, Dry Syrups, Directly Compressible (DC) Granules, Pellets, Capsules, Oral Thin Films (OTF), and Taste - Masked Powders.

Manufacturing Process Capabilities

ZIMs manufacturing process capabilities include: Oral film casting, Stability enhancement, Transmucosal and Multilayer film technologies, bi / multi - layer film casting, Active nanoparticulate granulation, Solvent-less processing, Taste masking, Solubility and Bioavailability enhancement, Multilayered pellets.

Proprietary and Non-Infringing Technology Platforms

• Micro-Emulsion Coating Technology (MECT)

• Pellet Cold Forming Technology (PCFT)

• Rapid Gelation Drug Release Technology (RGDRT)

• Matrix Pore Forming Tablet Technology (MAPOTAB)

ZIMs Innovative Products Basket, including New Innovative Products (NIP) and Oral Thin Films (OTF), is designed to drive high value revenue growth, expand the global footprint, and improve patient outcomes.

With a strong commitment to delivering high-quality healthcare solutions worldwide, ZIM continues to develop proprietary technology platforms and differentiated, value- added generics through continuous R&D efforts. The Company is a key supplier of both finished and semi-finished products across therapeutic areas in its targeted markets.

State-of-the-Art Manufacturing Facility & R&D Capabilities

ZIM operates state-of-the-art manufacturing facilities and a robust R&D centre, staffed with highly skilled professionals. These capabilities enable the Company to develop and manufacture high-quality medicines that meet global regulatory standards.

Key Certifications:

• EU-GMP

• WHO-GMP

• ISO 9001

• NSF/ANSI 455-2

Global Presence & Operations:

The Company has established subsidiaries at strategic locations - including India, UAE, Australia, and the EU - to support global operations, enhance operational efficiency, and ensure compliance with local regulations.

Additionally, ZIM has set up a Scientific Office (SO) in the UAE to facilitate the registration and marketing of its innovative Pharmaceutical and Nutraceutical products.

ZIMs integrated business model offers end-to-end product development solutions, covering:

Product Conceptualisation -> Product Development -> Dossier Development & Filing -> Marketing Authorisation (MA) Manufacturing & Supply

Key Offerings

The Companys product portfolio comprises value-added and complex generics, offered as both - Pre-Formulation Intermediates (PFI) and Finished Formulations (FF).

Pre - Formulation Intermediates are developed in collaboration with distribution partners to deliver tailor-made solutions for the development, sourcing, and marketing of differentiated generic products.

Additionally, Finished Formulations (FF) include branded generics, which are registered in select markets and launched through partnerships with local distributors and marketing companies.

The companys innovative product basket includes:

o New Innovative Products (NIP)

• Focuses on advancing innovation, featuring complex generic Pharmaceuticals developed using in-house technology platforms

• These next-generation complex molecules have the potential to become first- or second-generation advanced generics in select markets

o Oral Thin Films (OTF)

• Offers branded Pharmaceutical and Nutraceutical products delivered in a patient-centric, innovative film format

Performance Highlights

• Pharmaceuticals remained the primary revenue driver, contributing 75% to total revenue, while Nutraceuticals accounted for 25%

• Exports remained the key growth engine, accounting for 83% oftotal revenue

• NIP revenues reached Rs437 Mn, while the OTF segment contributed Rs186 Mn to operating revenue

• The combined of NIP + OTF to Total Operating Income was 19% including licensing fees

Export Business

ZIM Laboratories Limited continues to strengthen its global footprint through strategic partnerships, innovative R&D, and local presence and offices across regions. ZIMs diversified technology and product portfolio enables its presence in 50+ countries, including:

• Asia (including India), Africa, MENA (Middle East & North Africa), Latin America, and CIS

• Key developed and Pharmerging markets: EU, Turkey, Canada, Australia, BRICS, Saudi Arabia, and other high- GDP markets

To support this expansion, ZIM is actively strengthening its Business Development team across regions.

Key Filings and Business Updates

ZIM successfully completed EU re-accreditation through Portugal and also received NSF re-accreditation for its Orally Disintegrating Strips (ODS) Dietary Supplements.

In November 2024, ZIM established a Scientific Office in the UAE to support the registration and marketing of its Pharmaceutical and Nutraceutical products, enabling expansion across the MENA region.

In FY25, ZIM completed a total of 50 regulatory filings across key geographies. This included 23 NIP filings for 6 molecules, 17 OTF filings for 5 molecules, and 10 FF filings for 5 molecules. Of these, 5 NIP filings (for 4 molecules) and 6 OTF filings (for 2 molecules) were submitted in the EU, while 1 NIP and 1 OTF filings were completed in Australia through ZIMs Australian Subsidiary, ZIMTAS Pty. Ltd.

During the year, ZIM received 2 EU Marketing Authorisations for NIP products (Azithromycin Oral Suspension and Dimethyl Fumarate). In partnership with Neuraxpharm, EU-wide Marketing Authorisation was secured for Buprenorphine Sublingual Films across 24 countries. During the year, ZIM and its partners successfully secured 6 Marketing Authorisations for NIP, 7 for OTF, and 14 for FF products, marking a significant milestone in regulatory achievements.

Additionally, ZIM entered into a landmark licensing agreement with its UAE-based partner for its innovative Oral Thin Films (OTF) technology & products. This strategic collaboration enables local manufacturing and further strengthens the Companys presence across the GCC region.

ZIM entered into multiple licensing agreements with partners across the EU and other international markets, underscoring the commercial viability of its innovation-led product portfolio. Licensing income during the year amounted to Rs98 Mn.

Domestic Business

ZIMs operations focuses on delivering unique and differentiated Pharmaceutical and Nutraceutical products, to a diverse customer base, including central and state government agencies, as well as private-sector Pharmaceutical and Nutraceutical companies.

The Company supplies high-margin, value-added generic formulations under key government schemes, which helps mitigate risks associated with price volatility and delayed payments. Major initiatives include: Jan Aushadhi, Central Government Health Scheme (CGHS), Employees State Insurance Corporation (ESIC), and the Indian Railways.

ZIMs innovative formulations gained strong traction under central and state government schemes, with domestic revenues contributing 17% to Total Operating Income in FY25.

R&D - Driving Product Innovation

ZIM remains dedicated to developing differentiated generics by leveraging innovative and advanced drug delivery systems and proprietary manufacturing technologies. This innovation-first approach is powered by a robust R&D infrastructure, supported by a team of highly skilled, target- driven professionals and sustained investments in research and development.

Financial Overview
Ratio		FY25	FY24	YoY Change
Current Ratio	Times	1.39	1.43	-3%
Debt - Equity Ratio	O/ /o	44	45	0%
Debt Service Coverage Ratio*	Times	1.65	2.03	-19%
Return on Equity Ratio	O/ /o	4.96	7.86	-37%
Inventory Turnover Ratio	Times	2.00	2.54	-21%
Trade Receivable Turnover Ratio	Times	3.50	3.64	-4%
Trade Payable Turnover Ratio	Times	4.27	5.00	-15%
Net Capital Turnover Ratio	Times	5.84	5.39	8%
Net Profit Ratio	O/ /o	3.21	4.69	-32%
Return on Capital Employed	o/ /o	8.29	10.10	-18%
Operating Profit Margin	o/ /o	7.76	8.32	-7%
Basic EPS	Times	2.50	3.54	-29%
Interest Coverage Ratio	Times	2.58	4.41	-42%

(i) Return on Equity Ratio: Decreased by 37% in the current year due to decrease in profitability of the Group

(ii) Net Profit Ratio: Decreased by 32% in the current year due to decrease in profitability of the Group

(iii) Basic EPS: Decreased by 29% in the current year due to decrease in profitability of the Group

(iv) Interest Coverage Ratio: Decreased by 42% in the current year is mainly due to increase in the finance costs on account of working capital utilisation

"Earnings for Debt Service = Net Profit after tax + Depreciation and amortisation expense + Finance costs (recognised excluding lease), Debt Service = Principal Repayments + Finance costs (recognised excluding lease)

Future Outlook

ZIM is strategically positioned to capitalise on emerging opportunities in both domestic and international markets. The Company plans to leverage its expertise in innovative drug delivery solutions, strong market presence, and continuous innovation to expand its business in the years to come. By optimising its existing product portfolio, ZIM aims to grow its New Innovative Products (NIP) and Oral Thin Films (OTF), targeting high-potential markets and strategic partners, with a focus on increasing revenue from developed markets in FY26.

The Company remains committed to enhancing product life cycles and prioritising patient convenience through innovative technologies and differentiated offerings. ZIM aims to deliver value-driven products to its partners and patients across RoW and Pharmerging markets.

In the coming years, ZIM is set to build on strategic collaborations around the globe, expanding its reach and creating synergies through key partnerships. The Companys focus on R&D innovation will be reinforced by continued investments in bioequivalence studies, registrations, and advanced drug delivery technologies. These initiatives will support ZIMs penetration into both regulated and emerging markets, paving the way for growth, product diversification, and long-term success.

With a robust strategic approach, continuous regulatory filings, and a steadfast commitment to innovation, ZIM is well - positioned to achieve sustained growth and expand its global presence in the coming years.

Key Risks & Mitigation

1. Geo - Political and Economic Risk

Geo - political events, such as government or regime changes, modifications in trade and investment policies, and conflicts, can lead to political instability and impact financial markets. Rising inflation, financial sanctions, and trade restrictions may disrupt supply chains, increase commodity prices, and cause shortages of key resources, ultimately affecting industrial production worldwide.

Mitigation measures:

• ZIMs diverse geographic presence and product portfolio reduce dependence on any single region or product, mitigating geopolitical risks

• The Company has established alternative raw material sources, including domestic suppliers within India, ensuring business continuity

2. Registration and manufacturing approval delays

Regulatory approvals for registrations and manufacturing involve extensive processes, including plant audits, accreditations, and commercialisation steps. Delays in these processes can impact overall financial performance, especially of New Innovative Products (NIP) in the Developed and Pharmerging markets.

Mitigation measures:

• ZIM has adopted a multi-country registration strategy, filing simultaneously across multiple European and target markets

• Subject Matter Experts (SMEs) have been engaged to ensure compliance with regulatory guidelines and proactively mitigate procedural delays

3. Competition Risk

The Indian Pharmaceutical industry is highly competitive, with both large corporations and small - to - medium enterprises competing for market share. This results in pricing pressures and market fragmentation.

Mitigation measures:

• ZIM maintains a balanced mix of exports and domestic businesses across Pharmaceutical and Nutraceutical segments

• Strategic market expansion and strict regulatory compliance ensure ZIMs long-term sustainability

4. Compliance & Regulatory Risk

The primary regulatory body overseeing the pharmaceutical sector is the Central Drugs Standard Control Organization (CDSCO).

Recent Regulatory Developments (2024):

• Introduction ofthe Uniform Code of Pharmaceutical Marketing Practices (2024) to ensure transparency and ethical marketing

• Implementation of updated Schedule M guidelines requiring adherence to stricter regulations

• Strengthened drug quality standards and enhanced supply chain integrity

Mitigation measures:

• ZIM maintains EU - GMP and NSF / ANSI 455-2 certifications, ensuring adherence to the highest manufacturing and regulatory standards

• Regular third-party audits and compliance checks reinforce regulatory commitments

• Expert regulatory consultants ensure proactive compliance with evolving global standards

5. Cyber Security Threats & Data Protection Risk

The organisation faces an increasing risk of cyberattacks, data breaches, and intellectual property theft. These threats can result in the loss of sensitive data belonging to customers, partners, or shareholders, as well as financial losses and reputational harm.

Mitigation measures:

• Deployment of advanced cyber security frameworks with real-time threat detection

• Conducting regular audits and comprehensive employee training programmes

• Utilisation of data encryption, multi-layered security protocols, and adherence to global compliance standards

Opportunities and Challenges Opportunities

• Global demand for Indian Generics: Indias generic drugs market continues to expand, driven by cost - effectiveness and high-quality manufacturing

• Enhanced Regulatory Compliance: The Indian government has strengthened quality controls, enforcing adherence to Good Manufacturing Practices (GMP) under the revised Schedule M guidelines (December 2023)

• China Plus One Strategy: Amidst geopolitical uncertainties, global companies are shifting manufacturing operations from China to India, presenting a significant growth opportunity for Indian pharmaceutical manufacturers

Challenges

• Counterfeit and sub-standard drugs: WHO

estimates that 35% of the worlds counterfeit drugs originate from India, affecting the credibility of the pharmaceutical industry

• Cybersecurity Threats: The industry remains highly vulnerable to cyber-attacks due to the presence of sensitive proprietary drug data and patient information

• Price Volatility in Active Pharmaceutical Ingredients (APIs): Currency fluctuations, inflation, and policy changes impact API costs and pressure profit margins

• R&D Investment: Escalating research and development (R&D) costs exerts pressure on margins and require careful capital allocation

Technology & IT Infrastructure

In FY25, ZIM Laboratories Limited made significant strides in modernising its IT infrastructure, reinforcing data security, and aligning systems with long-term strategic goals. Key advancements include:

• ERP (Enterprise Resource Planning) & MIS (Management Information System): Continued implementation of an advanced ERP system, integrated with real-time MIS dashboards, enhanced transparency and efficiency in

R&D tracking, machine utilisation, and sales order management

• HRMS (Human Resource Management System) & QMS (Quality Management System) Upgrades:

HRMS modernisation improved recruitment and performance tracking, while Quality Management Systems (QMS) were upgraded to include Document Management System (DMS), Transportation Management System (TMS), and e-BMR to enable paperless operations and facilitate remote audits

• Analytical Software Modernisation: Upgraded core research platforms to a hybrid cloud/on - premises setup, improving scalability and performance for scientific teams

• Cybersecurity Enhancements: Deployed next- generation firewalls and executed comprehensive Vulnerability Assessment & Penetration Testing (VAPT) to enhance cyber defenses and ensure compliance

• Advanced R&D Support: Introduced a modern Waters HPLC system, to enhance research and quality assurance capabilities

• Resilience & Data Protection: Established a Disaster Recovery system on Microsoft Azure, implemented a 3-2-1 backup strategy, and deployed Veeam Enterprise Backup for secure and rapid recovery

• Private Cloud Transition: Migrated from physical servers to an on-premises private cloud, enhancing operational efficiency and manageability

• Policy Implementation: Rolled out a standardised Laptop Usage Policy to bolster endpoint security and asset governance

ZIMs forward-looking IT strategy reinforces its commitment to operational excellence, digital resilience, and sustained stakeholder value.

Human Resources

During the financial year, the Company continued to strengthen its Human Resources function, with a strong focus on diversity, inclusion, and employee well-being. Female representation reached 17%, highlighting the Companys efforts to build a balanced workforce. Upholding its non-discrimination policy, the Company ensures equal opportunities for all, regardless of age, gender, ethnicity, or physical ability. To support fair and transparent HR processes, an HR Risk Management Subcommittee was established to review key decisions such as disciplinary actions, career advancement, and employee recognition.

In line with its commitment to long-term employee welfare, the Company introduced the National Pension Scheme (NPS), enhancing financial security and engagement. Its HR policies continue to promote a performance-driven and collaborative work environment, while aligning employee interests with organisational goals. To ensure workplace safety, enhanced protocols were implemented across manufacturing units, including the use of Powered Air-Purifying Respirators (PAPRs) in high-risk zones.

The Internal Complaints Committee (ICC) remained active in addressing concerns related to sexual harassment, and the Company successfully maintained a zero-complaint record during the year. In terms of organisational development, over 60% of managerial appointments were focussed on improving quality and operational excellence. The expansion of the technical team also played a vital role in strengthening customer service and driving efficiency.

The Company actively fosters employee engagement through a variety of initiatives designed to build morale, promote collaboration, and support personal development. These include cultural events, team-building activities, wellness programmes, and employee recognition platforms. By encouraging open communication and cross-functional participation, the Company creates a sense of belonging and shared purpose among employees.

As of March 31, 2025, the Company had 603 employees, reflecting a growing and dynamic workforce aligned with its long-term vision.

Internal Control Systems and Their Adequacy Strong Internal Controls & Risk Management Framework

ZIM Laboratories Limited has established a comprehensive internal control system tailored to its operational scale, complexity, and strategic objectives. This system is built on a strong foundation of risk management, financial discipline, internal audit practices, and sound corporate governance.

To ensure operational efficiency, regulatory compliance, and alignment with strategic goals, the Company has implemented well-defined policies and procedures across financial, operational, and compliance domains. The internal control framework is designed to provide reasonable assurance in the following areas:

1. Adherence to applicable laws and regulations

2. Accuracy and completeness of financial and accounting records

3. Timely preparation of reliable financial reports

4. Operational effectiveness and efficiency

5. Safeguarding of assets from unauthorised access or misuse

6. Early detection and prevention of fraud and errors

Proactive Risk Mitigation & Safety Enhancements

ZIM adopts a preventive approach to safety and risk management. Enhanced safety protocols have been rolled out across manufacturing units, including the installation of intrinsically safe Powered Air-Purifying Respirators (PAPRs) in high-risk operational zones.

Preventive and detective controls are in place to identify and address potential risks. A well-structured Whistle-Blower Policy empowers directors, employees, and stakeholders to report concerns confidentially. These reports are reviewed by the Audit Committee and the Board, ensuring appropriate and timely action.

Internal Audit Mechanism

Internal audits are conducted in close coordination between the Management and Internal Auditors. The scope includes evaluation of business processes, risk management practices, regulatory compliance, and internal financial controls (IFC), in line with the requirements of the Companies Act, 2013.

Each financial year, the Audit Committee and the Board approve a structured internal audit plan, executed quarterly. Key observations and action points from previous audits are reviewed regularly to drive continuous improvement. The management also engages in frequent discussions with Internal Auditors to implement enhancements across systems and processes.

Ongoing Evaluation & Governance

Acknowledging that every internal control system has its limitations, ZIM maintains a dynamic and responsive approach to control enhancements. The Audit Committee and Risk Management Committee periodically assess audit outcomes, recommend improvements, and refine the Companys internal control environment to strengthen operational resilience and business continuity.

Disclaimer

The Management Discussion and Analysis (MD&A) includes statements regarding expected future events, financial performance, and operational results of ZIM Laboratories Limited. These statements may be construed as forward- looking and are based on assumptions that are subject to inherent risks and uncertainties.

Significant risks exist that assumptions, projections, and forward-looking statements may not prove to be accurate. Readers are advised not to place undue reliance on such statements, as various factors could cause actual results and future events to differ materially from those expressed or implied.

Accordingly, all assumptions, limitations, and risk factors mentioned in the Management Discussion and Analysis (MD&A) of ZIM Laboratories Limiteds Annual Report for Financial Year 2024 - 25 should be carefully considered.