Lyka Labs Ltd Management Discussions

ECONOMIC OVERVIEW AND OUTLOOK

As per the United Nations forecasts, Indias economy will grow @ 6.9% in fiscal year (FY) 2024 and 6.6% in

FY2025, supported by increased private consumption, private investment on the back of Government policies to improve transport infrastructure, logistics and business eco systems.

The current account deficit has been reduced due to higher exports of services and oil prices have remained stable.

India is seeing sustained economic growth.

PHARMACEUTICAL SECTOR OVERVIEW

India is the largest provider of generic drugs globally. Indian pharmaceutical sector supplied over 60% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicines in the UK. Globally,

India ranks 3rd in terms of pharmaceutical production by volume and 13th by value. India enjoys an important position in the global pharmaceuticals sector.

The Indian pharmaceutical market has grown at a 37 percent CAGR from 2020 to 2023, reaching US$ 50 billion. According to the Indian Economic Survey 2021, the house market is expected to grow in the next years. By 2024, the domestic pharmaceutical market in India is estimated to be valued US$ 65 billion, rising to USD 130 billion by 2030. Indias exports stood at USD 25.3 billion.

The Indian Government has taken many steps to reduce costs and bring down healthcare expenses. Speedy introduction of generic drugs into the market has remained in focus and is expected to benefit the Indian pharmaceutical companies.

The pharma sector contributes to around 1.72% of the Countrys GDP.

COMPANY OVERVIEW

Lyka Labs Limited is a pharmaceutical company engaged in the development, manufacture and marketing of quality finished dosages. The Company has a well-diversified business model in terms of markets, therapies and products. The Company believes in Innovation. It provides state-of-the-art prepositions to advance the companys relevance and foster a spirit of experimentation. The pharmaceutical products of the Company are consistent in terms of quality and reliability.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE

The Company is engaged in only one segment viz. pharmaceuticals. The Company has a presence in Domestic as well as international markets. The Company has a commercial presence in various countries either on its own or through its subsidiary company.

OUTLOOK

The Company is focused towards expanding its geographical reach in Human & Veterinary Healthcare Business Segments. The Company re-entered into the business of animal healthcare in 2023 by acquiring the animal healthcare business of Agilis Healthcare Private Limited and FY 2024 was the 1st full year of operations.

During the financial year under report:

1. The Company has invested in building brands and distribution networks in Human and Veterinary Healthcare segments, both in the domestic as well as international markets.

2. The Company has continued to invest in Research & Development (R&D) for New Products and Novel Drug Delivery Systems. The R&D Department is focused on developing of New Formulations and has successfully developed several products in the following categories: a. Injectables: Lyophilised Injection, Liquid Injections & Dry Powder Injections b. Topical Preparation: Ointment, Creams and Lotions.

3. The Company successfully launched Tofacitinib ointment in India after completing clinical trials and getting CDSCO approval in November 2023.

RISKS AND CONCERNS</p>

Your Company does not perceive any risks or concerns other than those that are common to the industry such as regulatory risks, exchange risk, cyber risks and other commercial and business related risks.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has, in all material respects, an adequate internal controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at 31st March 2024.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the financial year, the total Income was Rs.10804.35 Lakhs. The Company has reported net loss of Rs.220.72 Lakhs during the financial year 2023-24.

HUMAN RESOURCE

There has been no material development on human resources and industrial relations front. The relationship with employees and workers continued to be cordial at all levels. As on 31st March 2024, permanent employees inclusive of workers strength was 423.

KEY FINANCIAL RATIOS

The key financial ratio for the financial year 2023-24 and changes therein as compared to the immediately preceding financial year along with detailed explanation in cases where the change is 25% or more are as under: a. Debtors Turnover ratio: Net credit sales/Average Account Receivable. The ratio for the year was 4.73

(times) as against 4.39 (times) in the previous financial year. This year this ratio is lower as compared to previous year. b. Interest Coverage ratio: EBIT / Interest Expense. The ratio for the year was 0.80 (times) as against (0.14) (times) in the previous year. This ratio has become negative in the current year due to a reduction in finance cost. c. Current Ratio: Current Assets/ Current Liabilities. This ratio for the current financial year was 1.39 (times) as compared to 1.41 (times) in the previous year. The ratio is higher as compared to the previous financial year. d. Debt-Equity ratio: Total Debt/ Shareholders Equity. This ratio for the year was 0.60 (times) as against 0.98

(times) in the previous year. This ratio has decreased due to repayment of loans during the financial year and the issue of equity shares and application money received against the convertible warrants. e. Operating Profit Margin: EBIT/Sales operating profit margin for the year was 3.63 % as against (2.03)% in the previous year. Decrease in Operating profit margin Profit for the year is Higher than previous year as previous year Lower realisation products are sold due to increase in demand. f. Net Profit Margin: Net Profit/Total Revenue from operations for the current financial year was (2.24) % as against (17.41)% in the previous financial year. due to Higher profit in the current financial year, as in the previous financial year Lower realization products were sold due to decrease in demand.

CHANGE IN RETURN ON NET WORTH

Return on Net Worth: This financial performance is calculated by dividing net income by shareholders equity. Return on net worth or return on equity during the year was (2.59) % as compared to (21.99)% in the previous year. Return on equity is higher than in the previous financial year due to loss for the financial year is lessor than the previous financial year.

For and on behalf of the Board

Lyka Labs Limited

Babulal Jain

Chairman

DIN: 00016573

Mumbai; 21st May 2024.