Saroja Pharma Industries India Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS

A. Chemical

The chemical industry, especially sectors focused on Liquid Bromine, Ethyl Acetate, Thionyl Chloride, and Benzyl Chloride, forms a critical backbone for various applications across pharmaceuticals, agriculture, plastics, and specialty chemicals. These chemicals serve as key intermediates, solvents, and reagents in diverse industries, playing a crucial role in downstream processes. Below is an overview of the industry structure and recent developments within these sectors.

1. Liquid Bromine Industry

• Industry Overview: Liquid bromine (Br₂) is a highly reactive, reddish-brown element primarily extracted from brine pools, seawater, and salt lakes. It serves as a key raw material for the production of brominated compounds, which are extensively used in flame retardants, pharmaceuticals, water treatment, and agricultural chemicals.

• Production and Geography: The largest producers of bromine are China, Israel, and the United States, particularly regions with large salt lakes and brine deposits. Countries like Jordan are also becoming significant producers due to rich natural resources.

• Industry Drivers: The primary demand driver for liquid bromine is its use in flame retardants, which are vital in electronics, construction materials, and textiles for fire prevention. Additionally, the pharmaceutical industry uses bromine compounds in the synthesis of sedatives and certain cancer treatments.

• Sustainability and Regulations: Given bromines reactivity and environmental concerns associated with its use, there is a growing focus on sustainable extraction and the development of environmentally friendly bromine alternatives. Strict environmental regulations, especially in Europe and North America, are encouraging the use of safer brominated compounds.

2. Ethyl Acetate Industry

• Industry Overview: Ethyl Acetate (CH3COOCH2CH3) is a clear, colorless solvent with a fruity odor, widely used in pharmaceuticals, coatings, adhesives, paints, and food industries. It is recognized for its high evaporation rate, low toxicity, and pleasant odor, making it a versatile solvent.

• Production Processes: Ethyl acetate is produced through the esterification of ethanol and acetic acid, with the use of catalysts like sulfuric acid. China and India dominate production due to their access to abundant raw materials and lower manufacturing costs.

• Market Drivers: The key drivers for ethyl acetate demand include its use in pharmaceutical formulations, paints, printing inks, and as a carrier solvent in adhesives. Its low environmental impact compared to more toxic solvents also makes it a preferred choice for manufacturers striving for greener processes.

• Industry Trends: There is increasing pressure for green solvents due to tightening environmental regulations, particularly in Europe and North America. The industry is focusing on reducing volatile organic compounds (VOC) emissions, and ethyl acetates status as a relatively environmentally friendly solvent makes it an attractive alternative to harsher chemicals like toluene.

3. Thionyl Chloride Industry

• Industry Overview: Thionyl Chloride (SOCl₂) is a reactive inorganic compound widely used as a chlorinating and dehydrating agent in the pharmaceutical, agrochemical, and dye industries. It plays a crucial role in the production of acyl chlorides, which are key intermediates in many chemical synthesis processes.

• Global Production: Thionyl chloride production is concentrated in regions with strong chemical manufacturing infrastructures, particularly in China and India, which supply global demand. Due to its hazardous nature, thionyl chloride must be handled carefully, requiring companies to invest in advanced handling and safety technologies.

• Application and Demand Drivers: In pharmaceuticals, thionyl chloride is vital for producing antibiotics and active pharmaceutical ingredients (APIs). It is also used in agrochemicals for producing herbicides and pesticides. Furthermore, thionyl chloride is increasingly employed in the lithium-ion battery industry, used as an electrolyte in certain types of high-energy batteries.

• Challenges and Developments: The hazardous nature of thionyl chloride presents regulatory challenges, particularly regarding environmental safety and transportation. Regulatory agencies impose strict controls on its production and distribution. The industry is investing in research to develop safer and more environmentally friendly alternatives to thionyl chloride.

4. Benzyl Chloride Industry

• Industry Overview: Benzyl Chloride (C₆H₅CH2Cl) is a colorless organic compound primarily used as a precursor to various chemicals such as benzyl alcohol, benzyl esters, and benzyl quaternary ammonium salts, which are used in pharmaceuticals, plastics, and personal care products.

• Production and Geography: Benzyl chloride is produced mainly through the chlorination of toluene, and key production hubs are found in China, India, and the United States. The Asia-Pacific region is a major producer and consumer of benzyl chloride due to the demand from its growing pharmaceutical and polymer industries.

• Application and Demand Drivers: The primary uses of benzyl chloride are in pharmaceutical manufacturing, especially for the production of antibiotics, antidepressants, and other therapeutic agents. It is also used in the production of plasticizers, coatings, and perfumes. The demand for personal care products and pharmaceuticals is driving significant growth in this sector.

• Health and Safety Concerns: Benzyl chloride is a hazardous substance, classified as toxic and carcinogenic. Strict safety protocols are necessary in its production, handling, and transportation. Increasing awareness of occupational safety and environmental regulations is driving companies to improve safety standards and develop safer alternatives.

5. Key Industry Trends Across the Chemical Sectors

• Shift Toward Sustainability: Across the liquid bromine, ethyl acetate, thionyl chloride, and benzyl chloride industries, there is a notable trend towards greener, safer, and more sustainable production methods. Governments and industry bodies are pushing for reduced emissions, safer chemicals, and sustainable sourcing of raw materials.

• Geographic Shift and Capacity Expansion: Asia-Pacific has become a critical hub for the production of these chemicals, thanks to lower labor costs, growing demand from local markets, and favorable regulatory environments. China and India are key players, with significant investments in expanding chemical manufacturing capacities.

• Technological Advancements: Innovations in chemical synthesis and process optimization have allowed companies to produce chemicals more efficiently, reduce waste, and improve safety measures. The development of new catalytic processes, enhanced safety equipment, and automation has had a positive impact on production efficiency.

• Regulatory Environment: The chemical industry is increasingly regulated to ensure environmental and health safety. Both international and domestic regulations are becoming stricter, compelling manufacturers to adopt cleaner technologies and adhere to stringent quality and safety standards.

• Global Supply Chain: The global supply chain for these chemicals is interconnected, and disruptions—whether due to geopolitical factors, environmental disasters, or logistical challenges—can significantly impact the availability of raw materials and pricing. Ensuring a resilient supply chain has become a priority for chemical producers.

The industries of Liquid Bromine, Ethyl Acetate, Thionyl Chloride, and Benzyl Chloride are integral to various downstream applications, particularly in the pharmaceutical, agricultural, and industrial sectors. While demand for these chemicals continues to grow, the industries are also faced with significant challenges, including environmental regulations, safety concerns, and the need for innovation in production processes. The move towards sustainability and greener alternatives is reshaping the landscape, and companies that can adapt to these trends are positioned for long-term success.

B. Veterinary Active Pharmaceutical Ingredient (API)

The Veterinary Active Pharmaceutical Ingredient (API) industry is an essential segment of the broader pharmaceutical industry, focusing on the production and supply of APIs used in the formulation of medicines for animal health. Veterinary APIs are critical for the development of drugs that treat diseases in livestock, companion animals, and other species, ensuring both public health and the welfare of animals. The structure of this industry, like its human pharmaceutical counterpart, is shaped by regulatory frameworks, scientific advancements, and market dynamics.

1. Industry Structure

• Raw Material Supply and API Manufacturing: Veterinary APIs are typically manufactured from basic chemicals, biological raw materials, or fermentation products. The process involves complex chemical synthesis, fermentation, or extraction, which then undergoes stringent testing and purification to ensure high quality. Major players in the industry are often specialized in producing certain classes of veterinary APIs, such as antibiotics, antiparasitics, vaccines, anti-inflammatory drugs, and hormones.

• Key Players: The industry is highly concentrated, with a mix of large multinational pharmaceutical companies and specialized contract manufacturing organizations (CMOs) that focus on veterinary drugs. Some of the major companies in the global veterinary API market include Zoetis, Boehringer Ingelheim, Elanco, Merck Animal Health, and Virbac, alongside several other manufacturers based in India, China, Europe, and the United States.

• Supply Chain Dynamics: The veterinary API supply chain is global, with manufacturing heavily concentrated in regions with established chemical and pharmaceutical industries such as Asia-Pacific (India and China being major producers), North America, and Europe. India and China, in particular, have become key suppliers due to lower production costs, availability of raw materials, and growing expertise in API manufacturing.

2. Market Demand and Growth Drivers

• Increased Pet Ownership: The rising trend of pet ownership, especially in developed markets, is driving the demand for veterinary drugs, particularly for companion animals. This has expanded the market for veterinary APIs aimed at treating chronic diseases in pets such as arthritis, diabetes, and cancer.

• Livestock and Food Safety: In the livestock sector, veterinary drugs are essential for disease prevention, treatment, and productivity enhancement. The global demand for meat, dairy, and poultry products continues to increase, leading to higher demand for veterinary drugs and, consequently, the APIs used in their production. APIs for antiparasitic drugs, vaccines, and growth promoters are particularly important in this sector.

• Regulation of Antimicrobials: The growing awareness of antimicrobial resistance (AMR) is shaping the development of veterinary APIs, especially antibiotics. Regulatory bodies are increasingly restricting the use of certain classes of antimicrobials in animals to preserve their effectiveness in human medicine. This has led to more stringent regulations around the production, quality, and use of veterinary APIs, and has spurred innovation in alternative treatments, such as vaccines and probiotics.

3. Key Developments in the Veterinary API Industry

• Focus on Animal-Specific APIs: While some APIs are shared between human and veterinary medicine, there is increasing investment in the development of animal-specific APIs. These APIs are tailored to the specific physiological needs and disease profiles of animals, leading to more effective and targeted treatments. For example, there is significant innovation in APIs used for anti-parasitic treatments, vaccines, and growth-promoting drugs in livestock.

• Shift Toward Biologics: There is a growing emphasis on biologics in the veterinary space, mirroring trends in human pharmaceuticals. Veterinary biologics, including vaccines, monoclonal antibodies, and other biotechnology products, are becoming more prominent as they offer new avenues for disease prevention and treatment. This shift is particularly noticeable in the treatment of companion animals and high-value livestock.

• Custom Manufacturing and Outsourcing: Many large pharmaceutical companies are increasingly outsourcing the production of veterinary APIs to contract manufacturing organizations (CMOs). This trend is driven by the desire to reduce costs, enhance flexibility, and focus on core competencies. CMOs in countries like India and China play a crucial role in the custom synthesis and production of veterinary APIs under stringent regulatory frameworks.

• Regulatory Environment: The veterinary API industry is heavily regulated, with guidelines set by agencies such as the U.S. Food and Drug Administration (FDA), European Medicines Agency (EMA), and various national veterinary regulatory bodies. The manufacturing of veterinary APIs is subject to strict quality control measures, including adherence to Good Manufacturing Practices (GMP), ensuring product safety, efficacy, and consistency. In recent years, regulations have focused more on antimicrobial stewardship and the responsible use of antibiotics in veterinary medicine.

4. Industry Challenges

• Antimicrobial Resistance (AMR): One of the most significant challenges facing the veterinary API industry is AMR, which poses a threat to both human and animal health. The overuse of antibiotics in livestock has led to increased scrutiny and regulatory oversight. This is pushing the industry to develop alternative therapies and reduce reliance on antimicrobial drugs.

• Regulatory Hurdles: Navigating the complex and evolving regulatory environment can be challenging for veterinary API manufacturers, especially when entering new markets. Compliance with international regulations, including the registration of APIs and adherence to local environmental and safety standards, can be time-consuming and costly.

• Supply Chain Vulnerabilities: Global supply chains, particularly for key raw materials and intermediates, can be disrupted by factors such as geopolitical tensions, trade restrictions, or natural disasters. The COVID-19 pandemic exposed vulnerabilities in the supply chain for many critical veterinary APIs, leading to delays and shortages in production.

• Price Volatility of Raw Materials: Fluctuations in the prices of key raw materials and solvents used in API manufacturing can impact the cost structure for producers. The dependency on certain raw materials from regions with volatile markets, particularly China, adds an additional layer of uncertainty for manufacturers.

5. Outlook and Future Trends

• Growth in Emerging Markets: Emerging markets, particularly in Asia-Pacific, Latin America, and Africa, present significant growth opportunities for the veterinary API industry. The rising demand for animal protein, increased livestock production, and growing companion animal populations are driving the need for more veterinary medicines and, consequently, APIs.

• Technological Innovations: Advancements in biotechnology, fermentation technology, and green chemistry are expected to play a key role in the future of veterinary API manufacturing. These technologies can enhance production efficiency, reduce environmental impact, and improve the safety and efficacy of APIs.

• Sustainability and Green Chemistry: The veterinary API industry is increasingly focusing on sustainable manufacturing processes, reducing waste, and minimizing environmental impacts. Green chemistry approaches, such as the development of solvent-free processes, energy-efficient synthesis methods, and the use of renewable raw materials, are gaining momentum in API production.

• Expansion of Biologics and Alternatives: The shift towards veterinary biologics and nontraditional therapies, such as probiotics and immunotherapies, will continue to gain traction. This is driven by both regulatory pressures and a growing interest in safer, more sustainable treatments for animal health.

In conclusion, the veterinary API industry is evolving rapidly in response to changes in market demand, regulatory frameworks, and technological advancements. As the world continues to focus on animal welfare, food security, and sustainable farming practices, the veterinary API sector is poised for continued growth, particularly in biologics and alternative therapies. However, the industry must navigate challenges such as antimicrobial resistance, regulatory complexity, and supply chain risks to sustain this growth in the coming years.

C. Pharma Intermediates

The pharmaceutical intermediates industry is a key segment of the broader pharmaceutical supply chain, providing the essential building blocks needed for the synthesis of active pharmaceutical ingredients (APIs) and drug products. Two important intermediates that play crucial roles in specific pharmaceutical applications are N-[(4S,6S)-6-Methyl-7,7-dioxido-2-sulfamoyl-5,6- dihydro-4H-thieno[2,3-b]thiopyran-4-yl)acetamide and Para Nitro Phenol. These intermediates serve specialized purposes in drug synthesis, contributing to the development of a variety of therapeutic agents.

1. N-[(4S,6S)-6-Methyl-7,7-dioxido-2-sulfamoyl-5,6-dihydro-4H-thieno[2,3-b]thiopyran-4- yl)acetamide

• Industry Overview: This compound is a highly specialized sulfonamide derivative that acts as a critical intermediate in the production of certain drugs. Sulfonamide-based compounds are widely used for their antibacterial, diuretic, and anti-inflammatory properties. The specific structure of this compound suggests its potential use in the synthesis of drugs targeting conditions like hypertension, cardiovascular diseases, and metabolic disorders.

• Manufacturing and Production: The production of this intermediate involves complex multi-step chemical synthesis processes that require advanced knowledge of heterocyclic chemistry, particularly involving thieno [2,3-b]thiopyran structures. The sulfonamide group and the thieno ring system are known for their biological activity, making this intermediate valuable in the pharmaceutical industry.

o Production is typically concentrated in regions with a strong pharmaceutical chemicals industry, such as India, China, and Europe, where companies specialize in custom synthesis of advanced intermediates.

• Applications and Demand Drivers: The demand for this intermediate is largely driven by the pharmaceutical companies developing drugs for treating chronic conditions, particularly in the cardiovascular and metabolic domains. Its application in drug synthesis means that it is primarily used in the R&D phase as well as in commercial-scale manufacturing of APIs.

• Industry Trends:

o Increased Custom Manufacturing: Due to the complexity of this intermediate, custom contract manufacturing organizations (CMOs) are becoming key players in the supply chain. CMOs with expertise in heterocyclic and sulfonamide chemistry are increasingly being relied upon by pharmaceutical companies for the production of such advanced intermediates.

o Regulatory Challenges: As with many pharmaceutical intermediates, this compound must meet stringent quality and purity requirements set by regulatory agencies such as the FDA (U.S.), EMA (Europe), and ICH (International Council for Harmonisation). Manufacturers must adhere to Good Manufacturing Practices (GMP) to ensure product safety and consistency.

2. Para Nitro Phenol (PNP)

• Industry Overview: Para Nitro Phenol (4-nitrophenol) is a yellow crystalline solid primarily used as a chemical intermediate in the synthesis of various pharmaceuticals, agrochemicals, dyes, and other industrial chemicals. It is a key starting material for the production of paracetamol (acetaminophen), one of the most widely used pain relievers and fever reducers globally.

• Production and Global Supply: PNP is produced through the nitration of phenol, a well- established industrial chemical process. Major producers of para nitro phenol are located in China, India, and Europe, with these regions supplying both local and international markets. The Asia-Pacific region, especially India, is a significant player in the production of PNP due to its extensive chemical manufacturing base and cost advantages.

• Applications and Demand Drivers:

o Pharmaceuticals: The largest use of para nitro phenol is in the production of paracetamol (acetaminophen). It serves as a precursor to p-aminophenol, which is then used in the synthesis of this widely used drug. With the rising global demand for painkillers, especially during pandemics like COVID-19, the demand for PNP has remained strong.

o Agrochemicals: PNP is also used in the synthesis of herbicides, insecticides, and fungicides. The agrochemical industry continues to drive significant demand for this intermediate, particularly in developing regions where agriculture is expanding.

o Dyes and Specialty Chemicals: PNP is an important intermediate in the production of azo dyes, used in textiles and other industries. Although this is a smaller segment

compared to pharmaceuticals, it still contributes to the overall demand for para nitro phenol.

• Industry Trends:

o Environmental and Safety Concerns: PNP is considered a hazardous substance, and its production, handling, and transportation are subject to strict regulations due to its toxicity and environmental impact. Regulatory bodies like the Environmental Protection Agency (EPA) and the European Chemicals Agency (ECHA) have set stringent guidelines for the safe use of PNP, driving manufacturers to adopt more sustainable practices.

o Rising Focus on Green Chemistry: The chemical industry is increasingly moving toward greener synthesis methods for producing intermediates like PNP. New research into reducing waste, improving atom economy, and minimizing the environmental footprint of PNP production is underway, reflecting a broader industry trend toward sustainability.

3. Key Developments Across Pharma Intermediates Industry

• Innovation in Chemical Synthesis: The pharmaceutical intermediates industry is witnessing continuous innovation in synthetic chemistry to optimize production processes, reduce costs, and improve yields. New catalytic processes, solvent-free reactions, and continuous flow chemistry are being explored for intermediates like N-[(4S,6S)-6-methyl- 7,7-dioxido-2-sulfamoyl-5,6-dihydro-4H-thieno[2,3-b]thiopyran-4-yl)acetamide and para nitro phenol to enhance production efficiency.

• Custom and Contract Manufacturing: A major trend in the industry is the growth of contract manufacturing and outsourcing. With pharmaceutical companies increasingly focusing on core competencies like drug development, they are outsourcing the production of complex intermediates to specialized CMOs. This trend is particularly strong in the production of intermediates like N-[(4S,6S)-6-methyl-7,7-dioxido-2-sulfamoyl-5,6-dihydro- 4H-thieno[2,3-b]thiopyran-4-yl)acetamide, which require specialized expertise.

• Regulatory and Quality Control: As with all pharmaceutical chemicals, intermediates must meet the regulatory standards set by authorities like the FDA, EMA, and local regulatory bodies. Manufacturers must ensure the traceability, purity, and quality of intermediates like PNP and other sulfonamide derivatives to meet the stringent standards required for drug manufacturing. This drives the adoption of advanced analytical techniques, such as HPLC (High-Performance Liquid Chromatography), for quality control.

• Geopolitical and Supply Chain Shifts: The global supply of pharmaceutical intermediates, including those for N-[(4S,6S)-6-methyl-7,7-dioxido-2-sulfamoyl-5,6-dihydro-4H- thieno[2,3-b]thiopyran-4-yl)acetamide and PNP, is increasingly influenced by geopolitical factors, trade policies, and regulatory harmonization. The COVID-19 pandemic exposed vulnerabilities in global supply chains, leading many pharmaceutical companies to diversify their sourcing strategies. Countries like India and China remain dominant in production, but manufacturers are looking to expand production in Europe and North America to mitigate supply chain risks.

The pharmaceutical intermediates industry, particularly for complex intermediates such as N- [(4S,6S)-6-Methyl-7,7-dioxido-2-sulfamoyl-5,6-dihydro-4H-thieno[2,3-b]thiopyran-4-l)acetamide and Para Nitro Phenol, plays a pivotal role in the global pharmaceutical supply chain. Driven by increasing demand in the pharmaceutical and agrochemical sectors, this industry is seeing rapid growth. However, it is also facing challenges related to environmental regulations, supply chain vulnerabilities, and the need for sustainable practices. Innovations in chemistry, process optimization, and custom manufacturing will continue to shape the future of this industry.

OPPORTUNITIES

The pharmaceutical industry, with its vast scope encompassing pharma chemicals, veterinary APIs, and pharma intermediaries, presents numerous growth opportunities driven by technological advancements, evolving healthcare needs, and expanding global markets. Below is a concise overview of the key opportunities in these sectors:

1. Pharma Chemicals

• Growing Demand for Specialty Chemicals: The rise in chronic diseases and advancements in drug formulations are driving the need for specialty chemicals in pharmaceutical production. Green chemistry innovations and environmentally friendly production processes present a significant opportunity for companies to develop sustainable chemical solutions.

• Expansion in Emerging Markets: As pharmaceutical consumption in regions like Asia- Pacific, Latin America, and Africa increases, the demand for pharma chemicals is expected to rise. These regions offer lucrative opportunities for expanding manufacturing and supply chain networks.

• Custom Manufacturing and Outsourcing: The growing trend of outsourcing pharmaceutical chemical production to specialized manufacturers, particularly in India and China, provides opportunities for companies to tap into contract manufacturing services.

2. Veterinary APIs

• Rising Demand for Animal Health Products: The increasing global consumption of meat, dairy, and poultry products, coupled with the growth in companion animal care, has led to heightened demand for veterinary medicines. This offers significant potential for companies specializing in antibiotics, antiparasitics, vaccines, and anti-inflammatory APIs.

• Growth of Biologics and Alternative Therapies: The veterinary space is seeing a shift towards biologics, including vaccines and monoclonal antibodies, as well as alternative therapies like probiotics. Companies innovating in veterinary biologics will benefit from the rising preference for non-antibiotic treatments.

• Regulatory Focus on Antimicrobial Resistance: As governments impose stricter regulations on the use of antimicrobials in animals to combat antimicrobial resistance (AMR), there are opportunities to develop AMR-compliant APIs and alternative treatments.

3. Pharma Intermediaries

• Increased Demand for High-Value Intermediates: Pharma intermediates such as N- [(4S,6S)-6-Methyl-7,7-dioxido-2-sulfamoyl] and Para Nitro Phenol are essential for drug synthesis. The rising demand for specialty drugs and complex formulations creates opportunities for manufacturers of high-value pharma intermediates.

• Innovations in Process Chemistry: Opportunities exist for companies investing in continuous flow chemistry, green chemistry, and catalytic processes to improve the efficiency, sustainability, and cost-effectiveness of pharma intermediate production.

• Contract Research and Manufacturing Services (CRAMS): The increasing reliance on CRAMS for the production of intermediates provides significant opportunities for companies with the technical expertise to offer custom synthesis services.

The pharmaceutical sector, especially in pharma chemicals, veterinary APIs, and pharma intermediates, is positioned for strong growth driven by rising healthcare demands, regulatory changes, and technological advancements. Companies that focus on innovation, sustainability, and market expansion in emerging regions stand to gain substantial competitive advantages.

THREATS

The pharma chemical, veterinary API, and pharma intermediaries sectors, despite experiencing growth, face significant market threats that can impact their stability and profitability. Below is an outline of the key threats:

1. Pharma Chemicals

• Rising Regulatory Scrutiny: Increasing environmental regulations and stricter standards for chemical manufacturing pose a significant threat. Companies must comply with stringent Good Manufacturing Practices (GMP), environmental norms, and waste management protocols, which may raise production costs and limit operational flexibility.

• Volatility in Raw Material Prices: The pharma chemical industry heavily depends on raw materials, which are subject to price fluctuations and supply chain disruptions. Any instability in sourcing key raw materials, especially from countries like China or India, can lead to higher costs and delayed production.

• Geopolitical Risks: Trade restrictions, tariffs, and geopolitical tensions between major chemical-producing nations can negatively affect the supply chain, leading to increased operational risks and uncertainties in global sourcing strategies.

2. Veterinary APIs

• Antimicrobial Resistance (AMR) Regulations: Growing concerns about antimicrobial resistance (AMR) are leading to tighter restrictions on the use of antibiotics in animals. This could significantly impact the demand for veterinary antibiotics, requiring companies to pivot toward developing alternative therapies, which may be costly and time-consuming.

• Competition from Biologics: The veterinary API market is facing increased competition from biologics such as vaccines and monoclonal antibodies, which are gaining popularity due to their efficacy and safety profile. Companies not investing in biologics may lose market share to innovative biologic-based treatments.

• Market Fragmentation: The veterinary API market is highly fragmented, with many small players competing for market share. This can lead to price wars, reduced profit margins, and difficulty in gaining a competitive edge, particularly in regions with growing regulatory complexity.

3. Pharma Intermediaries

• Dependence on Key Markets: Pharma intermediates production is often concentrated in a few geographic regions, like India and China, which creates vulnerability to supply chain disruptions, regulatory changes, or political instability in these areas. Disruptions in supply can lead to shortages and increased production costs globally.

• Price Competition and Commoditization: Pharma intermediates can become commoditized, leading to intense price competition. Companies may struggle to maintain profitability, especially when larger players or new entrants drive down prices to capture market share.

• Regulatory Barriers: The industry faces heightened regulatory scrutiny, with authorities like the FDA, EMA, and other local bodies increasing compliance demands for quality, traceability, and environmental safety. This can result in delays, additional compliance costs, and barriers to market entry, particularly in developed countries.

The pharma chemical, veterinary API, and pharma intermediaries industries face several market threats, including rising regulatory pressures, raw material price volatility, and increased competition from new technologies and biologics. To remain competitive, companies must adapt to these challenges by investing in innovation, compliance, and supply chain diversification to mitigate risks.

SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE.

The Company is operating in single segment i.e., Pharma Chemicals. The Company is into

dealing in Chemicals, Pharma Veterinary API and Pharma Intermediaties.

Name and Description of main products / services	% to total turnover of the Company
The Company has only one reportable segment i.e. pharma chemical like Thionyl Chloride, Ethyl Acetate, Thionyl Chloride, Benzyl Chloride and Pharma API and Pharmaceuticals Intermediaries.	100

OUTLOOK

The outlook for the pharma chemical, veterinary API, and pharma intermediaries industries is promising, driven by the rising global demand for pharmaceuticals, advancements in healthcare, and expanding animal health needs. The increasing prevalence of chronic diseases and the growing focus on preventive animal healthcare are expected to fuel demand for pharmaceutical ingredients and veterinary APIs. Moreover, the shift toward biologics, specialty drugs, and green chemistry presents opportunities for innovation in chemical processes and drug formulation. However, the industries will need to navigate challenges such as regulatory pressures, supply chain disruptions, and pricing competition. Companies that invest in sustainability, advanced manufacturing technologies, and supply chain resilience are likely to experience growth, especially in emerging markets where healthcare access is expanding rapidly. Overall, the industries are positioned for steady expansion, but agility and innovation will be key to longterm success.

RISKS AND CONCERNS

The Pharma Chemical, Veterinary API, and Pharma Intermediaries Industries face several risks and concerns that could impact their growth and stability. Key risks include increasing regulatory scrutiny related to environmental impact, quality control, and compliance with Good Manufacturing Practices (GMP), which can raise operational costs and lead to delays. Supply chain disruptions and raw material price volatility, particularly from key sourcing regions like China and India, present significant challenges, potentially leading to production delays and cost inflation. Additionally, rising competition, particularly from biologics in the veterinary API market, and the commoditization of pharmaceutical intermediates, may compress margins and erode profitability. Geopolitical tensions, trade barriers, and intellectual property concerns further compound risks, making it essential for companies to diversify supply chains, invest in innovation, and ensure regulatory compliance to remain competitive.

The Company faces the following Risks and Concerns also:

• Credit Risk

• Interest Rate Risk

• Competition Risk

• Input Cost Risk

• Liability Risk

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company implemented proper and adequate systems of internal control to ensure that all assets are safeguarded and protected against loss from any unauthorized use or disposition and all transactions are authorized, recorded and reported correctly. The Company also implemented effective systems for achieving highest level of efficiency in operations, to achieve optimum and effective utilization of resources, monitoring thereof and the compliance with provisions all laws including the Companies Act, 2013, Listing Agreement, directions issued by the Securities and Exchange Board of India, labour laws, tax laws etc. It also aimed at improvement in financial management, and investment policy. The System ensures appropriate information flow to facilitate effective monitoring. The internal audit system also ensures formation and implementation of corporate policies for financial reporting, accounting, information security, project appraisal, and corporate governance. A qualified and independent Audit Committee of the Board of Directors also reviews the internal control system and its impacts on improvement of overall performance of the Company.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Companys financial and operational performance is at par with other entities in the segment. The Company is recording significant even in Covid19.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The Companys HR philosophy is to establish and build a high performing organization, where each individual is motivated to perform to the fullest capacity to contribute to developing and achieving individual excellence and departmental objectives and continuously improve performance to realize the full potential of our personnel. As on March 31, 2024, Company is giving employment to 16 permanent employees. Industrial relations are cordial and satisfactory. Employees are critical to our business. The Company internally assess its employees to periodically identify competency gaps and use development inputs (such as skill up gradation training) to address these gaps. The Company has implemented staff training policies and assessment procedures and intend to continue placing emphasis on attracting and retaining motivated employees. The Company also plans to continue investing in training programmes and other resources that enhance employees skills and productivity which will continue to help our employees develop understanding of the customer-oriented corporate culture and service quality standards to enable them to continue to meet the customers changing needs and preferences.

INFORMATION TECHNOLOGY

Our deep understanding of local needs and our ability to adapt quickly to changing consumer preferences has helped our performance driven growth. We are planning to established robust ERP system and robust IT systems have significantly aided this growth by simplifying complex processes throughout our operations. Our IT systems are equipped with an array of data management tools specific to our business needs and support key aspects of our business. IT has enabled our cash management systems, in-store systems, logistics systems, human resources, project management, maintenance and other administrative functions. This implementation has contributed positively towards minimizing product shortage, pilferage, out of stock situations etc. and has increased overall operational efficiency.

DETAILS OF SIGNIFICANT CHANGES

There are no significant changes in full financial statements in all respect which is clearly visible in the financial statements as the Company is recovering rapidly after damaged cause by covid 19 outbreak. Its changed by more than 25% as compared to the immediately previous financial year.

KEY FINANCIAL RATIOS

Particular	Year ended March 31, 2024	Year ended March 31, 2023	% Change
1 Current ratio	1.95	1.20	62.46%
2 Net debt equity ratio	0.38	2.00	-81.01%
3 Debt service coverage ratio	1.90	2.18	-12.98%
4 Return on Equity	4.59	14.71	-68.78%
5 Inventory turnover ratio	16.72	20.91	-20.05%
6 Debtors turnover ratio	2.97	4.00	-25.67%
7 Trade Payables Turnover ratio	5.32	8.54	-37.70%
8 Net Capital Turnover Ratio	7.02	8.06	-12.85 %
9 Net profit ratio	2.15	2.11%	1.96%
10 Return on Capital Employed	12.47	25.23	-50.58%
11 Return on investment (%)	4.59	14.71	-68.78%

DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR ALONG WITH A DETAILED EXPLANATION THEREOF

No Significant changes noticed.

The Companys financial and operational performance is at par with other entities in the segment. The Company is recording significant growth.

CAUTIONARY STATEMENT

Management Discussion and Analysis detailing the Companys objectives, outlook and expectations have "forward looking statement" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied depending upon global and Indian demand supply conditions, changes in Government regulations, tax regimes and economic developments within India and overseas.