Walpar Nutritions Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

A. Overview of the Indian Economy:

The Indian economy has fully recovered to the pre-pandemic real GDP level of 2019-20, according to the provisional estimates of GDP released on May 31, 2023. Real GDP growth in FY 2022-23 stands at 7.2%. These figures are associated with stronger growth momentum, indicating increased economic demand. The investment rate in the fourth quarter increased to its highest level in the previous nine quarters. Moreover, capacity utilization in the manufacturing sector rose in the fourth quarter, as against the third quarter, implying a build-up in demand, which is consistent with the growth objectives of the Indian economy.

Future capital spending of the government in the Indian economy is expected to be supported by factors such as tax buoyancy, streamlined tax system, thorough assessment and rationalization of the tariff structure and digitization of tax filing. In the medium term, an increase in capital spending on infrastructure and asset-building projects is set to increase growth multipliers. Furthermore, revival in monsoon and Kharif sowing helped the agriculture sector gain momentum.

India has emerged as the fastest-growing major economy in the world, and is expected to be one of the top three economic powers globally over the next 10-15 years, backed by its robust democracy and strong partnerships.

B. Outlook:

In the last decade, India has been one of the fastest-growing economies, with annual growth rate averaging 6-7%. The increase in GDP can be attributed to a variety of reasons, including favorable demographics, influx of investment capital and technological efficiency and productivity gains.

If regaining pre-pandemic levels was the biggest challenge for the Indian economy in 2021-22, its biggest challenge in 2022-23 is going to be to return to a high growth trajectory. As the new financial year begins, there is greater uncertainty on this question, not just because of difference in assessment of the economic situation at hand but also due to the ongoing geopolitical crisis which is fuelling a surge in global commodity prices, especially crude oil.

C. Industry structure and development:

India ranks as one of the top countries in terms of pharmaceuticals production with 3,000 drug Companies and 10,500 manufacturing units. According to IBEF, the Indian Pharmaceuticals Industry ranks 3^rd worldwide by volume (10% share of production] and 14^th by value (1.5% share). It contributes about 2% to Indias GDP and 8% of the countries merchandize exports. Indian pharmaceuticals hold an important place in the global supply chain with over 50% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicine in UK supplied by India. Further, the sector has been historically resilient to economic shocks exemplified by the fact that drugs and pharmaceuticals was one of the two commodity groups that did not de- grow.

As per IQVIA, Indias domestic pharmaceuticals market (IPM) is estimated at Rs. 2,08,452 Crores in 2022 with growth of 9.5% vs growth of 18.5% in 2021. Over the long-term, the market is expected to grow annually at 9.2% till 2026.

The IPM remains dominated by branded generics which make up 80% of sales by value as per IQVIA. Brand names and company image are regarded as de facto indicators of quality. With healthcare becoming a key government agenda in the wake of the COVID-19 pandemic, government interest in the pharmaceuticals industry will continue. The government is expected to continue to build on initiatives to improve access to healthcare. Initiatives like improvements in the drug registration process, OTC regulations, expansion of Ayushman Bharat, etc., are expected to be longterm growth drivers.

D. Opportunities and Threats:

Opportunities:

> Network area: The Company has diverse product portfolio, wide network area of sales, marketing and distribution, wide range of fill volumes etc.

> Management: The Company has experienced management team and well qualified senior executives.

> Technological Developments: The Company has adopted superior and advanced technology for manufacturing Pharmaceutical, Nutraceutical, Ayurvedic and Herbal Products.

> Market: Companys manufacturing and institutional sales stabilize revenue stream and helps in targeting new domestic and export markets. Hence, the Company has a wide range of network area for trading its products online or offline.

> Alternative Fuel Utilization: A region with an alternative abundant fuel, such as coal can help in increasing its chemical production. There is an increase in demand for petrochemicals, which can be mitigated through the utilization of coal gasification technology to produce more chemicals and petrochemicals.

Threats:

> High Competition Era: The Pharmaceutical Industry has entered into the orbit of the high competition. The market fights are set to intensify with unstoppable capacity build up. The Competition from both unorganized and other organized players, leading to difficulties in improving market share.

> Manpower: The one of the common problem emerged for finding talent with competence or even skilled man power for Pharmaceutical Industries irrespective of the Companys Brand or Size.

> Under cutting of price: Due to high competition in market, the competitors are doing price cutting of Services to compete or keep their existence in markets which is ultimate big problems for the industries.

> New Entrance: More and more new organized players are entering into market which will increase competition in organized sector also.

E. Segment-wise or Product-wise performance:

The Company is primarily engaged in single segment i.e. manufacturing and Trading of Pharmaceutical, Nutraceutical, Herbal and Ayurvedic commodities.

The Turnover of the Company for the Financial Year 2022-23 is Rs. 2,897.04 Lakhs.

F. Future Outlook:

The Companys outlook for the year 2023-24 is to add more products in the product range as per requirement in both Indian and Global market. The Company will focus on research and development, higher productivity, etc.

G. Risks and concerns:

Nutraceutical Industry has a certain specific set of risk characteristics, which needs to be carefully evaluated and mitigated. In order to effectively manage the same, the Company has evolved proactive Risk Management System, which is adhered to. The risk management covers the entire process from capital investment, competitors activities, new entrants etc. Continual reforms and emphasis on technological developments shall reduce the exposure to risk.

H. Internal control systems and their adequacy:

The Company has an independent Internal Audit function with a well-established risk management framework. The scope and authority of the Internal Audit function are derived from the Internal Audit Charter approved by the Audit Committee. The Company has engaged a reputable external firm to support the Internal Audit function for carrying out the Internal Audit reviews.

The Audit Committee meets every quarter to review and discuss the various Internal Audit reports and follow up on action plans of past significant audit issues and compliance with the audit plan. The Chairperson of the Audit Committee has periodic one-on-one meetings with the Chief Internal Auditor to discuss any key concerns.

Additionally, the following measures are taken to ensure proper control:

• Budgets are prepared for all the operational levels.

• Any material variance from budget has to be approved by the Commercial director.

• Any major policy change is approved by the managing director.

• Any deficiency in not achieving target is reviewed at management meetings.

I. Discussion on financial performance with respect to operational performance:

The financial performance of the Company for the Financial Year 2022-23 is described in the Directors Report of the Company.

J. Material developments in Human Resources / Industrial Relations front including number of people employed:

The cordial employer - employee relationship also continued during the year under the review. The Company has continued to give special attention to human resources.

K. Caution Statement:

Statements made in the Management Discussion and Analysis describing the various parts may be "forward looking statement" within the meaning of applicable securities laws and regulations. The actual results may differ from those expectations depending upon the economic conditions, changes in Govt. Regulations and amendments in tax laws and other internal and external factors.