The Members,
Gujarat Themis Biosyn Limited
Your Directors have pleasure in presenting herewith the 43rd Annual Report together with the Audited Accounts of the Company for the Financial Year ended 31st March, 2024.
i. financial statements & results:
a. FINANCIAL RESULTS:
The Company's performance during the year ended 31st March, 2024 as compared to the previous financial year, is summarized below:
b. OPERATIONS:
Your Company is in the business of manufacturing and sale of raw material by fermentation process. Your Company's performance during the year in terms of Income and Profit was higher than the previous year. The change in business model Implemented more than four year ago years ago which was reported earlier has continued to help the Company to achieve a good financial performance.
During the period, sale of finished products recorded at '16,982.19 Lakhs (previous year '14,838.52 Lakhs) registering increase in sale. The Net Profit after tax recorded by the Company for the year under review is ' 5,916.32 Lakhs as compared to net profit of '5,796.88 Lakhs during previous year registering an increase of 2.06%.
There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and as on the date of the report.
c. SUBSIDIARIES:
The Company does not have any subsidiary.
d. ASSOCIATES:
The Company does not have any Associate Company.
e. DIVIDEND:
At the Board meeting held on 10th February, 2024, the Board had declared an interim dividend of '0.75 (Rupees Seventy- Five Paisa only per share) (75.00%). Total dividend payout was '5,44,82,632.50.
Your Directors are pleased to recommend a final dividend of '0.25 per share for the financial year 2023-24. Total final dividend payout works out to '1,81,60,877.50.
Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (the "SEBI Listing Regulations"), as amended, the Dividend Distribution Policy of the Company is available on the Company's website at http://www.gtbl.in/wp-content/uploads /2023/06/Dividend-Distribution-Policy GTBL -Final.pdf .
f. TRANSFER TO RESERVES:
Your Board has not recommended transfer of any amount of profit to reserves during the year under review.
g. REVISION OF FINANCIAL STATEMENTS:
There was no revision of the financial statements for the year under review.
h. DEPOSITS:
Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 (the "Act") and the Companies (Acceptance of Deposits) Rules, 2014.
2. DISCLOSURES UNDER SECTION 134(3)(L) OF THE ACT:
Except as disclosed elsewhere in this report, no material changes and commitments which could affect the Company's financial position have occurred between the end of the financial year of the Company and date of this report.
3. STATEMENT ON DECLARATION UNDER SECTION 149(6) OF THE ACT:
The Board has received declarations from the Independent Directors under section 149(6) of the Act that they are not otherwise disqualified to be Independent Directors. The Board further States that all the Independent Directors are persons of integrity and possess relevant expertise and experience to discharge their duties and roles as Independent Directors of the Company.
4. STATEMENT UNDER SECTION 178 OF THE ACT:
Your Company has constituted Nomination and Remuneration Committee as well as Stakeholders Relationship Committee as prescribed under section 178(1) of the Act. The Nomination and Remuneration Committee considers that the Qualifications, Experience and positive attributes of the Directors on the Board of the Company are sufficient enough to discharge their duties as such.
During the financial year 2023-24, the Company has paid sitting fees to the Independent Directors for attending Board meetings, Audit Committee Meetings and also for Separate Independent Directors' Meeting.
Policy on Nomination and Appointment of Directors/Criteria for appointment of Senior Management and Remuneration Policy as formulated under Section 178(3) of the Act is annexed as "Annexure I" and forms part of this Report.
5. BOARD'S EXPLANATION ON AUDITORS' REPORTS:
I. Explanation on Statutory Auditors' Report
There are no qualifications, reservations or adverse remarks or disclaimer made by the Statutory Auditors in respect of financial statements as on and for the year ended 31st March, 2024.
II. Explanation on Secretarial Auditors' Report
Provisions of Section 204 read with Section 134(3) of the Act mandates the Company to obtain Secretarial Audit Report from Practicing Company Secretary, M/s. HSPN & Associates LLP, Practicing Company Secretaries were appointed to conduct Secretarial Audit and issue Report for the financial year 2023-24.
Secretarial Audit Report issued by M/s. HSPN & Associates LLP, Practicing Company Secretaries in Form MR-3 for the financial year 2023-24 forms part of this report. The report of the Secretarial Auditor is annexed to this report as Annexure II.
6. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:
Details of Loans, Guarantees and Investments, covered under the provisions of Section 186 of the Act are given in Notes to the Financial Statements.
7. PARTICULAR OF CONTRACTS OR ARRANGEMENT WITH RELATED PARTIES:
The Company in the ordinary course of its business, enters into transactions for purchase and sale of goods, materials & services, other obligations from 'Related Parties' within the meaning of Section 2(76) of the Act and Regulation 23 of the SEBI Listing Regulations.
Contracts/arrangements/transactions entered by the Company during the financial year with related parties were on an arm's length basis and in the ordinary course of business. All related party transactions were placed for the approval of the Audit Committee / Board / Shareholders wherever necessary in compliance with the provisions of the Act and the SEBI Listing Regulations. During the year, the Company has not entered into any contracts/arrangements/transactions with related parties which could be considered material in accordance with policy of the Company on material related party transactions or under section 188(1) of the Act. Accordingly, there are no particulars to report in Form AOC-2.
The details of the transactions with related parties are also provided in the accompanying financial statements.
The Company has formulated a policy on materiality of Related Party Transactions and also on dealing with Related Party Transactions.
The policy on materiality of related party transactions and dealing with related party transactions as approved by the Board has been adopted by the Company and uploaded on the Company's website at the link: http://www.gtbl.in/wp-content/uploads/2015/08/Related-Party-Policy.pdf.
8. DISCLOSURE OF INTERNAL FINANCIAL CONTROLS:
The Internal Financial Controls with reference to financial statements as designed and implemented by the Company are adequate. During the year under review, no material or serious observation has been received from the Internal Auditors of the Company for inefficiency or inadequacy of such controls.
9. DISCLOSURE OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL:
During the financial year 2023-24 no orders have been passed by any Regulator or Court or Tribunal which can have impact on the going concern status and the Company's operations in future.
10. DISCLOSURE UNDER SECTION 43FA)(II) OF THE ACT:
The Company has not issued any shares with differential rights and hence no information is provided as per provisions of Section 43(a) (ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014.
11. DISCLOSURE UNDER SECTION 54(1)(d) OF THE ACT:
The Company has not issued any sweat equity shares during the year under review and hence no information as per provisions of Section 54(1) (d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 is furnished.
12. DISCLOSURE UNDER SECTION 62(1)(B) OF THE ACT:
The Company has not issued any equity shares under Employees Stock Option Scheme during the year under review and hence no information is provided as per provisions of Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014.
13. disclosure under section 67(3) OF THE ACT:
During the year under review, there were no instances of non-exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014.
14. MATTERS RELATED TO DIRECTORS AND KEY MANAGERIAL PERSONNEL: CHANGES IN BOARD OF DIRECTORS:
In accordance with the provisions of the Act and the Articles of Association of the Company, Dr. Sachin D Patel (DIN: 00033353), Director of the Company, retires by rotation at the ensuing Annual General Meeting (AGM) and being eligible offers himself for re-appointment. The Board recommends to the members the re-appointment of Dr. Sachin D. Patel (DIN: 00033353) as Director in the ensuing AGM of the Company.
Necessary Ordinary Resolution for the reappointment of Dr. Sachin D. Patel (DIN: 00033353) is included in the Notice convening the ensuing Annual General Meeting.
Mr. Vijay Agarwal (DIN: 00058548) will be completing his second term as an Independent Director at the ensuing Annual General Meeting. Your Directors place on record their appreciation of the valuable services rendered by him during his tenure as Director of the Company.
Pursuant to Section 161 of the Companies Act, 2013 the Board of Directors of the Company had appointed Mr. Hitesh Dharmasinh Gajaria (DIN: 10044310) as an Additional Director in the category of Non-Executive Independent Director of the Company with effect from 14th May, 2024. The Board recommends to the members the appointment of Mr. Hitesh Dharmasinh Gajaria (DIN: 10044310) as Director in the ensuing AGM of the Company.
Necessary Special Resolution for the appointment of Mr. Hitesh Dharmasinh Gajaria (DIN: 10044310) is included in the Notice convening the ensuing Annual General Meeting.
There were no other changes in Directors during the year.
CHANGES IN KEY MANAGERIAL PERSONNEL:
There were no changes in Key Managerial Personnel during the year.
BOARD MEETINGS:
The Board of Directors met 4 (Four) times during the financial year ended on 31st March, 2024 in accordance with the provisions of the Act and rules made thereunder.
The Meetings of the Board of Directors are held at regular intervals of not more than one hundred and twenty days. These are generally scheduled well in advance. The Board meets at least once a Quarter to review the Performance and Financial Results of the Company. All the major decisions are taken at the Board meeting wherein Directors are provided with all material information. The Senior Executives of the Company are invited to attend the Board meeting and provide clarifications as and when required.
DIRECTOR'S RESPONSIBILITY STATEMENT:
In terms of Section 134(5) of the Act, in relation to the audited financial statements of the Company for the year ended 31st March, 2024, the Board of Directors hereby confirms that:
i) in the preparation of the annual accounts, the applicable accounting standards had been followed and there is no material departure according to the accounting standards;
ii) such accounting policies have been selected and applied consistently and the Directors made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2024 and of the profit of the Company for that year;
iii) proper and sufficient care was taken for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv) the annual accounts of the Company have been prepared on a going concern basis;
v) internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively;
vi) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
COMMITTEES OF THE BOARD OF DIRECTORS:
In compliance with the requirement of applicable laws, the Company has following Committees of the Board as on 31st March, 2024:
i. Audit Committee;
ii. Stakeholders Relationship Committee;
iii. Nomination and Remuneration Committee;
iv. Corporate Social Responsibility Committee;
v. Risk Management Committee.
The details with respect to the aforesaid Committees form part of the Corporate Governance Report.
VIGIL MECHANISM POLICY FOR THE DIRECTORS AND EMPLOYEES:
The Board of Directors of the Company has, pursuant to the provisions of Section 177(9) of the Act read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, framed "Vigil Mechanism Policy" for Directors and employees of the Company to provide a mechanism which ensures adequate safeguards to employees and Directors from any victimization on raising of concerns of any violations of legal or regulatory requirements, incorrect or misrepresentation of any financial statements and reports, etc.
As per SEBI (Prohibition of Insider Trading) (Amendment) Regulation, 2018 which amends SEBI (Prohibition of Insider Trading) Regulation, 2015, the listed company shall have a whistle blower policy and make employees aware of such policy to enable employees to report instances of leak of unpublished price sensitive information.
Considering the above amendment in SEBI (Prohibition of Insider Trading) Regulations, 2015, the Vigil Mechanism Policy of the Company was amended with effect from 1st April, 2019 to enable employees to report instances of leak of unpublished price sensitive information.
The employees of the Company have the right/option to report their concern/grievance to the Chairman of the Audit Committee.
The said Policy is available on the website of the Company at http://www.gtbl.in/wp-content/uploads/2019/04/GTBL- Vigil-Mechanism-or-Whistle-Blower-Policy.pdf
The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations.
RISK MANAGEMENT:
We have an integrated approach to managing risks inherent in various aspect of our business.
CORPORATE SOCIAL RESPONSIBILITY POLICY:
Gujarat Themis Biosyn Limited CSR initiatives and activities are aligned to the requirements of Section 135 of the Act. The brief outline of the CSR policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure Ill of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.
For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. This Policy is available on the Company's website at http://www.gtbl.in/wp-content/uploads/2022/07/CSR-Policy.pdf.
ANNUAL EVALUATION OF DIRECTORS, COMMITTEE AND BOARD:
Provision of the Regulation 17 of the SEBI Listing Regulations mandates that the Board shall monitor and review the Board evaluation framework. The Schedule IV of the Act states that the performance evaluation of the Independent Directors shall be done by the entire Board of Directors, excluding the Director being evaluated.
The Board has carried out an annual evaluation of its own performance, Committees and Individual Directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by the SEBI Listing Regulations.
The performance of the Board and Committees was evaluated by the Board with the help of inputs received from all the Directors and the Committee members on the basis of the criteria such as the Board composition and structure, effectiveness of Board processes, information and functioning, etc.
The Board and the Nomination and Remuneration Committee reviewed the performance of the Individual Directors on the basis of the criteria such as the contribution of the individual Director to the Board and Committee meetings like ability to contribute and monitor our corporate governance practices, meaningful and constructive contribution in the issues discussed in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.
In a separate meeting of Independent Directors, performance of non-independent Directors, performance of the Board as a whole and performance of the Chairman was evaluated, taking into account the views other non-executive Directors. The same was discussed in the Board meeting that followed the meeting of the Independent Directors, at which the performance of the Board, its committees and individual Directors was also discussed. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.
The Board was overall of the opinion that the Independent Directors have contributed through the process of Board and Committee meeting of which they are members in effective manner as per as their expertise in their field and needs of the organization. The suggestions and contributions of the Independent Directors in the working of the Board/Committee were satisfactory and the value addition made by such independent directors individually and as a team is commendable.
DISCLOSURE UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 AND OTHER DISCLOSURES AS PER RULE 5 OF COMPANIES (APPOINTMENT & REMUNERATION) RULES. 2014:
The Company has paid Commission to its Non-Executive Directors and sitting fees to its Independent Directors attending Board and Committees meetings during the year. However, in respect of Key Managerial Personal, the disclosure is attached as Annexure IV.
15. AUDITORS:
STATUTORY AUDITORS:
M/s. GMJ & Co., Chartered Accountants (Firm Registration No.103429W), the Statutory Auditors of the Company, were appointed by the members at the 41st Annual General Meeting (AGM) to hold such office till conclusion of the 46th AGM. The Ministry of Corporate Affairs (MCA), had amended the relevant provision of the Act relating the requirement of placing the matter relating to ratification of appointment of Statutory Auditors by members at every Annual General Meeting. Therefore, the ratification of appointment of Auditor is not required, M/s. GMJ & Co., Chartered Accountants will continue to hold office till conclusion of the 46th AGM and their appointment will not be subject to ratification by the members at every intervening AGM held after 41st AGM.
MAINTENANCE OF COST RECORDS:
Maintenance of cost records is required as specified by the Central Government under sub-section (1) of section 148 of the Act and accordingly such accounts and records are made and maintained.
COST AUDITORS:
Pursuant to the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit) Rules, 2014, the Board of Directors on recommendation of the Audit Committee, appointed M/s. Raja Datta & Co., Cost Accountants (Firm Registration No. 101555) as the Cost Auditors of the Company for the financial year 2024-25 for the applicable Product. Pursuant to Section 148 of the Act read with the Companies (Audit and Auditors) Rules, 2014, appropriate resolution seeking your ratification to the remuneration of the said Cost Auditors is appearing in the Notice convening the 43rd AGM of the Company.
16. OTHER DISCLOSURES:
Other disclosures as per provisions of Section 134 of the Act read with Companies (Accounts) Rules, 2014 are furnished as under:
a. EXTRACT OF ANNUAL RETURN:
Pursuant to Section 92(3) read with Section 134(3) (a) of the Act, Annual Return in Form MGT-7 as on March 31, 2024 is available on the Company's website at http://www.gtbl.in/wp-content/uploads/2024/06/GTBL Annual-Return- FY-2023-24.pdf
b. CONSERVATION OF ENERGY. TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
The particulars as required under the provisions of Section 134(3) (m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 in respect of conservation of energy, technology absorption, foreign exchange earnings and outgo etc. are furnished in Annexure V which forms part of this Report.
c. CORPORATE GOVERNANCE:
Report on Corporate Governance and Certificate of Auditors of your Company regarding compliance of the Conditions of Corporate Governance as stipulated in regulation 17 to 27 and clauses (b) to (i) of sub-regulation (2) of regulation 46 of the SEBI Listing Regulations with the Stock Exchanges, are enclosed as a separate section and a part of this report in Annexure VI.
d. BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT:
In accordance with Regulation 34(2) of the SEBI Listing Regulations, the inclusion of Business Reporting and Sustainability Report (BRSR) as a part of the Annual Report is mandated for top 1000 listed entities based on the market capitalization. BRSR for the financial year 2023-24 has been prepared in accordance with the format prescribed by SEBI. The summary of the BRSR is appended herewith as Annexure VII to this Report.
e. SUB-DIVISION OF ORDINARY SHARES OF THE COMPANY
On May 13, 2023, the Board of Directors of the Company, considered and approved the proposal for sub-division of 1 (one) equity share of the Company having face value of '5/- each into 1 (one) equity shares of the Company having face value of '1/- each ('sub-division') and consequential amendments in the Capital Clause of the Memorandum of Association of the Company and Articles of Association of the Company, subject to the approval of the Shareholders of the Company and other necessary approvals. The said proposal was approved by the Shareholders of the Company at the Annual General Meeting held on September 09, 2023. The Record Date for the sub-division was set as October 10, 2023 and consequently, the face value of the equity shares of the Company (fully paid-up and partly paid-up) was subdivided to '1/- each from '5/- each.
17. PREVENTION OF SEXUAL HARASSMENT:
We have zero tolerance for sexual harassment at the workplace and have adopted a Policy on prevention, prohibition and redressal of sexual harassment at the workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder for prevention and redressal of Complaints of Sexual Harassment at the workplace.
During the financial year ended 31st March, 2024 your Company has not received any complaint related to sexual harassment.
18. SECRETARIAL STANDARDS:
The Company has complied with the applicable Secretarial Standards, as issued by the Institute of Company Secretaries of India and notified by the Central Government.
19. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY:
20. MANAGEMENT DISCUSSION & ANALYSIS:
Cautionary Statement:
The statements in the "Management Discussion and Analysis Report" describe the Company Rs.s objectives, projections, estimates and expectations which may be "forward-looking statements" within the meaning of the applicable laws and regulations. The actual results could differ materially from those expressed or implied, depending upon the economic and climatic conditions, government policies, taxation and other laws and other incidental factors.
Financial Overview:
The financial performance of the Company for the financial year ended 31st March, 2024, is as follows:
Total revenue from operations stood at Rs.169.82 Crores for the year ended 31st March, 2024, as against Rs.148.39 Crores for the corresponding previous financial year, an increase of 14.45%.
The total cost of raw materials incurred (including changes in inventory) for the financial year ended 31st March, 2024 was Rs.36.68 Crores as against Rs.26.49 Crores for the corresponding previous period.
The EBIDTA (earnings before interest, depreciation and tax, excluding other income) was Rs.78.73 Crore for the year ended 31st March, 2024, as against Rs.73.63 Crore for the corresponding previous period, an increase of 6.93%.
The finance cost for the financial year ended 31st March, 2024 was Rs.0.23 Crore as against Rs.0.18 Crore for the corresponding previous period.
The PAT (profit after tax) was Rs.59.16 Crores for the year ended 31st March, 2024, as against Rs.57.97 Crores for the corresponding previous period, an increase of 2.06%.
Resources and Liquidity:
The cash, cash equivalents and bank balances at the end of 31st March, 2024 were '8.16 Crore. The debt to equity ratio of the Company was zero as on 31st March, 2024.
Business category wise performance:
GTBL operates in one segment i.e. pharmaceuticals. The results of the Company depict business growth during the period. The Company is presently manufacturing Rifamycin S, which is an intermediate for manufacturing the drug Rifampicin (an Antibiotic used for the treatment of several types of bacterial infections, including tuberculosis, Mycobacterium avium complex, leprosy, and Legionnaires' disease) and Rifamycin O, which is an intermediate for manufacturing the drug Rifaximin (this is an Antibiotic used for treatment of traveler's diarrhea, irritable bowel syndrome, and hepatic encephalopathy).
Risks & Concerns:
The business of the Company is exposed to some risks. Risks, liabilities and losses are part and parcel of any industry and need to be tackled through well forecasted strategies and actions.
Unfavourable Policy Changes
Drug pricing and other policies and laws impacting the operations of the Company are subject to changes by the Government. Any potentially adverse changes in government policies with respect to essential medicines and pricing with respect to the products may impact margins of the Company. For instance, inclusion of new molecules into the price control umbrella, or bans on various fixed dose combinations, by the Government, may create new risks for the domestic market.
Credit Risk
To manage its credit exposure, GTBL has determined a credit policy with credit limit requests and approval procedures. The Company does its own research of a counterparty's financial health and business prospects. Timely and rigorous process is followed up with clients for payments as per schedule. The Company has suitably streamlined the process to develop a focused and aggressive receivables management system to ensure timely collections.
Competition Risk
Like in most other industries, growth opportunities lead to a rise in competition. We face different levels of competition, from domestic as well as Chinese companies. GTBL has created strong differentiators in execution, quality and delivery which make it resilient to competition. Furthermore, the Company continues to invest in R&D and its skilled workforce to maintain a competitive edge. Stable and long-standing client relationships further help maintain a strong order book and insulate the Company from this risk. We also mitigate this risk with the quality of our infrastructure and specialized fermentation-based methodologies, coupled with prudent financial and human resources management and better control over costs.
Input Cost Risk
Our profitability and cost effectiveness are affected by changes in the prices of raw materials, power and other input/utility costs.
OPPORTUNITIES & THREATS
Opportunities Growth in Pharma Sector
India is one of the largest provider of generic drugs globally and is known for its affordable vaccines and generic medications. The Indian Pharmaceutical industry is currently ranked third in pharmaceutical production by volume after evolving over time into a thriving industry growing at a CAGR of 9.43% since the past nine years. Indian pharmaceutical sector supplies over 50% of global demand for various vaccines, 40% of generic demand in the US and 25% of all medicine in the UK. This presents a strong growth opportunity for the Company in the global scenario.
Indian Market Size & Export Opportunities
The overall size of India pharmaceuticals industry is expected to reach US$ 65 billion by end of 2024, and ~US$ 130 billion by 2030. According to Government data, the industry is worth approximately US$ 50 billion with over US$ 25 billion of the value coming from exports. About 20% of the global exports in generic drugs are met by India.
India is among the top 12 destinations for biotechnology worldwide and 3rd largest destination for biotechnology in Asia Pacific. In 2022, India's Biotechnology industry crossed US$ 80.12 billion, growing 14% from the previous year.
India is the 3rd largest producer of API, accounting for an 8% share of the Global API Industry. About 500+ different APIs are manufactured in India, and the country contributes 57% of APIs to prequalified list of the World Health Organization (WHO).
Note: 2024 figure estimated, 2030 figure forecasted Source: https:/ /www.ibef.org/industry/pharmaceutical-india
Outsourced Manufacturing in Global Pharma Sector
There is an increasing trend of outsourcing manufacturing for various drugs and pharma products across the world. Pharmaceutical research firms are increasingly looking to focus on R&D and outsource the manufacturing to Companies that have requisite manufacturing expertise. Such trends present new opportunities for Companies that can leverage their production capacities.
increasing investments in the Pharma Sector
The sector has been witnessing strong inflow of investments which are conducive for companies operating in this industry to grow.
- Up to 100% FDI has been allowed through automatic route for Greenfield pharmaceuticals projects. For Brownfield pharmaceuticals projects, FDI allowed is up to 74% through automatic route and beyond that through government approval.
- The cumulative FDI equity inflow in the Drugs and Pharmaceuticals industry was US$ 21.58 billion during the period April 2000 to September 2023. This constitutes almost 3.3% of the total FDI inflow received across sectors.
- The Department of Pharmaceuticals is planning to launch a Scheme for the Promotion of Research and Innovation in Pharma (PRIP) MedTech Sector. The scheme has been approved by the Union Cabinet for a period of five years starting from 2023-24 to 2027-28 with a total outlay of '5,000 crore (US$ 604.5 million).
Government initiatives
Favourable schemes by the Government of India in the recent past to support and grow the Pharmaceuticals sector bode well for companies operating in this industry.
The Union Budget introduced several new schemes to provide impetus to the pharma and healthcare sector in India.
- The Union Cabinet approved the National Medical Devices Policy, 2023. This policy is expected to facilitate an orderly growth of the medical device sector to meet the public health objectives of access, affordability, quality and innovation.
- The Ayushman Bharat Digital Mission (ABDM) was recently launched
- The Department of Pharmaceuticals has prepared an Umbrella Scheme namely 'Scheme for Development of Pharma industry', which covers: Assistance to Bulk Drug Industry for Common Facilitation Centres; Assistance to Medical Device Industry for Common Facilitation Centres; Assistance to Pharmaceutical Industry (CDP-PS); Pharmaceutical Promotion and Development Scheme; and Pharmaceutical Technology Upgradation Assistance Scheme.
Sources: https://www.ibef.org/industry/pharmaceutical-india.aspx
Threats
Threat from Global Competitors
Indian pharma companies face competition from bigger, global pharma companies, backed by larger financial strength, as well as from China-based players. Disproportionate or anti-competitive pricing from Chinese companies can pose threat to the domestic market.
Threat from Generics
Generic drugs offer cost-effective alternatives to drugs innovators and significant savings to customers. internal control system and adequacy:
The Company ensures the orderly and efficient conduct of its business, including adherence to Company's policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013. The Statutory Auditors while conducting the statutory audit, review and evaluate the internal controls and their observations are discussed with the Audit Committee of the Board. Other statutory requirements especially, in respect of pharmaceutical business are also vigorously followed in order to have better internal controls over the affairs of the Company.
Outlook:
Over the next five years, India's medical spending is expected to increase by 9-12%, placing the country among the top 10 in the world for medical spending. Future domestic sales growth will also be contingent upon companies' capacity to match their product offerings to treatments including cardiovascular, anti-diabetic, anti-depressant, and anti-cancer medications for chronic diseases, all of which are experiencing an increase in prominence.
The Indian government has implemented several measures aimed at curbing expenditures and lowering medical prices for consumers. The aging population, an increase in chronic illnesses, government initiatives like the National Health Protection Scheme (which aims to provide universal healthcare), and the opening of pharmacies selling low-cost medications should all help to strengthen the Indian pharmaceutical sector. Indian pharmaceutical companies stand to gain from the ongoing focus on timely launch of medications into the market. Furthermore, the focus on preventive vaccinations, life-saving medications, and rural health programs reflects well for businesses in this industry.
There are very few companies in India which have the expertise in the field of fermentation. Many products manufactured by fermentation are not made in India. The country's needs are largely met through imports. GTBL is continuously identifying fermentation-based products which have good domestic and export potential.
The Company is investing in:
• R&D for new product development;
• Expanding fermentation capacities; and
• Forward integration into API, through an API facility
Capex plan of '200 crores capex already underway, and the new facilities will comply with global standards.
With such R&D and manufacturing capacities in place, GTBL is in a good position to capitalize on the significant growth opportunities in this sector going forward in the domestic as well as global markets.
Sources: https://www.ibef.org/industry/pharmaceutical-india
https://www.ibef.ora/download/1659942652 Pharmaceuticals-June 2022.pdf https://www.ibef.org/industry/pharmaceutical-india.aspx
OPERATIONAL OVERVIEW:
GTBL constantly reviews its product position in the market in terms of demand trends, with a view to sustain its growth. The Company also explores opportunities for new fermentation-based products. The Company is operating in a dynamic environment, characterized by the following aspects.
(a) Industry structure and developments:
The Indian pharmaceutical industry, which is frequently referred to as the "pharmacy of the world", has been expanding. It is forecast to grow from $40 billion in 2021 to an estimated $130 billion in 2030, and by 2047, it is predicted to reach $450 billion.
In addition to meeting domestic demand, the Indian pharmaceutical industry controls more than 20% of the global pharmaceutical supply chain and provides vaccines for over 60% of the global vaccination market. It supplies 25% of all medications in the UK and 40% of the generic demand in the US. It has undergone a remarkable transformation, evolving into a dynamic powerhouse driving healthcare advancements worldwide. Interestingly, India is the biggest contributor to UNESCO, with a share of over 50-60%. Plus, it boasts the highest number of US FDA-approved plants outside the U.S.
The industry benefits from cost competitiveness, driven by factors such as lower labor costs, economies of scale, and efficient manufacturing processes. This cost advantage enables Indian pharmaceutical firms to provide competitively priced products both domestically and globally. The industry's broad reach and diversity provide resilience and adaptation to the demands of the supply chain, allowing companies to effectively navigate through market volatility and address a wide range of needs. The significance of strong supply chain networks that can fulfill strict regulations, guarantee superior quality, and get over logistical obstacles is highlighted by their extensive global presence.
Following the Covid-19 pandemic, pharmaceutical supply chains have evolved to become more agile, transparent, and resilient. There is a significant ongoing investment in automating manufacturing and packaging processes to enhance productivity, operational cost efficiency, and labeling precision. This transformation has enabled the implementation of on-demand delivery models, employing strategies like direct-to-patient approaches and B2B e-commerce platforms. Source: https://www.maersk.com/insiahts/arowth/2024/02/27/pharmaceutical-supply-chain-in-india
(b) Government Initiatives for Pharmaceuticals Industry:
There have been several initiatives by the Government to Support the Indian Pharma Sector. In the Union Budget 202324, the Government announced the following:
• A mission to eliminate sickle cell anaemia by 2047 will be launched. It would involve raising awareness, conducting a comprehensive screening of seven crore individuals in the impacted tribal regions, up to the age of 40 years, and providing counselling through coordinated efforts.
• The government would also facilitate select ICMR labs with facilities like research by both public and private medical collage faculty's alongside private sector R&D teams.
• For innovation in the pharmaceutical sector, through centres of excellence, a new initiative to encourage pharmaceutical research and innovation will be implemented. The Government persuades businesses to spend money on R&D in a few chosen priority fields. At the grass root level, the Government has also announced on building 157 nursing colleges in co-location with Government medical colleges.
• The Ministry's scheme "Strengthening of Pharmaceutical Industry (SPI)" with a total financial outlay of US$ 60.9 million ('500 crore) extends support required to existing pharma clusters and MSMEs across the country to improve their productivity, quality and sustainability.
• The Government has set a target to increase the number of Pradhan Mantri Bhartiya Jan Aushadhi Kendras to 10,500 by March 2025. The product basket comprises 1,451 drugs and 240 surgical instruments.
• The thrust on rural health programmes, lifesaving drugs and preventive vaccines augurs well for pharmaceutical companies.
Source: https://www.ibef.org/industry/indian-pharmaceuticals-industry-analysis-presentation Company's Strategy
GTBL is focusing on organic growth initiatives to capitalize on the rising market opportunities.
The Company is expanding its growth avenues through an ongoing capex plan which will help increase its product portfolio as well as position in the overall value chain. As part of this strategy, the Company has been investing in new product development through R&D, as well as forward integration into API, and lastly, in expanding its fermentation capacity.
Consequently, the Company aims to expand its product portfolio with new fermentation-based molecules, as well as some APIs.
The increase in top line and profitability of the Company have continued to sustain over the last year. The Company is fully aware of its capabilities and strengths and is going ahead with the expansion initiatives.
(c) Segment-wise or product-wise performance:
The Company operates in single segment i.e., pharmaceuticals. The results of the Company under review depict business growth during the period.
(d) Discussion on financial performance with respect to operational Performance:
The operational performance during the year under review has grown year-on-year. The Company has maintained its levels of production at optimal utilization. Demand for both products has also remained healthy.
The top line and Profit after Tax increased by 14.45% and 2.06%, respectively, compared to previous year. The Company continued to generate profit during the year under review.
(e) Material developments in Human Resources/lndustrial Relations front, including number of people employed:
The core of the Human Resource philosophy at Gujarat Themis Biosyn Ltd. is empowering human resources towards achievement of company aspirations. Your Company has a diverse mix of youth and experience which nurtures the business. As on 31st March 2024 the total employee strength was 157.
(f) Details of significant changes in key financial ratios (i.e. change of 25% or more as compared to the immediately previous financial year):
(g) Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof.
AA 2023-24
Change in return on Net Worth in current year compared to last year is due to dividend declared and distributed during the year.
21. ACKNOWLEDGEMENT:
Your Directors have pleasure to place on record their sincere appreciation for the continued co-operation and support extended to the Company by Union Bank of India, all the Employees, Indian promoters, various other Government authorities and of course, shareholders.