Ajanta Pharma Ltd

To Stakeholders

Creating a Differentiated Branded Generics Portfolio

Dear Stakeholders,

You would be pleased to know that Ajanta was conferred two prestigious recognitions during the year - each confirming our best practices in business and people.

The first one was from the world-renowned consulting firm, Deloitte, who conferred us with the "Best Managed Companies for 2022" award. It was a result of a rigorous evaluation process, with benchmarking against the best of the Indian companies.

Our second prestigious recognition was getting into the elite league of people-friendly companies i.e. "Great Place to Work". It was very satisfying to get the recognition from Great Place to Work Institute which validated our people practices against the best globally.

For the last decade-and-a-half, we, at Ajanta have been standing tall, backed by our resilience, vision, and future readiness. Our strong suit has been our ability to build formidable brands across markets. We attribute this to our excellence in market intelligence, in addition to our adherence to 'go-to-market'. Our growth story is powered by our exemplary R&D capabilities and the best-in-class manufacturing infrastructure.

Having leveraged our strengths, while capitalising on growth opportunities, we have steadily expanded our business into three verticals. The first vertical is that of Branded Generics business where we are now enhancing our focus across India, Asia, and Africa. While the second vertical of the US Generics business is battling some headwinds at the moment, the third vertical of the antimalarial Institutional business remains unpredictable.

Despite these stumbling blocks, we continue to stand strong on the back of our fortified foundation of the Branded Generics business. During FY 2023, we significantly enhanced capital allocation to this business with accelerated product filing and enhanced ground presence, and we will continue to do so in the upcoming year. We are confident that this business segment will continue to grow consistently over the years.

This higher operating expenditure came at a time when raw material and freight costs touched record highs. The price erosion in the US made the situation worse and this brought our profit margins down to the lowest level in the last decade.

Our Branded Generics business stood at 73% of the revenue in FY 2023, attributed to 32% in India, 26% in Asia, and 15% in Africa. This was the result of our robust product pipeline and excellent execution of the strategy across markets.

Generics business in the US contributed 22% of the total revenue in FY 2023 with a growth of 19%. Our growth accelerated due to favourable conditions brought on by an intense flu season, during which our oral suspension medication played a crucial role in saving numerous children's lives. Driven by a sense of humanitarian urgency, we stretched our resources to safeguard these young lives, even though the significant logistical costs associated with this effort had a substantial impact on our profit margins.

Our Institutional business in Africa posted a de-growth of 5% due to lower demand from the sponsors.

Revenue from operations grew by 12% to Rs.3,743 cr., displaying robust performance. Our EBITDA margin fell to 21% in FY 2023 due to the reasons mentioned earlier.

Our net profit for the year fell by 16% to Rs.588 cr.

Our balance sheet position remains pristine with Rs.841 cr. as cash and liquid investments. We generated a free cash flow of Rs.463 cr. in the year, up from Rs.453 cr. in the previous financial year. We remain prudent in our capital allocation by returning excess cash generated in the business to shareholders.

For us, our human capital is the most invaluable asset.

We continue to strive to upskill our employees and ensure that they are well-equipped to achieve their professional goals and aspirations while staying aligned with our Company's objectives.

We take this opportunity to express our deepest appreciation to all our employees and their families for their inspiring contribution in our journey. We also thank you for your continuing trust, support, and commitment to Ajanta.