Hester Biosciences Ltd

RAJIV GANDHI

DEAR ESTEEMED SHAREHOLDERS,

I am honoured to present to you the performance highlights of your Company for the financia! year 2023-24.

This year has been about growth, transformation and new developments, driven by our commitment to innovation and respond to market dynamics.

I am pleased to report a significant milestone in our financial performance this year, with our consolidated revenues reaching Rs.3 Billion for the first time.

As part of our goal to become a comprehensive Animal Healthcare Company, we now have three divisions: poultry healthcare, animal healthcare and petcare, with petcare being the newest addition.

Last year, we focused on reducing our reliance on any single division, achieving a more balanced sales spread, enhancing our resilience to sector- specific downturns. While the pet division currently contributes the least, we are actively working to increase its contribution to match that of the poultry and animal divisions. We are now targeting local markets in India, Tanzania and Nepal across these three divisions.

PERFORMANCE OF HESTER INDIA

In the financia! year 2023-24, on a standalone basis, Hester India achieved a net revenue from operations of Rs.2,851.55 million, reflecting a notable growth of 12% compared to Rs.2,540.00 million in the previous year.

Below is the analysis of the division-wise performance:

Poultry Healthcare Divisi?n on an Upswing

In the financial year 2023-24, the poultry healthcare division rebounded significantly. Last year, the industry faced challenges with high feed costs and low product prices, leading to fewer bird placements and longer collection cycles, which caused our sales to drop by 17%. This decline was reversed this year, with net revenues growing to Rs.1,444.95 million, making it to 51% of our total sales. Our technical sales team has been key in supporting our customers on the ground, enhancing product usage and boosting customer satisfaction and loyalty.

The government's support in producing Avian Influenza vaccines, set to launch by Hester and other companies in the coming year, is a positive development for the poultry market. This, along with our strategic product launches tailored to market needs, has strengthened our position. We also prioritised technical sales services, including field performance monitoring, efficacy evaluation and vaccine administration.

We see significant growth opportunities in the poultry sector, supported by our focus on market trends and the development of improved poultry vaccines.

Animal Healthcare Division Stands Tall

Despite regulatory changes leading to the discontinuation of two key brands, the animal healthcare division has shown positive growth. The demand for Goat Pox Vaccine, due to the Lumpy Skin Disease outbreak in cattle and the PPR vaccine, under the National Immunisation Program, have driven this growth. The division's annual revenue increased by 10%, from Rs.1,006.79 million in FY23 to Rs.1,112.30 million in FY24, demonstrating our resilience.

Our commitment to innovation and quality has

led to new product development and market expansion. Significant investment in R&D ensures our products meet high standards and evolving customer needs. Partnerships with veterinary institutions and active participation in industry forums have strengthened our market position.

We prioritise the Government of India's immunisation programs by consistently supplying Goat Pox and PPR vaccines. Acquiring tenders in the animal healthcare sector is crucial and we are actively engaged in this process.

Additionally, we have introduced three new specialised health products to broaden our portfolio. We aim to capitalise on growth opportunities in the dairy sector, expecting stable bottom-line growth alongside an increased top-line.

The Perseverant Petcare Division

Hester's Petcare division achieved a 49% growth in FY24 compared to FY23. The past year provided valuable insights for strategic planning and we see significant potential for exponential growth in petcare. We plan to introduce new products in pet food, supplements and prescription-based products to enhance our offerings.

The division has focused on expanding its distribution network and boosting marketing efforts to reach a wider audience. Collaborations with leading Petcare brands and participation in industry events have raised our profile and attracted new customers. We are committed to branding, product quality and introducing solutions that address unmet needs in the petcare segment.

Hester Nepal

In FY24, Hester Nepal achieved sustained growth, with revenues reaching Rs.135 million.

We have enough capacity to triple our current turnover.

The subsidiary has successfully executed various tenders for PPR vaccines and will continue to fulfil these commitments this year. Additionally, Hester Nepal plans to enhance poultry vaccine manufacturing to meet the export and domestic demands of middle and

central Asian countries, specifically of smaller dose vaccine packs, thereby reducing the pressure on our Indian plant, in turn improving operational efficiency, across.

Hester Africa

In FY24, Hester Africa achieved a revenue of Rs.52 million. Our focus products include vaccines for LSD (Lumpy Skin Disease), CBPP (Contagious Bovine Pleuropneumonia) and PPR (Peste De Petits Ruminants), which are significant to the African continent.

We are well-equipped to fulfill government orders, particularly in East and Central African countries and are actively developing a strong marketing & distribution network in these regions. Our strategic focus is on addressing region-specific animal diseases and strengthening our presence in African veterinary markets.

The Tanzanian Government is exploring disease immunisation programs and we are prepared to support these initiatives through a robust distribution network that serves both government and private sectors. Our distributors buy directly from us, ensuring supply to cattle and poultry farmers without sole reliance on government procurement or intermediaries.

GIVING IMPORTANCE TO ENVIRONMENT & SUSTAINABILITY

At Hester, we recognise the environmental impact of our operations and are committed to minimising our ecological footprint.

We implement sustainable manufacturing practices, including water recycling and waste management. Our India plant now operates with a Zero Liquid Discharge (ZLD) mechanism and we have installed and commissioned a new 40 KLD Sewage Treatment Plant, replacing the old septic tanks.

We also collaborate with veterinary associations, non-profits and government bodies to advance animal health. Through vaccination camps and educational programs, we empower communities with the knowledge and resources to care for their animals.

ONWARDS AND UPWARDS FROM HERE...

We are excited about the future and the opportunities that lie ahead. Our stable performance provides valuable insights that

guide our strategic focus as we move forward with meticulous mid-term and long-term strategies.

This year, we achieved significant milestones, including a 12% growth in standalone revenues for Hester India and substantial progress across our divisions. The poultry healthcare division rebounded with a 51% contribution to total sales, driven by our technical sales team's support and the anticipated launch of avian influenza vaccines. The animal healthcare division demonstrated resilience, achieving a 10% revenue increase despite regulatory challenges and we continue to prioritise innovation and partnerships to strengthen our market position. The petcare division saw a remarkable 49% growth, with plans to introduce new products along with expanding our distribution network.

Our subsidiaries, Hester Nepal and Hester Africa, also showcased growth and strategic advancements. Hester Nepal achieved sustained growth, increased its capacity for vaccine manufacturing to cater to regional and export markets.

Hester Africa focused on vaccines for critical diseases in the African continent, building a strong marketing network and distribution channels to serve both government and private sectors.

As we look to the future, we are focused on capturing local markets across India, Tanzania and Nepal, and expanding our presence in East and Central Africa. Our strategic initiatives include developing new products, enhancing operational efficiency and leveraging growth opportunities in sectors such as dairy and poultry.

I extend my heartfelt gratitude to our dedicated employees, loyal customers and valued shareholders for their unwavering support and trust in Hester Biosciences. Your confidence in us inspires our pursuit for excellence and innovation.

Together, we will continue to make strides in veterinary healthcare, ensuring a healthier and more sustainable future for all.

DEAR VALUED STAKEHOLDERS,

As we advance through another year of innovation and growth at Hester Biosciences, I am thrilled to share some key developments and our strategic vision for the future.

Our relentless pursuit of excellence in animal health continues to drive us forward, with significant progress in our research and development efforts. The development of our Lumpy Skin Disease (LSD) vaccine at the India plant is progressing well and we are optimistic about its imminent release. Currently, we supply our Goat Pox vaccine to combat LSD, but soon we will have a dedicated LSD vaccine that will play a crucial role in the immunisation programs led by the Government of India.

Looking ahead, we have identified several key areas for growth and development. In the realm of animal healthcare, we anticipate double-digit growth in the dairy sector and are prepared to capitalise on this trend by expanding our product offerings. Additionally, the small ruminant market is set to experience growth, prompting us to further extend our presence in this segment.

In poultry healthcare, we recognise the stabilising poultry industry as an opportunity for growth, driven by increasing demand for poultry products. We are focused on innovation, including the development of modified vaccines that will offer enhanced protection in poultry. Moreover, we are expanding our poultry division's product range by introducing feed supplements, which will strengthen our market position.

In the petcare sector, we are well-positioned to leverage our backend activities and anticipate significant benefits in the coming year. With an expected rise in pet adoption, we are ready to capture a substantial market share and address the evolving needs of pet owners. Our strategy includes launching prescription-based pet food specifically focusing on various health conditions such as mobility, obesity, renal and cardiac-related conditions for both dogs and cats. Being a healthcare company, we want to focus on healthcare-related solutions and this aligns perfectly with our strategy.

Your continued support and trust are vital to our success. As we move forward, we remain committed to exceeding expectations and building a future on a foundation of innovation and excellence.