MANAGEMENT DISCUSSION AND ANAYLSIS World Economy and Industry Overview Global growth in 2014 at 3.4% remains moderate, with uneven prospects across the main countries and regions but reflecting a pickup in growth in advanced economies relative to the brvious year and a slowdown in emerging market and developing economies. It is projected to be 3.5 % in 2015. Relative to last year, the outlook for advanced economies is improving, while growth in emerging market and developing economies is projected to be lower, primarily reflecting weaker prospects for some large emerging market economies and oil-exporting countries. Economic Overview The Economy of India is the seventh-largest in the world by nominal GDP and the third-largest by purchasing power parity (PPP). India's economy became the world's fastest growing major economy from the last quarter of 2014, replacing China's. India also topped the World Bank's growth outlook for 2015-16 for the first time with the economy having grown 7.3% in 2014-15 and expected to grow 7.5-8.3% in 201516. The long-term growth prospective of the Indian economy is moderately positive due to its young population, corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy Ayurvedic Industry Ayurveda is brdominant among India's traditional health systems. It runs parallel to the modern health care sector and has a 70% share of the formal medicine market. India is 2nd largest exporter of ayurvedic and alternative medicine in the world. We have 6200 indigenous herbal plants. The country has developed vast AYUSH infrastructure comprising of 686,319 registered practitioners, 26,107 dispensaries and 3,167 hospitals in public sector, 501 undergraduate colleges with annual intake of 28,018 students, 151 centres for post graduate education with annual admission of 3504 scholars and 8896 licensed drug manufacturing units. There is an opportunity to tap Medical tourism market for curative and rejuvenation treatments. Business Overview Ayurveda by itself is a contribution to mankind in its quest towards human well being. Kerala Ayurveda Ltd, hereinafter referred as "KAL", was founded in 1945. With an experience over 70 years and through a unique combination of heritage richness and investment in technology, KAL has developed into full spectrum Ayurveda Company, encompassing Academies, Herbal Garden, Products, Clinics, Hospitals, Resorts and Research. Over the years, KAL has developed proprietary formulations which have been widely accepted in the market. KAL has constantly endeavored to deliver authentic ayurveda to the world through its chain of hospitals, treatment centers and consultation clinics. The KAL Herbarium which has more than 1500 varieties of plant has won many accolades. KAL is finalizing an agreement in US to integrate Yoga with Ayurveda as they are interconnected in practice and philosophy. Business Review The business review has been dealt in the Directors Report forming part of this Annual Report. Future Outlook Under the "Make in India" initiative for wellness industry, a scheme has been envisaged for the development of AYUSH clusters, for creating a Common Facility Centre for standardization, quality assurance and control, productivity, marketing, infrastructure and capacity-building through a cluster-based approach. The National Rural Health Mission has a declared policy of promoting 'Pluralistic Healthcare' by involving, alongside the allopathic system, the AYUSH systems, including local health traditions in its operational mission. 100% FDI is being permitted in the Ayush Sectors. The company strategy for long-term profitability is to scale up its core business of authentic ayurveda with increased focus on customer satisfaction. The company has clinics and wellness centers across India and has made human clinical trials for some of its new formulations. The distribution of KAL products through ethical route has increase by 13%. The following are some of the key business strategy of KAL • Develop products and technology platform for the unmet medical need that add meaningful value • Provide customer centric services to build deep and long lasting customer relationship • Concentrate on the export market to tap the potential demand for ayurvedic brparations in the global market • Investment in new treatment centers, hospitals and product distribution networks. • Innovate and bring to market patented products, in this regard company has filed 3 patent application for products focused to manage Diabetes, Inflammation and Obesity. Strengths We believe the following are our competitive strengths • Strong R&D Capability & network • Fully integrated and GMP manufacturing facility to manufacture both classical and proprietary ayurvedic formulations in the most hygienic and strict adherence to brscribed norms • Competent and experienced team of experts for the standardization of treatments • Well established network of clinics and treatment centre and distribution centers • Developing a range of Beverages with Herbal additives for a launch by FMCG Major. Challenges Major challenges for Ayurveda industry are regulatory concerns, consumer perceptions and competition. The regulatory agencies all over the world are focusing on the Quality, efficacy, safety and standardization of herbal medicines. The new guidelines from USFDA and EMEA cover the need for documentation in the above areas. Your company has been working in this area. Human Resource Continuing Training programs for employees by internal faculties have greatly contributed to the HR development of our employees. The company has focused strategy to attract, integrate, develop and retain the best talent required for driving the business growth. Internal Control System KAL has in place a well defined organizational structure and adequate internal controls for efficient operations. The team has in place internal policies, and is cognizant of applicable laws and regulations particularly those related to protection of resources and assets, and the accurate reporting of financial transactions. The company continually upgrades these systems. The audit findings are reviewed by the audit committee. Cautionary Statement The statements in this Management Discussion and Analysis describing the company's objectives, projections, estimates and expectations may be treated as 'forward looking statements' within the meaning of applicable laws and regulations. The success in realizing these goals depends on various factors, both internal and external. Therefore, the investors are requested to make their own independent judgments by taking into account all relevant factors before taking any investment decision |