13.

14.

market. However, it is difficult to consistently and successfully predict which products doctors may prescribe and the
products and services our customers may require from us. We have recently introduced a wide range of private label
products so as to distinguish ourselves from our competitors and offer our customers a variety of products based on their
purchasing power and spending capacity. Any failure or inability to timely identify or effectively respond to changing
preferences in the medical industry, spending patterns of our customers, evolving demographic mixes in markets or obtain
and offer particular categories of products could adversely affect our relationships with customers and clients, as well as
the demand for our products and services. This could also result in us holding an excess inventory of unsold products,
which could adversely affect our operating results. Specific instances of such risk that adversely affected our Company in
the past three financial years and the six months ended September 30, 2021 are not ascertainable or measurable, and the
impact of such risk on the financials of our Company cannot be quantified.

Changes in our product mix may impact our results of operation.

A significant portion of our gross margin on drug sales is generally represented by the mark-up charge on drugs dispensed
as well as the related prescription mix. The mix and volume of drugs that we sell are determined by a number of factors,
including the mix of patients, mix of pharmaceutical drugs we routinely stock, seasonal changes in pharmaceutical and
FMCG products and sale of private label products. Changes in the mix of any of these categories could impact our sales
and results of operations. Moreover, any modification or withdrawal of essential pharmaceutical products by
manufacturers, or an increase in safety risk profiles of specific drugs or classes of drugs resulting in decreased usage, may
cause physicians to reduce or stop writing prescriptions for these drugs. Negative media reports or other reputational issues
regarding drugs could result in reduced consumer demand for such drugs. In cases where there are no acceptable
prescription drug equivalents or alternatives for these prescription drugs, our prescription volumes, sales and profitability
could decline.

The following table sets forth our product mix and its impact on the gross margins of the Company for the six months
ended September 30, 2021 and the financial years 2019, 2020 and 2021:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Financial Year Six months
ended
2019 2020 2021 September
30, 2021

Revenue from branded pharmaceutical products and branded FMCG 20,457.25 | 25,917.45 | 26,582.81 | 15,547.76

(@in millions)

Percentage of store revenues from branded pharmaceutical products and 95.52% 94.30% 89.64% 86.46%

branded FMCG (%)

Revenue from private label pharmaceutical products and private label 960.49 | 1,565.44] 3,071.01 2,435.42

consumer goods (2 in millions)

Percentage of store revenues from private label pharmaceutical products 448% 5.70% 10.36% 13.54%

and private label consumer goods (%)

Revenue from others (? in millions) 1,309.63 | 1,223.14 [1,038.87 816.03

Gross margins (@ in millions)* 4,287.10 | 5,340.65 | 6,450.76 | _4,004.74

Gross margins (2%) "* 18.86% 18.60% 21.02% 21.30%

 

“Gross margins = Revenue from operations minus purchase of traded goods and cost of materials consumed and increase in inventories of finished
goods and work in progress.
“*Gross margins (%) = Gross margin divided by Revenue from Operations

The pharmaceutical industry’s pipeline of new drugs includes many drugs that may, over the long term, replace older, more
expensive therapies, whether due to the replacement of brand name drugs with cheaper alternate generic substitutes, the
development of other replacement therapies and new and less expensive delivery methods (such as when an infusion or
injectable drug is replaced with an oral drug) or the addition of products to a therapeutic class. As new treatments and drugs
are developed, price competition among products may increase and drug costs may decline. The mix of our dispensed
drugs could change over time as technology advances and existing products are improved or become obsolete, and these
changes may adversely affect our sales, results of operations and financial condition.

We may be subject to information technology systems impairment and cyber-attacks in the future.

Our business operations are supported by an integrated information technology infrastructure, including operating an omni-
channel platform which allows our customers to shop from our physical stores as well as place orders online. In addition
to our physical stores, we offer ‘click and pick’ services and home delivery and all online orders can either be picked up in
person from one of our stores, or be delivered directly to the consumer’s home. If our point of sale systems is disrupted or
suspended, due to technological issues or otherwise, our sales will be reduced, affecting our revenues and margins. Our
warehousing and logistics chain utilise automated systems and require timely maintenance including the upgradation and
replacement of networks, equipment, information technology systems and software, as well as pre-emptive expenses to
mitigate the risks of failures.

Our financial, accounting or other data processing systems may sometimes fail to operate adequately or become disabled
as a result of events that are beyond our control, including a disruption of electrical or communications services, particularly

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