Good day. Welcome to the Q4 FY 2023 earnings call of JB Pharma, as on the 25th of May, 2023. As a reminder, all participant lines will be in a listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star and 0 on your touchtone phone. Please note, this conference call is being recorded. I now hand the conference over to Mr. Jason D'Souza, Vice President at JB Pharma. Thank you. Over to you, sir. Thank you, Vikram. Welcome to the earnings call of JB Pharma. We have with us today, Nikhil Chopra, CEO and Whole Time Director, Mr. Kunal Khanna, President, Operations, and Mr. Lakshay Kataria, Chief Financial Officer of J.B. Chemicals & Pharmaceuticals Ltd. Before we begin, I would like to state that some of the statements in today's discussion may be forward-looking in nature and may involve certain risks and uncertainties. A detailed statement in this regard is available on the Q4 FY23 results presentation that has been sent to you earlier. I would like to hand over the floor to Mr. Nikhil Chopra to begin the proceedings of the call with his opening comments, after which Mr. Lakshay Kataria will address the financial highlights. Over to you, sir. Thank you, Jason, and very good afternoon to all of you who have taken time out to join us for the fourth quarter and annual conference call for JB Pharma. To commence, I would like to take all of you through the highlights of our performance, then, as Jason said, our CFO, Mr. Lakshay Kataria, will follow with his views on the financials. After our comments, we'll be more than happy to take the questions from all the participants. To start with, I am pleased to announce a robust quarter and a financial year with a healthy contribution from both domestic and international business. During fourth quarter, we reported a revenue growth of 22% to INR 762 crores and crossed a milestone of INR 3,000+ crore sales for the financial year. Our domestic business formulation business grew at 29%, and the revenues increased to INR 380 crores in the quarter, whereas annually, it stood for INR 1,640 crores for the current financial year, with a growth of 38%. While our big brands got bigger, the acquired portfolio also ramped up. Our per person productivity improved to INR 6.2 lakh in the year, up from INR 5.4 lakh in FY 2022. Speaking of the brands that we acquired, starting with Azmarda, a very potent addition to our cardiac portfolio, emerged among the top 300 brands in IPM, as per IQVIA MAT, March 2023, and now ranks at the number of 261, as per IQVIA MAT March data. I am pleased to share that thanks to our dedicated efforts of our team, Azmarda continues to draw monthly volumes similar to those in our pre-exclusivity periods. Across our big brands, I am again happy to share that we have made gains in our market rankings. As per IQVIA MAT, March 2023, the domestic business witnessed a growth of 22% versus IPM growth of 8%. I'm proud to know that as per this information, we are the fastest-growing company among top 25 in IPM for 2 consecutive years. If you talk about the big brands, what we have been talking, the entire concept of making big brands bigger, let me talk about Rantac, which gained 10 ranks, which stood at number 35. Cilacar, Cilnidipine, our anti-hypertensive franchise, gained 8 ranks to rank at number 44. Metrogyl gained 52 ranks to rank at number 142. Nicardia gained 68 ranks to rank at number 172. Cilacar-T, combination of Cilnidipine and telmisartan, gained 9 ranks to number 194. Azmarda, what I shared earlier, gained 125 ranks to rank at number 261. Why I'm sharing these numbers is in lieu of the business that we have achieved in India, is a combination of both organic and inorganic mix that we are trying to drive on the ground with our 2,000-plus medical reps, who day in and out meet all the healthcare professionals. The entire hypothesis of making big brands bigger and not going wide, but going deep in terms of what we have done for our brands, in terms of lifecycle management, incremental innovation, looking at what we can do with the patients, in terms of consumerization, looking at what more can be done in terms of driving better adherence in chronic therapy. Those all aspects we have taken of building the business, that is where we stand. In terms of value, what I shared, that we ranked at 23rd number, fastest growing company in top 25. Also I'm very happy to share from a backbone perspective, from a prescription perspective, we are now 15th ranked company in the country. JB Chemicals generates close to 5 crore prescriptions in a quarter, which enlightens me in terms of the journey that we have traveled in last 8 quarters, and we have gained ranks in prescription. Talking more about what we are trying to do in India, our chronic portfolio continues to outperform. The chronic portfolio outperformed the overall industry chronic portfolio growth at 24% in the year, as compared to 11% IPM growth in chronic part. JB Pharma now ranks 20th in overall chronic segment, gaining 4 ranks in last 12 months. Within chronic portfolio, if we are talking of cardiology, we are now 8th ranked company as compared to 13th ranked company 18 months ago. Three of our brands feature in top 25 in cardiology. Besides having a progressive portfolio like Azmarda and Razel, we are well-placed to drive the therapy-shaping initiative across the care continuum for hypertension and hypertension to heart failure. Let me talk about the acquisitions and the inorganic business that we acquired in last one and a half year. The acquisitions we have made have been strategic, keeping in mind company's overall objectives. Azmarda and Razel have strengthened our presence in cardiology therapy, as I shared earlier, and now we are eighth-ranked company in cardiology overall as a segment, and we are the fastest-growing company in the cardiology segment. As per IQVIA, March 2023 data, JB Pharma is the fastest-growing company in top 10 in cardiology, and that is, that was shared earlier. Talking about Sporlac gained 152 ranks in the and is now ranking at number 334. Overall, in the covered markets, Sporlac is number 1 brand when we compare ourselves to Bifilac and Vizylac. Our pediatric brands that we acquired have also performed well during the financial year. Smooth integration of our acquired Razel franchise from rosuvastatin, which we acquired 4 months ago, is as per plan. The company is already beginning to witness good momentum for Razel. Concluding in terms of the way we are positioned now in India, 23rd ranked company in terms of value, close to INR 1,640 crore revenue that we generated for the financial year. In terms of prescription, we are 15th ranked company. Mix of our organic brands as well as inorganic acquisitions are overall performing as per our plan. We have 2,000-plus medical reps who continue to day in and out, meet doctors. Our per person productivity now stands at around INR 6.2 lakh. I shall now turn my attention towards international business. We witnessed good traction in the international formulation this quarter and the year. The Russia business witnessed demand normalization, while we continue to focus on increasing our sale in South Africa private market. Our other BGX market, which is a combination of Sub-Sahara Africa, Latin America, Southeast Asia, and Middle East, also reported good results on the back of demand normalcy seen back post-COVID times. Put together, if you look at what, the way we have performed in our ROW international market, first half of the year, we were flat in growth, but if you look at our YTD growth, it is around 12%. We have gained growth and overall the demand has come back in quarter three and quarter four, particularly in our business in BGX, that is ROW, Russia and South Africa. Just to share in terms of the work that we do in our CMO business, our CMO business has been a feather in the cap, registering a growth of 60% to a revenue of INR 406 crores in the financial year, while the growth for the quarter has been 18%. If you look at our CDMO business, we have been touching a figure of 100 crores every quarter, which has been a fantastic performance, and it has only helped us in terms of what revenue and what EBITDA we have generated to further invest in the company. The CMO business, along with domestic formulation business, today accounts for 65% to total revenue in the year. I would like to repeat this once again. The CMO business, along with domestic formulation business, accounts for 65% of total revenue in the year. The increasing acceptance and continued demand of lozenges was the key driver for this upsurge. We have introduced a number of products in our international markets, in the world of lozenges with our marquee partners, expect that they should gain traction in the coming years. We are cognizant of geopolitical issues and economic headwinds and their impact on the demand patterns. Our teams are managing our response in a calibrated manner. Our focus on containing cost continues as we combat inflammatory, as well as environment issues globally. I would like to hand over to Mr. Lakshay Kataria to take you through the financial details and overall performance of the company. Thank you, Nikhil. Thank you, Nikhil. A very good afternoon to all of you, and welcome to our earnings call. I'll now be taking you through the financial highlights of quarter four, fiscal 2023, and fiscal 2023 overall. We witnessed a strong growth on our revenues, both for the quarter and financial year. Quarter four, we clocked a revenue of INR 762 crores, and the year, we clocked a revenue of INR 3,149 crores. Gross margins stood at roughly 63.9% in the last quarter versus 65.9% in the same quarter previous year, with a sequential improvement from 62.3% in the previous quarter. Gross margins for the year were 62.9% versus 65% last year, largely impacted by cost inflation and high Azmarda sales in the year. In the quarter, our operating EBITDA, which is EBITDA before ESOP cost, reached INR 181 crores, reflecting a 21% year-on-year growth. The margins were flat compared to Q4 FY22. We registered an increase of 26% in the operating EBITDA for the year, which was at INR 765 crores versus INR 605 crores in the previous year. On the expense front, our total employee cost, including ESOPs as a percentage to overall revenue, improved both for the quarter and for the financial year. There was a reduction in the non-cash ESOP cost, therefore, this cost as a percentage to reported EBITDA improved from 19.2% in quarter 4, fiscal 22, to 10.4% in quarter 4, fiscal 23, and from 11.4% in fiscal 22 to 9.9% in fiscal 23. Other expenses as a percentage of sales, improved to 24.7% in Q4 FY23, vis-a-vis 27.4% in Q4 FY22. In the financial year, this ratio was 23.6% versus 24.7% in the last fiscal. Depreciation was INR 32 crores in the quarter, up quarter-on-quarter due to new acquisitions of Razel, and INR 114 crores in the financial year on account of amortization of acquired brands. The increase in finance cost, year-on-year and quarter-on-quarter, was largely due to term loan for brand acquisitions. Profit after tax for the quarter was at INR 88 crores, with a growth of 4%, while it stood at INR 410 crores in the financial year. ETR for the year, that is the effective tax rate, was 26%. We reported a healthy balance sheet and a strong cash flow during the year. Operating cash flow at INR 626 crores versus INR 170 crores in the last fiscal. The company's cash and cash equivalents, including investments in mutual funds, was at INR 282 crores, and our net debt situation also improved from INR 429 crores in December 2022 to INR 266 crores in March 2023. There was a substantial improvement in our net working capital metric, which improved to 89 days from 111 days in FY 2022. This is the lowest level of working capital that the company has witnessed in the past many years, in an overall challenged macroeconomic environment. In summary, our journey of growth and transformation continues, and as we move forward, we hope to continue to improve our operational efficiency. I now request the moderator to please open the forum for Q&A. Thank you very much, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question, may press star and one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. We will wait for a moment while the question queue assembles. To ask a question, please press star followed by one on your touchtone phone now. Take our first question from the line of Rahul Jeewani from IIFL Securities Limited. Please go ahead. Yeah. Hi, sir, thanks for taking my question. Hope I am audible. Yes, Rahul, you're audible. Yeah. Thank you, sir. Sir, our organic India business growth looks slightly muted this quarter, that for the 9 months, our run rate on organic India business was around mid-teens, but for this quarter, we have grown in double digits, likely at 11, 12%. What has led to this muted performance on our organic India business? Was it any base effect or the annual price revisions impacted us? I don't think there was any base effect or any annual impact. Overall, Rahul, if you look at quarter four has been soft, this quarter has been soft for us. If you look at overall the IPM performance, particularly, I think, two, three category of elements, particularly if you look at respiratory, you look at conjunctivitis, you look at upper respiratory tract infections, there, I think you could see the upsurge. I'm talking of IPM now. JB does not have that type of portfolio. Our portfolio is steady in terms of what we market for cardiology, what we do with our antibiotic and GI product, and whatever new launches we have done, probiotic. It was a soft quarter for us, but overall, the guidance that we would like to give for India business, that we should always be 300, 400 base better than the market. That is how. You will see more stability in terms of how, what we report every quarter to quarter, in terms of what we will deliver for India business. Sure, sir. For the categories where you are present, can you call out what was the growth at an IPM level for, let's say, cardiac or the anti-infective segment? How would these therapies have grown at a market level? Rahul, I think, offline, I think Jason will be more than happy to share all these specific details. I will ask Jason to share all this. More or less, if you look at the growth that we saw, if I have to give a top view, our chronic portfolio grew at around mid-teens plus, and our acute portfolio grew at around high single digit. That is what I can share, but more details, we'll be more than happy to share to you offline. Sure, sir. And on the gross margins, we saw quarter-on-quarter improvement. Was that gross margin improvement entirely driven by lower Azmarda sales during the quarter? Rahul, we have certainly seen RM and PM prices being in a steady state from November, December onwards, right? Compared to what we saw in H1 of last financial year, the inflationary pressure is much lower. If that trend continues, we certainly see sequential improvement in gross margins. As was stated earlier, which should overall help our EBITDA operating margin profile as well. It's a mix of steady state RMPM, and yes, there is a marginal impact of Azmarda portfolio mix as well. Okay. Sir, our guidance for next year's gross margins earlier was around 64%, and we have it 64% in fourth quarter itself. Do you see any upside risk to our gross margin estimates for next year? Rahul, let me more talk about the guidance that we would like to give for our EBITDA margins. If you look at what EBITDA margins guidance that we have been giving for last two years is 24%-26%. Operating EBITDA, I'm talking. For the current financial year, as what Lakshay shared, we reported INR 765 crore EBITDA, which was 24.3% margin. Going ahead, for next couple of years, we are revising our EBITDA margin guidance from 24%-26% to 25%-27%. That is what we would like to share. This will be backed up by some gain that we will get in Azmarda because of now sourcing becoming more softness for us. Equally, the better mix of products, that we see, which we want to sell, and probably some benefits that we will get in the overall. RMPM. RMPM and freight softening. That is how we are trying to at least give the guidance. Sure. Sure, sir. One last question, and then we for your CMO business, because this year we saw very strong growth on the CMO. Now, your voice was cracking. We are not able to hear. Can you repeat what you were asking? Yeah, sir. I was asking a question on your CMO business, that this year we saw very strong growth of 60%. What is the outlook for the next year, given that this year we would have also benefited from, let's say, an acute, cold and flu season as well as markets? The fortunate part of the story, Rahul, is that we have a handsome book order for first three, four months of the year, which we are trying to look at how do you meet the demand. Probably, we will get some view, because, see, this whole business is happening with our partners outside India, outside India and outside U.S. and Europe, in every part of the world, and we work with all the big players. Right now, the demand is there. Probably August, September, we'll be able to put more color in terms of how do we see rest of the year. Generally, in this business, the front-end loading in terms of order, which comes in, is the way of business. First half of the year, you see a better performance. If you get a good season, which happened for last year, then probably you outscore yourself. If I have to give a guidance, low double digit to mid-teens growth, that is what we should get into in terms of what we see our CMO business. We can outscore ourselves, depending upon how the season is there of post viral cough and cold symptoms, and that we'll get to know only probably in August, September, and at that time, we'll be able to share more details with you. Sure, sir. Thank you. Thank you for answering my questions. Thank you. We take the next question from the line of Sriraam Rathi from BNP Paribas. Please go ahead. Thanks for the opportunity and congratulations on good set of numbers. Firstly, just continuing from the previous question of CMO. You said that, I mean, for the next 3, 4 months, you have strong order book. I mean, is it fair to assume that the quantum would be higher than what we would have done in the last 3, 4 months? If you calculate backwards, our growth has been 60% for the year, and for quarter four, we grew at 18%. Okay. Where we see first 3, 4 months of the year, we should be at par with what we have delivered every quarter. Going ahead, what I shared earlier, I think by mid of quarter 2, we'll be able to share more details. Okay, got it. Got it. Secondly, in India business, in the last, I mean, 12, 18 months, we have done multiple acquisitions, and now the base is also very strong. In terms of M&A, what would be the strategy going forward? Which therapies you will target further, the same similar therapies or new therapies we are looking at? If you can share, I mean, what kind of size will be appropriate for JB Pharma now, in terms of, I mean, doing any M&A? We'll continue to evaluate opportunities in terms of what is available in the market. We would like to... Given a choice, we would like to do a deal in the therapies where we are already present, which will be more synergistic to what we are trying to do in India Business from a portfolio perspective. If you get an opportunity where we think that we can grow this portfolio better than the way portfolio is growing today, with the concerned company who is owning the right, owning the portfolio today, we will evaluate the right pricing in terms of what historically you have seen us paying 3, 4 times of the top line, and 15 times, 15-18 times of 15 time of EBITDA. That is where we stand. More so, it is not that tomorrow we are in a rat race. It is not that tomorrow we want to. We will look at things from a perspective if tomorrow it is suiting overall from a portfolio perspective, suiting from a valuation perspective, and probably if we can build some synergy, and if those type of assets are available, then we are sure, we'll surely evaluate and look at tomorrow, how we can take that ahead. Okay, sure. That's helpful. That's helpful. Lastly, on gross margin, I mean, of course, Azmarda sourcing would have benefited to some extent this quarter. I mean, are we still continuing to source from the innovator, or we have changed the source? See, we would not like to diverge a lot of details on our sourcing strategy. What we can clearly state is that Azmarda, as a brand, is a bit decorative for us. You see the performance even after LOE erosion, we have been able to maintain the market share. The recent month numbers, figures suggest that our volumes have increased by almost 20%. It's a great portfolio for us, in a very, very progressive therapy area. Yes, the gross margins will significantly improve, but beyond that, we don't want to further diverge any sourcing details. Okay, got it. Got it. Sure. Thank you. That's helpful. Thank you. We take the next question from the line of Rashmi Shetty from Dolat Capital. Please go ahead. Yeah, thanks for the opportunity. Just on the CMO segment again, we had seen a huge demand in terms of cough and cold segment, but we were also planning to, you know, enter into the other segments like motion sickness and all. When are we targeting, you know, those lozenges? Very good question, and I missed in terms of what we want to do in the world of lozenges going ahead. You should see us launching lozenges in the category of sleep disorders, in the category of anti-inflammatory lozenges, probably Q4 of the current, of the financial year, probably FY 2024. Okay. Immunity? Immunity. Immunity also. Immunity, sleep disorders, overall, anti-inflammatory, these are some of the category products that we have developed, and we have got the inputs from our partners. Please understand, this entire process has got its own gestation period. You get, the discussions, they happen with our partners, then you get the reference product, you develop the product, you share the product with them. Our partners, they do their own research and study, and then they come back to you, and then you do modification and then go back to them. All this takes time. That is why whenever I, we are talking in terms of the way new category of lozenges, we will be able to get business, it will come, but it has its own modality. We are on good at journey. These are 3 category of products which you should see us launching, FY 2024, probably quarter four. That is the task that we have taken, and more so in our offering. At the right time, we'll be more than happy. Not only this, but if you look at antifungal lozenges for dry mouth, those all things at some given time, you will see us more entering into more categories. Okay. Sir, in terms of geographical expansion, you know, we are currently present in some of the European countries and some of the emerging markets. You know, any plans, you know, for the US entry in terms of lozenges? You think that, you know, it is like, you know, the company would be struggling and, you know, you won't get a proper tie-ups, or you think that it is a commodity business? Any color if you can give on how lozenges business is basically in the US, and are you planning to enter? Yeah, first focus is definitely deepening our presence in current markets with our existing partners and look at pockets of expanding in the geography areas like APAC itself, identifying more countries like parts of Middle East, parts of Europe, Russia, CIS, right? In addition to that, there are certainly more opportunities we are evaluating in other geographies, such as LATAM, parts of, you know, Central America as well. As far as North America is concerned, yes, a long-term view on that, but too early to comment on, you know, what exactly will be our strategy there. Also, please note, we have always maintained, like Nikhil mentioned earlier, we operate in the medicated lozenges space, right? We don't want to do conventional lozenges. Just because North America is a big private market for conventional lozenges, that is not something, you know, which pretty much hits our sweet spot. Couple of more addition to this. We also are on the roadmap, on the roadmap of launching around some of the lozenges in our home market, that is South Africa. It should happen probably in quarter two. Also, we are testing waters in terms of what we are trying to do in India. We have introduced around 3, 4 lozenges in the country, where we are trying to now put a very different model, not to market and not direct to consumer, but we are trying to look at how do you have the mind space of the entire digital phase of selling and making your product exposed to the community? We are trying to put some different model. How can you do some retail activities which will help you to expose your product? These are some of the trials that we are trying to do. At the right time, once we have some more substantial things to share, we'll be more than happy to talk. Okay. Regarding your export formulation business, you know, Russia, we have seen some demand revival, but is this temporary or, you know, you see that, you know, things are stabilized and Russia could actually grow better? Also, in your South Africa business, if you could call out, you know, the proportion of private and public share, you know, in terms of the business, because, I think that we are seeing some increasing share in the private market business. If you could tell that. Finally, on the U.S. business, you know, if you can comment something, whether we are growing in that market, we are still launching 1 to 2 products, or what exactly is happening over there? I'll take the Russia piece first. You know, we have always maintained that for Russia and CIS region, H1 tends to be soft, and we were expecting a revival when the demand comes in Q3 and Q4, and the same was witnessed in FY 2023. As things stand right now, the demand is much more normalized than what the situation is, and we expect the same trends to continue going forward as well. Yes, there were some benefits of currency gain also, which will be pretty much normalized going forward. South Africa, as the team has also always mentioned, that our focus clearly will be to drive profitability through increasing private share mix, and that is going to be the main objective for the coming next couple of years. That how do we really drive our profitability by increasing our private market share mix, and that's in line with our strategy, what Nikhil spoke about, launching our own lozenges and looking at other product categories. From a long-term standpoint, we have always looked at expanding our portfolio, and, you know, that is for ROW and U.S. market as well. We are pleased to state that, you know, as we had mentioned, that we will be doing close to 3 to 4 filings every year. In the last financial year, in H2 particularly, we were able to do filings, and we expect that, you know, the approvals for the same should come over the next 14 to 16 months. Okay, sir. That's really helpful. That's it from my side. Thank you so much. Thank you. A reminder to participants, if you wish to ask a question, please press star 1 to ask a question. We'll take our next question from the line of Dheeresh Pathak from White Oak Capital. Please go ahead. Thank you. For the international formulation business, what is the share of brand generic in that INR 1,000 crores of revenue for the full year? For international formulation business, we really don't divulge geography-wise or portfolio-wise share. Okay. To the earlier question of the growth in the India business, organic growth down from mid-teens from nine months to fourth quarter, low double digit. I didn't understand the answer. You're saying that there is no base impact, there's no impact this quarter, and we are growing faster than the market. Are we saying that the market growth decelerated in the fourth quarter, and what is the baseline growth to expect? Is it mid-teens or is it low double digit? I think the conclusion drawn there is slightly erroneous to what you have stated right now. When you look at the Indian market overall, let's understand at what rate the Indian market has grown over the last 12 months, right? The Indian market grew at 8%, okay? Which I'm talking about total, right. Compared to that, our growth was pegged at 22%. In the last quarter, of, you know, when you look at January, February, March, MAT, the IPM reflection was slightly higher, which was at 14%, 15%, to what Nikhil had stated, that that was because of some categories growing significantly because of a very high season, specifically in upper respiratory as well as conjunctivitis, right? Just because certain categories have grown significantly, that does not mean that, you know, we should be stressed about why, you know, we have not been able to grow those categories, because we don't have the portfolio in those categories as well. As far as our growth momentum is there, it is maintained. Overall, Q4 tends to be slightly softer than Q1, Q2, and Q3, that is what the reflection is in the terms of our double-digit growth, but there is nothing else to be stressed about. No, I'm still not understanding. What I'm saying is, I'm not comparing your growth to the market growth rate. I'm saying, as per your disclosures, for nine months, your growth in organic growth in your business, leaving the market aside, organic growth in your business was mid-teens. In Q4, it is low double digit. Clearly there is a deceleration in your growth in the organic portfolio. What is the correct assumption to have in mind? Is your organic portfolio growing in low double digit or is it growing in mid-teens? The right way to look at it is that the organic portfolio is in a steady state scenario, growing at mid-teens only. March tends to be soft, and that's a reflection of what you have seen. Okay, thank you very much. Last question: Azmarda, in one comment, you said volumes are up 20% pre-exclusivity. In the presentation, it says March month volumes are flat. Can you just explain, like, volumes pre-exclusivity, are they up, are they flat for you? Pre-exclusivity, the volumes are up. When we said that, you know, volumes are up 20%, they are as per the latest figures, reflection of April, if you look at it, and you compare that with pre-LOE and post-LOE, you see a significant difference, which is 20% up delta. The market volumes are up, like, 50%, we've lost some volume market share, right? We have lost some market volume share. Our overall value share pretty much remains the same. We have maintained an 18% overall market share. Yes, with competition increasing, generics coming, there will be some kind of competition which will be there. Overall, we've been able to maintain the run rate and market share, which we had projected. Okay, thank you for answering my question. Thank you. We'll take the next question from the line of Shrikant Akolkar from AMSEC. Please go ahead. Hi, good afternoon. Thanks for the opportunity. Just on the CMO business, is it possible for us to rank the largest market for our CMO business? Is it possible to talk about which markets are seeing very strong demand currently? ...The way business is poised, I think overall Southeast Asia is doing well. That is where we stand. We have business in MENA region. We do business in Australia, New Zealand, Canada also. If I have to rate, I think Southeast Asia has performed much better for the last financial year. Okay. On the domestic markets, we have seen very strong price increase, lead growth in FY 2023. Within that, I think ranitidine probably also saw some of the very strong growth in last two years. Going in FY 2024, what should be the outlook on the pricing? Specifically on ranitidine, if you can provide commentary on pricing, as well as one of the litigations that have been filed in the Gujarat High Court. The litigation part, we still have to receive the details, which we have not got, so I can't comment on that. On the pricing point, if I have to talk about, we will adhere to what pricing policy government adopts in terms of the control portfolio. Otherwise, outside the control portfolio, what we think will be competitive in the market, there is a price increase. It will range between 6%-7%. That is where we will stand. What was your first question? on ranitidine, it has seen very strong growth because of pricing. You should see high single digits to double-digit growth in ranitidine. That is what you should see. All right. All right, thank you so much. Thank you. We take the next question from the line of Cyndrella Carvalho from JM Financial. Please go ahead. Thanks for taking my question. Am I audible? Yes, yes. Yeah. First question is, we are seeing increasing strong growth on the annual basis in the domestic market. We are growing the domestic market share also. Somewhere, like, I'm trying to understand the gross margin profile. Is there any impact of the raw material cost still there fitting in, which is troubling us, apart from Azmarda? Should we be able to see a 65% gross margin level in FY 2024? Can you help us understand this? I'm looking at an annual level. I'm not looking at quarterly numbers. That's a fair assumption which you made in terms of FY 2024. If things remain the way they are, then we should certainly be looking at those levels. From an FY 2023 perspective, you know, specifically for the first six to eight months, there was inflationary pressure. Since end of Q3, Q4, we are seeing that pressure being eased out. As we mentioned earlier, if the situation remains the way it is, and with the Azmarda sourcing mix also improving, we should be closer to the number which you stated for FY 2024. Okay, this is helpful. Now coming to the PAT growth numbers, I mean, we understand the acquisition impact, we know that. Is there any thought process to pass on the EBITDA level growth, or should we start seeing it more from FY26 perspective, that this growth number at the EBITDA level will start flowing in? Of course, I know our focus on acquisition. I'm just trying to understand what is the management thought process on this working or looking at the PAT growth levels. You're absolutely right. I think, you know, there should be a transformation of the EBITDA growth into the PAT numbers. As we are looking at FY 2023, 2024, you will start seeing some of that reflection. The drivers clearly being, one, you know, strong cash flow generation that the business is seeing. We will sort of turn cash positive or, you know, zero debt by Q3 this year. That will take off, you know, a fair bit of charge from a borrowing perspective on the P&L. Second, from a perspective of the investments in M&A, you know, as you know, each of these assets are seeing significant growth, both in terms of top line and bottom line. That operating leverage impact of EBITDA will also start reflecting in PAT. Those will be the two drivers. As we move on from here, with the portfolio we right now have, you will start seeing, you know, improvement in the PAT margin as we move forward. Okay, thanks for that confirmation. You had mentioned ROCEs of around 35%. Any update, when can we expect these in terms of timeline? Can you highlight, what should be ideal timeframe to look at, these levels of ROCEs? If you look at last year, we are at a ROCE of about 21%. Steady state right now, with no more acquisitions, we should inch up to about 25%-26% by end of next fiscal, and you will see that sort of sequential growth happening year on year to ROCE. In the next, say, about 3 odd years, we should target 30% upwards in terms of ROCE. Okay, this is helpful. One more thing, on the performance side, on the India performance side, I'm looking at the prescription growth that you have highlighted in your PPT, as well as your MR productivity. It has improved significantly. What are the key? Is it, again, our top 3, 5, 6 brands are the key drivers of this, or even the new products that we are able to bring on our platform are also aiding the entire process here. Can you help us understand the mix a bit in terms of, you know, the MR productivity as well as the prescription growth drivers for us? That's it. Thank you. It's a mix of many things. First of all, I would like to talk about, it starts with discipline in terms of the way… The way discussions happens with our feet on the ground, in terms of what we expect from them to do, when they visit healthcare professionals, in terms of what products have to be detailed. Company has not shied away in terms of investment that we have done with equipping all our teams on the ground with iPads, equip, looking at in terms of the investments that we have done in putting teams in head office, in aspect of sales force excellence, sales force automation, getting into the world, embracing technology, getting into the world of digital detailing. All those things, over a period of time, it has helped us in terms of when we talk of prescriptions and when we talk of productivity enhancement. Obviously, the mix has been a combination of all our big brands, which I shared in my commentary, which only have been gaining ranks, which only have been gaining market share. Also, there are some other brands outside the seven, eight brands, which range between INR 10 crore-INR 15 crore revenue annually, which also have been growing handsomely, and there we are gaining good momentum. Last but not the least, overall, the acquired portfolio is also helping us in terms of garnering more and more prescriptions, particularly in mass category, be it in the area of probiotic, be it in the area of now heart failure, be it in the area of organic portfolio for Rantac and Metrogyl. This is overall, which has, it has helped us in terms of being now 15th ranked company for prescriptions and our productivity going up from INR 5.4 lakh to INR 6.2 lakh. That is where we stand. By the way, we have top two brands in top 10 prescribed brands in the country, which is Rantac and Metrogyl. That also, I think details are there as when we talk of prescriptions. I hope this helps you. Thank you so much. It does. All the best. Thank you. We take the next question from the line of Sayantan Maji from Credit Suisse. Please go ahead. Thanks for the opportunity. My first question is on the guidance that you've given that organically, we are expected to do 300-400 basis points above IPM. Now that, you know, Sporlac, Azmarda, they are also in the base, and whatever synergies are left, you know, we will continue to grow. Is it coming more from your base molecules of ranitidine, Metrogyl, and Cilacar, or is it more from, you know, the acquired brands further ramping up? Both. If I have to talk about Sporlac probiotic, we started, we had 7.5% market share. Today, we are close to around 9%-10% market share. We have huge opportunity in terms of where we stand. The revenue at that time was close to INR 60 crores when we acquired, the revenue raised INR 90 crores. A lot of, I think, better penetration that we have done across the country, better distribution practices, lifecycle management, launching new versions of Sporlac. That is what we have done. Azmarda, Kunal spoke about in terms of where we stand. More, let me talk about the burden of disease. 15-20 million people suffer from heart failure. Only 10%-15% are getting the treatment. Now with the cost of therapy annually going down from INR 45,000-INR 25,000, the way we are facilitating with 500+ heart failure clinics that we are running with healthcare professionals and point-of-care diagnosis being available at that place, I think more and more patients are only going to get benefit who are suffering from heart failure. Equally, when you look at Razel, rosuvastatin, the product that we have acquired, we are 10th-ranked company in rosuvastatin in the country. We want to only inch up, we want to gain ranks. There we have good portfolio. This was what more from an acquired perspective. Equally, I think the teams, both on the ground and in the corporate, have done good work in terms of new launches, lifecycle management for our organic brands, incremental innovation, exploring those opportunities, whether we talk of Metrogyl. Metrogyl, we have traditional Metrogyl, 200 and 400 milligram, but the entire focus now is on Metrogyl ER 600, which is BD dosage formulation, which is more accepted from surgeons and gynaec. We acquired this product called Z&D, and that is Z&D zinc supplement, from Dr. Reddy's in the form of drops. We are now launching Z&D Liquid syrup formulation. Lot of opportunities are there in terms of when we look at how do we want to look at growing better than the market, and we have identified our spaces. What earlier also I spoke about, that we don't want to go wide and start getting into new category of, portfolio and launch new businesses, but we would like to do better lifecycle management. We would like to penetrate deep and increase our market share in the existing portfolio that we have got. Sure. Thanks for the answer. My next question is on, you know, now that we are a formidable player in the cardiac therapy, we are now ranked eighth with addition of Azmarda and Razel as well. Do you see some rub off benefit, in, you know, improvement in Cilacar prescriptions among cardiologists? Do you expect this, you know, that there's further headroom to this? Not only from cardiologists, we are looking at many, not only rub off benefit, from the diabetologist also. If you look at Cilacar-T, that is what I spoke, is now closer on 120 crore brand. It's a drug of choice for diabetic hypertensive. Cardiology, overall, we can share details with you in terms of the prescription that we are gaining at the level of cardiologists for our Cilacar franchise. It's a combination of plain Cilnidipine, Cilacar-T, and now teams are also focusing on combination of Cilnidipine metoprolol, which comes from cardiologist. Combination of Cilnidipine and nebivolol, which once again, the target specialty is cardiologist. Also two versions of Cilacar, which are triple combo, that is, Cilacar TC, Cilnidipine, telmisartan, and chlorothiazide. Metoprolol. Cilacar, telmisartan, and metoprolol. All these prescriptions we are targeting to get from cardiologists as a specialty only, cardio, diabeto, endo. That is the agenda going ahead? Okay, and my last question is on results. Like how you mentioned that it's more like there were or in acquired science and portfolio, there are multiple synergies in terms of, you know, improving the geographical reach or improving prescriptions among, you know, general physicians as well. What would be, say, the top one or two synergies, revenue synergies that you expect to play out in the acquired Razel franchise? Are there any gaps that you see where JB is already strong, which you can, you know, fill to grow this franchise? The teams on the ground, I met a couple of teams when I was in Jaipur and Delhi. We've been a dominant player in the world of hypertension. People, the teams on the ground have started organizing cross talks of diabetologist, cardiologists, and physicians under the banner of lipi tension, lipid-lowering pills and hypertension treatment tablets. What we are trying to do in terms of how do you partner with the healthcare professional and position yourself as a company who cares for their patient. We try to run different types of programs, whether it is for doctor education, whether what we ran a campaign for consumers in the world of hypertension, BP Right Karo, in terms of how you can create more awareness at the level of patients with the help of healthcare professionals. By the way, just going and promoting product in the clinic of doctor is not going to give you results. That era is gone because you are not first to launch, you are 10th ranked company. You need to either have a portfolio of lifecycle management or a different drug delivery in terms of what you have, or to more partner with the healthcare professional, or directly go to the consumer with the help of healthcare profession in terms of how they can live a better quality of life and drive better adherence. These are some of the elements that we use, and at the end of the day, better segmentation, targeting of the right SKU to the right specialty with a discipline helps you long term. That is what we follow at JB. Okay, got it. Finally, can you give the number of the, you know, revenue contribution from the 4 acquired portfolio in this quarter? I think what we are sharing the presentation, it is close to around INR 300 crores for the year. For the acquired, we have given the growth rates, right? It is close to INR 80 crores. INR 80 crores, okay, sure. Okay, thank you so much for answering the questions. Thank you. We take the next question from the line of Prakash Agarwal from Axis Capital. Please go ahead. Yeah, hi, good afternoon. My questions are related to, you know, two, three things. One is, you know, if you see the AIOCD data, it had a soft April, and I hear the May is also soft, and the main reason was volume decline. I heard you saying that you are seeing good growth across the new acquired brands, double digit and one product, you said 20%. What do you think is the key here, and do you think the market volume growth can revive soon? First of all, Prakash, we unfortunately don't follow AIOCD data, but we subscribe to IMS. We subscribe to SMSRC prescription audit data, and I can talk more about that if you want to hear more about April. April, the market grew at around 11% as per IMS data, and we grew at around 18%. Out of 18%, JB volume growth was 11%, which was highest. We were once again the fastest growing company in top 25. Obviously, when you look at INR 2 lakh crore market in IMS, we cover close to INR 45,000 crore market. That is what is our penetration when we look at the portfolio that we have bought. Prakash, what we have done, we have identified our winning propositions and our winning portfolio, where we would like to either gain market share, like what we want to do for Sporlac, what we want to do for Razel, what we want to do for Azmarda. Azmarda, at least, we, the status now is at least we want to maintain our market share. Somewhere in the world of hypertension, with 50%-80% market share, there we are looking at how do you influence the ecosystem? How do you drive better campaigns with the consumers? That is what we are trying to do in the company. That is how at least what we can talk about ourselves. Market tomorrow may grow at 8%, market may grow at 11%, 12%, but this is how we are focusing, the way we are positioning as a company. Being focused, this helps us. We are not into 15 categories of portfolio. We are into half a dozen. That helps us with now 3, 4 teams. One team focusing on chronic business, one team focusing on acute business, one team focusing on hospital, and your overall business in respiratory and pediatrics. That is the way we have structured. That is helping us in terms of driving better volumes and better prescription growth. Perfect. You mentioned your volume growth was higher, so this price increase that companies are taking starting 1st April, so this is more from effective from second quarter, is what I understand from? Prakash, every company carries 45 to 60 days inventory, so that price benefit probably you should start seeing probably June starting or some part of May. That is what practice I have seen over a period of time. Sir, you mentioned, you know, in your presentation, slide 19, you've given this MR productivity. If you could just break it down into the field force and the manager and the total number of, you know, the MR staff we have. This is MR productivity, nothing to do with managers. We calculate productivity based on the number of MRs. There's nothing to do with managers. Okay, and what is that number? It is around INR 2,200. INR 2,200. Okay. Would you split it versus chronic and acute? Uh, fifty/fifty, fifty, sixty. So it is fifty-five, forty-five. That is, that is how- 45 being acute? 45 being acute, 45 being chronic. 50/50, you know, 50/50 would be a good, yeah, good figure to hear. Okay. In, you know, the last slide, you mentioned that our target is to, you know, in the medium term, to achieve 60% in chronic share. Yes. Where are we today, and, where are the gaps that you plan to address over the medium term? From a gap perspective, I think we have been addressing every 6 months. We start with what we did with Cilacar and Nicardia in terms of life cycle management. That is, that is what we started doing when we in early 2021, when we acquired Azmarda. That is once again in the space of chronic part, then we acquired Razel. I think we have got the right portfolio now in terms of where we are. We are 10th rank company in rosuvastatin. Only opportunity for us is to gain ranks, is to gain market share. Cilacar, Nicardia, we want to look at what we can do with the line with the extensions, where we can look at how we can gain market share there and build the ecosystem. Alka, right now, the competition is stiff, but I think the story will be very different in six months, where you will see selective players and being patient and looking at in terms of continue to do what we have planned. From a chronic perspective, we want to be a 60% chronic portfolio over a period of time, and probably that should happen 18-24 months from here. Yeah. We have got a portfolio. We have got a portfolio. It is not that tomorrow we are looking at anything that we have not got. This will happen with the existing portfolio. With the existing portfolio, you plan to move it to 60% is what I understand. Is that right? Yes, yes. there would be some additions where if there are any gaps. If we, if it comes across, yes. Yeah. The current number is what, sir, for chronic? Closer to 53. Okay, perfect. This is very helpful. Thank you and all the best. Thank you. We take the next question from the line of Alka Katiyar from Centrum Broking. Please go ahead. Hi, my question has already been answered. Thank you. Thank you. We take the next question from the line of Ankit Shah from Canara Robeco. Please go ahead. Hi, thanks for the opportunity. Sir, you mentioned that by Q3, we'll turn net cash, and you also touched upon M&A opportunities, but if attractive opportunities do not turn up, can you give some sense on how the capital would be deployed, you know, going forward? I can only give you scenarios, because like you rightly said, you know, we don't know how M&A, et cetera, and some of the other investment opportunities are minute. Currently, if you look at our borrowing, it's about INR 550 crores, and it's at an average cost of about 8.5%. We will watch out the situation, you know, for 1 or 2 quarters. If there is no significant investment opportunity, we can start repaying some of the loans. That is always an opportunity. In the short run, we are invested in liquid and mutual funds, which generate in the range of about 7%-7.5%. Incrementally, if you see what we are carrying is about, you know, 1.5% of cost, which at the right moment during the year, we will take a call in terms of, you know, whether we want to start repaying the loans or there is more opportunity to invest. Just to add to that, there's no real significant greenfield expansion. Yeah. Our CapEx addition is largely steady at the rate of INR 70 crores. Okay. I hope we answered your question. Sir, in case you do turn a net cash and you don't find investment opportunities, I mean, would you deploy, I mean, would it be distributed to shareholders? Like, what will do? Ideal would be to repay the debt, right? You would want to start repaying the debt. I'm talking about once the debt is repaid, by maybe, end of next year, it might get repaid. At least our calculation shows we'll have cash enough to run the liquidity of the company. I mean, ideally, we would want to retain that level of cash in the company. I think that question probably will arise next year, and we'll address it next year when we get there. Got it. A couple of clarifications on finances. On the other expenses front, sequentially, there was an increase of around INR 7-8 crore or so. Yes. Any non-recurring item in that, or this kind of run rate, will continue going forward? there are a few non-recurring items. One, there have been a few integration-related costs as we acquired the Razel portfolio last quarter. There were a few integration-related costs that we've taken. In addition, some of the expenses, seasonality changed this year, so some of the expenses moved into Q4. I think overall, from a year perspective, like I covered in my commentary, I think we've seen reasonable operating leverage, and some of this should even out as we move forward, right? I think you should look at the year as a whole and not look at really a quarter rate trying to extrapolate numbers. Right. Would you be able to quantify the integration-related cost in this quarter? We wouldn't want to quantify. ... Okay. Like I said, see, it's rephasing and integration. Look at year as a whole. Don't sort of try and extrapolate the quarter. Right. Similarly, on the depreciation side, there was an amortization of cost of INR 14 crore related to brands. This will continue at a similar rate going forward as well? Yes, it will be at a similar pace for next. Got it. Yeah, those were my questions, sir. Thank you so much. Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. I would now like to hand the conference back over to the management for closing comments. Over to you, gentlemen. First of all, thank you for attending the annual conference call for JB Pharma. Just once again, in my concluding remarks, I would like to share the overall guidance that we see for next couple of years. Business growing at around 12%-14%. EBITDA growth, we should be growing at around 16%-18%. EBITDA margin, what we have revised to 25%-27%. That is what we would like to at least share. We would like to see in terms of the journey that we have traveled, in terms of the portfolio for India business, organically, inorganic expansion that we have done, how do we continue to at least build a robust company in India, with gaining ranks in prescriptions, not only in terms of value. Couple of opportunities that we see outside India is in the world of CDMO, which I shared earlier, more therapeutic options that we would like to share with our partners, and equally, new launches in the BGX world. Net-net, the journey that we have traveled as the leaders in the company, and I can talk on behalf of our company, that we want to see our organization and we want to build the organization, which is resilient to difficult times. You don't know, you can't predict the future, but overall, it has been a good year for us in terms of what we, what milestones we have achieved in terms of INR 3,000 crore plus revenue and close to INR 765 crore EBITDA. Also, happy to share in terms of where we stand from a guidance perspective. Thank you, all. Thank you all for patient hearing, and we will continue to be in touch with all of you. Thank you, members of the management. Ladies and gentlemen, on behalf of JB Pharma, that concludes this conference call. Thank you for joining with us. You may now disconnect your lines.