Ladies and gentlemen, good day, and welcome to the Q2 FY 2024 earnings conference call of J B Chemicals & Pharmaceuticals Limited. As a reminder, all participant lines will be in the 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, then Zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Jason D'Souza, Executive Vice President, JB Pharma. Thank you, and over to you. Thank you, Yashashree. Welcome to JB Pharma's Q2 earnings call. I would like to introduce the management who's present at this call. We have Mr. Nikhil Chopra, CEO and Whole Time Director, JB Pharma; Mr. Kunal Khanna, President, Operations, JB Pharma; and Lakshay Kataria, CFO, JB Pharma. I would like to hand this over to Mr. Nikhil Chopra for his opening remarks. Over to you, sir. Thank you, Jason, and a big welcome to all of you for the conference call for JB Pharma. Overall, we are gathered to discuss the operating and the strategic progress made by JB Pharma during quarter two and first half of the year. Let me first talk about quarter two. During quarter two, the business delivered a healthy blend of domestic and international business growth, with expansion in domestic business led by our chronic segment and acquired portfolio. Sharing quick highlights of the results, in quarter two FY 2024, we saw revenues of INR 882 crores, which is an increase of around 9% year-on-year. With a combination of good product mix and execution of our strategy, we saw gross margins rising strongly by 350 basis points in quarter two FY 2024 over the last year. We have a dedicated approach on the cost containment, and this has led to translation of good performance into higher operating EBITDA margins at 28.5% related, relative to 25% in the same period last year. Domestically, we saw continued traction in chronic therapies and our acquired portfolio, driving domestic business growth of 11% year-on-year to INR 481 crores in the same period. JB Pharma featured as the fastest growing company in top 25 within IPM, as per IQVIA at September 2023 data, with a growth of around 18% versus IPM growth of 10%. We have also earned the distinction of being the fastest growing business among the top 25 in chronic segments, with 18% year-on-year growth versus IPM chronic growth of 12%. Our entire hypothesis of making big brands bigger continues to be there, with our big brands only gaining ranks and improving market share. The focus on building brand franchise remains, and we have seen a good performance from all our big three franchises. That is Cilacar franchise for hypertension, which is nearing now INR 600 crores, the Rantac franchise, that is INR 400 crores, and Metrogyl franchise, which is now close to INR 300 crores. In a short period, also, we are delighted to share that we have now built another 100 crore franchise, which is in the form of Sporlac. The Sporlac brand has seen a significant gain in rankings and is now ranked 336, close to entering the top 300 brands in Indian pharma market. Now, giving highlights of international business. The international business recorded revenue of INR 401 crore in Q2, FY 2024, and INR 808 crore in H1 FY 2024. Excluding South Africa, the business grew double digits in Q2, FY 2024, and mid-teens in H1 FY 2024. CDMO has witnessed a sustained momentum, giving us revenue of INR 115 crore in Q2, FY 2024. Let me throw some highlights of our financials for first half of the year. For first half of the year, that is for six months, revenue saw a growth of 12% at INR 778 crore. The domestic revenue was INR 970 crore, growing at 14%, aided by a favorable product mix and acquired portfolio. In international business, the formulation segment grew, grew by 10%, contributing INR 538 crore and CDMO segment 11% at INR 234 crore. Rest of the world export contributed significantly to the growth in the first half. Operating EBITDA, which excludes the ESOP charge, was at INR 494 crore versus INR 392 crore for the corresponding period. Operating EBITDA margins saw an expansion coming in at 27.8 crore, 27.8% versus 24.6% in the prior year. This, I'm talking of first half of the year. Operating cash flow was higher at INR 421 crore versus INR 279 crore in H1 FY 2023. Gross debt, gross debt reduced to INR 427 crore as on 13th of September 2023, versus INR 548 crore as on thirty-first of March 2023. Net debt stood at INR 18 crore as of thirtieth September 2023, versus INR 266 crore as of thirty-first of March 2023. We have invested close to INR 93 crore in CapEx for first half of the year, mainly in expanding our lozenges facility in Daman, and estimated CapEx is of INR 145 crore for the current financial year. With fresh fronts opening up in the geopolitical situations, we are cautious about our approach in international, in international markets. Using the learnings from past periods and favorable trade and logistic cost, we are driving a curated portfolio in selected markets. The way forward is going to be marked by superior execution of our stated strategy in our domestic business, especially for chronic side. Together with CDMO, the combination of India and CDMO should contribute 75%-80% of overall sales, mid to long term. We are investing in making our big brands bigger, as I shared earlier, and we navigate growth in chosen categories of cardiac, of cardiology, probiotics, pediatrics and gastro segments in domestic market. The international business will focus on to expand the offering in CDMO and ramp up our presence in identified ROW markets, led by pro-better productivities and cost. Given that the operating environment continues to throw up new challenges, it will be an endeavor to keep control on cost across board so that we have the headrooms to react and readjust. I would also like to add that being sustainable is just as core to us as our performance is. We have published our second sustainability report recently and urge those interested to access it at our website. Thus, I have come to conclusion of my remarks. I will take this opportunity to wish our CFO, Mr. Lakshay Kataria, the best on behalf of everyone at JB team, at JB, for his sterling contribution to the company. Also taking this opportunity to wish everyone on the call, to you and your family members, a joyous and happy Diwali and a prosperous new year. Now, I hand it over to moderator and request to keep, to get the forum open for the question and answer session. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone 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. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We have a first question from the line of Rashmi Shetty from Dolat Capital. Please go ahead. Yeah, thanks for the opportunity. So, just want to know and understand more on the export formulation business. You know, where you mentioned that, you know, ex-South Africa, we have grown mid-teen. But in South Africa, since you have taken some restructuring, so what was the rationale behind it? What exactly you have done? How much, you know, sales had we had foregone in this quarter? If you can give more color on it. So South Africa, we have taken a haircut of around, annually you should assume that it should be close to around INR 120 crores. So for first half of the year, it is close to INR 60 crores. What we have done is some part of tender business, which we were doing with government, we have let go because the margins were thin. So and more focus, we are asking our teams in South Africa to put in private market. We are getting into some consumer business. We are getting into some launch of new lozenges. We are closely working with Clicks and Dis-Chem, who are the chains in the South Africa market. That is what we are trying to do. So outside South Africa, if you look at our DGX and CDMO business, they are showing handsome growth. That is what we were trying to communicate, and that is what we have done overall, resetting our base for our South Africa business for the current year. Sir, this entire INR 60 crore is gone from this quarter only, or there was some part sitting in the first quarter also? This quarter is INR 30 crore. So assume INR 25 crore-INR 30 crore every quarter. Okay, and INR 25-30 crores in the first quarter, and more 60 crores is expected to go- Yeah. in the second half? Yeah. Yes, yes, yes. These products were mainly antivirals, anti-infective sort of the products, or which, which kind of products? It was a mix of genericized. It was a genericized portfolio, a mix of antibiotics, anti-diabetics and the cardiology segment. But Rashmi, also, one thing that I would also like to add, that this entire INR 120 crore does not make any big impact in our Okay. overall EBITDA margins and EBITDA absolute value. Okay. So the gross margins, which we have seen improvement, is majorly coming from a higher chronic share, and to some extent, which is coming from this, rationalization of this, tender business. And third is the CDMO contribution, which is where there is a big weightage from one or two big players, which has overall helped us to maintain our gross margins. In the CDMO business, this INR 115 crore, you know, quarterly run rate, which we have established, this will be continued in the second quarter, or we are expected to see higher number because, you know, the winter season will be setting in? Winter season has already set in, in that part of the geography. And if when you look at us as a company in the world of CDMO business, if you look at in last 12-18 months, Rashmi, almost we have doubled our business. So this, the way this business has trajectory, I think first half of the year we do 60% of the revenue. You should see some softness in quarter three. I think quarter four, we should be back to where we are today. And our mid to long-term plan, which I've shared earlier, continues to be there, with this business now contributing around 12% to overall revenue for JB, which was last year close to $50 million. We continue to stick to our commentary, where we want to take this business to $100 million in mid- to long-term vision. Understood, sir. And so one more question. You know, as we are generating good cash, we are looking for more M&A activity or, you know, this cash will be used to pay off debt completely in this year. What I meant is the long-term debt. There's no long-term debt. We are conceptually, we will be basically, see, we are generating close to INR 500 crore cash every year. So irrespective of... Let us keep the debt and the M&A issue separate. Irrespective of debt being there or not there, we continue to evaluate assets, and that is what we have seen. We as a company have have done around 4 acquisitions, invested close to $200 million, buying around INR 275 crore revenue in India. And wherever we see right opportunity for us, which has got more synergy with the business, where we see payback period close to 7-8 years, and where we see a potential quality asset, we'll be more than happy to invest. Okay, sir. I have more questions. I will get back in with you. Thank you so much, and Happy Diwali! Thank you. Thank you, Rashmi. Thank you. A reminder to participants to press star and one to ask a question. We'll take our next question from the line of Abdul Kader Puranwala from ICICI Securities. Please go ahead. Yeah, thank you for the opportunity. So just back on the India side, so in the presentation, you talked about the acute growth getting slowed down. So I mean, can you just provide some color as to, for the quarter, you know, what would be your growth in acute brands like Rantac and Metrogyl, and vis-a-vis the chronic growth for the quarter? So if you look at overall market, if you look at quarter two, the acute portfolio grew at around 6%. And we at JB also, the growth was 6% for acute. So you should, you should look at our overall Rantac, Metrogyl, Rantac, Metrogyl, Praji grew at around 5%-7% for the quarter. And if you look at first half of the year, Abdul, the acute market, Indian pharma acute market, grew at 7%, and we also were in line with that growth. That is where we stand. Our portfolio is more dominant towards the GI part of acute, if you look at Rantac, Metrogyl, Sporlac. Mm-hmm. So the way we see traction in first half of the year, unfortunately, for us and fortunately for the betterment of the mankind and humanity, that people did not suffer from the GI infections. That is why you don't see that traction, which we see every year for JB portfolio in acute. That is what we would like to share. Going ahead, I think what I shared earlier also, the focus will be how do we improve our chronic contribution in India business, where a lot of effort has been put by the JB team in building big brands, particularly in hypertension, and doing justice to the acquired portfolio in the field of heart failure, in the field of statin, and launching some new portfolio in the field of diuretics. So we'll continue to focus on chronic, and as and when we are supported by acute season, I think the portfolio is there, and I think the teams will do the needful in the doctor's clinic. Yeah. And, and just to add, you know, to the point of chronic, if we look at the chronic growth scenario in quarter two, the IPM chronic grew by 9, whereas we grew at 40. And for H1, the chronic growth was 10%, and we outpaced that by 8 percentage points, growing at 18%. Yeah. Great. Fantastic. And, so for the full year, then, you know, what is the kind of growth we should bake in for India? I mean, 10%-15%, something, still looks achievable and reasonable for the full year? See, the Indian pharma market, if you look at MAT September 2023, is growing at around 10%, and we are growing at around 18%. Indian pharma market should grow between 8%-12%, and we should be 200-300 basis points better than the market. That is what I have been stating in my commentary, if you hear it. So you should expect us to grow at around 12%-14%. Sure, sir. And so from your end, do you have any plans to add any field force for any particular segment or any new segment to you, you would be planning to enter? Not as of now. I think we have adequate presence in, on the ground. We have close to 2,200 medical reps, and we are meeting close to 2.5 lakh doctors across pan-India. And probably, the productivity that we are expecting this year, we should be touching INR 7 lakh, and we should be pressure testing ourself in terms of how we can inch up the productivity and grow at around 10%-12% next year. So in near future, we are not looking at adding any as is, medical reps on the ground. Got it, sir. Thank you, and wish you all the best. Thank you. Thank you. Before we take the next question, I would like to remind participants to press star and one to ask a question... We'll take the next question from the line of Rahul Jeewani from IIFL Securities. Please go ahead. Yeah, hi, sir, thanks for taking my question. Sir, can you please comment on this capacity expansion which you are doing on the lozenges business? Because if I remember correctly, our utilization on the lozenges plant was around 55%-60%. So what necessitated this CapEx for the lozenges facility? See, Rahul, when you look at the capacity expansion, it has to be looked at it from two perspectives. One is the debottlenecking of the packaging lines, which we have, right? To match the manufacturing capacity. And the other part is the long-term land acquisition, which we have taken, for which we are not putting up any capacities right now, but that's a plan which is more kind of futuristic, so that, you know, going forward, you know, if we have to double the manufacturing throughput 2-3 years from here on, we already have the land available, right? As we have stated earlier, we have a manufacturing throughput of close to 17-18 crore lozenges per month. Our packaging throughput was close to 12-13 crore lozenges, which will match our manufacturing output by end of December. The significant investment which you see in the CapEx is actually is for land acquisition, which is more of, you know, futuristic preparation if we want to double our manufacturing capacity 2-3 years from here on. That land was very adjacent to our current unit, and therefore we saw synergies because of all the approvals which we have with our current principal partners, so that we don't have a dispersed manufacturing scenario, and it also helps us, logistically. Sure, sir. So, of this INR 145 crore CapEx, which you will be spending this year, what was the quantum for the acquisition of the land, if you can disclose? So land acquisition is INR 50 crore, right? And the other, we have always maintained there is close to INR 70 crore of maintenance CapEx, which anyways goes. And we are also kind of expanding our granulation tablet unit, but that's again, a very marginal CapEx expansion. So mainly the investment is on land acquisition, close to INR 50 crore. Sure, sir. And sir, you indicated that obviously our growth in the India business this quarter is seasonal. But what we hear from some of your other peers is that the season has started picking up from September onwards. Even the October month, growth was very robust for the domestic market. So have we also seen Rantac and Metrogyl picking up from third quarter onwards? So please understand, Rahul, which I stated earlier, there are two hypotheses which are coming in. First of all, October, November, December is not a... Overall, what you will see in Indian pharma market, you will see good growth because of the base being low. Indian pharma market monthly reports around INR 18,000-19,000 crore, and October base was INR 16,000 crore. So you will see growth as if absolute value, quarter and quarter, you will not see growth. Second, for us as a company, our portfolio is is majorly, majorly being, dominant, dominant in the world of GI, Rantac, Metrogyl, Sporlac. So that fraction we could not see. That is why, that is what was a commentary which I stated earlier. But I think what was stated also parallelly, that the entire effort of being improving the entire chronic contribution to the business, looking at how we can with giving justice to the brands that we have now in chronic space, that will be the agenda going at, going ahead for us. Sure, sir. And sir, one last question from my end, before I hand back the queue. So in terms of operating EBITDA margins, in first half, we are closer to 28% kind of a number, versus our guidance of 25%-27%. So are we upgrading...? So any thought process in terms of revising the margin guidance, particularly given the fact that now you are also rationalizing some of your low-margin export businesses, such as the South Africa tender business. So fortunately, Rahul, for us, I think first half of the year, we have been on the higher side of the guidance that we have been giving. So you can take that as a new guidance from us. Okay, sir. So that implies a 28% operating EBITDA margin- 25%-27%. That was the range that we had given. So you can assume that we should be on the higher side of the guided margin. Sure, sir. Thank you. Thanks, sir. Thank you. We have our next question from the line of Shrikant Akolkar from AMSEC. Please go ahead. Hi. Thanks for the opportunity. Can you provide the update of the same business in terms of how should we look FY 2025? Because last two years have been very good for us, and FY 2025 seems to be not a pandemic year or not anyway related to cold and cough year. So how should we look at the growth in cable business? See, first of all, none of our growth was attributed to COVID, right? Even in our India domestic business, when we look at our segments in which we are operating, we don't have any core or adjacent COVID portfolio. So our business particularly was not kind of aided by any COVID portfolio. All the growth which we were driving was, is essentially excluding COVID. So it really doesn't affect us much with the external market changing and, you know, everyone estimating that, you know, it's no longer going to be a phenomenon next, next year. Even in the CMO business timing? The CMO is plain cough and cold. Again, you know, we saw a significant uptake last year, but the good thing is that we have seen similar trends this year as well, and that's the reason why you see in H1. On a quarterly basis, we have been able to maintain INR 100 crore plus run rate. As Nikhil mentioned, we have almost traveled a journey of taking our CMO business from close to INR 65 crore to INR 110 crore levels right now. Q3 generally tends to be soft, but from a mid and long-term perspective, as we see, you know, FY 2025 and next year, we have our plans with our key clients. We are looking at life cycle management of brands, introduction of new portfolio, so the growth trajectory will continue. Understood. For this quarter in domestic market, what was the actual chronic mix? We are close to 52%-53% chronic. Okay. And, coming to Azmarda, so, can you talk about the addressable market? And last quarter, we had 16%-18% market share in that market. So how has been the improvement, between the quarters? So the good thing is that the market has grown. Of course, you know, when we were talking about the pre-LOE period, somewhere around December, the market was closer to 1 million, 10 lakh units, per month, right? Right now, the market is trending at closer to INR 16-18 lakh units, per month. Our overall market share continues to be in the range of 16%-18%, despite the price erosion, which we have taken. And, you know, our steady state run rate forecast was, we had always estimated closer to INR 1.4-1.5 lakh units, and we are pretty closer to maintaining that run rate. Understood. And lastly, on Razel, so since we have acquired, how has been the impact on the profitability of the product? From a profitability standpoint, you know, it has, of course, contributed very well. You also kind of when we were talking about our overall gross margin profile, we did mention that the reason why the margins have gone up is because of the chronic mix in India improving, and some of these acquired assets have significantly contributed to that margin going up. From a top-line acceleration perspective, you know, when we acquired the brand somewhere around December last year, it was closer to INR 4 crore, and we are actually closer to INR 6 crore run rate right now. So its margins would have gone up during that period, right? Only for the- Some of the decisions which we have taken in terms of shifting sources and insourcing of brand into our own manufacturing site, have also helped us improve margin, for the brand itself. Understood. And last one, if I can. Just wanted to understand our respiratory and pediatric play. We have launched, I think, the Uncertain. So can you talk about our play in this area? So respiratory, we are present with six products, which are more in the oral space, antiviral, anti-allergic, anti-mucolytic. We have launched nebulization range, which is close to INR 1 crore in the season. That is where we are from a respiratory perspective. No plans of getting into the world of inhalation. Very clear. Pediatrics, we have done fairly well. We meet close to 25,000 pediatricians. We have a dedicated team. And, the business, if you look at pediatric all put together, it would be close to INR 150 crores annually. We are present majorly in the world of gut health with Rantac syrup, Sporlac syrup. We are into laxatives with Laxolite, Laxolite syrup. We have cough syrup. So we have a range of, portfolio in pediatrics, which will only help us to double our business mid to long term. All right. Thank you so much. Thank you. We have our next question from the line of Harith Ahamed from Avendus Spark. Please go ahead. Hi, thanks for the opportunity. So, one of the slides you've commented that the share of domestic and CDMO combined is expected to go up to 75%-80% in the near term. That's a sharp increase from around 68% in the quarter. So what are the timelines that you're looking at for this share increase? Mid- to long-term, around 3 years from here. So if you look at, Harith, when we started this journey, the domestic contribution was 45% and CDMO contribution was 5%. Today, it is almost a combination of 53% and 12%, close to 65%-67%. And 3 years from now, we should be able to be close to 75%-80%. Okay. Can you comment a bit on the growth rates that you're seeing for your legacy brands, like Rantac, Metrogyl and Nicardia? I'm looking at the MAT values that you've shared. Growth rate appears to be strong. You know, we're seeing almost 20% growth in Cilacar, 20% plus, 30% in Nicardia. So are the primary sales growth trends in line with these IQVIA growth rates? So if your question is more alluded towards primary versus secondary, whatever data you see is largely completely in line with our secondary sales trends. When we compare our inventory in the channel, versus the peers, we have possibly the best inventory levels. We do not operate at more than 32-34 days of inventory. F or us, Cilacar, Nicardia continue to be the most progressive brands, and as was mentioned earlier, these are progressive therapeutic segments like hypertension. The life cycle management initiatives which we have taken across these brands have actually helped us drive this level of growth. Okay. Kunal, just to confirm, or just, additional clarity there, so, is it correct to assume that these brands are growing above the company, average, growth for the domestic business, which- Absolutely. Okay. And then lastly, on Azmarda, you know, we've seen a frequent expiry, but when I look at the MAT value for September 2023 versus September 2022, we still managed to record growth in Azmarda. So, have we been able to offset the price decline with additional volumes, and is that why there is still growth that we're seeing in this brand? See, when we compare what is the scenario 12 months back, yes, there has been, you know, a kind of a volume increase which has happened. Having said that, you know, over the last 3 months, we have achieved a steady state run rate in this portfolio. So for all said and done, yes, a large significant percentage of the price erosion has been offset by the volume gain impact, which we have seen. Okay. Thank you so much, that's all for myself. Thank you. We have our next question from the line of Charul Agrawal from Bank of America. Please go ahead. Hi, thank you for taking my question. So my first question is on the cardiac franchise. Given that, we have reached a sizable, a good size over there with the Cilacar brand, being among the top four players in the therapy, how should we look at growth from here? Would we expect the growth to moderate given the scale we have reached, and, or do we see outperformance versus, versus the therapy growth? And, in that case, what would continue to drive growth from here? So overall, the way what we have been commenting on, we want to improve our chronic share within India business. Cilacar is a pivot brand, and it is not only Cilacar play. See, when you talk of Cilacar, INR 600 crore, it's, it's an umbrella brand, and we have 10 different versions of Cilacar. And we fundamentally believe in the approach of STP: segmentation, targeting and positioning. Just to give you example, what I'm trying to say is, when you look at Cilacar T, that is, cilnidipine, telmisartan combination, it's a fastest growing combination, antihypertensive, and the revenue is close to around INR 120 crore. So we have targeted that combination for diabetic hypertensive. Cilacar 20 as a brand for newly diagnosed hypertensives. Also, from a statistical point of view, when you look at India as a country, close to 100 million people potentially suffer from hypertension in the country, and one in four patient is undiagnosed. So the way we are looking at this as a opportunity, that, being 50% market share in cilnidipine franchise with Cilacar as a brand, we have the onus and the responsibility to grow the category. So obviously, to fulfill that, we have to outgrow the market, and that is the agenda going ahead. Thank you, sir. Just a follow-up on that: so when we're talking about growing the market, are we also going to new geographies or, do we continue to focus on, the areas where we have stronger presence? So we continue. But first off, last what I spoke earlier, I think we have pan-India presence. Basically, we go to cardiologists, physicians, GPs, nephrologists for this, our entire presence in Cilacar as a franchise. We are trying to run some patient-centric campaign. We are trying to run some campaigns in terms of how tomorrow people should follow the precautions in terms of monitoring their blood pressure at their home. So all those efforts have been put. Once you have a sizable brand and you have critical mass, this all helps us in terms of what you can do, inverted comma, patient-centric campaign and adherence model that we want to put in place, which will only help us in terms of what more we can do. Also, besides Cilacar, Cilacar T, I think what we have also taken the right steps is getting into the right life cycle management, with combination of Cilacar, cilnidipine and metoprolol, cilnidipine telmisartan. That is dual combination, and then getting into triple combination of cilnidipine, telmisartan, chlorothiazide, cilnidipine, telmisartan, metoprolol. So all this, over a period of time, is only going to help us to make this franchise unique. Thank you, sir. So my next question is regarding the additional therapy areas. So apart from the therapies you are currently present in, are you also exploring other therapy areas? Sorry, sorry, I could not get it. Are we also exploring other therapy? So when you see, I think earlier also what we have stated, we conceptually don't believe in starting things from scratch, and I think the concept which works better for us, for India, is buy versus build. So I think we have an efficient engine, where we look at inorganic opportunities, where we have a good starting point, and that is from a buyer perspective, but also the build that we have put in place is the entire competency model, which we have in terms of how we can grow the asset better. The classical example is, I think, what was stated earlier, what we bought this asset, Razel rosuvastatin, from Glenmark, which was around INR 4 crore, INR 4.5 crore a month, where in a period of 1 year, we have taken it to INR 6 crore. So we see that opportunity in terms of what we can, how we can grow the asset better as compared to where it is placed by putting the right valuation on the table. So that makes us a company which conceptually are able to put right all the tick box for any inorganic opportunity. So very difficult. We find it difficult to start from scratch, so that is not that we would like to get into any category of business starting from zero. Thank you, sir. That answers my question. Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phones now. We have our next question from the line of Tanmay Gandhi from Investec. Please go ahead. Hi, sir. Sir, my question is on the M&As. So can you give us some color that, you know, what kind... So we know that chronic is a focus segment for us, but, you know, if you can give some color on, you know, what could be the potential size of these acquisitions? Because, if you look at our India business, we have almost doubled our base in last two, three years. So is it fair to assume that this, you know, the future acquisitions would be bigger than what we have done earlier? Very difficult to give any specific commentary on this. It all depends upon- Sure. See, we have done. We have acquired a INR 35 crore revenue of pediatric portfolio from that Dr. Reddy's to a INR 150 crore revenue from Sanzyme, that is, that is probiotic and infertility portfolio. See, it all, it all depends upon what is available, valuation, the quality of asset, being in progressive market, can we grow the asset better than where it is, where it stands today? So we have to put all those things into perspective, and then only, you can arrive with, arrive in terms of, if, if you are interested to buy. Also, it is not that over everything has worked in our favor. We have let go many of the, of the buying opportunities, which I think other companies have bought, and they think it suits them better. So that is how this model works. Sure. And, sir, how are the valuations, you know, looking at, right, so, at least for in terms of M&A, right? Because, a lot of Indian pharma companies have a, you know, huge, cash on books and- Yeah, yeah. Looking to acquire, in India. On this point, we cannot comment on valuations or what others would be expected to, you know, be paying for the assets which are there in the market. I think the key takeaway for all of us is if you compare the acquisitions which we have done versus some of the other acquisitions which have happened, one will clearly understand that we have been judicious about our capital allocation strategy, right? So we just don't believe in acquiring top line and paying a higher multiple. Like Nikhil said, it should be progressive, it should fit into our overall thesis, it should be synergistic with our existing focus areas, and then we arrive at what value we pay for. Sure. So you will continue to do bolt-on acquisitions only, right? So you are not really open to acquire smaller companies or, you know, maybe- Again, it's difficult to comment, because our, you know, what we have done over the last 18 months, it's a combination of a small, full, you know, sales marketing engine being bought from Sanzyme versus, bolt-on acquisitions of, you know, pediatric portfolio and Rosuvastatin being bought from, Glenmark. So it's, it could be either. Very difficult to comment on, on that. Sure. And sir, lastly, on M&A only. So, is it possible for you to give a, you know, broad number in terms of what kind of return are we seeing on the acquisitions which we have done, right? I'm not asking for the margins, but if you can give a broad number, you know, what kind of return on those acquisitions. Return? So, see, we are very clear that, you know, our payback period should not be more than six years. We have some of our internal hurdle rates, and we work around those. Yeah. Got it. Thanks. Thank you. We have our next question from the line of Bino Pathiparampil from Elara Capital. Please go ahead. Hi, good afternoon. Just a clarification of India domestic growth. This 9% that you have reported, I believe, has the benefit of some inorganic acquisitions you did in the previous year. If we remove them out, what would the growth look like? Pretty much now everything is built in the base, right? So whatever you see is a complete picture of organic and inorganic. Oh, okay. Everything is in the base. Okay. Yeah. Okay. Thank you. Thank you. We have our next question from the line of Alok Dalal from Jefferies India. Please go ahead. Yes, good afternoon. So, first question is, as you look to enter new geographies, can it lead to some incremental cost and maybe margins remain flattish for next year? Is that something that is possible? No, Alok, I think you would have read something that we are trying to do in the world of Philippines, but that is a very, very early starting point. I think it's happening probably one or two years from here. It takes. These all things take time. So there is no cost involved in terms of what you are asking in terms of setting up new geographies. So no worries about that. ... Okay, so, this 27.6 is not peak margin, right, Nikhil? There is room for margin expansion. So as I stated earlier, Alok, that fortunately for first half of the year, we are on the higher side of the guidance that we have given. So that is what we continue to guide. Okay. And, Nikhil, I think you were mentioning about some specific launches in CDMO. Say, you know, some- Yeah. Sleep-related disorder, lozenges, et cetera. Have those been launched in the market already? No, no, no. So you should see, I think 2, 3 new launches should happen next year. That is what you should see. See, these all things, please, it takes time. The gestation period is 24-30 months, because with the entire conception of newer idea, getting the reference sample, developing the product, sending it to our partners, they're doing their own research. They give us back with some specification changes. We go back to them. So all those things take their own time. You should see things happening probably in second half of next year. Some progress we have made, but that is why I'm... The guidance that I've been giving for CDMO business is, we were fortunate enough that in last 12 to 18 months, because of the good cough and cold season, we could almost double our season. We are trying to explore more geographies with existing portfolio, diversifying into new portfolio, and also looking at cross-selling of our existing, products that we have to our existing partners. So these all things put together will help us in terms of, getting this business almost close to $100 million in probably 3 years from here. Yeah, okay. Last point, so India has slowed down a bit. If you want to come back to the 13%-15% growth rate, can you do it organically, or you will need a small, inorganic push here? So you should see, say, quarter three, you should see that growth coming in. That is not a worry, because it all is a reflection of what I had said earlier, that you will see all pharma companies showing good growth in quarter three because of the low base last year. So for us, overall, 12%-14% growth will happen as is on the existing portfolio that we have got. Now, we have got a good presence within cardiology, hypertension, heart failure, statin, probiotic, pediatric, respiratory, GI, so we have got a good range of products. What you did not see this year, unfortunately, was the traction in the GI portfolio, which is a combination of Rantac, Metrogyl, and Sporlac, which did not give us a benefit. Otherwise, if you look at our chronic journey, we are growing at 18% as compared to market growth of 10% in first half of the year. So that itself tells the story in terms of, what building blocks we are putting for us in this journey, is helping us to grow better than the market. Okay. Okay, great. Thank you, Nikhil. Thanks. That's it from my side. Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone now. We'll take our next question from the line of Harsh, from Bandhan AMC. Please go ahead. Yeah, thank you. Good afternoon. Just two, three questions from my side. One is on the gross margin aspect. It might be a little bit repetitive, but, given second quarter, do we have a fair sense that for H2 of FY 2024, this would be a base to work with in terms of gross margins? Because I'm trying to understand that, you had already highlighted a couple of points in terms of gross margins, but is there any incremental benefit of the raw material, pricing scenario, from, the last three, four month perspective, or let's say the last four, five month perspective? Because going forward, your chronic mix might change, your CDMO, product profile, customer profile might also change. Just on that angle. I think, first we'll talk about the material prices and inflationary, you know, pressure. The situation has been much better off than where we were almost 10 months back. And, it's pretty much remained, you know, as is for the last 4-6 months, and we don't see the scenario changing over the next 2-3 months, as well. There are certain areas, where there are kind of slight blips, but that should not kind of significantly, you know, hurt us. And overall, even our portfolio mix should pretty much remain the way it is, with chronic continuing to grow, for our India business. And from a mid to long-term perspective, the CDMO business also within the international formulations, contributing significantly. So this is the base we should work upon. You know, unless something changes, as far as external market situation is concerned, where there is more inflationary pressure, which as of now, we cannot predict, but otherwise, this should broadly be the base we should, we should work with. Sure. What is the split at the India level, volume, pricing, and new product introductions in terms of year-on-year basis? If you really look at it, from a reported growth perspective, volume and pricing is evenly split, with some part of new introductions coming within the volume. Okay, but would volume be somewhere around 5%-6%? That is correct. Okay. And lastly, what is the situation on this Azmarda API sourcing as of now? ... So as of now, we are actually sourcing the formulation from Novartis, and we are doing finished formulation manufacturing through loan licensing arrangement in India as well. All right, sir. Thank you. Thank you. Thank you. Ladies and gentlemen, to ask a question, please press star and one on your phone now. So there is a question on the chat from Rajdeep. Is that with the international business reporting a sub-10% growth, where do you see the international business in the next year? I think what was stated in the commentary, that next year we should be resetting base of South Africa, we should grow at, probably double digit, which is a combination of, our branded generic business, which we do in four clusters, CDMO, and, with South Africa now, base being reset of their contract, we have taken off INR 120 crore. We should be, we should go around double digit, 12%-14%, 12%. Thank you. I would now like to hand the conference over to Mr. Jason D'Souza for closing comments. Over to you. So thank you all, for all the questions and patience hearing of our commentary. I think the progress that we have made delights us in terms of where we stand as a company in first half of the year, and we'll continue to focus on the entire growth aspect and looking at what efficiency we can drive in the company, which will only help us to maintain our gross margin and report healthy EBITDA margin on the upper side of the bracket in terms of the guidance that we have provided between 25%-27%. We as a company would like to go at mid-teens and, what, what was stated that in terms of the combination of India and CDMO, close to 80% contribution coming from these two businesses, where we see a bright future, will only help us to serve more and more number of patients in India and, serve more and more number of consumers and close your work with some big partners outside India. Wishing you once... Wishing you all and your family member a happy Diwali and a prosperous new year, and keep, and keep healthy, keep safe. That is what we wish for all of you. Thank you. Thank you all. Thank you, members of the management team. On behalf of JB Pharma, that concludes this conference. Thank you for joining us, and you may now disconnect your line.