Ladies and gentlemen, good day and welcome to the Q4 and FY 2022 earnings conference call of Gufic Biosciences Limited. As a reminder, all participant lines will be in the listen-only mode, and anyone who wishes to ask a question may enter star and one on their touchtone phone. To remove yourself from the question queue, please press star and two. Should you need assistance during the conference call, please signal an operator by pressing Star, then 0 on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Ami Shah from Gufic Biosciences Limited. Thank you and over to you, ma'am. Thank you, Diksha. Good evening, everyone. I am Ami Shah, Company Secretary of Gufic Biosciences Limited, and I welcome you all to Q4 2021-2022 earnings conference call. I have with me Mr. Pranav J. Choksi, Chief Executive Officer and Whole-time Director, Mr. Devkinandan Roonghta, Chief Financial Officer, and Mr. Avik Das from investor relations team to give the highlights of the business performance of the company and to clarify all the queries of the investors during the call. After the opening remarks from the senior management, operator will open the bridge for Q&A session. Before we proceed with the call, please note some of the statements made in today's discussion may be forward-looking and are based on management's current expectations. This may be viewed in conjunction with risks and uncertainties involved in our business. The company assumes no responsibility to publish or update or amend, modify, revise any forward-looking statement based on any subsequent development, new information or future, all except as required by the applicable laws in force. This call is being recorded and the playback shall be made available on our website shortly after the call. The transcript of this call will be submitted to the stock exchanges and be made available on our website. I'll now hand over the call to Mr. Avik for his opening remarks. Thank you all. Over to you, Avik. Thank you so much, Ami Shah, and a very good evening and thank you all for attending our call. We deeply appreciate your participation. I'll provide a brief overview of the key developments in the past quarter and the year. We ended the year as the fifth fastest growing company among the top 100 pharma companies in India. We have seen a strong and sustainable growth across all business verticals, whether it was our domestic branded business, the CMO business, our export business or the API business. Something good that happened is the growth was primarily driven by our non-COVID portfolio. To begin with, I'll give you all an overview of the developments in the critical care division, where we've launched Zarbot, which is the first botulinum toxin in India targeting cerebral palsy, migraine and overactive bladder. We've taken botulinum toxin range of products beyond the aesthetic dermatology into an absolute blue ocean where we are the first-mover advantage with this product. Overall, there has been a shift in our strategy where earlier we were mainly targeting secondary and tertiary care hospitals. Now, we also started penetrating into primary care hospitals and nursing homes, which is a fragmented but a large and a fast-growing market. Clinical trial for D-29 has progressed very well. This is a novel once-a-week anti-infective to be launched for the first time in India. Now coming to Ferticare division. The sales in this division has crossed our pre-COVID levels. We've also improved the technology for one of our flagship brands, which is Puregraf, which will help us increase traction and gain market share within this category. We are also exploring two new indications for an existing peptide molecule, mainly targeting endometriosis and recurrent implantation failure. The results of studies and initial trials are very, very promising. Both these indications have a large unaddressed market in India. Within our healthcare and spa division, we have launched a new multivitamin formulation to augment our anyway well spread and well diversified product portfolio. Coming to Aesthaderm division. Post-COVID-19, the cosmetic procedures have increased twofold, and we've seen similar traction in the Aesthaderm portfolio as well. This has been backed by you know, improvement in doctor coverage and very good acceptability by doctors and the fraternity in large. We are starting a center of excellence to impart training as well as to import novel innovative practices, equipment, and products in this field, in the field of hair and body aesthetics. This is to ensure there's adoption, expansion and penetration of our botulinum range of products at an affordable price point for the Indian market. Now coming to Stellar division. The division was launched last year and we are seeing good traction. We've launched one new product, Sallaki Max. It's a nutraceutical targeting arthritic pain. A quick update on our international business. In the past year, we've commenced exports to regulated markets for molecules such as Vancomycin, Clindamycin, Teicoplanin, and Tigecycline. In FY 2022, we received five new product approvals from regulated markets and eight new product approvals from the semi-regulated market. We've entered two new regulated markets of Brazil and Canada. In Q3 and Q4, we have very aggressively invested in a new biological technology platform. Our CEO will throw some light on it later in the call. Now some very strategic developments that happened in Q4. We've received permission to manufacture, sell, and distribute Isavuconazonium sulfate API and the finished formulation, which is Isavuconazole for injection. This is an injection targeting patients above 18 years of age for treatment for invasive aspergillosis and invasive mucormycosis. Beyond this, we've received the DCGI approval for Thymosin alpha-1. Immunocin Alpha was a homegrown brand in this molecule, which is used as an add-on therapy for treatment of moderate to severe COVID-19 patients who require ventilator support. Immunocin α has significantly reduced the risk of death in phase three clinical trials in adult patients with moderate to severe COVID-19. We've also applied to DCGI for sepsis indication, which in itself is a large market. Another development in the past quarter was that we forayed into cancer immunology by undertaking research collaboration with Selvax, which is a research company based in Australia. As a part of this initiative, we will collaborate on development activities in return for exclusive commercial rights for the immunotherapy in India, along with an equal share of revenues from Europe. Selvax's goal is to develop a very safe, effective immunological base treatment for a range of hard to treat solid tumors. We foresee tremendous synergy in this collaboration. I'll also give a quick update on the ongoing CapEx. At Indore, we are very happy to announce that our civil construction and site development work is in progress as per schedule, and we anticipate that it will be completed within four months from now, the civil construction. All equipments have been selected and orders have been placed. The dispatch schedule for all the equipment is as per plan. The R&D center at the Indore city has become functional and we've put together a team and product development work has also commenced. For the Indore facility, we expect commercialization by first quarter of next financial year. Now about the Penem block at Navsari. Our decision to move the Penem block to Navsari to reduce the time to market has turned out favorably for us. We've completed the civil work there. The equipment has been received and installations nearly completed, and we expect commercialization in Q2 of the current financial year itself. Now with this, I'll hand over the call to our CFO, Mr. Roonghta, to throw some light on the financials for the quarter and the year. Thank you so much. Thank you, Abhi. Good evening to everybody. I'm Mr. Devkinandan Roonghta, the CFO of the company. I will just highlight the financial performance of the company for the financial year 2022 versus 2021 and Q4 of 2022 versus Q4 of 2021. First, I will going to highlight the financial of financial year 2022 versus 2021. The total revenue of a company has increased from INR 488 crore to INR 779 crore. If we compare both the financial year, it has not been comparable because in the financial year 2021, Because of COVID-19, where the whole country was under lockdown from the second week of March till mid of May 2020. In the financial year 2022, because of the second wave of the COVID-19, there was a heavy demand of COVID-related drugs. Out of INR 779 crore turnover, this year around INR 170 crore turnover is related to COVID drugs. If I remove the COVID drugs, the current year normal turnover should be around INR 610 crore, and there is a natural growth of around 25%. Actually, if you see the growth is looking like INR 487 crore to INR 779 crore, it look like a 60% growth, but normal growth is around 25%. 35% growth is because of the COVID-related growth. EBITDA has been jumped from INR 87 crore to INR 148.8 crore. That has been 70% jump because main contribution is also coming from COVID-related drugs. EBITDA margin has also been jumped from 18% to 19.1%. Profit before tax has been jumped from INR 57.7 crore to INR 126.8 crore. PAT margin has also been improved from 11.8% to 16.3%. Income tax liability has increased from INR 13.5 crore to INR 31 crore. Profit after tax has increased from INR 42.2 crore to INR 95.8 crore. That is increase of 117%. PAT margin has also improved from 9.1% to 12.3%. The cash generation from operations before tax. Last year it was INR 98.50 crore. This year it was INR 137.50 crore. If you see the financial highlights for Q4 of current financial year versus Q4 of financial year 2021, the turnover has been increased from INR 131.9 crore to INR 162.2 crore. There is a jump of 23%. Here, there was no COVID-related drugs in the Q4 of 2021 and as well as the Q4 of 2022. It is a normal jump across. EBITDA margin has been increased from INR 24.4 crores to INR 31.6 crore. There is jump of 29%. EBITDA margin has been improved from 18.5% to 19.5%. Profit before tax has been improved from INR 17 crore to at least INR 26.2 crore. There is increase of 54%. PAT margin has also improved from 12.9% to 16.1%. Profit after tax has been increased from INR 12.9 crore to INR 20.3 crore. PAT is increased from 9.8% to 12.85%. If you see the balance sheet, there has been one abnormal. This non-current asset has been increased from INR 6.5 crore to INR 35.3 crore. This is basically a capital advances that's been given for our Indore project around INR 30 crore. In cash flow also we are incurred around INR 88 crore on the CapEx program for the Indore as well as Navsari factory. In Indore, we incur around CapEx expenses around INR 54 crore. Navsari we have incurred CapEx expenses of around INR 20 crore and around INR 4 crore we have incurred on account of implementing of SAP as well as purchasing of SAP in hardware as well as software development. Thank you. Diksha, we can open the floor for Q&A session. Sure. Just give me a moment. 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 the 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. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. Anyone who wishes to ask a question may press star and one at this time. We take the first question from the line of Rajat from iThoughtPMS. Please go ahead. Hi, am I audible? Yes, please go ahead. Sir, just what we said, the market opportunity that we see for some of the products that we have gotten approval recently, that we talked about as well as D-29, which is in the pipeline. What is the current line of treatment for the, you know, disease that they are going to cure? What's the competition basically? Hi, Rajat. Can you hear me clearly? Yes. If I understood. This is Pranav Choksi, the CEO of the company. Just to understand your question properly, you have asked me that the current approvals which we have got in the last quarter, what is their market size estimate? You also have asked me what is the competition against them. Is that the right understanding? Absolutely. Okay. As well as D-29, which is in the pipeline. Can you repeat that again, please? If you can also talk about D-29, which is in the pipeline. Okay. D-29. Okay. Right. Yes. Fine. I'll first answer your question. Isavuconazole was of course, if you follow the last few quarters, we have been talking about the approval, which we finally got in the last quarter of 2022. Right now, specifically, as Avik said, we have got the permission of API as well as the injection. Right now there are two potential of the product. One is of course the domestic market and one is the international market. The domestic market has its own, you know, market size of $6 million specifically related to the molecule Isavuconazole, where there is only one innovator that is of course Pfizer, which is there in the market. We foresee that this product is also going to be working against other molecules, having a similar therapeutic profile like voriconazole, you know, amphotericin-based molecules and also used in combination with echinocandins. If I combine all that market up, of course it goes beyond INR 230 crore. Like I said, when we talk about we have got the permission right now only of injection. We are expecting the oral permission also to be received in the next, I think maybe the third quarter or fourth quarter, and it'll be a good basket for us to take it forward. In terms of the international market, this also has bigger traction because, you know, apart from the mucormycosis and the black fungus, which was a big issue post-COVID, and itself is a, you know, a market which is intrinsic, which will help us to unlock the value. Being the first, I would say generic in India gives us the, you know, good opportunity to take a good market share, not only of the direct $6 million market, but also the other market, where, you know, the price was an issue and we could not take it up. Internationally, we have little bit bigger ambitions because this molecule is the drug of choice because it has oral option, along with the injectable one, which is normally for hospital therapy. Once the patient is discharged, there is a good option where the actual oral tablets goes for a longer period of time, and that is where we can see a bigger traction in terms of the sales. Answering your question about Thymosin alpha-1, which we got approval in COVID, we don't foresee much traction in sales in India for COVID, but it clearly shows that the beauty of the molecule's approval is that in moderate to severe, they're very limited, almost no products approved in India, whereas this is the only product where we have seen the death ratio and the death percentage really being amplified, where the drug was really a drug of choice and we have seen a lot of lives have been saved. The more interesting part would be sepsis management, because when you see the therapeutic profile of a patient with COVID. I'm talking about a moderate to severe patient. Then you see a severe patient who has, you know, sometimes also goes for sepsis. This is again a combination of the immunity of the patient along with environmental factors. We foresee that sepsis is a big market via which the. We are, of course, applied to DCGI once again. We want to do a separate clinical trial on sepsis patient, which we have applied in the last quarter. That data once it gets you know out and of course once we get the study out and once we get all that, we see higher traction because there are almost a million patients suffering from sepsis in India itself. If the protocol is, you know, validated and it's shown as what we propose, then we can take the market. We can take the product internationally. Sepsis is a huge market. If you want to know, I mean, I don't have international numbers in terms of patients or international numbers in terms of, I would say U.S. dollars as of now, but I'll be more than happy to see what we can get from our medical and regulatory team and pass it on to you. D-29, again, like I say, it's sort of an upgrade to the existing therapy of vancomycin, linezolid and teicoplanin. Again, there is no innovator in India for D-29. We'll be the first company to launch D-29 in India. What I foresee since we are backward integrated in terms of API, we will be having limited no competition at least for the first year in India. Going forward, we have aspirations from our Indore factory to take this D-29 to the European and the U.S. market, where this product is already approved. The innovator is already there. The start of the sales might be slow in India, but the international market will be much bigger. We foresee that, with the ease of, you know, administration, where it's once in one week and maximum maybe the second dose in five days if needed. A lot of outpatients which normally get treated in U.S. for certain index indications or in Europe, this is a drug of choice as compared to the conventional ones. Let's hope so. That is what we have expectations of these three candidates. There are other products in the pipeline, but I mean, if I go on, it'll be quite long. I'll just take my talk here and then if anything, we'll get back to the pipeline later on. Sure. Also, if you can talk about the market opportunity again for these alternate uses of botulinum toxin that we have recently launched and which, you know, we will be selling those. Yeah. As you must be following the company, we launched the Stunox brand in February 2021, which was mostly. Okay. Related to the facial aesthetics, and we were very keen I think to launch the, you know, Zarbot brand. Especially no, you know, I would say related to medical uses and especially for neurological uses apart from other uses in pain also. This indication, there are more than, I think, 600 indications where there have been papers published. Of course, there have been few indications where the actual approval has been done. I'll just take my call in terms of approved indications only. What we foresee that, you know, a lot of doctors in India have of course. The neurology doctors are much more advanced, and I mean, they already have been trained. They are aware about it. There is still a good old lacuna in terms of the ratio of the doctors to actually the patients. With the center of excellence, what Avik spoke about, we are trying to create a training center where around I think to all those 30-odd, I mean, approved indications which we have selected. You know, it might be hyperhidrosis, it might be migraine, it might be, you know, cerebral palsy, it might be dystonia and so on, whatever. We are trying to actually impart training to a set of doctors who are interested in, you know, increasing their, I would say, foray into this particular indication. Plus, we have our own in-house medical team. We have taken a very senior, I would say, medical professional from the industry as well, having an MBBS and, who's worked in, of course, in MNCs in the same product lineup, who is gonna run this center of excellence. There will be at least, you know, batches of 20-30 doctors, every month trained itself in Mumbai. If the model is successful by Q2 or Q3, we are planning to open similar centers in Delhi, in Bangalore, as well as Hyderabad, then followed by Ahmedabad. Let's see how we do it. Because, like I said in all my earlier calls, training, imparting and, you know, I would say not educating the doctors. Doctors are much more, you know, aware and much more educated than. You know, getting the right training in terms of the application and the dosage is something which we are very, you know, picky on, and we want to pass it on to the right medical practitioners and the professionals who can help us to expand the market further. How big do you think these products can become over the next, let's say, three to four years? Very, very difficult question. I'll just tell you know, the entire international market is $8 billion. Whatever I see data online, the U.S. market itself is $5 billion. The population of U.S. who can actually afford it, forget facial aesthetic is not covered by insurance, but the medical is covered by insurance. I mean, this is assumption what we have as per market data that I mean, am I using the right terminology? I'm using Indian numbers, but please excuse me because 28 crore out of the 40 crore population in U.S. are the population which can afford botulinum toxin. In India, we have a 130 crore population. If I assume only 28 crore can afford it, the market is endless. I'm not saying that the market it can be INR 1 billion or INR 5 billion or anything. I'm not saying all that. If we see the penetration and we see the amount of users, even if we sell one-eighth of the vials which are sold in U.S. or one-tenth of the vials are sold in U.S. in the same population in India. I'm saying the affording population in India, that is 28 crore to 28 crore. We look at minimum of INR 1,200 crore-INR 1,500 crore market just for this. Of course, it's not so easy as it sounds. It has to be a good amount of training, good amount of, you know, expertise, getting the right people on it. Creating an awareness that, you know, a lot of patients in India don't know that there are. There is an option available with the botulinum toxin, of course, along with other drugs which can be used in combination to serve the, you know, people in certain medical conditions which right now just people are living in or are suffering silently. Let's hope. This is what we aim to target to do. Sure, sure. Thank you so much. I will come back in this. All right. Thank you. We would like to request the participants to restrict their questions to one per participant. We take the next question from the line of Chetan Phalke from Alpha Invesco. Please go ahead. Can you just throw some light on for R&D expenditure going forward, I mean, over the next two, three years, what is the budgeting that you foresee, let's say, in terms of percentage of sales or in absolute amount? What was the R&D spend for FY 2022? Thank you, Chetan. Well, I think the R&D spend answer will be related by Roonghta, sir, because mostly we normally do as a proportion of the cash flow rather than the sales or something. Roonghta, sir, can you take this question? Yeah. Yeah, definitely. Thank you, sir. Generally, it's depending upon the financial condition of the company. We always plan minimum 8%-12% of R&D expenses. In case of a cash flow is tight, then minimum 8% we are spending on R&D. If cash flow is permitting us, we can go up to 12, or sometimes we have crossed the 12 also. Our target is on at least to maintain 8% minimum R&D expenses so that the development will not be stopped and we will always be putting money for new product development, new segment development. We are also lot of spending on the new trials also. You can judge that whatever the turnover is there, average we can say that over three, four years, the average expenditure will be around 10% of the turnover. Thank you. Okay. What is the number for FY 2022? FY 2022, if you can see the sales target of this year was INR 788 crore. I can say out of INR 788 crore, INR 170 crore was related to COVID-related. The actual sales is around INR 610 crore. We say there will be a minimum 15%-20% growth. You can say around INR 750 crore. Minimum we are expecting INR 750 crore, and something more good it can touch to INR 800 crore. Sir, I think he's asking about the R&D spend for the current year. For the current year. Yeah. For the current financial year 2021-22? Yes. Yes. 2021- 2022, we have spent around INR 65 crore on R&D expenses. Mm-hmm. Got it. Pranav sir, can you just throw some light on what are the? Sorry to interrupt. This is the operator here. The participants are requested to restrict their questions to one per participant. You may get back in the queue, sir. Yeah. This is just a follow-up to my R&D question. Anyway, I'll get back to you. Thank you. Okay. Before we take the next question from the line of Mr. Aman from Astute Investment Management, please go ahead. Yeah. Good evening, Pranav sir. First, this is clarification on the numbers which you have shown in the presentation. Because the numbers are not mentioned actually if you look at the segmental breakup in terms of domestic formulations and API and all those things. If you can just talk about the current domestic and export mix for FY 2022, and then what was the growth in our CMO segment in our international CMO. If you can talk about those things, and if you can break the CMO into domestic and international CMO. Sure, Aman. I think answering your first question, as we always and I have said in the last, I think year also in the quarter, normally around 50%-55% of our revenue comes from the domestic business. That is our domestic branded formulations. Around export, which was at one time of 15%, has gradually moved to 22%-25%. Let's say on an average it will be still around 20%-22%. CMO business was affected somehow in the first, I would say six months, of our thing. When I mean CMO business, the non-COVID portfolio CMO business was definitely affected in the first six months because a lot of our capacities were blocked for our own domestic Thymosin alpha-1, as well as MDC for our clients, as well as liposomal amphotericin B for mucormycosis. I would not use this year's capacity to give you numbers which are. If I compare maybe 2019-2020 numbers with now numbers, we have seen a CMO market also grow by around 20%-22% year over. When I take like-to-like comparison, ignoring the COVID portfolio out of it. Just to give you a little bit more light on the CMO, we have expanded our capacity pre-COVID on March 2020 with some lyophilization. Again, in March 2022, we had some small expansion coming up for not only a replacement, but an addition of capacity of a lyophilization. This will play a role in the growth of the CMO business also going forward, which is an important part of us. To bifurcate into a domestic and a, I would say, international business. The domestic business, because of some products which were, you know, life-saving and related to COVID, we saw a good traction of jump of COVID-related CMO in the first half. In the non-COVID CMO, like I said, we could not supply those products, so we have seen some degrowth in that, which of course, we hope to compensate. We had to actually say no to certain clients, which we are now in the last three months trying to get back because they were part of the core business who has evolved in the last decade. I'm talking about especially about infertility, I'm talking about certain cardiac products, I'm talking about parenteral products, and I'm talking about some other products which we have as legacy going forward, and also new pipeline being added here. Like for example, when the Isavuconazole product is added, apart from Gufic, we are helping you know, three of our clients launch it also in the first month itself and then also offer it to others in the time to come. There are other new drug delivery systems which are coming up, which also we'll be offering to you know, other clients. The advantage of the CMO always will become an important pillar of our portfolio of our company going forward, and there you see a larger traction. International business, the CMO business, suffered again because the capacity occupied, but we have seen a good jump in the last three months from January to March. We'll see a further good jump in, you know, the times to come because like I think we announced also we got a U.K. approval, we got other approval. Apart from our own sale there, because of the capacity being free now, the international CMO also should see a positive turn in the coming year. Just one clarification on the- Thank you. Request you to get back in the queue for the follow-up question. Sure. Thank you. We take the next question from the line of Maitri Parekh from Pi Square Investments. Please go ahead. Yeah. In the opening remarks, you mentioned about the breakup of CapEx, which I missed. Could you please repeat the same? I'm sorry, ma'am, I didn't get your question very well. Can you repeat the question, please? Yeah. I was asking that in the opening remarks, you mentioned about the CapEx breakup, right? I missed the same. If you could please repeat. I think maybe the moderator can just convey the question because of the voice. I'm not able to hear the questions. I just heard about the opening remark and about something there. Even I could not hear the question clearly as the voice is not clearly audible. Maitri, can you just see if your mic is there? Are you using a mic or something? Yeah. Is it audible now? Yeah, perfect. Perfect, ma'am. Yeah. I was asking about the CapEx breakup, which you mentioned in the opening remark. Right. I missed it, so if you could please repeat. Yeah, sure. I'll give it to Roonghta sir. I think he'll be in a better position to answer. Okay. Yeah. No issue. Yeah. Hello, Madam. Could you please just repeat your question once again? Ami Shah, they want the CapEx breakup what Devkinandan Roonghta sir gave in the opening remark about Indore and Navsari and about the total here. Can Devkinandan Roonghta- Okay. No, no issue. Yeah. We are having a total CapEx of around INR 220 crore for Indore plant. Out of INR 220 crore, INR 60 crore has been already spent up to March 2022, and remaining balance INR 160 crore we are expecting to be incurred in the next financial year, against which we are expecting certain internal accrual, and for the remaining amount, we are going to take a certain bank loan on a long-term basis. Around INR 25 crore we have spent in Navsari plant for our Penem as well as dual chamber and certain increase in lyophilizer capacity. Around INR 3 crore-INR 4 crore we have spent on the CapEx for our SAP implementation, plus hardware for our IT department. That is basically the breakup of the. Out of INR 220 crore, I can say Indore plant, INR 20 crore we are spending for R&D facilities and INR 200 crore for lyophilizer facilities, including civil construction and land cost. Okay. Yeah. That was helpful. Thank you. Thank you. Thank you. We take the next question from the line of Ayush Agarwal from Mittal Analytics. Please go ahead. Thank you for the opportunity, sir, and congratulations on the CapEx numbers. My first question is on your R&D spend, which our CFO sir mentioned that was around INR 65 crore. I mean, in the annual report, past annual reports, we don't see that the number is as high. You know, if you can help us understand where do we and how do we spend this INR 65 crore and what was that number in the year earlier? Yeah. Ayush, first of all, yes, this year definitely we have spent a little bit more because also apart from the positive cash flow coming in, we had certain amount earmarked. Since we got that little bit excess, you know, I would say inflow coming in, we had kept some projects on hold, which we were very keen to execute. I think when Avik spoke about in his opening remarks, there are certain biological, I would say, pipeline investments which we have done specifically in the last two quarters, which is related to the new biological pipeline which we are hoping to get into, which is again a very, you know, well, you know, IP protected as well as patented platform, which can be a tech platform technologies for many of our future products to come. Since we saw a good traction happening, and if you see the numbers of the company in the last three to four years also, we have whenever we get an opportunity to spend in R&D in terms of either a generic pipeline expansion or a new product introduction in India or even for that matter. When I talk about R&D, sometimes we also talk about certain products which we specifically develop for certain international markets in terms of the, you know, the, for their marketing authorization and going forward. This year the highlight has been, I would say the biological pipeline expenditure, which has been to the tune of around almost INR 12 crores-INR 14 crores, out of the INR 65 crores. That again will continue in the next two years because we foresee that will be another additional, I would say, weapon in our arsenal in terms of certain prevention of certain diseases in the future. That is something very interesting. If you see botulinum toxin also was something which was done around three to four years ago, which eventually we started getting the traction in year 2021 and now eventually in 2022. The percentage, like he, Mr. Roonghta said, has been around 8%-10%. This year we have gone to INR 65 crore. Again, keeping in mind what Roonghta sir said, INR 65 crore is a pure R&D spend. Additional amount was also spent in the dossier creation, the regulatory and the clinical trial cost, which is apart from that, which also will make the amount go much higher. That was helpful. I mean, I also wanted to understand even more. Sorry to interrupt. This is the operator here. You are requested to get back in the queue for the follow-up question. I just asked one question, ma'am. If I can ask just follow-up on the R&D question. Yes May I? Yes, please go ahead. Thank you. What constitutes the INR 65 crore, you know, in terms of salary or equipment or other things. If you can give a break up of that, then that will be really helpful. I can, I mean, offhand I don't have the breakdown. I'll just tell you what all it comprises of. Of course, it comprises of the salary, it comprises of certain specific tests, it comprises of certain maybe unique equipment required to maybe do certain I would say reactions or certain biological amplification or certain I would say processes. Of course, it takes care also of some part of intellectual property which we pay to our, you know, in-licensed companies where we get certain basic technologies from. When we do a biological process, there are around four sort of steps. We sometimes, you know, are good in two or three steps and we outsource the other step from a company, who is an expertise or maybe has a core competency in that particular subject. It also takes care of certain tech transfer fees or the process transfer fees also. All right. That's it, thank you. Yeah. Thank you. We take the next question from the line of Alisha from Envision Capital. Please go ahead. Ma'am, your line is unmuted. You are requested to please go ahead. Hello. Yes, go ahead. Am I audible? Yes, yes. Yeah. Hi, sir. Good evening. Thank you for taking my question. Just wanted to understand that while we know in Q1 there was benefit of the COVID-related drugs, but last three quarters the run rate has been consistently declining, but the gross margins have been expanding. One is what is sustainable gross margin? And two is the QoQ decline in sales that we're witnessing since the last two, three quarters. I think I'll answer your sales decline question, and I will request Roonghta sir to comment on the gross margin question. Answering your question first about the sales decline, as you rightly said, the first quarter was more about the COVID drugs. The second quarter was a combination of COVID and black fungus mucormycosis drug. The third quarter, of course, we had you know returns which were in terms of inventory built up, which was for the first two quarters. The fourth quarter, if you see historically also in terms of our or maybe the pharma industry, post the 15th March, the purchase at the stockist level or at the trade level just goes off. Plus, of course, apart from that, there is a very specific thing also. If you see a lot of inventory built up has also have been happened in you know the market for certain sectors. Especially I would like to tell you critical care and maybe to some extent I would say these you know institution businesses, which anyway is not a very big component of our company. Critical care we have seen a huge inventory pile up in the market especially which took time in the third and fourth quarter go up. It's still simmering off, and that's what we mentioned in our opening remarks, that it'll still take time till Q2 for the critical care market I would say inventory to go down. Hence, I think we... If you see the last two quarters also, the main division which has been pumping in the growth is of course exports. It's also in fertility. The CMO market also in the last quarter, last two quarters went down again because of the inventory filled up because a lot of products were preponed. Since the first quarter was INR 250 crore, we all feel INR 160 crore and all that is the number. As Roonghta sir clearly explained that from INR 487 crore, we. If our revenue without COVID would still be around INR 610 crore or INR 620 crore. That is where we feel that run rate should be in the right way. Of course, we feel other things will start kicking in along with Penem from the second quarter, and we hope so we can achieve our target as what we have thought about. In terms of the gross margins, I'll hand it over to Roonghta sir. I think, he'll be much better to answer that question. If you can see, the financial year 2020-2021, the gross margin was around 48.5%. The current year, the gross margin has been around 46.5%. There was a reduction of 2% in the gross margin. That is basically during the COVID period, certain drugs has been written off in Q3 and Q2 of the current financial year, and which do not have any future market. We have to write off that drug inventory which was lying during COVID. Drugs which was related to COVID in the books of account. Therefore, there has been reduction in the gross margin around 1.5%-1.6%. If you see the EBITDA of the company has been improved from 18%-19.5%, and the profit before tax has been also improved from 11.8% to 16.3%, and tax margin has also been improved from 9.1% to 12%. Overall, the performance has been very good compared to the financial year 2021 versus 2022. The gross margin I already said because of the COVID-related drugs which was not able to have market after September 2021, that inventory has been write off in the books of accounts, therefore the gross margin has been reduced. Overall the performance of the company has been improved. Thank you. Sir, in Q4 the gross margin is almost 55%-56%. Yes, madam. That's the reason because the writing off has been happening in Q2, Q3. What you see now is more of a, I would say, the actual margin. As I said, the domestic business is picking up, infertility products are picking up. Critical care is somewhere where we see the margins little bit get affected. The exports has come back to normal. Exports and, you know, our own domestic sale is somewhere where the margins improvement happen because again, it's all about amortization and we have improved. There has been an impact of Chinese import on, you know, the RM and PM and all that also. Somewhere because of our own, I would say, domestic base and because of the exposure also because of the rupee thing. To some extent in the last quarter, more also we'll see in the first quarter this year. There has been overall improvement in the margins going up. Thank you. You can take the next question. We take the next question from the line of Mr. Bhavya Sonawala from Prime Asset Source. Please go ahead. Thank you so much, sir, for the opportunity. Just have one question. There's a lot of competition in the critical care segment and, you know, we have managed to make that area big enough. Just wanted to understand what is letting us compete and, you know, what can you attribute this growth to? Yeah. Bhavya, thank you. If you see what we have done, we have seen the entire Indian market is INR 1,81,000 crore. That is as per our IQVIA IMS of course. I'm quoting their number. This plus or minus depending on what is the last month's average. We have selected around market of around INR 36,000 crore-INR 38,000 crore only in critical care. Out of that INR 36,000 crore-INR 38,000 crore, we have right now products of only around INR 14,000 crore-INR 15,000 crore. We foresee in the next two to three years, this natural erosion of margin always happens. That's why the pipeline and the new product launch is very important to us. We foresee that with the help of economies of scale, the erosion wave will be ridden much better by the company. Secondly, since we'll have a pipeline coming in, we will always see that margin getting compensated with the new launches coming up. Plus, in the next three months when we announce certain new drug delivery options also, we will see some improvement happening. By which we can see that we always offer the trade and the critical care trade specifically, something unique and something always big. The moment that unique thing becomes a generic or unique thing, where a competition comes in, we have some other offering which comes and, you know, reestablishes our, you know, I would say, presence in front of them. Gradually what we feel from this INR 12,000 crore-INR 14,000 crore, we want to start a product pipeline on to all the way till INR 36,000 crore, where the penems will help of course, then of course certain other, I would say unique neurological then also anesthetic and other offerings will help. Basically we are looking at an ICU setup and what all products are required, and then eventually use our presence in the form of trade and penetration in terms of the current logistic channel what we have, to ensure that the basket keeps on expanding, either via further generics or either via innovative products or either via new delivery systems, which ensure that we keep this warm. Also, because of economies of scale of India and exports, our efficiency in purchase is our strength. When we have to really, we are a EU-approved facility, and sometimes we compete with companies in India who are basically highly even just about WHO GMP or just basically have GMP. Still with the same quality as international markets, we will still be able to compete with them at the prices because of this efficiency and the economies of scale. That helps us to improve. Because of the sourcing efficiency, we still are a force to reckon with. That way I feel that yes, we can still survive and expand in the critical space. We foresee and we have seen a lot of people grow tired of this critical care also because they don't have the pipeline or they don't have nothing new to offer. They just, you know, get, you know, decimated in this price war and the erosion of margins. That is where we, our pipeline and our R&D team and our other sourcing team and reg team keeps us, you know, moving on and on. Thank you. We take the next question from the line of Sweta Jain from ANS Wealth. Please go ahead. Hi sir. Thank you for giving this opportunity. My question is, what I understand, you know, in the previous participant's answer, I think, you had mentioned that we can expect a 25% growth in the top line and, the current gross margins are the normal margins. I just want to understand, you know, is this correct? Especially if we are expecting the Indore and Penem block to, you know, come up, this year and, by Q2 of next year. What kind of, revenue, you know, are we expecting from, these two blocks to add to our normal growth of 25%? And is this 56% gross margin sustainable? And also if you could help us understand the current, utilization of our plants, currently what we are at. For the CMO, do we have any order booked, you know, for the CMO business? Yeah. Answering your first question, no, we did not say that we will be continuing at 25%. 25% is our organic growth last year, which Roonghta sir clarified that, you know, from INR 487 crore, if we consider our organic growth without COVID-related products, then it was 25%. When we already asked all of us always say that we are, I mean, our estimate is 15%-20% year-over-year. That is what we foresee. In this year, I don't see Indore contributing to the top line as of now. Because, as Avik has mentioned in his opening remarks that we look at March 2023 is when the plant will be ready, and April to June 2023 is when the revenue will be captured for Indore. This year, yes, I agree that, you know, Penem will be something which will be, you know, taking it up as a part of our, I would say additional in terms of, products offering. That is where, taking care of all this, still we feel around 15%-20% bare minimum is something which we target over our non-COVID sales. Assuming INR 610 crore or INR 620 crore as a base, 15%-20% is what we foresee for the next year. Gross margins, Sorry. Sorry. No, sorry. Go ahead. I have a clarification. Gross margins is something, as we, you know, improve and launch new products and improve the product lineup, and again, we improve in some terms of our efficiency sometimes going forward. We will see the gross margins at least, you know, improve a percentage over, you know. When I say a percentage, average percentage of the year. Because in a year there might be price rises. Sometimes the RM price shoots up and it doesn't give us enough time for us to implement that price in the market. We have to take permission of NPPA and XYZ and all that. When I consider the average percentage year-over-year, we have a target of improvement of at least 1% gross margin year-over-year. Again, because of the pipeline, because of the new regulatory systems, because of efficiency and so on and so forth. That is what. Did I answer both the? That was the question, right? Anything else to be answered? Basically, yeah. Thank you. Request you to kindly get back in the queue for the follow-up question. I'm just confirming to Sir what he said, you know. He just asked me. Yes. A question. I'm just asking him. Yes. Please confirm. Can I ask? Yeah. Yeah. Basically you're saying that the 56% on the quarterly basis that we have the gross margin, that is not sustainable, right? Madam, it's very difficult for me to say that. Again, I'm saying because the product mix is so dynamic right now in terms of the sourcing from China and even the other utility and the oil prices and whatever. I think it's all adding up to the RM and PM also. I will only hope for improvement. If I see there are so many SKUs of ours and so many things, it's very difficult for me to give a percentage there. What I can, I mean, what we are working on as a company is a percentage improvement of gross margins year- over- year. Again, it might. Tomorrow you don't tell me that you made it 60. Why did you make it 60? I'm sorry. I didn't improve it. No. We will try, but I cannot promise it because everything is very dynamic right now. Right. Sir, you didn't answer my question on the plant utilization and the order book for next year. Oh, yeah. It's around 70% in lyophilization right now, which should pick up. It's 70% there. Otherwise, I mean, overall, I think we are around 70%. Okay. Sir, any order book for the CMO? We do, but we cannot share that number with you, ma'am, because it's ever evolving. Okay. Yeah. Okay. Thank you. Appreciate it. Thank you. We take the next question from the line of Arpit Agrawal from Electrum Capital. Please go ahead. Yeah, good evening, sir. Thanks for taking our question. Actually a couple of things. One is obviously you are doing, you know, a lot of products on R&D, and you are working on different product pipeline. I just want to understand a little more, you know, high-level question that, say, if you see over three years, what will be the key growth drivers for the company? Which products you think or, you know, which will clearly drive the growth, and take the company to the next level? That is something which is because, you know, you have so many divisions, so many new product pipelines. Which are the you know, as a CEO, what do you think will be the key products which will scale up? Secondly, on the Stunox's, it's been like about more than 1.5 years since you've launched. So if you can give us some sense on the numbers. Are we seeing some traction? Because, you know, we also understand that the market size is too large, but, you know, obviously in India it is very small. You being technically a domestic leader, one of the first companies to launch it, you'll probably have to create the market. So what are the efforts going on that side? Yeah. Answering your first question, like I mentioned, we have our legacy pharma business. When I mean legacy, it's something which we have created in the last 10 years, and that is something as a main strong point. Our business is, of course, domestic, export, CMO and, of course, the API. That business, in terms of the new product pipeline for anti-infectives, infertility, cardiac. Like I mentioned, we are expanding it to anesthetic now. We are expanding it to neuropsychiatry and I would say not neuropsychiatry, I would say only neurological for that matter. Then through parenteral nutrition is something we are going forward, where we feel the existing R&D should come in terms of how we can also take it up to international market also via Indore in addition to Navsari. Biologics is something which was very close to my heart specifically because I am basically a B.Pharm and MSc in biotech, and we started the journey with botulinum toxin. Me along with Dr. Balram Singh, who's of course, you know, our strong driver and the strong, I would say, the main fulcrum of our biologics division going forward, have always had certain ideas which he wanted to, you know, work on. But not at the cost of the main company. Because the main company has its own trajectory growth, and we are very confident about that. Sometimes, you know, biologics can become a gamble at the end of the day. We always have felt that, you know, getting into certain biologics where the proof of concept comes to a particular stage. There might be some projects which we might have been working for the last five years, six years, or something we might have just worked on the last one and a half year because of the COVID, and then we have seen some positive results coming in. Those are the proof of concept approved projects which we are now taking it forward in a much more, I would say, organized way and amplified way in last year and of course in these two years to come. We feel again, when I say botulinum toxin becomes a part of it, because there we have now new drug delivery systems coming up, botulinum toxin, a new variant coming up, botulinum toxin. Along with that we are coming up with some oral platform technologies for certain products coming forward. As and when, again, I'm allowed to give more and more information, I'll be more than happy and excited to share that with you. As of now, we feel the existing generic pharma along with new development in pipeline and in drug delivery system will be our focus growth. Indore of course will play a big role because of the market access of U.S., what we are hoping. Again, starting as a CMO there and eventually seeing if anything of our because we still feel we are very small and we don't want to take that risk of having our own ANDA and all that. We have a lot of people showing interest in our product line up and hence that Indore is good. Also at the same time, we feel that the capacity of Navsari will be stretched in this year or maybe maximum by next year. That is why Indore, I mean, it has to be there. Coming to, you know, your second question, Stunox. Yes, we Stunox and Zarbot for that matter, as I mentioned earlier also, we have to invest a lot in, you know, the training of people. A lot of people want to train it, but it's like, you know, one teaspoon of this toxin can kill the world. So it's not so easy to handle it. And a lot of people are scared before that. So a lot of effort of ours has been going in training and developing people. Right now, what we said, we are just taking some existing market share. Eventually, if you ask me, our real vision is to actually create a bigger market, keeping in mind the population and the opportunity which it has in front of us. We have grown month-over-month by at least 20%. The base is so small that, you know, it's not something that I would say, "Oh, it's making a big difference in the total revenue of Gufic." Growing month-over-month of any product in the last 10 years I've been in Gufic, I've not seen that. Maybe we start with 100, maybe we would have gone in a much bigger way. That gives us a lot of confidence. Now with Zarbot and Stunox was being promoted by only 28 people last year. Now we have Zarbot, which is almost promoted by 150 people. We feel that the amount of use per patient, you know, Zarbot is much higher than something used for a facial aesthetic or for any other matter. Combined way of Stunox and Zarbot, we feel a higher traction this year. We expect what we did last year, we should be 4x doing that this year, and hopefully we should be doing 10 x that of last year in next year. That is the level of amplification we are seeing in the botulinum toxin business. That is how I can answer that. Thank you. We take the next question from the line of Darshil Jhaveri from Crown Capital. Please go ahead. Hello. Am I on? You may go ahead, sir. Actually, I just wanted to ask from a long-term vision, when can we expect in FY 2025 to reach INR 1,000 crore? How much revenue can we expect from Indore facility in the first or second year? That would be very helpful to know. Again, I feel I hope I reach INR 1,000 crore as soon as possible. I don't know if it'll be in 2024 or 2025 or 2026, but keeping in mind our target internal, I would say, as we say, 15%-20% is what we plan of going on. I think, yes, 2025, maybe not, but maybe 2026 or something looks possible. Again, we don't know how everything will kick in. Indore also, I mean, we are living in a very, you know, dynamic time right now also with a lot of, you know, uncertain happening of certain things in terms of supply, utilities and all that. Still, we have managed and we have ensured that Indore is on track. We started the construction in December 2021, and I think getting it done by March 2023 will be good. I hope Indore can, you know, help us contributing in a more substantial way in the year 2024, 2025, which might help us to reach thousand by then. It depends on a lot of factors. I'd just like to say that Indore is approximately 1.5 x the capacity of Gufic, plus around two more additional product lines of ampoules in terms of, I would say, suspensions also, and along with that, eye drops. The revenue capability of Indore is much higher because of the capacity. Maybe you can just do your internal math, but right now Gufic, whatever it is, what you see is as per the Navsari facility. Indore coming up, definitely it has its own traction of at least 1.5 x. Assuming that we get those business and we penetrate the market as soon as possible, there'll be definitely an erosion coming in, and we have already factored that in our approach going forward. Thank you. Due to time constraint, I would now like to hand the conference over to Miss Ami Shah from Gufic Biosciences Limited for closing comments. Thank you. Thank you everyone for joining this call. I hope all your questions are satisfactorily answered by us. In case if there are any further questions that have remained unanswered today, you can reach out to us or to Mr. Devan Trivedi from SGA Investor Relations partner. The contact details are already provided on the last slide of the presentation uploaded on the website of the stock exchange and also on the website of the company. Thank you so much. Please, stay safe and take care. Thank you. On behalf of Gufic Biosciences Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.