Ladies and gentlemen, you are connected to the Poly Medicure Limited earnings conference call. Please stay connected, the call will begin shortly. Participants who are connected to the earnings conference call of Poly Medicure Limited, kindly stay connected. The call will begin shortly. Thank you. Ladies and gentlemen, good day and welcome to the Poly Medicure Limited Q2 FY27 and half-year FY27 earnings conference call. 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 0 on your touchtone phone. Today on this call, we have with us the senior management team of the company represented by Mr. Himanshu Baid, the Managing Director, Mr. Naresh Vijayvergia, CFO, Mr. Rahul Gautam, President Strategy and Corporate Development. I would now like to hand the conference over to Mr. Himanshu Baid. Thank you, and over to you, sir. Uh, thank you very much. Uh, good evening everyone, and I welcome you all to Q2 and H1 FY27 earnings call. I sincerely thank all of you for being here today. Before we get into the financial performance, I want to highlight a few strategic updates since our last earning call. We are on track to optimize Medineo, our subsidiary in Brazil. We had mentioned in our last call that Mr. Ronaldo Roca has joined as a CEO of the company Polymers Brazil operations. We have also started dispatching our goods, uh, you know, for shipments to Brazil to the new subsidiary. in October. This is a vital step for us to service our customers in Brazil, which is one of our key markets. We will also establish a direct presence in the UK. This has been done to capture new opportunities under the India-UK FTA agreement. Uh, we are already working on 3 important projects, and hopefully the first project will go live in, uh, Q1, uh, the second one, uh, the Q4 of this current financial year. The next one in Q1, and then the third one is anticipated in Q3 of, uh, the next financial year. So we have 3 important new projects going on other than what we're currently doing in the UK market. So These are some important initiatives we have taken. We also see similar opportunities in other parts of Europe under India-EU trade agreement. which is going to be operationalized soon. We are building— working on building some direct presence in some of the key markets in near future. So these are some of the important initiatives I just wanted to call out earlier. Now on the financial performance summary, starting on our standalone performance. which remains the core for the group. For the half year, revenue was ₹919 crore, up 15%, with domestic revenue of ₹318 crore going by almost 20%. International revenue of ₹595 crores going around 20.5%. Gross profit was ₹645 crores, up 17%, with a margin expanding by 111 pips. to 71— 70.1%. Operating EBITDA was ₹255 crores, up 20%, reflecting the operating leverage in the business. Profit after tax was ₹180 crores. For the quarter, revenue was ₹488 crores, up 17%, with domestic revenue at ₹172 crores, growing 22%, and international revenue at ₹313 crores, growing at 15%. Gross profit was ₹336 crores, reflecting a gross margin of 68.9% with an absolute growth of 16%. Operating EBITDA was ₹134 crores with EBITDA margin of 27.4% with an absolute growth of 20%. PAT for the quarter was ₹92 crores. Our domestic business continues a strong growth trajectory with the growth of 22% in quarter and more than 19% for the half year, broadly in line with our guidance of around 20% given in the beginning of the year. Taken together, we are seeing high growth across all verticals, not only established verticals like infusion therapy and blood management, but also on the newer verticals. On export business, deserves particular attention. International revenue grew by 15% in quarter 2 versus 10% in quarter 1. Reflecting improving growth trajectory. Export revenue grew by 12.5% for the half year, uh, once we add up the 2 quarters. And we're confident that the revenue recovery that we had spoken about earlier is showing up consistently in the numbers. In international markets, we have added 30 new customers in last 6 months, deepened relationship with existing customers by increasing our share of revenue and cross-selling new products to them. On the gross profit front, our gross margins increased by 111 pips to 71— 70.1% in H1, with the gross profit growing around 17%. As you may recall that in the beginning of the year, we had guided for an impact of 200 to 300 pips on gross margin due to increase in raw material prices on account of ongoing West Asia crisis. We have effectively mitigated that risk by proactively managing inventory, taking calibrated price hikes, and focusing on selling high-value products. We reported a PAT of ₹180 crores in H1. Reflecting a margin of 18— reflecting a margin of 18.4%. Q2, the PAT was ₹92 crores, reflecting a margin of 18.1%. Coming on the consolidated picture, for the half-year revenue was ₹1,106 crores, up 31%. Excluding the impact of acquisition, organic consolidated revenue grew by 14%, led to continuous strong growth in India and Europe, which grew by 19% and 29% respectively. Gross profit was ₹793 crores, up 36%, the margin expanding by 270 bps to 71.7%. As the better margin profile of acquired businesses and greater contribution of higher value-added products continue to lift group's gross margin. Operating EBITDA was ₹266 crores, up 19%. Profit after tax was ₹180 crores on H1 basis. It's important to know that H1 operating EBITDA of ₹266 crores also absorbs the setup cost for our new UK and Brazil subsidiaries. For the quarter, consolidated revenue was ₹581 crores, up 31%. Gross profit was ₹487 crores, up 32%. Operating EBITDA was ₹139 crores, up 24%. Up 20%. PAT, profit after tax, was ₹95 crores. Let me give you a quick update on each of the business segments. Infusion therapy grew 11% to ₹542 crores in H1, 12% to ₹280 crores in Q2, with domestic growing in this segment 20% both in H1 and Q2. Orthopedics contributed to ₹92 crores in H1 and ₹43 crores in Q2, reflecting consolidation at CTFE. Dental business recovered well, growing 7.5% to ₹94 crores in H1 and 20% to ₹51 crores in Q2, despite the continued dumping from Chinese players. Our dialysis machine business continues to scale. We have cumulatively sold now approximately 1,250 machines till date. We are still waiting for the results of the anti-dumping case which we have filed, which was filed in end of June. Uh, it's been 4 months we have been pursuing with the government, and I think we are seeing some movement there. Hopefully in a few months, you know, we should be able to see some action from the government on this issue. Cardiology revenue was ₹56 crores in H1 and ₹27 crores in Q2. As per Pendercare acquisition, clinical deployment is improving month on month. As in October, we have implanted close to 18,000 drug-eluting stents. Our 2,000-patient pacifier DS clinical registry has enrolled 1,150 patients with full enrollment targeted by end of FY27. We've also launched iDL, a minimally invasive technology that uses sonic pressure waves to break up calcium in heavily calcified arteries. This new product launch was done, uh, in August, uh, in current financial year, and hopefully we will see the revenue ticking up from this business also shortly. The other segments grew 23% to ₹317 crores in H1 and 26% to ₹173 crores in Q2, with broad-based growth across critical care, transfusion system, etc. Liquidity position and CapEx. Turning to our balance sheet, our liquidity remains strong at ₹839 crores as on 30th September against consolidated debt of ₹377 crores, net cash position of ₹460 crores. This gives us capacity to keep backing our strategic growth and growth-oriented initiatives. We spent ₹124 crores on CapEx in first half of our annual guidance of 225 crores. Out of this, 110 crores in India business and 15 crores in overseas businesses. Forward-looking guidance. Now let me connect to our forward-looking guidance for FY27. We are reaffirming the guidance we have shared previously. Importantly, based on our Q2 performance, our annualized revenue run rate is already close to what is required to achieve our full-year guidance. On a consolidated basis, we maintain revenue guidance of ₹2,300 to ₹2,400 crores. On a standalone basis, ₹1,900 to ₹1,950 crores, with domestic growing 20% and international growing 15%. We are increasing our standalone EBITDA margin guidance from 25% to 27% to 26% to 27.5% for FY27 on improved performance. For consolidated business, we are maintaining our EBITDA guidance of 23 to 25%. Our CapEx guidance also remains the same between 200 to 225%. In summary, H1 and Q2 FY27 numbers have reaffirmed the fundamental strength of our business model, diversity of our business across regions, customers, therapies that has ensured our business continues to grow despite geopolitical challenges. Our ability to improve EBITDA margin despite headwinds of raw material price, freight cost increase reflects the inherent resilience of the business and its pricing power. Strong comeback in European business for us in this year reflects strongly on our brand presence in that core market. This is extremely important given Europe is a core part of our business. I remain extremely confident about the future potential of our business. We are aggressively working to go beyond the vision of doubling the revenue we have set for ourselves for under Polymer 3.0. Again, thank you very much for your trust and your time. I now hand over to the operator and will be happy to take your questions. Thanks again. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, to ask a question, please press star and 1. Ladies and gentlemen, to ask a question, we would request you to please press star and 1 now. Participants who wishes to ask a question, please press star and 1 now. Ladies and gentlemen, to ask a question, please press star and 1. First question is from the line of Sidharth Negandhi from CWC. Please go ahead. Hi, thanks for the opportunity. Uh, just wanted to understand, uh, on 2 aspects. One, organically, uh, what was the growth in Europe and rest of the world? Uh, and on PendraCare and ChittiApp, uh, in terms of their own growth, what was their organic growth and how are you seeing some of the geopolitical headwinds, uh, that were impacting their growth now play out? Uh, and, you know, the impact that you had on your own Middle East business, how are you seeing that? Uh, that is one. The second was, uh, you saw, uh, strong growth on the critical care business. Is that coming from domestic markets? Is that coming from Europe where, where are you seeing the growth? And third is on US, if you could give us some color in terms of what's the early traction, where are you, what's the GTM? Some, some color on that might be helpful. Yeah, those are my questions. Thanks. So I think on the organic side, we have put out the presentation also which provides data on region-wise growth organically, which is excluding the impact of the acquisition. So if you look at that Our Q2 European business has grown at close to 40%. Um, you know, which is, you know, on the back of Q1, which has also grown quite well, but Q2 has really come back strongly. Our ROW market is down 7% in Q2, reflecting the constant, consistent geopolitical challenge that we're seeing because of West Asia war. On an H1 basis, our Europe business has grown at 29%. While the ROW markets are down 1.8%. So I think as we had called out earlier this year, we expected Europe business to come back strongly, which is very clearly getting played out. ROW market, because of the current challenges due to logistical and freight costs which has gone up, is creating pressure on, on growth on the ROW markets, primarily in the Middle Eastern region. Uh, to your next question on the growth of the PendraCare and CityAir businesses, so PendraCare business this year has till, you know, till September has grown at about 10% as compared to on a year-on-year basis. Uh, CityAir is up about 3 to 4% on a year-to-date basis between April and September. And, you know, given the work that we're doing on integration, we expect that growth to go up over the next few years. In terms of your question on critical care, I think the business on the critical care segment, uh, is growing well both in India and in Europe. As you might know, our subsidiary in Italy, Plan One Health, Um, you know, primarily runs a critical care business, and that business is also witnessing double-digit growth, while our domestic business, which we set up the team about a year and a half back, And, you know, it took time for us to develop the product and build relationship with the customers in India. That business is really starting to take off in the Indian market. Some color on the— yeah, go ahead please. Sorry, you go ahead and then I'll come to you. No, no, that's what, uh, go ahead please on the US. Yeah, on the US side, we got one more product approval in 510(k). Uh, it's an irrigation set which we got recent approval of, and, uh, business is starting to, uh, grow quite well in US as well. The project that we had started which had come to a standstill last year because of that tariffs issue, have picked up pace. And US is growing quite well for us in the current year. I think we will achieve the guidance on the US that we had given of achieving about $7 to $8 million sale at the group level from the US geography. That's useful. Uh, just wanted to understand 2 additional follow-ups on CTF. Where do you think the challenge has been? Uh, and even on Pendercare, right, if I recall right, this was growing in the mid-teens earlier. So where is the challenge on that? And the second one is on ROW, Uh, what— given that this is really an essential, right, is there a— is there a reason why, uh, you know, growth is still not— I mean, somewhere this— this is an essential product and therefore growth somewhere needs to pick up. agnostic of the logistical challenges, right? Uh, so let me take that one by one. Uh, on CTF, the primary challenge in calendar year 2026 has been because of, uh, you know, delay in tendering, primarily in the Italian markets, right? As you might know that a lot of the business is public tender driven in Europe, specifically in Italy, and there have been delays there because of which Uh, you know, the business has, uh, not grown as well in Italy. If you— for CTF growth outside of Italy, whether it is US or the larger LATAM region has been in line with our expectation. Hence, primary disappointment in CTF has come from the Italian region. With respect to PendraCare, um, I, I think as you've guided in the past this asset on its own can grow in high single digits, and with the integration with India and cost-saving projects that we're doing, we expect it to go back to mid-teens. But with PendraCare, the biggest challenge has been its exposure to Middle East. Uh, you know, almost 20% of the revenue in last year came from Middle East, uh, and given the challenge there, you know, business effectively come to a standstill because within Middle East, they also had a reasonably large exposure in, in the Iranian market. So I think that's really been the reasons why these assets have not grown as, as well as we expected them to. On your question on the nature of the product and the fact that they are essential in character, you're absolutely right. Um, you know, the demand for the product continues to remain strong from that region. The biggest challenge is the fact that logistically to fulfill that demand is becoming very very, very difficult for 2 reasons. One, availability of containers has been a challenge. Secondly, obviously, with all the issues going around Hormuz you know, getting products to, uh, you know, to, to the ports is a challenge. And thirdly, the freight costs have also gone up, right, which basically means the customers tend to you know, just wait it out and say, okay, if the freight rates will come down, they'll place the order. But from a demand— underlying demand perspective, that's— that remains quite strong. Got it. That's useful. Thank you and all the best. Thank you. Thank you. Next question is from the line of Bhavya Jain from DV Investment Advisors. Please go ahead. Oh, hello, am I audible? Yes, Ravi. Sorry to interrupt you, Mr. Jain, but we are unable to hear you, sir. Your voice is breaking. Can you please come into a good reception area? Hello, uh, Mr. Jain? Yes. Yeah, so, uh, thank you so much for the opportunity. My question is related to the Europe business, right? So, uh, we have registered a growth of around 40% in FY and in FY26 Yeah, so, uh, I was saying we have registered a 6% growth organically in the Europe business in Q4, and in FY26 we had faced challenges related to some inventory issues and dumping from China. So can you just elaborate on what is driving this growth and how sustainable it is for the European market? Yeah, so, uh, you're right, Pavesh, that last year was a tough year for the European business, uh, and we had called it out, uh, reasons for it, you know, over-inventory in the year prior to that. Uh, the challenges of tariffs as well as the dumping, right? Um, you know, we had already started working last year on deepening our engagement with the customers, right? Adding more customers, doing more clinical engagement with the customers. Some of that benefit is starting to accrue now. As Himanshu also mentioned, we've been working on many projects, uh, in the larger European region, which, uh, you know, some of them are starting to play out and some will play out in the next year. Uh, in fact, Q4 and then next financial year. Um, and so I think the fact that we've been able to gain share in our existing customer base as inventory situation normalizes Uh, the new projects that we're doing plus the new customers that we've added, about 28, 29 customers that we've added in the first half, all of those things are helping us, um, in driving the growth in the, in European region. And we believe that the opportunity set in Europe is very much larger for us, and that's why the belief that the business can continue to grow organically. in the European region at very, very attractive growth rates is, is very strong. So, uh, this growth is driven by inventory normalization predominantly. Anyway, bunch of, uh, multiple things. As I said, as we engage deeper with our customers last year, because we started to see challenges there in terms of bringing more clinical side of the side of the story with them. That relationship building plus new customer addition, all of those factors have contributed to the growth. Okay, and any status of Chinese supply? Is it still there or is it— or has it normalized kind of situation? I mean, I think, see, China dumping is not a medical device issue. I think in general there has been a lot of rhetoric around the fact that, you know, despite tariffs, they've been able to grow their export business quite significantly. You know, we are taking steps which are in our control, which is building more customer relationships, deepening the engagement, introducing new products, right? As you've mentioned, we have multiple products which were under registration. Some of them have come through and are starting to get commercialized. So, you know, in the higher value-added segment that we operate in, there we are able to continue to remain competitive and grow. You know, keeping in mind all the clinical engagement we're doing. Okay. Hello. Just one more question on the subsidies. So you have— hello? Sorry, just one more last point. We have 30 new product registrations which are coming up for registration in that market. Okay, okay. And just one more question on the subsidiary. So you have, uh, like elaborated on the challenges faced by the CTFE and the Panda Care subsidiary. So my question is, uh, firstly, on the— what, what is the sustainable growth rate we can look for these subsidiaries? And secondly, uh, the subsidiary margins have been operating at around 4 to 5%. Standalone and the consolidated numbers. And we— I think these were operating at around 12 to 15% kind of a margin band. So what sort of recovery in margins we can hope for, uh, in these businesses and in what time frame? Yeah, so Bhavesh, on the growth point, as I mentioned earlier in the call, these businesses' growth sort of uh, potential was in the high single digits on their own, right? They were small assets operating in Europe, right? So, you know, on, on their own, they can grow at between 8 to 10%. Um, sort of on a secular trend standpoint, from— with the initiatives that we are taking with them in terms of, you know, bringing more procurement synergies, supply chain synergies, distribution synergies, and, you know, product development synergies. We expect that to go back, you know, go into the mid-teens, uh, from a growth perspective. Again, just to clarify, some of— you know, most of these initiatives have long lead time because all of them need to be uh, go through the regulatory approvals. So, you know, they take, you know, sometimes they take between 1 to 3 years. Um, you know, a lot of the work has happened on, on the synergy side in the current year, in calendar year 2026. And hopefully we should start seeing benefits of some of those initiatives in the upcoming financial year. Uh, to your question on the margins, you mentioned that the margins for these subsidiaries at 4 to 5%. It's actually when you look at— when you're just doing the subtraction of consolidated versus the standalone, that's when you get to 4 to 5% EBITDA margin. You know, if you look at the EBITDA margin of the 3 subsidiaries separately, right? PendraCare currently, because of the challenges on, on the revenue side, is currently making losses at the EBITDA level. The other 2 subsidiaries, which is, uh, CTF, which we acquired last year, and Plan One Health, are operating in mid-teens in terms of EBITDA margin. So, you know, in the consolidated, we also have other subsidiaries which are currently being in setup situation, right? So as Himanshu mentioned during the call, uh, you know, the EBITDA that you see in H1 also includes the setup cost for Brazil. UK, and in some aspects even US, right? Because that is still under operationalization stage. So those are the reasons which is— that's why you're seeing 4 to 5% when you just do a subtraction between standalone and consult. Okay, so any outlook on recovery for Panda Care and Miles? Yeah, so I think, uh, with the projects we are doing with them currently, uh, we are expecting some of those projects to, you know, start getting implemented from Q1 of calendar year 2027. Um, and those will start accruing. Uh, you know, they've also got, uh, you know, one big breakthrough, uh, with a large OEM, revenue for that. should start accruing to them from calendar year, you know, mid of calendar year 2027. So I, I expect that calendar year 2027 or FY28, uh, we should start to see recovery of EBITDA margins, um, from Panda Care as well. 2 things happened. Uh, one, because of the war that's going on, the raw material prices have gone up in general, which has led to their increase in raw material prices. Um, secondly, and which is probably the bigger impact, because you have to understand that these companies are fairly small, right? Uh, you know, €10 million, even small minor changes lead to significant just from a margin standpoint, right? Just when you look at the margin percentages, uh, because of the loss of revenue in the Middle East region, which was close to 20%, of the revenue of 2025. Those are the 2 primary reasons I will say why the margins have gone down. Fundamentally, there is nothing that has changed in the business. Uh, the products continue to get sold, uh, in other markets. In fact, we are gaining more customers, uh, including, you know, we have grown the one of the large OEM where we have a relationship for over 15 years has grown at about 40% this year, right? Okay, so, uh, just one more question, uh, on Panda Care. So when we acquired this, uh, subsidiary, so it was operating at around 12%, so it is 14% margin. So what led to, uh, this subsidiary, uh, like going into EBITDA losses? Like, can you explain what operational challenges Thank you. So some of the revenue loss has been recovered from other customers, but you know, when you have, uh, you know, 20% fall for a business which is €10 million in size, Uh, you know, the margins do get impacted. Okay, okay. Thank you. Next question is from the line of A. Sriram Palaniappan from iThought PMS. Please go ahead. Uh, sir, may I know the lower and upper range of tender values in Europe and UK for the kind of medical devices you deal with? Sorry, Sriram, can you please repeat your question? Uh, may I know the lower and upper range of tender values in Europe and UK for the kind of medical devices we deal with? That's very tough to answer, uh, honestly. It could be billions. Yeah, maybe 1 billion. Okay, understood. So yeah, every company has a different procurement process, and there's like some work on GPO, some work on tender systems. And, uh, because we have a wide product range, so I think total available TAM in Europe could be exceeding a few billion dollars actually. Yeah. And, uh, how many dialysis machines have we sold in H1 FY27? Over 300. Okay, sir. All right, thank you, sir. Thank you. Next question is from the line of Simran Thakkar from B's Capital. Please go ahead. Thank you for taking my question. First, on extending the travel questions, thank you for the great insights on the pent-up demand for the sea. Simil, we are unable to hear you. Okay, am I audible now? Yes, better, better. Okay, okay. Uh, so, so, uh, thank you for the detailed insights on the pendra care and CTC and what are the, the, uh problems that they are going through. But also, uh, one color that I wanted on this missed earnout milestone, right, because of which we have booked an exceptional item of 96 million. So if you could just, uh, uh, detail out what milestone was missed and why was it the case, that will be helpful. Yeah, so, um, Simran, if you, if you go back to our investor presentation when we did the acquisition for PendraCare, we mentioned that, uh, you know, there are certain certain projects for which we had agreed on an earnout structure with the selling shareholders. One of the projects working on— I mean, in medical devices, as you know, a lot of projects which are in development stages tend to not cross the commercialization threshold, right? Because the company PendraCare does, in addition to selling their own products, also does a lot of contract development manufacturing work. development and manufacturing work with other customers. One of the projects did not pass the regulatory and clinical trials, and hence that project was shelved. Um, and because of that, we reversed the contingent consideration which we had included in our financials. I understand. Helpful. Uh, sir, on second thing, on the gross margin front, wherein it's a quarter-on-quarter drop, uh, reduction of from 73.4% to 70.1%. So, uh, one is how much was the reversal of Q1 inventory gain that we had and versus the RM inflation, if you could just, um, dissect these 2. And second part to this is, what is your FY27 gross margin outlook overall? Yeah, so, um, again, in Q1, our margins had expanded, uh, you know, for 2 things. One, uh, as we had called out As we started to see raw material prices increase, we took pricing actions proactively to push out some of the cost increase to the customers, right? And we were successfully able to, you know, pass on the price hikes about 4 to 5% in Q1 because we were carrying inventory, uh, which was, you know, low-cost basis in Q4. Uh, we were able to increase our margins in, in quarter 4. Some of those gains are now starting to get normalized, right? And, you know, That's why you see on a quarter-on-quarter basis the margins have come down. Having said that, uh, you know, instead of a 200 to 300 basis point margin reduction called out at the beginning of the year, able to maintain margins, uh, close to our historical trend of about 60-69%, which I think has been good performance, and we expect the full year, uh, to be in the range of 68 to 69% from a gross margin standpoint. I understand. Uh, okay, uh, so my third question is on the US business. So like you mentioned that we are targeting $8 to $10 million, um, by the year end. We can't hear you well, actually. Uh, very hard to understand on the call. I understand. Uh, am I audible now? I'm sorry for this. Uh, but then, uh, seeing the US policy changes because of the, uh, because of the elections that are going on, uh, Yeah, if you could just go a little slower. Okay, sure, sure. Uh, so on the US business, uh, like you mentioned that our target is $8 million to $10 million. also see, uh, maybe the 15+ approvals and 10+ more in the pipeline and also the GPO contracts that you mentioned on the— in the last, uh, con call? But, uh, looking, uh, now in on the policy changes, right, due to elections, etc., uh, uh, do we stand on this goal and how do we So how are we there on the US business front? So I think, uh, it's too early to call out what is going to happen in the US after this election, but I think the, the good part is that we have a lot of, uh, you know, products in the pipeline for 510(k). approvals. As Rahul mentioned, we have approval recently, and, and we have guided revenue between $7 to $8 million this year. And then going forward, uh, you know, uh, it'll continue to increase. And, you know, we have mentioned clearly that in next 3-4 years, we'll build up to between $15 to $25 million, and that's the plan. And, and for that, already a lot of, you know, new development is happening in terms of, you know, product side specifically related to US market. And we are also working— we are doing some new products, are undergoing testing requirements in the US labs. And once those testing requirements are fulfilled, and we are— we hope to get approvals for those products also. So I think that remains to be our focus right now, and we'll wait out for the next few months how things change in the US, and probably in the next quarter we'll be able to maybe give more clarity what we see changes happening in the US, uh, with the new changes which has happened recently. you mentioned the guidance is around 68% to 69% for the consolidated level, right? So you expect that in the second half due to the inflationary issues, cost inflation and all, uh, the gross margin will be soft in the coming quarters. Sure, thank you so much. That's it from my side. Thank you. Next question is from the line of Rashmi Shetty from Dolat Capital. Please go ahead. Yeah, thanks for the opportunity. This is Rashmi Shetty from Dolat Capital. Uh, so, uh, you know, just on the gross margin again, uh, 70% plus category. Understood. And, uh, on the, uh, debt part, you know, I've just seen that, uh, the long-term debt has been— has come down. Whereas your lease liabilities has gone up. So if you can explain that part. And the short-term borrowings, there is a spike in the overall number. So will it be going to the March levels again at the end of the year, or, you know, it will be on an increasing Uh, no, so actually that, that guidance was for a standalone basis. On a consolidated basis, we should still be in 70% plus category. modeling. Yeah, so, um, I think the working capital debt or the short-term debt is primarily increasing because of the increase in working capital, right? As the business has grown and the working capital has increased, so the short-term debt has increased in proportion, right? So I don't see any difference in the trend there. The lease liability that you highlight has gone up because, you know, we've moved the underlying subsidiaries to IFRS accounting from start of this financial year. So their rental cost which was getting expensed off in the P&L is now getting accrued as under IFRS 16 or IndAS 116. Correct, correct. Got it, sir. I understood that. Uh, but any, uh, further repayment in the long-term debt is expected, or it will be at the same level? 2 million. Okay, sir. Thank you. That's it from my side. Uh, at the March end, long-term debt actually on the balance sheet at a consolidated level as well. One of our subsidiaries in Italy has long-term debt and that has a repayment plan agreed. But that amount in total is, I think, about $6-7 million max. And that's getting repaid over next 5 years. So it should be between, you know, yearly repayment is between €1.5 to €2 million. €1.5 million to €2 million. Thank you. Participants, to ask a question, please press star and 1. Next question is from the line of Jasdeep Wadia from Clockwind Capital. Please go ahead. Oh, hi sir, thanks for taking my question. Uh, sir, in the— on the, uh, renal— in the renal segment on the dialyzer side, you have been facing significant competition from Chinese players. So what is the status on that, uh, considering that, you know, you've grown around 20%, uh, in this quarter on a YOY basis, uh, does it imply that the competition has reduced? Uh, some— this is my first question. So I think, uh, let me answer that. So basically, as you know, we had filed the anti-dumping case and government had initiated that process, and which is public knowledge. So it's already been 4 months now, and I think what we hear now is government may take some action on this. So, uh, there is some, you know, maybe movement in that direction, but as you know, these issues take longer than what we think. So you're just waiting it out. Uh, hopefully there is some, uh, you know, relief coming to us, and I don't know how it's going to come, but it's a matter of time. Uh, on the competition front, yes, the competition is still there. Nothing has changed, but I think One good thing which has happened, and I think I wanted to highlight that also, which, which I didn't mention in my opening comments, that there's a recent notification from Government of India, DGHS, to use medical devices only one time. And I think this is a very big thing which has happened because currently dialyzers were used 4 to 5 times. And now with this notification, I think most of these dialyzers change will be now forced to use it only one time because earlier they were able to, you know, leverage this cost by using the same product 4 to 5 times. So it's only designed for single use. So now this notification has been, you know, issued by DGHS, and that's a very important step. So I think this will also increase the demand for the product in the long run. So I think, uh, what we are seeing is that once this is implemented fully as all states are obligated to take this action and everybody has to follow this, all hospitals will also have to follow this. So I think this will lead to a demand, but I think it will take some time to build up. But we are also pretty hopeful that this is a very important notification which has issued, which is in our favor, which helps us to sell more products to the dialysis centers. So this, uh, new, uh, policy which has come up, when is it supposed to be implemented on the ground? Immediate effect. They have said immediate effect. There's a DGHS circular, you can Google it. Uh, this is issued by DG Director General Health Services, Government of India, uh, sometime in, uh, you know, end of October, uh, if I remember correctly, should be 22nd or 23rd October. And, uh, this is from immediate effect because today, uh, the biggest challenge which the patients are facing in hospitals is reuse of devices and not properly sterilized, and, and the hospital-acquired infections are actually increasing rapidly in hospitals because of reuse of devices. So I think this is something which has to stop, and I think government has taken some initiative. Let's see how it is implemented because India is a big country. And implementation may take time, but at least there is a direction which is set. Got it, sir. And so, uh, you had, uh, plans to take the renal business, uh, outside India as well. So, uh, where are you on that front? So I think, uh, firstly, uh, we are looking at Southeast Asia. I think that's the market we're developing. So we are working with some, uh, you know, uh, right now consultants to help us explore that possibility. And the first market would be Southeast Asia markets where we'll go. And so when do the revenues start, uh, outside India in, in this segment? Depends on the registration process. It's a cycle of 1 to 2 years. So we already initiated in some of the markets. So as and when we get registrations— but I think India is for us a bigger opportunity because what we are doing is full import substitution in the country. Still 90% market is import driven. So I think for us that is the big opportunity where we can replace that, you know, with our product. And, and this is a portion. So I think, and especially for machines, uh, you know, we need to set up the whole service setup and network and spare part and everything. And service engines. So I think India, we are very well positioned to do that. So initial, maybe next 12 to 18 months, will be more focused on India right now. Got it, sir. Thank you. That's all from my side. Obviously you said your standalone margins are 27-28%. By when do you expect your acquired business margins to trend above 20% mark? Uh, how long would it take? Thank you. Next question is from the line of Ashish D. from UTI Asset Management. Please go ahead. Yeah, thanks for the opportunity. Uh, so your acquired businesses, uh, Yeah, so I think, uh, Ashish, as you've called out earlier, these companies, uh, you know, CTF is already operating in mid-teens, right? Uh, 14-15% EBITDA margin. Uh, PendraCare before the crisis were operating in 10-11-12% margins, right? So I think once some of these, um, crises and raw material prices come down, we should, you know, have PendraCare back to similar kind of margin range. Our even 3 to 5 year target is to take these companies to close to 20% EBITDA margin. Um, and which is what we are working on, which will come through the synergy projects that we are running with them, as well as the benefit of operating leverage as the business scales up from the current levels. Yeah, so, so, uh, in the overall scheme of things, at console level at least, uh, since you're guiding for 23-25% margins, uh, we should not go below the lower end of the band, right, in the next 2 to 3 years. Yeah, I mean, I think we would expect it to, uh, you know, obviously we'll give the guidance as we go closer to the end of the financial year, but our aspiration is to obviously keep improving our consolidated EBITDA margins also, um, as we grow the business. एपिक साउंड प्ले आह सो व्हाट्सएप Great. I'm sorry, Mr. Ashish, your voice is breaking, sir. Hello. Yes, sir. Yeah, sorry for that. Uh, the ₹500 crore CAPEX guidance, uh, what was the facility status? And, uh, we have given a broader guidance of doubling our revenues in the next 5 years. So are we staying the course? Uh, any update on that would be helpful. So the CAPEX guidance for this current financial is between ₹200 to ₹225 crores. And of course, uh, we have already laid out very clearly that by FY30 we will double our revenues. That's the plan. And, uh, we are already, I think, on that path. So a lot of CAPEX have been doing— have been currently undergoing to, to balance those, you know, activities in different plants. Add capacity. So we are already working on it. And some— a lot of these new projects also are coming in, you know, where we're expanding our orthopedic and cardiology business, which we started just 1, 1.5 years ago. So I think that a lot of that is happening also as we speak. Yeah, great. And last is, uh, so India still does not have a dedicated medtech ministry, and since you are also on the cardiac stents, uh, you obviously are manufacturing all those products. Uh, by any chance, as far as the industry representation to the government is concerned, uh, would you guys have had any sense whether there would be a dedicated medtech ministry in place? That's the question which I can't answer honestly, Ashish. But yes, currently the Pharma Ministry is taking care of, which comes under chemical and fertilizers. which has oversight on the medtech industry. But the good news is that maybe we will hear in next— maybe government is already working on you know, bringing out additional PLI scheme for medtech sector because the first PLI did not work well and because of the shortage of time and it came during the COVID period, so many companies could not you know, meet the expected targets. Uh, so there could be something there. And then also there's a scheme for, you know, uh, R&D, you know, promotion in medtech. So there are some things which are happening. So on the policy front, I think government is very clear that they want more Make in India products to happen and they want to reduce the import. And I think we will see some action from government as time progresses on that front. Great. And finally, since you're planning to double your revenues roughly 3 to 5 years down the line, as far as your portfolio mix is concerned, how would you see infusion contribution panning over the next 3-5 years? Yeah, so I think, uh, you know, our infusion business growth is also expected to remain strong because a lot of our US expansion out of India is infusion-driven, right? So as the US business expansion happens, infusion will also continue to grow. Um, I, I think we will be happy if the infusion contribution remains between 45 to 50% over the next 4 to 5 years. Great. That's good to know. Thank you and all the best. Thank you. Thank you. Thank you. Participants, to ask a question, please press star and 1. As there are no further questions from the participants, I now hand the conference over to Mr. Himanshu Baid for closing comments. So thank you again everyone for your keen interest and, you know, very relevant questions you've asked. And I think As we have mentioned earlier, I think the Q2 numbers, uh, you know, are reflection of what we wanted to achieve during the whole year. And I think next 2 quarters also, you know, we are striving to achieve a similar or a better, you know, growth. And hopefully, you know, we are very sure about meeting the expected range of EBITDA and revenue for the year. And I think this has been a a big year for us in terms of, you know, adding new customers and, and also new products. And a lot of these will, will, you know, become more productive in, in next year where we see almost 30 new products getting added in European markets through new registrations which we are doing through— going through. And then, you know, Brazilian subsidiary picking up and UK business coming up. Where we have already established subsidiaries. So a lot happening right now. So hopefully, uh, you will see much better performance in, in coming years. Thanks a lot. Thank you again. everyone. Thank you, ladies and gentlemen. On behalf of Poly Medicure Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.