Ladies and gentlemen, good day and welcome to the Q1 FY 2027 results conference call of Fredun Pharmaceuticals Limited. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I hand the conference over to Ms. Sakhi Panjiyara. Thank you, and over to you, ma'am. Good morning, everyone. Thank you for joining the Q1 FY 2027 earnings conference call of Fredun Pharmaceuticals Limited. We have with us today Mr. Fredun Medhora, Managing Director of the company. Before handing over to Fredun, sir, let me briefly walk you through the company's performance for the first quarter of FY 2027. During Q1 FY 2027, standalone total income stood at INR 228.25 crores, registering a strong year-on-year growth of 90.44%. EBITDA stood at INR 32.78 crores, reflecting a growth of 92.90% year-on-year growth. EBITDA margin improved to 14.36%, expanded by 18 basis points year-on-year. Net profit of the quarter stood at INR 13.17 crores, registering a growth of 94.63% year-on-year growth. Net profit margin improved to 5.77%, expanded by 12 basis points. Overall, the company delivered strong growth during the quarter along with an improvement in operating margins and profitability. With that brief overview, I would now like to hand over to Mr. Fredun Medhora. We can open the floor for the Q&A. 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 touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A brief disclaimer, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one per participant. The first question is from the line of Manoj Shah from VS Ventures. Please go ahead. Yeah, good morning, sir. Good morning. Am I audible? Yeah. Yes, sir. So congrats on good set of numbers. You have almost delivered FY 2023's full-year revenue in this quarter only. Where can we see Fredun in next three to five years? As I have been always saying, there are two parts of the growth story. One is our new age brands, which are growing at around 35%-45% year-on-year. Some are growing even faster because they are at a lower base. Our vintage business is growing at around 15%-20% year-on-year. So a blended growth of somewhere around 35%-30% for the next three years is kind of on the charts, and it is going to be a combination of all the new brands and our existing ones, plus the increase in the capacities that we are building currently at our own facility and also around with our five plants in Palghar, we have added around 43 locations where we are manufacturing. Those product portfolios will also add in. It will give a very good boost to the sales and the product line in the coming three to five years. Okay, sir. Thank you. That is all. Thank you. The next question is from the line of Mayur Parekh from VY Capital. Please go ahead. Yeah. Hi, good morning. Can you hear me? Yes, I can hear you. Good morning. Yeah. I just wanted to know, can you just throw some light on the company's domestic growth opportunity? Fredun Gx is currently present across 17 states, and our strategy mentions the deeper penetration to Tier 2 Tier 4 cities. So how large could this opportunity become over the next two to three years? The Gx is currently now in around 19 states, and we are at a very small base of this year, about INR 100 crores, INR 110 crores only. So we have a very long way to go in terms of Gx also. We've got very good acceptance of our goods. Our goods are very well accepted in the market. Plus, along with our promoted brands, such as our Pet Care brand, our Nutrition brand, our Mobility brand, our other products, which are also sold in common chemist shops. So the pharmacies, the people, the distribution line feel very confident that there is a vast array of products across therapeutic ranges coming from this company, and they are more than willing to hold more and more of our goods and actually sell them. Plus, the repeatability of those products is quite high. Again, it's the same thing. We are very underpromise kind of people. We expect 25%-35% growth in this business year-on-year. Even for the next five years, we don't anticipate any hiccup because we are at a very small base. We have a long foresight ahead. We have planned for the next three and a half to four years. Anything more than that, I would not want to commit, but for the next four years, you can easily consider around 30%-35% growth on the Fredun Gx line as well. The market potential is huge. Some big companies are doing thousands of crores of Fredun Gx. Product penetration, I'm talking about pharma penetration itself, is very poor in our country, even in 2026. There are a lot of people on the poverty line as well. So many people are not even having access to medicine, forget Fredun Gx or anything. In the next 10 years, definitely, as India progresses, as people come out of the poverty line, even 1% of the people is like a small country in Europe. We have a long way to go. Our aim is to ensure that our supply chain is robust. Our aim is to ensure that our products reach the customers in time, and the product basket keeps on enhancing itself with the latest molecules and with the addition of further products to enhance the product basket as an overall offering. Okay, got it. Thank you. Thank you. The next question is from the line of Keshav Toshniwal from Kanakala Capital. Please go ahead. Congratulations, Fredun, for excellent sent off numbers. Your new website, wagr.in, looks super interesting. If you could expand upon what kind of developments have happened and what you're seeing this pan out like. It's looking excellent, website. Thank you. As we had taken over the website and the company last year, first, we spent about three to four months creating the team, because as you know, a strong team who has built websites and e-commerce platforms for a long period of time, and with successful e-commerce platforms. To get that kind of team engaged and formed, it takes time. But luckily, we were lucky enough to find the right kind of people. Then we started onboarding all our brands. Almost all the brands are complete. I think within the next 20 to 25 days, practically every single big brand in the country will be onboarded. We also have now onboarded our pharmacy. So we have a huge, almost 1,500, 2,000 product range of medicine products also that you can order from various brands across companies. It is already one of the most comprehensive Pet Care portals right now, even in our beta phase. We had a soft launch around 15th of June. We are testing the deliveries and small bits and issues, the hiccups. Again, as I was telling you, we are creating a pet parenting platform. It is not just an e-commerce platform. Many people have started now latching onto it and started changing their websites to calling pet parenting, but we are already having a list of breeders, a list of trainers, a list of groomers, a list of dog walkers, and a list of doctors. Plus, we have our own diagnostics. So that will link on the website to offer those services. We are also tying up with various blood collection for pet blood collection, and we are also creating a profile and an online portal within the Wagr thing for blood collection and blood donation for pets. So it will be one of the most comprehensive websites in coming time. I think within the next 60- 65 days, all our beta testing and all those things will be done. We are already live. People are already ordering from it. But we are still creating a stronger back end. Our warehousing is done, our supply chain is done. So I think within the next, say, 90 days, you will see campaigns coming out, partnership with various key players in the industry coming up, and a lot of exciting thing coming up. So Wagr is something to look out for. It's something personally I'm involved in on a regular basis because I really feel it is the need of the hour for pet parents. Especially as a pet parent, I know how important it is to have a 24/ 7 helpline, and that is also what we are creating. Even the look and the feel of the website, even from the current one, will be slightly different in the next 60- 90 days. That's great to listen, Fredun. Thank you. Thank you. Thank you. The next question is from the line of [inaudible] Bajaj from Serene Alpha. Please go ahead. My question has been already answered, but just to add, what is the- Sorry to interrupt. Ms. Bajaj, may I request you speak a bit louder, please? Yeah. My question is already answered, but just to add that, can you guide CapEx for FY 2027? Yeah. In terms of CapEx, as we are growing, we are expanding. Our goal by end of December 2028 and early 2029 is to be one of the largest manufacturing units at a single location in the country. We have a plan of about INR 30 crores- INR 40 crores of CapEx in this financial year from now onwards, maybe the same plan for the next year as well, about INR 30 crores- INR 40 crores. At around INR 1,000 crores of revenue, about 2% is generally a maintenance CapEx in itself because we have to constantly upgrade our facilities and machineries and create the latest, what you say, protocols for our new upgraded rules and regulations as per CGMP. So some CapEx will always be there for the plant perpetually. But for the next two years, you are looking at around INR 35 crores- INR 45 crores per year for the next two years. Okay. Noted. Thank you. The next question is from the line of Nabendu Mondal, an individual investor. Please go ahead. Yeah. Thanks a lot for giving this opportunity, and congratulations on the great set of results, Fredun sir. Historically, I have seen that always the Q1 has always been weaker than the Q4. Just had one question with regards to why exactly. Can you just elaborate on, for the current Q1, we have seen an exponential increase vis-à-vis the last year. What were the factors driving that, and do we see the future quarters to be maintaining this growth rate or it could be better than Q1? Sure. As you have noticed, last 20 years, our first quarter is always weaker amongst the four quarters, and that is because of the nature of the business. As we have sale targets, people have import targets and distribution targets, so there is a lot of purchase that happens in the last quarter. Then when the orders start rolling in, it is around April end, so by the time the dispatches happen, the first quarter is always slightly optically weaker. However, for many years, the numbers can talk for itself. The first quarter is always improved versus the first quarter before. This time, we have got a slightly higher growth. Yes, because during last year, in the last quarter, because of the price fluctuation increase, we generally carry more stock. We as a company used to always have a slightly higher number of stock. We could book orders at old prices with our customers and got a better order book. We in fact told our customers that if you give us further orders, we can kind of hit you with a very lower price increase than the world is giving. So we definitely got a slight boost from there as well. In terms of the coming quarters, yes we will see growth. It will be somewhat around the same kind of numbers that is there for the first quarter as well. Again, our growth and our numbers are something that we don't look at. What we look at is consistency in terms of our product availability in the markets and also the new product additions that we are doing. We will see a growth in all our numbers coming in from, say, the next quarter or maybe the quarter on. It would be around the same level as the first quarter for this year. Next year also, we are anticipating almost the same kind of growth in terms of revenue. This first quarter, we had a slight boost because we booked additional orders in the last quarter of last year, giving our buyers a good price which they would have not got elsewhere and we asked them to book further orders as well. So, yeah, we are on track. We're doing well, and I think our next two to three years, we will be on the same kind of growth trajectory as we have been right now. I also want to add that though people are congratulating us for the numbers that we have shown this quarter, my highest growth was in 2008 and 2009 when I've increased 110% year-on-year and 115% year-on-year. Because my numbers were so small, nobody congratulated me that time. So I really would want people to understand that we are consistently showing growth not for the last three years, four years, but for the last 19 years. As a company, we are 38, 39 years in the industry and these numbers we have achieved after 38, 39 years in the business. So yes, I understand that people are seeing our journey for the last five years, but honestly I'm very proud of what we have been doing from the day I joined and from the day this company is incorporated, because that is what is allowing us to grow right now. Okay, perfect. Thanks a lot for the detailed answer. I had one more question with regards to the- Sorry to interrupt, Mr. Mondal. May we request you return to the question queue for a follow-up? Just one last question, if that's all right. Okay. Yeah. I just wanted to understand about the functional foods division. How is it doing? How did it do this quarter? I believe in the last phone call you mentioned about the Jain food which was a hit in the market. How is it progressing and how do you see the functional food growing over the next two, three years? The functional food is part of the Pet Care. We are adding, as I told in the last call also, we are adding about 42 kind of variants in functional foods. Our Jain variant has picked up very well, of course, in certain pockets in the country, and it's done exceptionally well. We have also got our functional food response in all the metros very well. We also have a normal biscuit range which we are manufacturing and which has got very good response in Tier 2, Tier 3, Tier 4 cities. We have a wide array of products, one for the tier 1 cities and then others for the Tier 3, Tier 4 cities. The functional foods, some are almost given by the doctors, where the doctors say, "If you give treats to the animals, please give a snacky iron or a snacky for the bone and joint, snacky for the gut," so on and so forth. We are also coming up with cat biscuits. I think we will be the second or the third ones who have cat biscuit treats coming in the country. So that is also coming in, and we are creating a functional line even for the cats in the coming six to seven months. We are focused on it. We are looking at penetration, and we are looking at product acceptance right now. Again, we don't want to dump the sales. We are not in the dumping game. So we want people to slowly take it. Any good growth is exponential in nature. We like to flatline, no problem. But our flatline in functional foods is also growing very fast because the treats are accepted. So many parents come and call our company directly saying, "We love your product. My dog doesn't eat anything else. If I don't give him, he doesn't start eating his food also," or "She was having gut issues, but after taking her treats, it is doing well." So those small wins are more valuable to us than any numbers. Yeah. Thanks a lot. Thank you. I will join back today. Thank you. The next question is from the line of Khushi Jain from Share India Securities Limited. Please go ahead. Hi, good morning, sir, and congratulations on the numbers. Just one question I had on the working capital side. Could you just elaborate on the working capital side for this quarter and going ahead for next two years? Yeah. We are currently at now around INR 850 crores. We have a working capital of somewhere around INR 170, INR 175 crores, which is not a high working capital for a company our size. We also have a lot of debtors. We have a good stock, and we have almost 50% of our working capital as cash on hand. We will definitely. Will our absolute number of working capital increase? Yes, it will increase, no doubt about it. At INR 2,000 crores, at INR 3,000 crores of revenue, of course, we are going to have a higher working capital, but that would be in line with most manufacturing companies. Hopefully, we will have further positive cash flows, which will deter the requirement of higher working capital need from other bankers. Our goal right now is to go into the market, add more states, add more demographics. Next three, four years are quite dynamic. But through higher margins, through better cash flows, and through a strong repeatability that will reduce the customer acquisition cost, that will also improve the gross margins tremendously and net margins tremendously, actually. So we are quite comfortable, actually, in terms of the working capital. Okay, great, sir. Thank you, sir. That was it. And congratulations once again. Thank you. Thank you. The next question is from the line of Ashish Malani from Malani Family Office. Please go ahead. Hello. Am I audible? Yes. Hi. Yes. Hi, Fredun. Congratulations on a good set of numbers. My question was on the line of interest rates. I just wanted to understand, has that changed meaningfully? Because if you see year-on-year, signals have grown significantly, but quarter-on-quarter, the interest cost has gone down. Is it because the borrowings have gone down or the interest cost in itself has gone down? Interest costs are slowly reducing. Our cash flows are getting better. The interest is, we are using less and less of our limits, so that is also there. Of course, there are certain spots in requirement when we do some procurement or when we do some penetration for certain states. But overall, the need for working capital is reduced. The interest spending versus the top line has also drastically reduced. If you see the numbers in the first quarter, it will reflect so. We are on track to ensure that we spend very frugally in terms of interest. However, interest cost alone is not our focus. Our focus is to ensure that our products meet the market. For that, if we have to have some temporary spending, we will do that. Overall, we are improving. Overall, our sales versus our interest cost are going down. Yes, because of our credit improved also. We went from BB B to BB B+. Hopefully, we will have better ratings in the coming years. That has helped reduce the interest rate even further, and overall factors also has helped. So it is a part of accumulation of a lot of things and not just one thing in particular. Got it. Just one more thing. Your inventory and inventory days have been on the higher side, and I feel a lot of that is there to support the growth. So what kind of inventory days are you targeting for this year? Yeah. If you go to see our inventories, inventory days were quite high four years ago. That time people were asking, "How come you have so many days of inventory?" At that time I was explaining to people that, "Boss, if I have to launch five brands with multiple SKUs, I require that kind of inventory to hold up, to bulk up, because there are 2,100 products." Now, on 30%-40% growth on the revenue, the inventory increases by 10%. That just shows that we are rationalizing. We are looking at around 140, 135 days of inventory. Hopefully within the next four quarters, it will come to around 120 days. It will always hover between 110- 125 days because of the nature of the business and the number of SKUs that we have. Also, next four years, we are into a hyper growth phase for our new age products in Pet Care, in Mobility, in Nutrition and in cosmetics and so on and so forth. For those reasons, we will have to and many of the products we manufacture ourselves apart from just outsourcing. We have those things, but they are rationalizing. You've seen the trend. Inventory days have gone down by almost 50% in the last two years. We are quite okay with that. Got it. Thank you. Thank you. The next question is from the line of Nirali Shah from Ashika Investment Managers. Please go ahead. Hi. Thank you for the opportunity. I have three questions. First one I have on the margin lever. What is the biggest margin lever over the next two to three years? Should we expect margin expansion to accompany the 30%, 35% growth that you've mentioned? Pet Care works at around 45%- 55%. Mobility works at around 40%- 50%. Nutrition has a higher intrinsic margin, but right now we are expansion, so we are looking at around 35%- 45%, maybe even 45%- 50%. Dermacetics has a gross margin of 70%- 75%. The blend of those margins coming in helps us improve our bottom line. Again, our focus is not just solely to increase profits. Right now, for the next three years, our focus is to increase penetration, increase product acceptance, increase the conversion rates in terms of repeat orders. For that, if we have to sacrifice on some of the margins, we will do it. However, because our vintage business is also getting more and more efficient and we are achieving more and more new registrations, which are of higher margins and in better geographies, and our Gx also will cross about INR 110 crore, INR 120 crore, INR 130 crore. There we will have a slightly few percentage basis points higher price acceptance in the market versus a new entrant. So rate group of margins are kind of in play and that is where it will head. As a company, our margins are doing quite okay. We know the intrinsic margins within the next 8- 11 quarters. I've been continuously saying now around seven to eight quarters there will be a sudden spike in the profitability also because we will have a demographic reach almost completed as we have planned, and then we'll slowly penetrate within those demographics further, add more products in those channels. Yes, we are going to expect growth of the margins in line of what we have been growing. In terms of a top line, as the top line grows, there are more and more new age products and higher margin products are sold versus what was sold last year. So definitely there will be an impact in the bottom line. Fantastic. That was really helpful. Second one, what revenue does the- Sorry to interrupt, Ms. Shah. May we request you to return to the question queue for a follow-up? Sure. Thank you. Thank you. The next question is from the line of Ketan Pathak, an individual investor. Please go ahead. Hi. With the good start to Q1, can we target a revenue of INR 1,000 crores and EBIT of INR 100 crores this year? No, I have never committed something like that. I would never commit. Absolutely. Yeah. I am saying is it something that is a possibility? Anything can be possible. But our roadmap for last year was 570. We achieved 635. This year, our target was somewhere around 800. I think we are in line to achieve that. We will cross that, hopefully. Thousand, I do not want to comment. I am a very underpromise kind of person. I hope you understand. And this is my trend since I have been doing these earning calls, since I have been giving guidances since 2016. So yes, it optically looks that we are going to definitely reach a good number. We are hoping that we will overachieve our target. We are on track to overachieve our target. Will we overachieve? Let us hope so. We are working on it. I would want to give our partners, our investors, our people who believe in us something tangible and a positive news at the end of the year rather than overpromise something now. We are on track. Sure. A follow-up to that is the EBIT margins have improved a lot. I think they stand at about 9%- 10%. Yes. Do we see that going to about 12%, 13% in next, say, 15- 18 months? I would not. Again, a reporting cycle in India, in most of the places in the world is 90 days. Business cycle is not 90 days. Accruing a fixed month to when the PATs are going to come in would be not correct on my part to give. But we are on line that within the next, let's say, 12 quarters we should be comfortably near that number. We might do something even better. We might reach there. It might take one quarter plus or minus, but one quarter is 90 days. Even if we achieve that number about 100 days post the plan on a 40-year journey, it doesn't matter. We are okay with it. We want our investors to strap in for a very long run. We are honestly not 1% of where we want to be as a company. Not even 1%. I'm talking not in terms of market cap or in terms of profitability, in terms of creating an impact in the industry. We are wanting to do that more than anything else. In the process, if our margins improve, in the process, we become slightly a bigger company, yes, of course, we will do that. But we are, as a company, more focused on the impact we have in the industries that we are present and something that lives beyond my lifetime as well. Sure, sir. Thank you and best luck for the future. Thank you. Thank you. Thank you. The next question is from the line of Yash Gupta and an individu al investor. Please go ahead. Hello, sir. Am I audible? Yes. Good morning, sir. First of all, congratulations numbers. Sir, my question is regarding the Pet Care business. For us, the business is currently generating around INR 40 crore-INR 43 crore in revenue. What revenue scale are you targeting for over the next three, five years, and what kind of margin provision? Yes. Pet Care, we are one of the only companies to have Nutraceuticals, allopathic formulations, functional foods, therapeutics, grooming, and also now diagnostics. We have India's first center in Mumbai. In Worli, we are starting one more in Malad, and we are creating one more center in Vashi as we speak. The growth in the Pet Care industry is going to come from all of these individually as well. We are also launching cat food by the third quarter of this financial year, or around the fourth quarter of this financial year. That itself, we are planning to be INR 100 crore sale within three years from launching or within three and a half years from launching our plants that we are building right now for increasing functional food capacity. That itself, we are going to also start OEM for those for other companies as well. So that we are looking at a positive growth in the numbers. Wagr is also technically part of our Fredun ecosystem. Of course, it's a separate company, but it's into Pet Care. So if you add that, we are looking at a good growth in those numbers as well. Our on-field penetration is increasing our functional foods this year. We are looking at around INR 18 crores- INR 24 crores to sell only functional foods. But that will also include what we are doing right now as a product basket. So overall, we are looking again at 40%- 50% growth in those numbers for the next three, four years. We have very small base of INR 40 crores, INR 45 crores overall with this. So growing at 40%, 50% year-on-year in Pet Care is not a big thing, at least for the next three years. We might have a further spurt once the cat food revenue start adding, once the diagnostics revenue start adding. We have also in line certain acquisitions coming in. We will be updating our investors, we'll be updating the markets and everything for those acquisitions which are coming in, which some are small, some are big, but they are all fundamental parts of the long-term growth story. So some exciting stuff is coming in the Pet Care. Let's understand what we are doing as a business and why we are doing that. I think then derivating those numbers will be quite easy. Thank you. The next question is from the line of Abhi Jain from AJ Capital. Please go ahead. Hi. Good afternoon, Mr. Medhora. Hope I'm audible. Yes. Sir, congratulations on good set of numbers. As you have always underpromised and over-delivered, so continuing that trend, it is heartening to see. I just want to understand one thing, sir, in the last call you had mentioned about as the company is going through this explosive growth, you would want to put in a formal structure in place in terms of finance, accounting, and slowly have an execution team which caters to your CEOs of different divisions so that Yes these are independent divisions to each of the business. Could you throw some light on that? Also I think I missed your comment on the margins that you were saying, the margin improvement that you were talking about. Could you throw some light on that as well? Okay. In terms of the team, you have to realize that already every single division and business has a separate CEO in place who have 10, 15 years of experience, some have 20 years of experience, some have 25 years of experience. Our team in Pet Care, India's number one pet nutritionist, is also part of our team. Our cat team has people in the industry who are stalwarts. Even in our Nutrition and our other people who have launched products for various MNCs in not only India but across the world. So the team is very strong. We are having a very strong internal team also. Our operations, in terms of finances and in terms of new product development, we have a very strong R&D team as well. On all fronts, yes, we have been building teams and I would proudly say that we have one of the lowest attrition rates in the country. So my team is with me. Practically every single core team member I have hired when I joined the company 19 years ago is still with me. Every single one. So our team is good. We are a crazy bunch of people, and everyone wants to grow. You come to our office at 9:30 P.M., you will feel it is 4:00 P.M. and a packed house, and everyone just is geared up because so many exciting things happening. So, yes, team is in place. Further strong, I would say, management will automatically form as a part of the process. We are very well-organized compared to where we were 10 years ago, compared to where we were five years ago, and where we will be in the next five to seven years. We will be better organized than what we are now. It's a part of the process. Yeah. I would want you to come, if you ever get time to hit our office and meet everyone in person. I would love for you to come and introduce you, and you can check the energy levels post meeting them. Yeah. Sure. Sir, I'll talk to Kirin and arrange a meeting. Sir, just to your last point on the margin- Sorry to interrupt You had told this in beginning. Mr. Jain. Yes, sorry. It was part of the first question only, but anyway. Thank you. Ladies and gentlemen, due to time constraints, we will take that as the last question for the day. Now I would like to hand the conference over to Ms. Sakhi Panjiyara for closing comments. Thank you everyone for joining the conference call, Fredun Pharmaceuticals Limited. If you have any further query, you can write to us at research@kirinadvisors.com. Thank you, Fredun, sir, for your time. Once again, thank you everyone for joining the conference call. Good day. Thank you. On behalf of Fredun Pharmaceuticals Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.