Ladies and gentlemen, good day and welcome to the Ajanta Pharma Q4 FY 2023 Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Yogesh Agrawal, Managing Director of Ajanta Pharma Limited. Thank you. Over to you, sir. Thank you. Good evening and welcome to all of you. With me, I have Mr. Rajesh Agrawal, our Joint Managing Director; Mr. Arvind Agrawal, CFO; and Mr. Rajeev Agarwal, our AVP, Finance and Investor Relations. I hope that the results are already there with you. We continued our growth in branded generics business, which is our mainstay, and also outperformed the market going ahead. However, the year saw severe pressure on the margins with EBITDA going down sharply from 28% last year to 21% this year. This was due to the factors beyond our control, like increase in material prices, U.S. price erosion, increase in freight costs, et cetera. We have taken effective steps to contain this impact and are confident of regaining some of the lost margins in coming years. In spite of pressure on margins, our cash flow generation was quite robust, and hence, once again, we have rewarded shareholders with a payout of INR 479 crores, being 81% of the PAT in form of dividend and buyback during the quarter. It reassures our commitment to pay back any excess cash to the shareholders of the company. I and our Joint MD will take you through business-wide performance for Q4 and 12 months FY 2023, along with comparison of previous year same period. It was overall a good year with total revenue for 2023 at INR 3,743 crores against INR 3,341 crores, posting growth of 12%. As you are aware, our business is divided in three verticals: branded generic business consisting of India and emerging markets, U.S. generic business, and institution business in Africa. Let us start with branded generic business. During the 12-month period, 73% of the total sales came from the branded generics, which is spread across India, Asia, and Africa. This business has surety, scalability, and sustainability for the long term. During Q4, branded generic sale was INR 625 crore against INR 644 crore, posting 3% degrowth. In 12 months, sale was INR 2,690 crore against INR 2,382 crore, posting growth of 13%. This growth was in line with our expectations and guidance's. I invite Mr. Rajesh Agrawal, Joint MD, to take you through India business. Thank you, and over to you, Rajesh. Thank you. Good evening to all of you. Let me discuss some of the key highlights of India business with you now. Our performance has been excellent on the back of new product launches, market share gain, and price increase. India business contributed 32% in the total revenue during 12-month period. In Q2, sales stood at INR 287 crores against INR 245 crores, posting a growth of 17%. For 12 months, sales stood at INR 1,174 crores against INR 982 crores, posting a healthy growth of 20%. India business includes revenue from trade generic of INR 42 crores against INR 30 crores in Q4 and INR 151 crores against INR 117 crores in 12 months of FY 2023. During the year, we launched 23 new products, out of which six were first to market. Our MR productivity has gone up by 20% against previous year on the back of consistent growth in business without any increase in MR share. I'm delighted to mention that our overall growth was 2 x to the IPM as per IQVIA MAT, March 2023, with Ajanta's growth of 16% versus IPM growth of 8%. Even in all therapeutic segments we are present in, our growth was much higher than the segment growth. In the covered market, we are fourth largest in IPM. In overall IPM, we gained two ranks in the last 12 months and stood at 27th as of the end of the year. It will be heartening to note that in all our therapeutic segments, our ranking in covered market is amongst the top 10 with second rank in ophthalmology. As per IQVIA MAT, March 2023, cardiology contributed 40%, ophthalmology contributed 31%, dermatology contributed 21% of our business, and the remaining 8% is coming from pain. Four of our brands are appearing in the top 500 list of IPM. Now, Mr. Yogesh Agrawal, MD, will take you through the other business performance. Thank you, and back to you. Thank you. Let me now discuss some of the key highlights of the branded generic business in Asia and Africa, which contributed 41% in the total revenue during previous year. Let's start with Asia. In Asia, our business is spread over Middle East, Southeast Asia, and Central Asia, covering about 10 countries. During Q4, sale was INR 238 crores against INR 263 crore, degrowth of 9%. Q4 2022 was elevated against the rest of the quarters as major countries saw increased demand after pandemic. In 12 months, sale was INR 957 crores against INR 813 crore, posting healthy growth of 18%. We launched 38 new products during the 12-month FY 2023 in the region. We continue to see mid-teens growth on the back of our robust product pipeline, increased productivity and excellent strategy execution across countries. Let's now move to Africa. In Africa, business is spread over sorry, West and East African countries in 20 countries. During Q4, sale was INR 100 crore against INR 136 crore, posting 26% degrowth. The growth was adversely impacted due to the strike in France for pension reforms, which led to considerable delays in the supply chain. The situation is slowly improving, and we are trying our best to keep up the supply chain going. In FY 2023, sale was INR 559 crore against INR 587 crore, posting 5% degrowth. The full-year degrowth can be attributed to INR depreciation against rupee from previous year by 5%. We have seen reversal of this trend, and we hope to see mid-to-high teen growth in this market again going forward. We launched eight new products during FY 2023 in the region. Let's move to U.S. Generics. This is the second vertical of business and contributed 22% to the total revenue. In Q4, sale was INR 197 crore against INR 168 crore, posting 17% growth. In FY 2023, sale was INR 828 crore against INR 696 crore, posting 19% growth. We see price erosion stabilizing, and it has come down to high single digit in our existing portfolio. At the end of 2023, we filed five ANDAs and also received four final and one tentative approval. We have 21 ANDAs awaiting approval with U.S. FDA. Africa Institution. This is third vertical of business comprising of anti-malarial products and contributed 5% in total revenue. In Q4, sale was INR 49 crore against INR 50 crore, posting 1% degrowth. In 12 months, sale was INR 190 crore against INR 106 crore, posting 8% degrowth. As mentioned earlier, institution business remains unpredictable and depends on the funds with the procurement agencies. With this, I will now hand over to Mr. Arvind Agrawal, CFO, to take you through the financial performance. Thank you. Over to you. Thank you. Good evening to all of you, and warm welcome to this earning call. For ease of discussion, we will look at the consolidated financials and provide year-on-year comparison. Let me take you through key financial highlights for Q4 and 12 months of FY 2023. In Q4, total revenue stood at INR 882 crores against INR 870 crores, posting 1% growth. In 12 months, total revenue stood at INR 3,743 crores against INR 3,341 crores, posting growth of 12%. Gross margin was at 73% for Q4 and 72% for the entire financial year. U.S. price erosion, higher material costs, one-time inventory write-offs, and INR appreciation against EUR for major part of the year adversely impacted it by about 3% in the FY 2023. As the euro-INR exchange rate is back to earlier levels and U.S. price erosion getting normalized, gross margin is expected to rebound to 74%-75% in FY 2024. Personnel costs have seen increase of 35% in Q4 and 22% in the financial year. The increase during Q4 was on account of some regrouping of related expenses from selling expenses following the best practices. For 12 months, the increase in costs mainly relates to expansion in international field force by 50% and small addition in production and R&D. All these are the investment for future growth. Other expenses stood at INR 268 crores in Q4 and INR 1,124 crores in FY 2023. This includes forex derivative loss in Q4 of INR 22 crores and INR 19 crores during the whole year. We closed the year with a net forex gain, which is included in other income. Logistic cost has impacted about 2% on EBITDA in FY 2023. It has come back to a normal level now. It should really give us a big benefit in the coming financial year. R&D expenses was INR 63 crores against INR 59 crores for the quarter. It was INR 237 crores against INR 204 crores for the whole year, an increase of 16% over previous year. R&D expenses continued to be at 6% of revenue. With the above impact on gross margin and other expenses, EBITDA margin saw a dip during Q4 and stood at 17% of revenue from operations at INR 149 crores. For 12 months, EBITDA was at INR 783 crores or 21% of revenue from operations. Going forward, the benefit of 2% each from gross margin and logistic cost is expected to take EBITDA back to about 25% in FY 2024. Other income was at INR 99 crores for the year, mainly contributed by forex gain of INR 66 crores without adjusting the unrealized hedge loss of INR 19 crores. There was a net gain in forex transaction of INR 47 crores for the whole year after adjusting unrealized loss. This reaffirms our prudent and robust hedge policy. Income tax stood at 20% for Q4 and 21% for the whole year. We expect it to remain at around the same level in FY 2024. PAT in Q4 was at INR 122 crores against INR 151 crores, 14% of revenue. For the whole year it was INR 588 crores, which is against INR 713 crores last year, which is 16% of revenue. We incurred CapEx of INR 160 crores for the year 2023. CapEx, including maintenance CapEx for 2024, is expected to be around INR 200 crores, which also includes our new corporate office CapEx. We have seen improvement in working capital cycle with both inventory and receivables showing reduction in number of days. The ROCE stood at 22% and ROE at 18%. With improvement in working capital cycle, our cash conversion ratio was almost at 99%. With these highlights, I open the floor for the question answer. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their 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 will wait for a moment while the question queue assembles. The first question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Yeah. Thanks for the opportunity. First on this employee cost, if you could elaborate, this regrouping of related expenses? Yeah. Actually, the cost of incentives which are being given to the field staff, that was about INR 27 crores for the whole year. That has already been... Now it was earlier in selling expenses, but it has been regrouped to the personal cost. That is the small change which is there. Okay. Henceforth, it will be in the employee expenses only. Pardon me? Henceforth, it would be in employee expenses only. Yes. Yes. Yes, you are right. Now that we've reached we are at 73% gross margin, maybe another 100 basis points we are guiding for next year. Just trying to bridge the gap of EBITDA margin of 17% in Q4 FY 2023 to almost 24%-25% for FY 2024. If you could just explain that. See, as far as Q4 is concerned. The whole year, sir. You are talking about whole year or? 17% he's asking. Right, sir. 17% is Q4, right? Whole year. Yes, sir. I think, 17% includes INR 22 crore of the forex loss also. If you remove that, it will come to 20%. Still 500 bits is there, sir. Uh? Still from 20%-25% is the bridge. As I explained, whole year if you talk, then, you know, 22% is freight cost, which we are expecting to recoup, and, 2% in the COG. two plus two, 4%, improvement we are expecting from 21 to go to 25. Okay. Just lastly on this, while FY 2023, it has been done in terms of filing as well as launches. Yes. R&D cost has been, sort of at a similar level as it was in the last year. How should one think about, you know, the product filing and the growth for FY 2024 for U.S. business? The R&D cost should remain an absolutely on the absolute number on the similar range. Percentage wise, it may decrease a little bit. For the filings, we are looking to file around six to eight ANDAs next year. Okay, sir. Thank you. Thank you. The next question is from the line of Rashmi Shetty from Dolat Capital. Please go ahead. Yeah, thanks for the opportunity. One question again on the employee cost, and the other expenses. While I can see that, just because of the regrouping, your other expenses has come down, but your staff cost has come up. Can you just explain that, you know, this INR 24 crores of Forex losses sitting in which line item and it is impacting the margin? It is in the other expenses. Okay. There is some Forex gain also, right? Which is sitting in above EBITDA or below EBITDA? Below EBITDA in other income. Okay. How much is that? That is neg for the current quarter. For the current quarter. It is INR 25 crores. INR 25 crores. Yeah. Now what we see is that the staff cost is around 24%-25% of sales. Going ahead, when we estimate it should be in this range only, right? Yes, absolutely. Okay. Does it include the expansion of the workforce, which has been taken into the international branded business, Asia and Africa? Partially, because some of the additions were done during the year, so the full year effect will come next year. Okay. How much of that, partial cost which is pending would come in FY 2024? Any ballpark number which you can give? It will be difficult to give you that number, but I think as you rightly said, as a percentage to sales, it should remain in that same range. 24%-25%. Yes, because we have given the guidance of about, you know, increase of the sales being in mid-teens. I think 25% should be okay. From 21% to 25%, you know, where we are expecting our EBITDA margin to move, it will majorly come from the gross margin improvement of 2% and logistic costs, stabilizing. Am I correct? Yes, you are absolutely right. Another question is on Africa branded business. You know, I understand that the quarter four we had seen some sort of strike in Francophone Africa, which you mentioned, right, for pension reform, and that delayed the sales. This delayed sales, is it expected to come in quarter one? Should we see that, you know, quarter one will have the deferred sales as well as the sales which expected to come in quarter one, so it would be a very strong growth, or it would be a, you know, the sales which is lost is lost completely. In nine months, we had, you know, seen a very subdued growth in Africa branded business. Just, you know, want to understand more on this piece of the business because here our supply chain and everything is also pretty strong. What actual problem are we facing in terms of growth? Two parts. One is some part of the business will get pushed out to the next quarter, but some loss is lost. It is difficult to recover. We will see some part of up getting spilled over into the next quarter. One is that. Second is on the growth. I think if you see the last three years' CAGR, we have posted a big team growth. There has been some pipeline filling at times because of the COVID, because of the opening of the COVID, some launches of the new products. We've seen some strong growth in the previous year, which kind of tapered off in the next year. Overall, on a consistent basis, we are very confident the health of the business is quite strong, and we don't foresee challenge in posting mid-teens to high-teens growth in Africa. How is your Africa pharma industry growing on in the respective markets where you are present? The industry. The industry also is growing in the low double digits. Lower double digits. Correct. Are we confident that, you know, we should see a low double-digit growth, once the sales get normalized, in FY 2024 and 2025? Absolutely. Absolutely. We should outgrow the market, at least 1.5 x. If the market is growing at low teens, we are confident of posting mid-teens to high-teens growth. Okay, sir. Thank you so much. That's it from my side. Yeah. Thank you. We have the next question from the line of Amar Mourya from AlfAccurate Advisors Private Limited. Please go ahead. Thanks a lot for the opportunity. Just to understand this 25% bridge again, like, you know, if I do like 2% in CAGR and 2% logistic cost savings and INR 25 crore Forex gain, also even if I do this math for this quarter, we get 23.7% kind of a margin. If you can help us this 25% margin bridge, it would be great. Secondly, I just missed that employee cost increase. What is the reclassification we did there? Okay. First I will take the second question. The reclassification is just that there are certain expenses which were related to employees, which were clubbed under marketing expenses or selling expenses that has been brought to the employee expenses. It's just the reclassification from other expenses to employee cost. Okay. If you take both together, it will remain the same. There is no difference at all. Okay. In terms of the EBITDA reconciliation, what you need to do is you need to work out for the whole year. If you see FY 2023, we are having a EBITDA margin of 21%. Now this 21%, as we mentioned earlier also, that there were these factors which impacted, including the U.S. price erosion, including the price, you know, raw material price increase and all those kind of things. Out of that, we will be able to recover in COG about 2%, including the Euro INR appreciation. That also is now normal. That also should help us. Total we should be able to get 2% benefit in cost of goods. Okay. Another 2% is something which we will get in logistic. Okay. As 21 plus four is about 25%. We will not be able to go to 28% immediately. We very clearly told you your last quarter also. Here also we are saying that we are talking about 25% plus around in 2024 EBITDA margin. Got it. Second question, sir, like as you are targeting for overall or mid-teen kind of a growth, so what would be the growth we are expecting from the export business and primarily from the emerging and the regulated markets? U.S. will be in the low single digit, mid, less than mid-single digit. Okay. The overall branded generic business, we are looking to grow at a mid-teens ±6%. On a blended basis, we should arrive at around the mid-teens. Africa, institutional business, we are looking at a flattish growth. Africa business we are looking. Both institutional and private, both overall Africa? No, no. No, No, no. Branded generic is all put together, look at as one bucket, which has India, Africa and Asia. Okay. All put together, we are looking to grow mid-teen. Okay. U.S. will be the mid-single digit, let's say 5%-7%. Institutional, we are looking at a flattish growth. Flattish. Thank you. you. Thank you, sir. Thank you. The next question is from the line of Kunal Randeria from Nuvama. Please go ahead. Hi. Good evening. Sir, just in your presentation you mentioned that, the price erosion in the U.S. is now normal. Just want to understand, what do you mean by normal? Normal is about, you know, single, high single digit. Right. Maybe if you can just, maybe explain, what is driving it. Is it maybe some new launches? Because you haven't done a lot of new launches. I mean, have competitors withdrawn from a lot of molecules you were in or you had some benefits from a few products? If maybe you can just explain a bit more. We are looking to launch five products during the year. Existing portfolio, as we said that I think we are estimating that the price erosion should stabilize to the mid to high single digit. In combination of the new product launches and stabilizing of the price erosion on the existing portfolio, we feel comfortable that we should be able to hold the similar kind of margins or maybe slightly improve it. Sure, sir. In your existing portfolio also, have you seen an improvement and is it because competitors have withdrawn or it's just that people have become a lot more disciplined than what they were, let's say, maybe month, year back or so? Right. Right. Yeah. We've not seen significant withdrawals of the players. In product to product there may be one player withdrawing here and there. In a market which is five players around, one player withdrawing doesn't have a very significant increase in the market share to any one company. We've not seen such big disruptions in withdrawal. There are, we've seen some products, some companies have withdrawn. We've seen, I think, some of the base portfolio we've seen, I think now the price erosion has pretty much hit to the bottom, at least we feel so. I think the price erosion should be more disciplined. Got it. Got it. Second question is on the India business. You know, NPPA has come out with its own, you know, list of products where, you know, prices have to be reduced. I think that included Metexcel also, our franchise. Has there been any impact in Q4 or do you expect it in the coming year? No, in the Q4 there has been impact in the month of February and March, it was quite low, insignificant. Now in April, because of the benefit of WPI, we have been able to increase the prices by close to 11%. There has been an offset to that extent. The original price reduction done by the NLEM was in the range of 18% for Metexcel, and we have been able to gain back around 11.3% due to the WPI. The net impact on us and the industry is about the difference of it. Sure, sure. Just as one last question for Arvind. Arvind, I'm still not able to understand your freight cost, you know, escalation. Three years back, your freight cost would have been, let's say, 4.5% of revenue. Last year it was around 5.5%. This time around you said there's been a 200 basis increase. Just, you know, want to get your thoughts on this. It is very simple. You see, as far as Ajanta is concerned, we are sending all our material in the refrigerated container. Part of it. Most part of it. 70% is exports. Yes. 70%... See, the proportion of our sale is skewed towards exports. Naturally, freight plays a very important role in our expense. Got it. Okay, sir. Maybe I'll just discuss this in a bit more detail with you offline. Okay. Thanks a lot for answering my questions. Thank you. The next question is from the line of Bharat Celly from Equirus Securities. Please go ahead. Hi. Thanks for the opportunity, and good evening, everyone. Sir, I just wanted to understand on 25% margin. I believe last part of the benefit related to freight, which we talked about, like two percentage points, as well as some part of cost related to key raw material prices would have actually come down and benefited in fourth quarter as well. From the fourth quarter, going towards 25% seems the bit of aggressive one, largely, because we have seen some benefit this quarter, right? Yeah, I think, you need to continuously see the whole year. You see quarter to quarter, there can be variations because of many, you know, product mix, because of the business mix, et cetera. Overall, if you see the whole year, it is 21% EBITDA margin which you can see. With that 21%, we are very confident that we should be able to recoup about 2% in COG. Right. Is it safe to assume that large part of the freight would have normalized in fourth quarter? Yeah, to some extent, and not in January, but February and March, yes. It has come down quite sharply. Even the input prices, right? Key raw material input prices. Input prices, not much, but yes, there was. Earlier inventory holding was something which was at a higher cost, so the benefit of the reduced prices in the last quarter, I should be able to get only after May or June. Good. Got it. Second one, actually on the U.S. market, we are seeing that there is a sharp decline sequentially. Is there any product which has seen extra competition or is it just general price erosion which has hit us? If you could explain that. Yeah, I think you have must have seen, no, in the last quarter, uh, uh, Q3, we have, uh, uh, already mentioned that there was a major, uh, sale of, uh, the product, uh, udenafil, uh, which is, uh, which was ten million dollars. So that is something which has gone away. That was a product. It's a very seasonal product. It comes. Right. for the season only. If you take that out, we are at a running quarter trend, which is what in the previous two quarters which you've seen, in fact, we improved from that. Our earlier two quarters- Right. Right, right. Right, right. was around INR 180 crores. This quarter we've done INR 200 crores, in fact. Right. There is a pat of udenafil also and the part of the existing INR 100, both put together is INR 200 crores now. Sure. Arvind mentioned $10 million related with that product, right? Yes. Yes. Oh. That is the money. That is. Sir, during this quarter, there was hardly any revenue coming out of that. Yeah. Very small. Right. Okay. That's it. Now, sir, last one on the Indian market. Is it possible for you to break down your growth in terms of pricing, volume and new introductions, if that is possible? Yeah, we have that growth. The composition of the growth I will share with you in a second. Let me pull up the data. The volume growth is 8% for us. Okay. The price growth is 6%. The growth from new brands, new brand launches is 3%. Sure. That's helpful. Thanks a lot, sir. Yeah, sure. Thank you. The next question is from the line of Bino Pathiparampil from Elara Capital. Please go ahead. Hi. good afternoon. most questions answered. Just a follow-up on U.S. any update on this Chantix product? has FDA come back regarding the API query? Yeah. We have filed all the required data information asked by the FDA. We are now given the target goal date of Q2 FY 2024. If all goes well, we could expect approval and launch thereafter maybe in Q3. Understood. When you say you look forward to five launches in FY 2024, do you include this as one of them? We are looking to launch five products, around five products. This is one of the five products, yes, potentially coming. Okay. This is one in that five. Okay. Yeah. Yeah. Any other limited competition product that could be part of that five? There are one or two products, limited competition, but. Sorry, but? Slightly smaller products. They're like. Smaller. Okay. Okay. Okay. You got approval, tentative approval for the Topiramate recently. Is that a near-term launch or is it a couple of years away? Yeah, it is, further ahead. It's not in the 24. Okay. Yeah. Thank you. I'll join back with you. Sure. Sure. Thank you. Ladies and gentlemen, to ask a question, you may please press star one. The next question is from the line of Saurabh Sabla from Multi-Act Equity Consultancy Private Limited. Please go ahead. Yeah. Hi, this is Akshat from Multi-Act. I have this question on employee cost. If you could quantify the amount of regrouping that we have done in employee cost and whether the entire amount has been done in Q4 or we've done some regrouping in the earlier quarters as well? The entire regrouping was done in quarter four and the amount is INR 27 crores. Okay. Okay. Out of INR 224 crores, INR 27 crores is the regrouping. The balance, INR 197 crores, just wanted to understand whether the MR addition that we've done. Yeah. -in the exit quarter, full impact of all the MR addition would have come. Going ahead, the absolute amount of employee cost should not grow, you know, significantly. No, there is some addition still going on, so there will be some addition. Normal addition, but more or less, I think most of it is baked into the Q4. What you will see is the normal incremental, you know, yearly incremental cost, which will come in now. Okay. Okay. Last year we've seen a significant rise in case in the manpower cost, which is over 20% and also. I think that kind of increase will not be there. Understood, sir. Sir, my one question was on the COGS. See, now we are very confident of, you know, recouping 2% gains in COGS. We also mentioned that already in Q4, some of the raw material prices have already corrected, and that would already be in the Q4 exit quarter base. Wanted to understand what gives us confidence to get back this 2% on a full year number, which on a Q4 basis looks like a 3% improvement in raw material costs that we'll have to do. If you could just break this 3% up in different factors of improvement, how much will we get from, you know, price hikes, from reduction in price erosion, and from raw material costs going down? Two factors. One is that there was some inventory which we were carrying, which still was there, which we are depleting in the Q4. That was one part of that. Second part of it is, if you see the branded generic composition in the Q4, it came slightly lower because of the Africa business being slightly depressed, which is a high margin business for us. That one factor also impacted the EBITDA in the Q4. Next year onwards, once we come back on the track on the branded generic Africa again firing to the normal level and the inventory depletion of the higher cost getting through in the Q4, both put together, we feel reasonably confident that we should be able to bounce back to the improved 2% or 2% there. Okay. This 25% EBITDA that we've been discussing that we are looking more from a exit quarter perspective or from a full year point of view? Full year point of view. Full year. Also it'll be important to mention here, I think we have to look at a full year story for the next year. There could be variations quarter to quarter because in the export business, unlike India, where the supply chain is very tight and the transfer happens within three days, in export it is a longer logistic lead time from inventory. We are talking of all these guidance's for the whole year. I think there could be some variable variations quarter to quarter. Sir, one last question, if you could elaborate a bit on the Franco-Africa issue so that we could understand what has led to a significant decline in the branded Africa piece. Thank you, sir. That's all from my side. The export happens through France, and because of the tension, that strike which has been going on for a long time, the supply chain has been disrupted there. There has been a lot of backlog of the containers being received and forwarded onwards. That kind of choked the supply chain there little bit, which we are seeing now is easing out now. Thank you, sir. Very helpful. Thank you. The next question is from the line of Rashmi Shetty from Dolat Capital. Please go ahead. Yeah, thanks for the opportunity again. Just from U.S. business, on the product Vimovo, if you can give updates, you know, because we were just waiting for the EIR on the Dahej plant to get the approval, have you received the approval on this product? Which product you said? Vimovo. Yes, we have received the approval for that. We are in the process of launching that product. We are at one stage. Now stocks have reached U.S. We are expecting to launch in the first quarter? Yes, yes, absolutely right. How do we see competition over in this particular product? Will it remain low cost? It's a good product to have. I think, it's going to be positively added to the top line, bottom line. Okay. On Topiramate, have you settled the litigation or we are still under the litigation? No, we have settled the litigation now. Settled the litigation. Okay. Just last question, if you can give, you know, total number of sales reps as on FY 2023, how much is it in India, Asia branded and Africa branded business? I think, India is INR 2,800. 2,800, you said. In India. Okay. INR 1,300 in the export market. One thousand three hundred in? Export markets. Asia and Africa branded. Yeah, yeah, all put together. All put together. Yes. Okay, sir. Thank you. you. That's it from me. Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Yes. Thanks for the opportunity again. This Africa issue is now, just to re-clarify, is it more or less sorted and we'll see recovery immediately in 1Q or will we have few more months for the Africa branded generics business? No, that is eased out. It is by and large streamlined to the maximum extent, so we don't expect that going forward in the Q1. Secondly, on the other expenses side, like INR 260-270 crores, with maybe like four to 5% sort of an year-on-year increase, is that the sort of quantum which one should expect for FY 2024? Do we see meaningful increase in the other expenses? It says where, you know, this INR 268 was the lowest. Actually, if you see, this total for the year is about INR 1,124. There is this regrouping, no, sir. Yeah. After the regrouping. Sure. INR 1,124 is after the regrouping. If you really see that INR 1,124, and then, you know, like, that INR 1,124 should really go to about, you know, INR 1,200, INR 1,300 or so. I think we should be talking about what? INR 320-INR 325. I think so. What would drive this increase in other expenses? Basically, I think, sales and promotional expenses will be the major one. INR 200 crore, sir? Yeah. Plus, regular inflationary increases which will be there. Overall the cost goes up every year with the Like, you know, the, all the costs are there. You You know, my administration cost is there. Other manufacturing cost is there. All those costs are also, having an increase, no? Okay. That helps. Thank you. Thank you. The next question is from the line of Abdulkader Puranwala from ICICI Securities Limited. Please go ahead. Yeah, hi. Hi, sir. Thank you for the opportunity. Just, if you could share some outlook on the India business and, you know, how do you see volume growth panning out for next year, as well as what are the kind of launches you would be doing next year? Some color on that, please. For the launches, we won't be able to share the sensitive data at this point. We have a couple of good product launches lined up for the domestic, which would be first time in the country. Going back to your earlier one, we are expecting a growth of low double-digit. The industry is expected to grow between 8%-9% based on the various reports. We are yet to see how the first quarter actually really. The growth is reported for the first quarter in IPM. More or less, if it is 8%-9%, Our objective is to grow at low double-digit growth, which would still be much faster than the IPM growth rate. The composition will again be, it will be driven by volume growth as well as the price increases. The new brand launches growth will be little lesser than the previous years. Sure, sir. Got it. Sir, just one more question on the margin front. I get it, we can guide, we are guiding for 25% kind of EBITDA margin for FY 2024. You know, sir, I mean, how do we look at our businesses now? I mean, in, say, next three to four years, is 30%+ kind of an EBITDA margin still, you know, seem to be achievable on the current set of products? You know, we would settle down somewhere below that in the next three to four years? I'm not supposed to give the guidance, but, it should keep on increasing every year with the health of the business, new product launches, brand extension composition going up. It should inch up, more than from the 25%, it should inch up, keep going up every year, we believe. Whether it reaches 30% and when it reaches 30%, is to be seen. I think. Sure, sir. Got it. Thank you. Thank you. Participants who wish to ask a question may please press star one. The next question is from the line of Harsh Beria, an individual investor. Please go ahead. Hi. Thanks for this opportunity. I have a question about our employee costs, and it being 24%-25% of sales. Isn't it a bit too high for the kind of business model we are in? Like, most of our peers in the same line of branded generics business would have somewhere around 19%-20%. My question is this because we have invested a lot up front in the last couple of years, and with growing sales, this will come down to 19% and 20%? Or will this stay at these levels? One thing you should remember, one is that, as I mentioned earlier also, for the whole year, our employee cost is 21%. If you calculate, it is 21% for the whole year FY 2023. It is only in quarter four that there was some reclassification. Understood. Also sales was down, because of which you are seeing it as 25%. Actually for the whole year it is 21% and we expect this to remain in that range. Perfect. That makes sense. My next question is, there was a lot of discussion on our margins. It seems from all the commentary that this quarter has seen the lowest possible margins and, going forward, we will start seeing improvement in our margins. Is that a correct understanding? Absolutely correct understanding. Absolutely correct. Okay. My last question is on our U.S. business. In the earlier calls, we have had discussions about capital allocation. However, U.S. being a slightly cyclical business, now that we are going through, like we have gone through a very bad down cycle, why are we not being more aggressive in pursuing growth? If we are assuming that prices have bottomed out and we have good product approvals, why are we not being more aggressive? Like, what will take us from the current $90 million run rate to the next level of $150 million-$200 million in U.S.? Just because of the nature of business. It can go up in short term, let us say, assuming if the competitors, people pull out the products, there could be for a short period, demand, for the products. But then again, in two to three years, it becomes like a commodity kind of market. Again, it could be, players coming in and the price erosion happening significantly. That is the reason we are, we are being very, cautious on, making the capital allocation on the product selection. We want to be sure that the products we select and the money we spend on it has a reasonably good chance of succeeding and making money. That's the only outlook. We are being cautious, be optimistic, not very, you know... We're still continuing with our program for filing the products for the next year and a year after. The numbers have reduced. we want to maintain... as a percentage of our consolidated sales, what is U.S. what is the ideal U.S. contribution for us? Today it is 22%. We want to keep it around that or do we want to take it up to 30% at some point? I think it should remain in the same, percentage around maybe a%, few up and down, but it would remain the same vicinity. That's it. Thanks for answering my questions. That's all from my side. Thank you. Ladies and gentlemen, to ask a question, you may please press star one. The next question is from the line of Mitesh Shah from Nirmal Bang Securities. Please go ahead. Yeah, thanks for taking my questions. My question is regarding the margins. Till FY 20, FY 18, your margins would be above 30% and then been continuously coming down. Actually, there's a couple of reasons, might be because of the sharp U.S. price erosion and the your new plants commission that was dragging the margin. I was expecting that the now utilization would be improving, margins would be... Going forward also, you're expecting normalizing the price erosion. Why we are not able to expect the 30%-plus margins in next couple of years, which we have achieved already in 18, till 18? Agreed. Agreed. We have achieved it. If you see really, you know, in 2018 it was 31, but after that it was 27, 26, 28. Got it. You know, like, it is in the, wholly in the range of 27, 28. You know, it is not beyond that. As you rightly said, the whole business was you know, balanced. The U.S. business came in as a bigger component compared to what it was in 2018. Naturally all these things also have its own impact. Manufacturing facilities. Manufacturing facilities, like what you only said, you know, that new facilities have come, so cost has gone up. All those aspects are there. I think 27%, 28% is something which we are really always being talking about, and that's why we gave you an elaborate reconciliation from 28% to 21% in this year. You know, that 7%, very clearly we gave you a very clear reconciliation how it has happened. Out of that, now we are expecting that at least in 2024, we will be able to recover about 4%. Balance 3%, how we will be able to recover? When we will be able to recover? We are 100% sure that we'll recover. Question is when? You know, how fast it can be. That is something which I think we will not be able to say today. As MD mentioned, it will be continuous improvement every year. We are going to see higher EBITDA margins year after year continuously now going forward. Yeah. I agree with you, I again fail to understand that the new plant commission and the after three, four years, you are not able to achieve that kind of margins. Initially, definitely it would be higher cost. Again, U.S., I think so if you are expecting a low, a single-digit kind of growth, it would be coming down in a overall contribution and the definitely the price erosion are coming down again. That could be some mismatch which I am expecting. I hope that it should happen. You know, if you are expecting towards 28, I always wish it should happen. Things are there. I think, the OpEx cost of manufacturing facilities, which is, it's here to stay. 2% increase in the RMPM cost because of the circumstances beyond our control are here to stay. What can one do about it? What can you do about 2% freight going up? These are the factors which are beyond our control. Earlier we were low on the OpEx because we had very light asset. We had lot of contract manufacturing. That had limitation. The fact that we put these facilities to get better control on the quality, supply chain, scaling up of the business of the future, this cost got retained. I get a feeling that I think 13% is a wrong benchmark to put. I think we should benchmark us against the industry where we are still much better. With the 28%, 26% EBITDA also, I think we are in the top tier of the company. I think that will be the right benchmark for you to kind of, you know, calculate against us. Got it. Thanks for the clarification. That's it from my end. Thank you. Participants who wish to ask a question may please press star and one. The next question is from the line of Harsh Beria, an individual investor. Please go ahead. Hi, thanks for this follow-up opportunity. My question was about the M&A opportunities you were looking for in our domestic market. Is there any development on that front, given how many acquisitions these days we are seeing in the market? Honestly, we have not found anything so far. Though we keep on evaluating every opportunity in the market, we are, you know, looking actively for that. Honestly, there is no clear opportunity at this point of time, which is there in front of us. We are open. We are definitely open. Is this largely because we are more value conscious, by purchasing brands or doing inorganic expansion? We are definitely. You know, I think we are not in a hurry to just pay any price for the, you know, just to acquire or to increase the bottom, top line. We are very conscious about it. We are definitely conservative. Question is, what is the right price and how we can add value? That is what we really see, that is what will drive our M&A. My next question was about our trade generics business. Now we are already at 40 crores plus quarterly run rate, so that this would imply an annual run rate of 160 crores. Is this business line, EBITDA positive for us? How do we see this business going forward? This has been the fastest growing business in our business mix. Yes, it is EBITDA positive. You're right, it has been, it has grown very, very well. In fact, we've outraised, outsmarted everybody else, who've been in the segment for far too long. We have done exceptionally well. In the last three odd years, we've ramped up the business to the scale of INR 150 crores odd. Going forward, I'm expecting a low double-digit growth for the trade generic business. Within this business also, our product portfolio is slightly more skewed towards the chronic nature of products as against the industry, which is more than 90% acute or around that. We are slightly better placed than that, intentionally so. Going forward, I think the growth rate should normalize. Our, our objective to grow, for the next year is to grow in the low double digit also in line with the India business. Okay. My last question was about a capital allocation. Unless we see very high, very good ROIC CapEx plans, we will be returning most of the incremental free cash flows that we generate to the shareholders like we have been doing for the last couple of years. Absolutely right. I would like to really appreciate this viewpoint of the management. Not a lot of companies do this. I feel this is a very, very judicious use of capital. Thanks for that. Thank you. Thank you. Ladies and gentlemen, that was our last question for today. I would now like to hand the conference over to Mr. Yogesh Agrawal for closing comments. Over to you, sir. Thank you everyone for joining this call. In case if there are any further questions that remain unanswered today, please reach out to our investor relations team. Thank you so much. Thank you. On behalf of Ajanta Pharma, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.