Ladies and gentlemen, good day and welcome to Alkem Laboratories Limited Q3 FY 2022 earnings conference call hosted by Motilal Oswal Financial Services Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Tushar Manudhane from Motilal Oswal Financial Services. Thank you, and over to you, Mr. Manudhane. Thanks, Neeraj. Welcome to Q3 FY 2022 earnings call of Alkem Laboratories. From management side, we have Mr. Rajesh Dubey, Chief Financial Officer, Mr. Amit Ghare, President, International Business, Mr. Yogesh Kaushal, President, Chronic Division, and Mr. Gagan Borana from Investor Relations. Over to you, Gagan, for the opening remarks. Thank you, Tushar. Good evening, everyone, and thank you for joining us today for Alkem Laboratories Q3 FY 2022 earnings call. Earlier during the day, we have released our financial results and investor presentation, and the same are also posted on our website. Hope you had a chance to look at it. To discuss our business performance and outlook going forward, we have on this call the senior management team of Alkem. Before I proceed with this call, I would like to remind everyone that this call is being recorded and the call transcript will be made available on our website as well. I would also like to add that today's discussion may include forward-looking statements, and the same must be viewed in conjunction with the risks that our business faces. After the end of the call, if any of your queries remain unanswered, please feel free to get in touch with me. With this, I would like to hand over the call to our CFO, Mr. Rajesh Dubey, to present the key highlights of the quarter gone by and strategy going forward. Over to you, sir. Yeah. Thank you, Gagan. Good evening to all of you, and thank you for joining us today for our Q3 FY 2022 earnings call. I will briefly take you through the key operational and financial highlight of the quarter gone by and would then leave the floor open for questions and answers. Starting with the financial performance of the quarter, revenue from operation grew by 30% Y-O-Y, driven by robust performance in India business. Despite the inflammatory raw material landscape, our gross margin was almost flat Y-O-Y. This was largely on account of better revenue mix with higher contribution from Indian, India business. EBITDA margin dipped by 380 point Y-O-Y to 19%. The Y-O-Y dip in the EBITDA margin was partially because of saving on the marketing and other promotional spend in quarter three of last year, which was impacted by COVID related lockdown and has got normalized this year. Our net profit after tax grew by 16.6% Y-O-Y, helped by tax credit on account of restructuring in the U.S. During the quarter, we also generated healthy cash flow, which has helped us further to strengthen our balance sheet with net cash position of around INR 1,500 crore as on 31 December 2021. Talking about our India business, it registered a growth of about 20% Y-O-Y during the quarter and about 35% for the nine months of the financial year. This growth was majorly driven by strong volume growth, partially helped by COVID-19 tailwinds in our acute therapy area of anti-infective vitamins, mineral nutrients, pain management and gastro. Most of our mega brands continue to outperform in their respective markets, thereby maintaining their leading position. Our chronic portfolio also delivered a market-beating performance for the first nine months of the financial year. Our trade generic business also grew well in the quarter and the nine months of the financial year, despite the high base of last year. Our recently launched Pulmocare division catering to the respiratory segment saw an encouraging start with growth rate higher than the therapy growth rate. Moving on to our international business, our U.S. business with quarterly sales of $77 million was down 10% Y-O-Y. This was due to significant price pressure on our base portfolio that we try to offset by regular new product launches. During the quarter, we filed 1 ANDA with the U.S. FDA and received 6 approvals. Apart from the U.S., our other international market delivered a robust Y-O-Y growth of 25% during the quarter with healthy performance in our focus market of Australia, Chile, Philippines, and Kazakhstan. Updating on our progress in the biosimilar segment, during the quarter we signed an agreement with Theramex to develop and commercialize trastuzumab for Europe market like U.K. and Switzerland and also Australia. The commercialization is expected in the year 2026. In terms of regulatory inspection, all our manufacturing facilities supplying to U.S., barring the St. Louis, has an EIR as on date. Our new manufacturing facility at Indore is awaiting the approval inspection by the U.S. FDA. With this, I would like to open the floor for question and answers. Thank you for your patient listening. Thank you very much. We'll 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 your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. The first question is from the line of Damayanti from HSBC Securities. Please go ahead. Hi, sir. Thank you for the opportunity. My first question is on some of the core headwinds which industry is currently facing. In your observation, have you seen any moderation of late in headwinds such as higher raw material price, freight cost, et cetera? What I understand, Damayanti, from your question, you wanted to know impact of higher API costs on our costs. Am I correct? Yes, sir. Yes, sir, like how has the trend been recently, say compared to last quarter, have you seen any moderation in recent weeks or so? As you know, this price increase on API started somewhere part of second quarter. We covered in our second quarter earnings call also, API prices; it has started rising up. It was expected starting giving impact in our COGS in quarter three and going forward. Quarter three also impact to certain extent it is there, but not significant; some impact is there. Definitely, since we ensure our raw material and packing material for at least three months. Whatever high price API or packing material we have procured, definitely quarter four is going to have major impact. We feel somewhere between 2%-3% of our margin, it may get impacted in quarter four. As far as answer to your question, whether softening of prices has started happening or not. Yes, in some of the API, little bit price softening we have witnessed. Our expectation after Winter Olympics completion, I think that is the time when we have to see how China is behaving and how prices start indicating. I think we'll come to know better once this Winter Olympics gets over. Definitely quarter four is going to have impact of higher API prices and ultimately impacting our margins also. Okay, sir. That's helpful. My another question is on India part of the business. Can you broadly specify what is the current contribution from chronic therapies and where you would like to reach in terms of chronic contribution in next three, four years from here? Damayanti, in our call also we said the same, that we are currently contributing approximately 15% to the domestic turnover. By 2024, 2025, our broad plan is that we should reach around somewhere in the range of 21%-22% of domestic turnover. Okay, sir. My last question is, can you also specify, the MR productivity for your acute and chronic segments, like where we are in terms of, two segments in terms of productivity? Yes. What is the blended right now, blended number? Okay. Chronic, sorry, acute, we, you know, all regions put together, we are close to INR 7 lakhs in our productivity, which ranges from 10.5, you know, to around 3.5. Broadly across chronic acute it is INR 6.92 lakhs. Chronic we have a productivity of 3.30. These are two productivities. Across company if you ask me, which was I believe was your next question, was around 5.78. Okay, sir, my last question is quickly on the U.S. part. Obviously you mentioned the prices are very challenging right now. Again, about recent trend, are we seeing similar, I'd say elevated level of price erosion the way we have seen in second quarter or so? Or in recent few weeks at least we have seen some softening on some specific products or so. Damayanti, some softening we have seen, but that perhaps is if you are looking year-on-year, obviously the price erosion started in the first calendar quarter of 2021. To that extent, you know, the base is already now at a lower number. Overall, the deflation continues, which of course always continues for generic business. Okay, sir. Thank you, and good part of the team. Thank you. The next question is from the line of Prakash from Axis Capital. Please go ahead. Yeah. Good evening. Thanks for the opportunity. I just wanted to check on the India business. What is the broad break up of the GX and the RX? Can you repeat your question? Broad? Broad, you know, contributions from the generic business and the prescription business, sir. Okay. You're talking about generic to formulation. Generic and prescription business. Yeah. It's trade generic is around 20% of our domestic sales. Okay. Would it be fair to say that it's grown higher than the prescription business? Yes. Prakash, so generic, it grew more compared to ethical. Okay, perfect. On the prescription business, sir, we had a good tailwind given the second, third round, you know, all the four big therapies where we are present had this COVID-led, which you also mentioned in the press release. I would assume it's very difficult to call out what would be the base business growth. Any ballpark number, I mean, would it be high single digit if these tailwinds would not be there? You're talking about year 2023, 2024? 2022, 2023, sorry. Yeah, current 9 months, sir. Current nine months? Can you repeat your question again? No, I'm just saying that we had some tailwinds of COVID, Q1 obviously, but especially in Q3 also there were some COVID-led tailwind which you have mentioned in the press release. Just trying to understand if COVID was not there, what could have been the base business growth, and how do you expect it next year given the high base you have? See, we don't have COVID-specific products, but then all empirical treatment or supportive treatment which are there for COVID. Yes. Marginal spike, like products like, you know, Pan, which is our GI product, then some of the multivitamins, zinc-based multivitamins, pains. There is a marginal impact. Of course, in the first two, three months, we had a good positive impact of antibiotics. Overall, there is, you know, impact of COVID on our business. If you ask me specific to third quarter, then not really much. Maybe the marginal impact of COVID, not much, yeah. Now your next question about how is next year we foresee. You know, very difficult to predict so far, but whatever some of the analysts, they have done some working. We see around, you know, if you remove COVID impact business in the current year, or if you include COVID impact, and then throughout the next year, I think the industry should grow at around what, you know, around the 8%-9% types. That's my stretch number, I would say. We would, you know, as a business, we would try to outperform the market growth. Okay. Okay, fair enough. Second question to Amit Ghare on the U.S. filings. Filings are about 9 approvals. Run rate is about 18 to 30 ANDAs to date. How do you feel, you know, numbers obviously don't matter much, it's the chunkiness of products, but how do you feel with this base, next year should pan out for us in the U.S.? Prakash, next year in terms of filings, I know your question is on the revenue. Just on the filings, the ambition will continue to be in that 12-15 range. In terms of, you know, launches, which will of course has helped the current year and will help the next year, we've had a good number of launches this year and we are very optimistic in terms of, you know, growth going forward for next year. That was the real question I understood. Also, with the price erosion, we have come to a certain base. Now with the new launches and ramping up of existing products, would it be fair to say that, the chunkiness or, you know, the, is not there anymore with, most of the products and we could grow double digits? Would that be a fair understanding? Look, the objective would certainly be that, to grow in double digits. It now totally remains to be seen in terms of how good our launches perform, what kind of market share we get. Also remember, the price deflation for all the new launches is always higher. If it's a day one launch, it's a rapid price deflation. Day one ANDA launches. If it's a follow-on launch, it still results into a fairly rapid, you know, price deflation compared to the legacy business. Keeping all that in mind, however, yes, we are optimistic for a good growth going forward. Okay. Lastly to Mr. Dubey, given the strong cash position now, how are we thinking about, you know, adding some, you know, using the cash? Because I mean, in the last one month itself, we have started to see some small acquisitions. I know as a company we have not followed that path, but, what is the thought process now, and how do you use the cash? Prakash, we have replied various times. In fact, whatever cash we have, it is for our business expansion. Of course, we are paying reasonably well dividend also going forward. When I say future business expansion, besides organic, inorganic opportunities also, we definitely will consider if we get the right price. We want to do any inorganic after having complete details and considering pricing of opportunities. Definitely we have plans for cash available with us. In any case, we'll keep on giving dividend the way we are doing right now. Any major CapEx plans, sir? Sorry? CapEx. Any major CapEx plans? No. CapEx guidelines we have already given to you. This year we are going to have somewhere close to 400. Next year between 400-450. After that, I think we'll be somewhere 450-500, kind of. Okay, sir. Thank you and all the best. I'm talking normal CapEx. If something Yeah, yeah. Nothing new. No new major project as such. Yeah. Not very specific, but we may be requiring domestic facility, say after two years. Perfect, sir. Thank you. Thank you. The next question is from the line of Kunal from Edelweiss. Please go ahead. Hi. Good evening. Thanks for taking my question. My first question, I guess, is again on the India business growth. I think you did mention that the market will grow at 8%-9% next year, and you would like to grow above that. While I understand this, I think this year you have beaten the market hands down because I believe the COVID-allied treatment or, you know, drugs you have, you have been very successful this year. I'm just wondering that on this base, do you see, you know, a growth actually tapering down very sharply next year? Not really. See, this year, particularly, you know, the antiviral treatment was restricted, okay? It is mainly antibiotics and all which were sold. Yes, there will be some tapering, which is certainly happen. There's a reason the market traditionally, which has grown by 9.5%-10%, we are talking about around 8%-9%. There will be certain tapering in the market and so is business. Our objective will remain to outperform the market. Even on this base, sir. Yes, I think no one's reported a 20% year-on-year, I mean, growth, you know, in this quarter. Yeah. From this phase also to grow, maybe, you know, at 9%-10% you think it's doable? Yeah. See, we are not saying that we grow at the same pace, but we are saying we'll be outperforming the market growth. Sure, sir. Yeah. One second question again is regarding India. You know, WPI this year is in double digits. I understand you have maybe 25-26% of your portfolio under price control. Should we, you know, what has happened typically, you would take the full 10% or 11% kind of price growth next year? Yeah. We'll try to see that we take almost the full advantage, you know, benefit of WPI price index. Yeah. Sure. If WPI is over 10%, so you can take over that. Let's say it is 15%, you can take 15% price growth? That won't be. You know, it is in the range of around 10% or so. That should be the impact on our overall pricing benefit, not 15%. Okay, sir. Up to 10%. Fine. Just one more clarification. Mr. Dubey mentioned that you will see around 2%-3% impact on gross margins in the next quarter. Did you mean 2%-3% on a 9-month FY 2022 base or over Q4 FY 2021? No, no. I was referring Q4, not nine months. Nine months, it has already gone. We have margin more than 60%. But for quarter four, our expectation or we have estimate having impact of higher API prices to the extent of 2%-3% to margin. Okay. I mean, so just to put that in context, last year did around 57% kind of gross margin. Maybe this time could be doing around 55%. Is that a fair understanding? No. Actually, if you see our last quarter, our gross margin, it was 60, more than 61%. We expect we will be somewhere closer to 59% or 60%. Sorry, sir, I don't understand this. Last year, because the Q4 is typically, you know, a seasonally weak quarter, your gross margins tend to go, you know, below 60%, right? The last two years it's been 57%, 56%. If you are doing 59% this year, then how come, you know, the price. I cannot see the input cost, you know, impacting. Sorry. Actually, I was not comparing this gross margin with last year's quarter four. Yeah. Because in last year's quarter four there were a few one-off items also, write-off. There was an element of write-off in last year. I was referring to quarter three or YTD and quarter four. YTD we have gross margin more than 61%, and we expect there will be hit by 2%-3% on that. Am I clear? Sure, sir. That's helpful. Sir, just lastly, you know, the new division that you have launched, the Pulmocare division, just want to understand a bit more, you know, in terms of what will be the recurring OpEx, you know, going forward, how many sales reps you have added and so on. We are currently at INR 130. We should be reaching close to INR 175 this year in Pulmocare. Yeah, that's your question, right? You are only wanting to know about people or beyond this also something else? Beyond this, I mean, the OpEx will probably, you know, start inching up, right? I'm just wondering what should be the new run rate. Yeah. Pulmocare, actually in fact recently we started and we cannot expect breaking even immediately. This year, our expectation at business level to have some kind of negative, but that will not be big. As Mr. Kaushal, he said, we have 170 people going to be in 2022 to 2023. Definitely, we have to wait for some period. Amount of negative this year is not big, but it may be in the range of INR 30 crore-INR 40 crore. Got it, sir. Thank you very much and all the best. Thank you. The next question is from the line of Saion Mukherjee from Nomura. Please go ahead. Yeah. Hi. Thanks. Good evening. Sir, on the India business, the growth is strong. Do you, I mean, is there some sort of channel fill or buying in anticipation of Omicron wave that we saw in December? Or you think December could have equal, you know, this quarter would have equal strength given the Omicron cases? Saion, we don't see any major panic buying, even in December or January also, because of Omicron. Possibly some element it will be there, but we don't think any significant impact is there. Okay. Have you seen any impact, significant impact, this quarter? I mean, so far, the month of January, for instance, where we have seen a lot of cases. As I said in the beginning, this year, the impact of Omicron is not on the core antiviral kinds, but some impact you can say very minor, you know, very difficult to even evaluate so far. Pain and your zinc preparations and antiulcerants, they may have minor, but not to the extent what was in the first wave or second wave, sorry. Mm-hmm. Yeah. Sir, you know, can you just talk about volume growth and price increase expectations that you have for the India business? Typically, like, of course, you know, next year may be slightly higher on pricing. Typically, what's the kind of price and volume combination that you're seeing for your business? You want to know, Sai, for this quarter or I don't know. I mean, maybe we can because, you know, because there's COVID-related demand sometimes, so it sort of may skew things. But, I know. I just want to know, like, you know, going forward, what I mean, as a on a normalized basis, what is your expectation of how much of the growth you generally expect from pricing and how much from volume? I think as you just a few minutes back, Mr. Yogesh Kaushal he indicated this time we have advantage of WPI also. Wherever we get opportunity, definitely we are going to take rise in price. Straightway we cannot apply all across because we have to see ultimate price, our price vis-a-vis our peers' price and all this. Generally our price increase is in the range of 4%-5%. Definitely this time it is going to be little bit more. You can assume around 5%-6% we expect to take price increase. Volume we are somewhere close to double, somewhere close to 7%-8%. I think there we may need to realign and there we can have 1% or 2% lesser compared to it. New launches are also there, and they are going to add up. Definitely we are going to outperform market. Okay. Sir, in the U.S., so there is this decline that we've seen. What exactly happened sequentially? Because this looks to be a steep decline. Any specific product you faced price erosion? If you can give some granular details on this dynamic. Yeah. Yeah, Sai. You know, obviously the loss of market share in the previous quarters certainly what is one of the factors that was responsible. The new launches that we had again in the previous quarter have gone through again a major set of deflation, price deflation. You know, obviously the base business itself for the previous quarters compared to the current quarter, there has been an overall deflation. That was obviously not offset by enough launches during the quarter, enough launches from a value perspective. I guess that's the reason for a quarter-on-quarter decline. Just one last question. I think in your opening remarks, regarding the tie-up on biosimilars, did you say you look at commercialization in 2023, or I got the year wrong? Twenty-six. Uh. Yeah. Twenty-six. Twenty-six. Okay. The commercialization is going to happen in 2026. When do you expect the filing? 25, is it? Calendar 25? Yeah, 2024, 2025, I believe. Okay. Thank you. Thank you. Operator, you may press star and one to ask a question. The next question is from the line of Nithya from Sanford C. Bernstein. Please go ahead. Yeah, thank you. I had just one question on your outlook for the trade generics in India. There's been a fair amount of interest in the recent past. Three or four of your large peers have launched divisions. Health tech companies have also been talking about pushing more of private labels, not technically trade generics, but along the same lines. How do you see this shaping up? Do you see this as a threat to Alkem's position in trade generics? Do you see this as a threat to branded generics, if broadly this is a zero-sum game? Or do you see this as something that's expanding the market itself? Just your thoughts on, you know, how you see this business shaping up. Sure. I think trade generic will largely play, you know, in a business of penetration because the prescription market, you know, if you traditionally see a prescription market, it is largely in, you know, metros class one and class two suburb ones. Below that, you know, it's still 60% odd population we don't have a reach of medicine. What we usually work on a channel management where they reach out to those places where, you know, traditionally a trade business may not. A prescription business may not reach. Strategically also as a business, we do not encourage, even in business also we can see there is an overlap between our brands and generics. That, you know, we maintain that line of differentiation between branded and generic. I don't see really, personally, if you ask me from the professional input, I don't see on a short or medium term any threat to branded business through generic. Because long way to go for generic to, you know, have a threat on prescription business. I hope I'm able to answer you. Hello? Hello? The line for the participant dropped. We move on to the next participant. Yeah. The next question is from the line of Yash Khanna, ithought Portfolio Management Services. Please go ahead. Hi, team, and congratulations on a good set of numbers. My first question is on the U.S. business. Our business was around INR 1,200 crore approximately in FY 2017, which is now around INR 2,500 crore odd. We have kind of doubled in four years. My question is, in how much time do you think, you know, from here we can double our U.S. business? You know, what will be the growth drivers? Because as we are seeing that the oral solids market is becoming more and more competitive. You know, do you think we might need to venture into other dosage forms, or is this growth engine enough? Sure. So I don't want to predict when we'll double from here. The base is already pretty high. This year we are, you know, flat or currently actually in a degrowth under nine months. For me to give you a number of years for doubling from here, very difficult. As far as your second part of the question is concerned, number one, we don't just sell oral solids. As you know, we do sell powders, liquids, semi-solids also, nasals. You know, even though that's a small part of our portfolio, I understand what you are asking. As our CEO has, you know, said in the past investor calls, we are, you know, investing into some of the other, you know, more difficult generics. It takes time. Registrations are high, as you know, on this side of the business. It'll take time before some of those, you know, start coming into the commercial side. Definitely for our company going forward, there are very clear plans of changing our product mix. More than dosage form mix, let me say the product mix. There may be some other dosage forms also we may look at investing. Certainly biosimilars is one area that we've talked in the past that we invest. All of these, though, may take, you know, at least 2-3 fiscal years before we start seeing them on the commercial side. Oh, fair enough. Fair enough. That's helpful. My second question is on the MR productivity side. I think you just mentioned to the previous participant that our MR productivity on the chronic side is around INR 3.3 lakh. I just wanted to know, you know, what would be the MR productivity of, let's say, your top best performing 20%-25% of the MRs on the chronic side? Where I'm coming from is, you know, eventually the others would move towards that range, right? You know, what is the broad 20%-25% top MR range, productivity range? See, in chronic also it ranges because we have been expanding year-on-year. You know, all those who are relatively new in the business in chronic, say around 2-3 years, there the productivity range will be somewhere between 1.5-2.5. You know, those who are little senior in the business, 6-7 years, our productivity range is as high as INR 10 lakhs in chronic also. It can average out from 10 to, say, 1.5, and thus it comes to 3.28. The top performing are around INR 10 lakh also? Yeah. There are quite a few people who are in a range of around 10, 9.5 or so. Okay. The others would eventually move towards that range? Yeah, because they are literally new. We keep on expanding for last three, four years. Yeah. Those ones finally will come to, you know, a relatively good level of productivity. Okay, fair enough. One more question. This quarter I think we had two interesting press releases, and one was about the exclusive agreement with Johns Hopkins University. One other one was about the launch of some patent technology for the treatment of diabetic foot ulcers. How are we thinking about these tie-ups, and what does this bring to the table for us? As far as the launch of foot ulcer is concerned, I think it has not gone. Actually, the filing with regulatory is yet to happen. We believe at the end of 2023, we'll be able to launch it officially. As far as Johns Hopkins understanding we have, I think it's a long-term kind of project we have taken. On the cost front, I think it is not very significant. But we understand we have guidelines of 6% of our revenue under R&D expenditure. I think we are going to manage within that. Okay. Anything on the diabetic foot ulcer? As you said, you will launch by end of FY 2023. Anything, what kind of product is that or what kind of a technology and what is the market of that? See, diabetic foot ulcer largely, you know, it is something which, you know, lead to amputation because of gangrene and all. This is not a treatment of gangrene. What it does is when there is a initial damage because of foot ulcer and the wound gets deep, okay. Doctor treats wound, and he tries to see that it doesn't reaches gangrene level. This is pre-gangrene level treatment, wherein doctor will try to heal the wound and then give a patch so that cosmetically the foot or whichever part, you know, the foot, the ulcer is formed, it looks, you know, cosmetically good, so aesthetically good. That's the basic objective of this treatment. Wound healing and preventing further damage of foot. That's the basis of genesis of this product. Okay. Ideally it's like, it's a mass problem or is it a very niche problem that happens to some people? Or if like most of the diabetes patients eventually do get this issue and there's no treatment to this. In most of the diabetics, but there are a good number of diabetics uncontrolled at a later stage of life will have a tendency for foot ulcer first, and if not treated initially, can lead to gangrene and amputation. You have to treat these patients pre-gangrene level, and there are a good number of cases. This is not, you know, too niche also, but relatively I would say it's a niche market. Okay. There's nothing else in the market right now, related. Yeah. So far there's nothing. There are treatments for wound healing. Okay. Post wound healing, can any product give a cosmetic look similar to that of original skin? This is the first of its type. Okay. That's amazing. That was helpful. Thank you, TM, and those are my questions. Thank you. Participant, you may press star and one to ask a question. The next question is from the line of Nithya from Sanford C. Bernstein. Please go ahead. Yeah, thank you. Unfortunately, my call got dropped, so I didn't really get to hear the response, but I'll ask a follow-up anyway. As the trade generic part of your business continues to grow faster and becomes a bigger and bigger part of your portfolio, I assume it's at a slightly lower EBITDA than your branded generic business. Do you see an adverse impact on EBITDA therefore? Yeah, Nithya, you rightly said, compared to our ethical business, EBITDA and margin, it is little bit on lower side. That's very true. Of course, business mix, if trade generic is on higher side, definitely it impacts our margin. But, Um- Let me tell you here, we have opportunities there also to optimize our margins, and I think we have reasonable margin in our trade generic also. Reasonable good margin. Understood. Do you see this current 20% share of India business becoming 30, 35, 40 or not in the near future? No, no. I don't think it is going to have that much share of our business, domestic business. Right now it is 20% and we don't see it is going to increase substantially in coming few years also. Are there any updates on the trade margin caps that the government was talking about a couple of years back? Initially it was discussed, but I don't think any further discussion is going on. Right now I don't think any news related to this is in discussion. Thank you so much. Thank you. Participant, you may press star and one to ask a question. The next question is on the line of Gaurang from Motilal Oswal. Please go ahead. Hi. Am I audible? Yes. Go ahead. Yes. Thank you for giving me this opportunity, sir. I just wanted to ask you about the addition of MRs over next 12-24 months. Can you give some guidance on that? Sure. Yeah. See, we have taken extension of 650 people last year, and this year we have added around 535. Total around 1,200 people we added in a span of 12 months. Currently what we are trying to see is how do we settle them and see the productivity. Management is not averse to any opportunity. If it comes, we are open. Maybe, you know, some expansion might happen in those businesses, which is need-based. As of now for next one year, so far we are not seeing any, you know, don't see any other opportunity of launching such full-fledged divisions. Obviously these additions of MRs over the last two or three years must have you know significantly affected the productivity, which you highlighted was around INR 5.78 lakhs, correct me if I'm wrong. Yep. How do you see this trend moving forward? Yeah. See, there's a reason some of your colleagues previously asked me a question about our confidence of next year growth. You know, these are the people who will certainly add to business. Yes, there will be some dilution of productivity, so it may not reach that level sooner, but they will add to the overall volumes. Reaching that productivity will take a reasonably good time. We can't predict, but, you know, it will take time. There will be some dilution of productivity for 1,200 people addition in acute and chronic business. Okay. Again, on tax rate, what will be your guidance on the tax rate? Tax rate, as we discussed, this time, we got advantage of recognition of deferred taxes assessed in quarter three. That's why if you see our result, it is, instead of expenditure now it is income. For this year, I think we'll be somewhere close to 3.5% to 4% effective tax. Provided, yeah, again, since now this budget has come out, and there are a few items which needs to be considered, so I have not factored that. In normal course, we expect our effective tax rate somewhere close to 4% this year. For next year and onwards, we have already given guidance of effective tax rate of 10%-12%. Okay. One more thing I wanted to ask was on this, so like Duet is, are there any other niche product launches, you are targeting over next, let's say, 12-18 months? Gaurang I wouldn't like to comment on that. Okay. One more thing on this, biosimilars. What would be your investment till date in for this business, and how do we see this going forward? Mr. Gaurang, do you want me to reply this? Yes, sir. Go ahead, sir. Our investment in biosimilar, OpEx, CapEx, and clinical studies and everything is in the range of INR 725 crores. Okay. How do you see this moving forward? What would be the, let's say for next 1-2 years, what would be the additional investment you would be doing? See, we don't see any major investment going forward. Of course, revenue stream has started at our biosimilar facility also. I think for some period, some kind of support is needed. We don't expect any major significant further support, but somewhere close to, say, around INR 80 crore-INR 100 crore kind of further support may be needed before this business starts generating positive. If I can add, Mr. Dubey, I think on the overall R&D investments, we will stay true to our 6% revenue ambition or guidance that we've given. Please remember, because our revenue keeps increasing every year, the absolute investment in dollars or rupees keeps increasing. Obviously, we'll allocate that 6% amongst all the R&D that we will take. Absolutely. Thank you, sir. Sorry to interrupt you, Gaurang. I request you come back in the question queue for a follow-up question. The next question is from the line of Rahul Jeewani from IIFL Securities. Please go ahead. Hi, sir. Thanks for taking my question. Fourth quarter is seasonally a weak quarter for us because of the seasonality which we have in the India business, and that leads to some sort of a margin moderation for us during the fourth quarter. For this fourth quarter, we are talking about this incrementally 200-300 basis points of margin impact being there on account of API cost increases. How are you looking at the overall company level EBITDA margins for fourth quarter, given that, for the last 4Q, so 4Q 2021, we had reported a 17% kind of a margin, excluding the inventory write-offs which we had taken. For this fourth quarter, do you think that the margins can go down below 17%? Rahul, you rightly said, quarter four is going to witness a hit from increased material costs, and definitely that is going to have some impact. Fortunately, in quarter four, you rightly mentioned quarter four normally because of seasonality, it is weakest quarter for us. I think trend what it is indicating, I think we are going to have a reasonable kind of quarter. As far as overall EBITDA margin for the year is concerned, we are not going away from our guidance, and we'll be somewhere close to 20%, as we said in our earlier call. Rest of the thing you can work out backward and see. You'll see we are not far away from what it was earlier. Sure, sir. How are you looking at margins for next year, given that obviously there is some sort of a cost pressure on the API side, but the India portfolio for us next year would benefit from this 10% price increase for the WPI or the NLEM portfolio. Given a sizable part of your India business is under price control, how should we think about margins for FY 2023? Right now we have, Rahul, we have to wait and let this Winter Olympics get over. Let's have some feel on pricing trend of material. I think we are keeping ourselves away from giving guidance on margin for next year right now. I think we'll be having some more clear picture once we sit for quarter four, and that will be appropriate time to indicate on margins. Sir, on a broad basis, you think that the API cost challenges or the API cost pressures which you will see that will largely be offset by this pricing fees which you will have on the DPCO portfolio? Rahul, actually I don't want to speculate. Actually there are various levers where you can work towards. I think at this moment it will be a speculative kind of statement from my side. My request to wait for some time and let some visibility come to material prices, and we'll be in better position to give you further guidance. Sure, sir. Thank you. That's it from my side. Thank you. The next question is from the line of Vishal Kanvi, Individual Investor. Please go ahead. Sir, in our last call we were talking about. Vishal, sorry to interrupt you. You're not very audible. May I request you to speak through the handset? Yeah. In last 3, 4 calls we are talking about that we have. We did expansion in management, productivity. I wanted to understand, if I go through in last 5 years, how many managerial person we have added and what is the productivity? How many reps we have added and what is the productivity, new added productivity through new representatives? That's what you're asking? Yeah, yeah. Yes. See, you know, we are no different than the pharma trend because when we add new people, normally you will see it is because of, you know, for a large division which has multiple brands. It is not new launch of the division. When we expand, our expansion objective always remains, you know, to build large brands bigger. You know, Clavam and Pan together, we create a Pan division and a Clavam division. Yes, when we take a growth of around, say 10 or 11%, new productivity added on that is, I can say, roughly INR 1 lakh-1.25 lakh from a new person who joins. Okay. If I take that, if I took that in FY 2016, 2017, 2018, what was the actual number and how much we have added? Can you give that number from FY 2016- We will come back. So far we have not done this analysis. Oh. We will surely respond. Vishal, you can, you know, call me after this, you know, call and I'll give you the numbers for that. Yeah. You don't have it with us for the of previous year. Yeah. Okay. Thanks. Yeah. Thank you very much. The next question is from the line of Prashant Kothari from Pictet Asset Management. Please go ahead. Yeah. Hi. So I just wanted to understand on the margin thing again, because we have been guiding for some years that our margin should be kind of trending up to about 100-150 basis points every year. Is that guidance kind of being a bit more doubtful given what is happening externally in terms of API price environment, or do we still kind of stick by that for the medium to long term? Actually, just now actually, I reaffirm our guidance given earlier. For the year, we have given guidance of our EBITDA margin somewhere close to 20%, and we expect we'll be able to meet that expectation. Of course, increased material cost is going to play a role in that. We understand and we are confident we'll be delivering whatever guidance we have given. Sorry, my question was kind of more beyond FY 2022 as well. Beyond FY 2022, just now I said we wait for some time, let's have some visibility, and we'll wait this Winter Olympics to get over. After that, we'll be able to give you guidance for 2022, 2023. I think it's too early, and we are also not having clear visibility on material price front. Okay, I understand. The current kind of outperformance that you have kind of in last few months is quite impressive. Are there any kind of interesting change in strategy you have done by which you are able to win better here? Color on that would be very useful to understand how we are kind of doing this well. See, last time I believe our MD also mentioned the same thing, and I will repeat that. See, during COVID, you would have seen that some of the companies, you know, they changed their strategy and came with antivirus and all. Today we are succeeding because we stuck to the basic and we kept on, you know, emphasizing on our core strategy. It is not right for us to explain the strategy here. Whatever we have been doing, we will, you know, consolidate that because that's how we have succeeded. No major change in core strategy. We'll just drive what we have been doing right. All right. Okay. Thank you. Thank you very much. A reminder to all the participants, you may press star and one to ask a question. As there are no further question, I now hand the conference over to Mr. Gagan Borana for closing comments. Thank you everyone for attending this call. If any of your queries have remained unanswered, please feel free to get in touch with me. Thank you. Thank you very much. On behalf of Motilal Oswal Financial Services Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.