Ladies and gentlemen, good day and welcome to Cipla Q1 FY22 earnings conference call hosted by Kotak Securities 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. Kumar Gaurav from Kotak Securities. Thank you, and over to you, sir. Good evening, everyone. On behalf of Kotak, I thank the Cipla management team for giving us the opportunity to host their Q1 FY 2022 earnings call. From Cipla, we have with us Mr. Umang Vohra, MD and Global CEO, Mr. Kedar Upadhye, Global CFO, and Mr. Naveen Bansal from the investor relations team. I now hand over the call to the management team for their opening remarks. Over to you, Naveen. Thank you, Gaurav. Good evening and a very warm welcome to Cipla's Q1 FY22 earnings call. I'm Naveen from the investor relations team of Cipla. Let me draw your attention to the fact that on this call our discussion will include certain forward-looking statements which are predictions, projections or other estimates about future events. These estimates reflect management's current expectations of the future performance of the company. Please note that these estimates involve several risks and uncertainties, including the impact of COVID-19, that could cause our actual results to differ materially from what is expressed or implied. Cipla does not undertake any obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. With that, I would like to request Kedar to take over, please. Thank you, Naveen. A very good evening to all of you. I hope that all of you and your families are safe and well. We appreciate you joining us today for the first quarter earnings call for the fiscal year 2022. I hope you have received the investor presentation that we have posted on the website. Before I come to the quarter, I hope you have had the time to review our recently published integrated annual report for fiscal 21. This is our fourth integrated annual report and reflects our relentless focus on improving transparency, governance and setting basis on our disclosure practices. This year's edition will also give significant updates on our business reimagination, sustainability and digital transformation journey. Over the last 15 months, Cipla has entered into multiple strategic global collaborations to support the healthcare ecosystem in the fight against the pandemic and living up to our purpose of caring for life. We continue to stay committed to servicing demand across global markets, monitoring the critical filings, continued portfolio expansion, rigor on cost control, digital engagement along with seamless coordination in our manufacturing, supply chain and distribution. Coming to this quarter, we are pleased to report another quarter of robust performance with historically the highest reported quarterly revenues with a 27% year on year growth. As we had communicated earlier, we have made a conscious effort to sustain a good share of the operating efficiencies and the expenses lacked, which has also helped us deliver sustained EBITDA margin of 24.5% for the quarter. We expect these efficiencies to continue in the coming period as well. The revenue growth for the quarter was driven by sustained momentum in our branded markets of India and South Africa, as well as U.S. and API. As alluded in our prior quarterly interactions, we did experience significant traction in our One India business, led by the strong core portfolio tailwinds in the prescription and trade generics business, along with the support from the COVID portfolio during the second COVID wave in India. Excluding for COVID, the portfolio momentum continues to be on track with solid double-digit growth during the quarter. You would have noticed the elevated inventory levels, which have been a conscious decision on our part to ensure the continuity of supply for our medicines. This also includes a portion towards the antibody cocktail inventory that we launched in May. We continue to see strong traction in our U.S. revenue run rate, both on a sequential and year-over-year basis, led by further expansion in the albuterol share and continued respiratory unlocking with the addition of arformoterol in our portfolio. This has helped us offset the erosion seen in the rest of the portfolio. Our profitability for the quarter continues to track well above our full year targets. For the quarter, there is no significant increase in OpEx on a sequential basis. The year-over-year increase is in line with the core revenue growth. We believe that there is reasonable headroom to drive EBITDA on a full year basis versus FY 2021. Our free cash generation and operating efficiency continues to drive our net cash position and free that return on invested capital ratio. This metric is now almost 22.1% on a trailing 12-month basis. Coming to the financial performance for the quarter, we would like to highlight certain specific items which are subsumed in the reported numbers. At a company level, the contribution of COVID is in high single digits for the quarter and after adjusting for this, the revenue growth maintains a strong trajectory of high teens for the company and respective businesses. While there is a low base baked in these numbers, we are happy to see well-diversified growth in the therapy divisions. Our reported API numbers include a profit share on the commercial supplies and API to partners. On emerging markets, the business was slightly impacted by a timing deferral pertaining to in-country currency allocations for our middle eastern supply during the quarter. We are highly optimistic that the issue is getting resolved and as we are speaking, in fact, the initial funding release has happened. As you may be aware that South Africa in the early part of this month went through challenges related to civil protests. Our Durban plant operations did not get impacted much other than some marginal damage to equipment and storage items. We had sufficient inventory on hand as from a norm. We look forward to starting full-scale normal operations of the plant soon and resume supplies of life-saving medicines. We have been very closely monitoring the progress of our specialty assets and evaluate options to structure this part of our business for a sustainable future. As you are aware that Avenue Therapeutics received the second complete response letter on IV tramadol and subsequently concluded a meeting over June, July 2021. In light of this development and from a good accounting practice standpoint, we have taken a one-time impairment of between INR 125 crores on our investment in Avenue Therapeutics during the quarter. It's captured as an expense line. The quarter overall income from operations is INR 5,504 crores. Gross margin after body cost is at 62.4%, approximately 100 basis point decline on a Y-O-Y basis was attributable to contribution from relatively low-margin COVID and COVID ancillary products and lower contribution from international market structures, which was offset partly by one-time profit share in API. On a sequential basis, this is almost 200 basis point expansion, driven by the improved mix. Total expense, which include employee costs and other expenses, is INR 2,090 crores, increased by 5% on a sequential basis. Employee cost for the quarter is at INR 887 crores, and that's a function of the increments as well as COVID-linked compassionate relief to employees. Other expenses increased by 2.5% sequentially. Total R&D investment is INR 264 crores. As a percentage of revenue, spends are lower owing to the scale-up in revenues. The absolute trajectory is intact, the portfolio development efforts continuing full swing through the quarter. Reported EBITDA is INR 1,346 or 24.5% sales. Tax charge is INR 284 and the ETR is 28.5. The higher ETR is a function of the fact that we have taken the charge on the increment, which does not have the tax shield. Profit after tax is about INR 715 crores. As of 30th June, our long-term debt is $138 million towards the U.S. acquisition and ZAR 120 million for the operational requirements in Cipla South Africa. We also have working capital loans in US dollars and South African rands, which act as natural hedges towards the receivables. Driven by the relentless focus on cash generation and rigor on cost discipline, we continue to be a net cash positive company. Outstanding derivatives as a hedge for receivables are $144 million, ZAR 651 million, AUD 20 million, GBP 7 million, and EUR 5 million. We also hedge a certain portion of our quota trade export revenues. The growth we saw strong tailwinds across portfolio geographies for Q1, and growth figures in the subsequent quarter will include continued market-leading growth across branded and consumer businesses, robust traction in our respiratory franchise across albuterol and arformoterol, sustaining and driving expansions to operating profitability and pre-tax ROIC, reinvesting the incremental free cash flow into suitable growth in the opportunities. With that, I would like to invite Umang to present the business and operational performance. Thank you. Thank you, Kedar. I would like to wish all of you and your families good health and well-being. Amid the looming threat of a third COVID-19 wave in India, our topmost priority is supporting the government efforts on increasing availability of our COVID and other life-saving products. Our teams have been working relentlessly to ensure supply continuity for the entire COVID portfolio. We have also conducted large-scale COVID vaccination drives for our employees, depot associates, and families. We've also initiated a compassionate relief policy to the bereaved families of deceased colleagues to stand by them and support them in these moments of grief. Coming to the strategic updates and operational performance. In FY 2021, we laid the foundation of our strategic reimagination journey led by the digital transformation of our value chain, including stakeholder engagement, R&D, manufacturing, supply chain, and business functions. I'm pleased to see the continued delivery reflected in the robust performance of the quarter, driven by branded markets of India and South Africa and the continued unlocking of our respiratory franchise in the U.S. Last year, we redefined our earnings trajectory both in terms of absolute and EBITDA margins at over 22%. Our EBITDA margins for this quarter came in at 24.5%, in line with our commitment to maintaining this trajectory in the current year as well. Our endeavor will be to closely match the operating profitability in the coming quarters, despite significant moderation to the contribution of COVID versus last year. In India, our One India strategy continues to see seamless execution. The One India business grew 68% Y-O-Y, driven by traction in core therapies, along with a contribution from the COVID products during the second wave. Adjusting for the core COVID portfolio, the revenue growth was still 47% over quarter one of last year. While the impact of COVID-19 will continue to play out in line with the spread of infections and the results of the vaccination drive, we continue to witness strong volumes across core therapies, which is likely to sustain over the coming quarters. The prescription business continued the market-leading performance during the quarter, driven by the strong volume growth in core therapies and support from existing and new introductions in the portfolio. Our acute and respiratory nebulization businesses have also recovered well. As per IQVIA MAT June 2021, we continue to deliver market-leading growth against the IPM. We grew at 20% versus the 14% growth of the IPM. On the therapy side, our MAT growth versus broader market for respiratory is 14% versus a 4%. Anti-infective is 10% versus nine, antidiabetic is 11% versus nine, derma is 13% versus 12%. Cardiac is 10% versus 15%. Gastro is 13% versus a 17%. Urology is slightly de-growing versus the market. Cipla consistently ranks number two with a market share of 8.2% in chronic therapies and grew by 16% versus the market growth of 12% as per the MAT June '21. We intend to maintain the market-leading momentum in the coming quarter and ensure serviceability across our portfolio. The generics business delivered a strong growth, adjusted for product transfers to CHL. The quarter witnessed healthy quarter flow across regions, benefiting from strong demand tailwinds across the core portfolio and the COVID, the other products that were linked with COVID sales. Our consumer health business reported healthy revenue for the quarter, led by growth in organic anchor brands, as well as continued traction in all of the six consumer brands transferred in FY 2021 from the generic business. Coming to our North America business, we are happy to report that we've entered the top 10 generic companies in the U.S. by prescriptions, driven by the respiratory franchise as well as the strong limited competition launches over the last two to three years. Our portfolio efforts on selection and execution have limited the impact of price erosion on our portfolio, and we hope to continue this momentum and scale up as new launches come in. The U.S. generic core formulation sales for the quarter were $141 million, with a growth of 5% over a high Q1 FY 2021 base, which included albuterol. It's also in line with a sequential ramp-up despite incremental competition in select product categories. The albuterol share has also ramped up, and today Kedar has already covered the market share that we have in the external reported numbers. I'm also delighted to see the continued unlocking of the portfolio with the launch of arformoterol during the quarter. Our contracted shares for arformoterol look extremely well, and we are working with the channel towards achieving our fair share of maintaining adequate supplies. Our focus in 2022 will continue to deliver complex launches along with driving growth in the institutional channel, which will accelerate in FY 2023, which we expect to be a big year of launches. On Advair, we are working with the FDA and responding to the queries and will continue to share the updates on the progress of the file. We continue to work with the FDA on the observations on the Goa plant. We equipped the plant with the required infrastructure to facilitate any virtual audit in case the agency requests one. Coming to SAGA, which includes South Africa, Sub-Saharan Africa, and CGA, the overall region reported a robust revenue growth of 13% in U.S. dollar terms. Our South Africa private business reported a 7% growth over last year for the quarter. In secondary terms, we continue to maintain market-leading growth of 7.6% versus a 5.7% as per IQVIA MAT. We continue to maintain the third position with a market share of 6.6% in the OTC and 7.1% in the overall private market. The Sub-Saharan business also witnessed strong demand in markets impacted by COVID-19 as compared to the previous year. Coming to international markets, which includes our emerging markets and Europe business. The Europe business and the emerging market business was impacted by issues of timing deferral that Kedar mentioned in his commentary. We are optimistic that this issue will get resolved and subsequent billing shall happen in this quarter. The API business reported a growth of 69% in US dollar terms and includes a profit share on the commercial supply from the API to a partner. Turning now to our outlook. We look forward to building this strong start to FY 2022. The underlying momentum of our growth drivers for the portfolio continues to be robust across markets. We will allocate capital to enriching our capabilities across portfolio and digital technology platforms to enable the patient care continuum. Our near-term priorities include a continued execution on the demand levers in the chronic and acute therapies, improving the manpower productivity across branded and generic markets of India and South Africa. Active advancement on innovative consumer-centric products to accelerate the augmentation of our global consumer wellness franchise across India and South Africa. Continue to lead the respiratory categories such as for albuterol and for arformoterol, and strengthen and accelerate our lung leadership aspirations. Maximizing the value opportunity in the U.S. complex generics space with launch momentum and with facilities always in compliance and control, and continued vigil on cost and cash management, operating margins, and return on capital employed. I would like to thank you for your attention and will request the moderator to open the session for 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 their 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. Participants, you may press star and one to ask a question. The first question is on the line of Neha from JPMorgan Chase. Please go ahead. Yeah. Thank you for taking my questions. My first question is on the U.S. business. We have seen a fair bit of momentum in albuterol market share over the last few quarters. I'm not even looking at this quarter, but over the last few quarters. Our U.S. business has been sort of range bound in the $135 million-$140 million, this quarter, $131 million. Is the core script still being higher than anticipated erosion? When do you see the next inflection in the U.S. business in your view? Neha, I think the portfolio actually has done quite well overall. We've grown it to this level. I think the new launches will take this higher. The big year for launches is next year for us. We have a few launches coming this year, which will improve the trajectory further, but the next material shift will probably happen after a few quarters. Okay. More in the FY 2023 timeframe. Around that time because we're expecting launches of some of the big products then. Understood. Kedar Upadhye, on the operating cost, despite the second wave and lockdown, it seems like we did see some increase in operating costs quarter-on-quarter despite the restrictions. How should we look at this cost from the current level that is reported in this first quarter as things have opened up completely? Should we see acceleration of SG&A spend in the India business and other branded markets going ahead? Yeah. Neha, there are certain elements in the operating cost which are quite responsive to revenue. Some commissions, some data feeds and all that. I think that will respond to the revenue growth, which we have seen very high this quarter. Part of the increase is towards those variable costs and balance is something where activity was there in the market. A large part of our field force is operating in the market. The operations and the manufacturing plants, depots, and all the offices is continuing. While most of the office-based staff is work from home, everything else is having a physical operation. That's going on. In addition, there is an increase in R&D as well, which is subsumed in OpEx. Understood. From what I'm understanding, other than the fact the number that is linked to revenue, most other costs is at a normalized level in this quarter. Yeah, that's correct. Maybe I think sequential quarter comparison is probably more appropriate comparison as we continue to believe that we have been able to regain some efficiency that we realized last year. Understood. One other question, if I can squeeze in. In terms of the R&D cost, you said that the absolute number should maintain the trajectory that we've seen. On an absolute basis, will the spend this year be similar to what we've been doing in this quarter or more like FY 2020, which also included some costs from InvaGen? It will be somewhere in between and that will be a function of how the trials get initiated. Understood. Neha, it will be somewhere in between. Understood. Okay. Thank you so much, Kedar. Yeah. Bye. Thank you. The next question is from the line of Nithya Balasubramanian from Bernstein. Please go ahead. Yeah. Thank you. My question is on some of the complex products that you're expecting approvals for in FY 2023. Advair, for example, or Abraxane, for example. Will these require a prior approval inspection by the FDA? If that is the case, do you have any visibility on when that might happen or is that likely to prove to be a bottleneck? For the sites that are clear, I don't think there will be GMP inspections required. There might be PAI inspections that could happen virtually. For sites like Goa, there's probably a prior approval is required Specifically for Abraxane and Advair, Umang, would that require a prior approval inspection? Is it a physical inspection or have you any indications from FDA that they would be okay with a virtual inspection? That's something that we have to get more guidance. Okay. Got that. Second one is on India. Umang, you had mentioned that removing COVID therapeutics, the base portfolio actually grew at 47%. Would that include the benefit that your base portfolio got from COVID, for example, Budecort or Azee, some of your other anti-infective brands as well. Does this 47% include the benefit from those COVID therapeutics? Yes, partially. It does. Understood. Thank you so much. Thank you. The next question is from the line of Anubhav Agarwal from Credit Suisse. Please go ahead. Yeah. Hi, guys. Is my audio properly? Yes, Anubhav. Okay, great. First question was on the cash position. We already have about $400 million cash. This will more likely double next year to $800 million. Sorry, Anubhav. We are missing you. Okay. Okay. Give me one second. Hello. Is this better? Yeah. This is better. Okay. I was talking about the cash position, which is at INR 400 million right now and with conservative estimates, it will at least double next year to INR 800 million. In the past, you talked about expanding consumer healthcare business, et cetera, doing so inorganic initiative there also. I just wanted to understand, what are the one or two things top of your mind in terms of different businesses you have? If you're looking for inorganic opportunities, like is consumer healthcare your top priority right now, or what would be sort of second priority there? See, actually there is some debt on the balance sheet. I think some of those debt servicing obligations do exist. There may have to be some payments towards some of the stocking which we have done and not paid, and dividends, which we have enhanced. I mean, two, three years back, we used to be around INR 2 per share. Now we increased it to INR 3, then INR 4, then INR 5. The dividend, et cetera, will get paid. You are right, I think the cash buildup is likely to happen. While organic CapEx may be high in selected areas like respiratory APIs or oncology APIs, et cetera, there might be some sterile capacity enhancements that we have to do. We will be left with sizable cash and all the possible value-enhancing initiatives are open, Anubhav. That might include acquisitions, that might include other strategic uses of cash. Specifically, the targets which do often get evaluated are around India branded markets, South Africa branded markets, and consumer health as well. I mean, potentially anything which is a longer term is a candidate and in the unbranded generics, which is U.S., Europe or other markets, I think niche capacity is the target. It's difficult to give with precision, which target will work out and which will not. I think the capital area is meaningful enough, the idea is to pursue value-enhancing initiatives. Thanks, Kedar. Second question will be on this complex launches. We already see generic Brovana launched on you guys. For the remaining of FY 2022, how many launches you're expecting, which is categorized in the category of complex launches? Sorry, what was the question there? On the complex launches in the U.S. We have already seen the generic Brovana being launched right now. Correct. For the remaining part of the year, how many complex launches are you expecting? Umang, you want to take the question? Yeah. Anubhav, we are not disclosing exact numbers. I think there are a few. I think we will wait to launch before giving the details there. Umang, just one clarity on the generic side there. Last quarter also, you mentioned that you're responding to FDA. In terms of response, when do you guys think that you will go back to FDA with the complete response of the queries which were raised earlier? I think this month. Perfect. Thank you. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. Hi, thanks for taking my question. Umang, just to sort of clarify one of the earlier comment about the EBITDA margin sustainability. We had 24.5% EBITDA margins for the quarter. Is it understanding right that for a year we're expecting to maintain margins around these levels despite the COVID impact not hitting in general numbers? No. I understand where you're coming from. We are saying that we will maintain our trajectory versus the last year, despite the last year having COVID, right? There might be a quarter where COVID may have taken our margin to 24% or 25%. Net of that, we will continue to maintain our trajectory at the 22.5%, 23% that we have guided quarter-on-quarter. Got it. That's understandable. Secondly, on the India sales. Obviously, April, May were huge sales for industry and especially for people like you who've done a phenomenal job in servicing the demand. Assuming there is no major fresh outbreak of wave three which comes through, how should one really think about India sales for the industry and for ourselves for the balance nine months? I'm not sure that I can give you a way to look at it. What I can say is that minus COVID, the market should show the 10%-12% growth. With COVID, obviously the COVID product sales take over. I think doctor visits have resumed, more or less people are going. I think a 10%, 12% growth in the market is possible minus the COVID impact. Last year had lots of COVID quarters as well. If you take out COVID, core product portfolio should probably show that amount of growth for the industry. You should continue to outpace the market growth as you've done in the last several quarters now. Yes, we are hoping to do that. I think the market should come. At the same time, I have to say it's very difficult to predict when a wave will come or not, right? Also there will be a shift in what gets used in every day. I think that is also going to make a change. Second, this will be my last one. In the recent annual report, you made a mention about a peptide in licensing strategy, peptide products. There was one ANDA peptide also that we filed. We haven't discussed much of this in the past around the peptide portfolio. Can you just throw some light on that, please? Well, we have about three peptides now in our portfolio. Peptide as an API is a pretty specialized game. We've got an in-licensing strategy where we worked with some peptide companies that deliver the APIs. Just like everyone else, there's a lot of characterization, et cetera, that is needed in a peptide product. We're working on these three, and I think we had alluded to filing one. Okay. Thank you, and best luck. Thank you. Thank you. The next question is from the line of Kunal Randeria from Edelweiss. Please go ahead. Good evening. Thanks for taking my question. I want to first talk about Abraxane. I believe the first generics could enter the market in March 2022. Would you be also entering at that point in time, or would you come maybe a few months later? No, I think this is a settlement agreement that the innovator has signed, so I cannot give any information on this. I would not be surprised if the person who enters first has got some level of exclusivity in the market. All right. Sure. Second question is on this antibody cocktail. It seems to be getting increasing traction from the medical community in the developed world as a means to prevent COVID infection. I'm just wondering what your thoughts are on its potential in India, and what are your commercialization plans? I think India, the antibody cocktail, I think as a therapy in terms of data that's available to us now, both for prophylaxis internationally, available in terms of prophylaxis, as well as both vaccinated and unvaccinated people who are getting COVID, outside of India, are being administered this cocktail if they need it. Remember, the cocktail is only approved for mild to moderate conditions. I think the use outside is significantly higher today, manyfold compared to what the use in India is. I personally think for somebody who's not been vaccinated or who's had just one shot but has unfortunately got COVID, I think the antibody cocktail has a fair amount of utility, especially if the patient is very high risk, right? The patient has another comorbidity or is high in age. We have seen a lot of data in India where this has been administered to people and even several old people, and they have had good results after the administration of the cocktail. I think it's really a function of the medical community agreeing with this. Over time, we've seen that the numbers are growing of people who are administering it, and actually even patients who are asking for it. Asking for it as an option from a doctor, and then the doctor decides whether they are eligible for it or not. I think it's not something which is a created market. It's not a Remdesivir. It will take some time to create, but I think we stay positive based on the scientific data that we've seen on the cocktail. Sure. I try to understand that it could potentially have a longer tail. That is correct. Considering even the vaccination status in India, I think that this, I mean, the tail could be longer, but I also think the product may have more utility over a longer period of time as well. Got it. Thank you very much. All the best. Thank you. Thank you. The next question is from the line of Sameer from Morgan Stanley. Please go ahead. Hi. Thank you, and good evening, everyone. Umang Vohra, just on the margins, if I see the pattern over the last five quarters, for example, first three quarters last year had about 23%-24% and suddenly dipped to 17% in the Q4. Now that you are guiding for 22.5%-23% for this year, just wondering, 1 down quarter, and that kind of messes up the full average. Just your thoughts on this. Actually, Sameer, Kedar will probably add more color. Sure Just to stand a little corrected. I think quarter four for us seasonally is the weakest quarter. It's across. I mean, the U.S. pretty much stays where it is. I think if you look at India sales, if you look at sales in emerging markets, it is actually our weakest quarter. Right? It's seasonal. It's not any other factor. When I mentioned FY 2022, FY 2023, what I was trying to guide to was that we will try and match the previous year and try to be higher than the previous year quarters, minus COVID. Our base portfolio will deliver that much. Right? In quarter four, if there is reverse seasonality, I think the margins fall on account of that. It's not for any other reason. I think product mix and margins fall in that quarter. We will hope to do better than the previous quarters for sure in our core business without COVID. I can't predict the COVID waves and how they will work. For example, quarter one of the previous year had no COVID, with relatively no COVID sales. Quarter two of the previous year has very high COVID sales. In quarter two, it's unlikely that we'll have COVID sales to the same amount in this quarter, but we are quite confident that our core business will beat last year's core business in this quarter, and quite significantly. That's how we are planning the quarter. At least the endeavor is to beat last year's core business profitability, which we believe was in the range of 21%-22% most quarters, other than quarter four, where reverse seasonality reduces our margins. Therefore, in quarter four also, we try to beat last year. We may not be at 21, 22. Average for the full year, we will come in at that level. Okay, Umang. This is very helpful. Thanks. Just on this Q1, there were two big one-off items, if I can one second. One was the one-time profit share on API and versus the ₹125 crore, I think you mentioned, on write-up on Avenue Therapeutics. If I just offset 1 versus the other, then would you say that your ₹715 crore net profit is the core underlying profit for the quarter? Maybe Kedar Upadhye can answer that. Yeah. I think on a P&L basis, one can offset that, Sameer. There is a growth which is linked to COVID, so that's something which we won't be able to predict going forward. Got it. Right. That's a fair assessment. Got it. Okay. Just one last question from my side, and that's on the India pricing environment. Anything that you can share? How was Q1, which I think is when a lot of pricing fees happen in the outlook for fiscal 2022 for India pricing. Sorry. I mean, we don't understand your question. You are referring to the YOY pricing fee? That is correct. The pricing fees that you would take for India portfolio. Yes. Outlook for this year and how was the Q1? Yeah. That's all regulated, as you know. I think we do have almost 30% and upwards of the portfolio under DPCO of the prescription business. That follows the WPI pattern, which was minuscule this year. The balance 1, I think our attempt is to see to what extent a price increase gets absorbed in the market, and then we do take price increases. Would you say that for that 70%, 3%-4% increase is what is normal, and that's what you would take for FY 2022? Yes. Actually, it comprises several buckets, Sameer. I think one bucket is injectable, where actually we do take price hits. There is another bucket which is highly competitive and we get a call not to increase the rating. I think there are two, three buckets, and there is surely one bucket where the pricing window is available. There we go to the extent what is allowed by the regulations. Okay, great. Thank you so much. Yeah. Thank you. Next question is on the line of Harith Ahamed from Spark Capital Advisors. Please go ahead. Hey. Good evening. Thanks for taking my questions. Last quarter you had indicated your plans to initiate clinical trials for a couple of ingredient products this year. Are we on track for this and have you initiated this already? We are in the process of initiation. We have not yet initiated, but I think the pre-work is going on. For both the products? Yes. Okay. On Avenue Therapeutics, you've taken an impairment this quarter, does this mean that we will not be exercising the option to acquire the remainder of the company? Yeah, I guess so. We have not yet chosen that option. I think the impairment is a function of the fact that it's a listed company and the investment needs to get mark to market at every quarter end. Appropriate discount has been applied and impairment has been taken. At this stage, it's not definitive whether we are going ahead or not going ahead. That evaluation is still on. Okay. Last one on trade generics business. Last year we had a very strong growth for this segment. We talked about a growth of around 18% Y-O-Y. What are the trends you're seeing for this business currently and then what's the contribution from trade generics towards our whole India business for the quarter approximately? See, that continues in the same zone if you take the COVID uplift away from the prescription business. On a normalized basis, the proportion of trade generics to overall One India is fairly in the same range which it was. The tailwinds do exist in this business. Even in this quarter also it's seen very healthy growth and we believe that will continue. Okay. That's all from my side. Thank you very much. Bye. Thank you. The next question is on the line of Prakash from Axis Capital. Please go ahead. Yeah. Hi, thanks for the opportunity. I just missed the India growth breakup. Are you breaking down into ex-COVID and generics growth please? I know what we said, Prakash, is if you take the direct COVID products out, I think the one is 47. These are the 68 which we have reported. Split of that into three, we are not giving at this stage, but [inaudible] have grown at very healthy registers. Would we fair to say Rx would be higher given the low base last year or? Not necessarily. All three businesses have grown in very healthy percentages. Okay, got it. On capacity and the CapEx. Capacity-wise, what is our capacity utilization currently? With U.S. maybe coming in the next six, 12 months, how do we see this capacity ramping up and what would be our CapEx requirement for this year, next year? The CapEx is in the zone of INR 700-INR 900 crore on a normalized basis, unless we choose to enhance, let's say, some greenfield for respiratory API or in the existing blocks. That will be additional, but on a normalized basis, I think you should expect us to spend about INR 700-INR 900 crore. Work on capacity for new launches is ongoing from the last 1.5-two years, in fact. Both API and formulations, the work is ongoing and at selected plants, be it Indore and Goa or other places. I think with respect to portfolio launch capacity should not be a constraint. What would be our current capacity utilization? It varies plant by plant. I don't have a number to give it to you. It varies site by site and unit by unit. Tough for me to give you one number, Prakash. This INR 700-900 is what? Largely maintenance with some add-on, or how do we think about this? Are you adding some more blocks or? That's an interesting question. I think one theme which is emerging and that's contributing to this CapEx is digitization. I think we are on a very ambitious automation program across all our manufacturing facilities. These sensors or other technologies that could get deployed, I think that work is going on. That is something which is as a mix of the CapEx is going up from this year. It was smaller to an extent last year, but I think this year onwards, I think that component is going up. It's partly maintenance and growth CapEx, but not necessarily in terms of new greenfield. Okay, great. Thank you. Thank you. Thank you. Always. Thank you. The next question is from the line of Vishal Manchanda from Nirmal Bang. Please go ahead. Hi. Thank you for the opportunity. Could you give us a guidance on R&D spend as a% of sales, how it would look in FY 2023? Vishal, our R&D spend is a function of the portfolio and the activity. Okay? Based upon certain high spend activities like clinical trials. Based upon which quarter or which year they fall into, I think the overall percentage of sales would get determined, but that's a corollary. I think we don't have a percentage of sales against. What we try to do is, as long as a product has a sound business case, I think we initiate and continue the development. Tough to give you, but over long term, I have seen, I think at a scale-up, which we are seeing on the revenue line, I think anything up to 7% should be enough to [uncertain]. Okay. Just one more. Just a clarification on the profit contribution that you have booked as part of the API sales. Will this not recur in subsequent quarters? Yes. It's for the quarter, so we have received that sale for the quarter. Unlikely it will be at that level in the balance quarter. It will be slightly lower and- Significantly lower. It will be more moderated to a great extent. Okay. Thank you. That's all from me. Thank you. The next question is from the line of Surajit Pal from Prabhudas Lilladher. Please go ahead. Thanks for the opportunity. You have guided that India formulation will be beating the IPM. Could you please give some idea, I can understand the IPM, what could be your idea of IPM growth and what could be your growth in that area if you give some basic about? Data? Yeah. Yeah. Surajit, I think Umang Vohra clarified that. I think what he said is on a normalized basis, you could expect IPM to be between 10-12% on a non-COVID basis. I think the whole thing is becoming a bit muddled. To take COVID out or the, what we call as a extended COVID products out, I think there is a large set of products which do benefit from the COVID. Let's see how does this evolve on a month-to-month, quarter-to-quarter basis, but we do hope that we'll be able to outperform the IPM. Okay. In U.S., when could we expect that typical range which we are seeing of slightly $140 million-$145 million per quarter, when could we expect that range could be crossed and getting into a new horizon? See, that will be a function of a meaningful launch. I think let's see how does the coming three quarters go and how does the next year go. That will be a function of a large meaningful launch. Any guidance when could you see that barrier to be broken? Surajit, not at this stage. I think let's take it as the way it comes. Okay. Thank you and all the best. Yeah. Bye. Thank you. The next question is on the line of Surya Patra from PhillipCapital. Please go ahead. Yeah, thanks for this opportunity. My first question is that on the COVID side, you see that this antibody cocktail that is still not, I think, part of the common treatment protocol for ICU that are released. Any specific reason for that, sir? Whether it is because of the availability is limited and that's why it is not being part of the common treatment protocol. Also, if you can just add something on the Moderna vaccine opportunity, what it is being talked in the media and the approval that is also that we have seen. I think the work is on. There's no specific reason why it's not. The work is on, and let's see how it pans out in the coming days. On the availability, there is no constraint at this stage. I think the awareness among the doctor community continues to be high. We do hope that wherever it's required, I think it gets picked up on the market. That's on the vaccine. On the Moderna vaccine, we have spoken in the past that there is no commercial arrangement in place and our arrangement for facilitating the importation was only for the donated vaccines. Okay. My second question is on the potential benefit that we can get out of the kind of top 10 positioning that we have achieved in terms of prescription generation by U.S. Despite being a kind of a late entrant to that market, we have now achieved a kind of sizable position in terms of prescription generation. Given our specialty product portfolio and all this innovation product pipeline and all that, can you give some sense how you'll be capitalizing this achievement for your subsequent pipeline and hence better qualitative growth in the U.S.? No, I think you have seen over the years the bigger baskets of portfolio. Reputation and credibility for a sound supply chain and customer relationships always help. All these factors come together along with your ability to launch on time. I think these are obviously some of the fundamentals of generics, I think. In that sense, I think this helps us. Okay. You have no specific answer like, okay, the pipeline, what you are willing that will be meaningfully benefited or it is just a facilitation or something. You think that even much demanded product like the REVLIMID, which is going to be there in the portfolio, which a positioning like this will really be complemented significantly. Do you see those kind of scenario emerging? No, very interesting question. There are aspects of synergy which is inherent in portfolio, in supply chain, in customer relationships and as I said, ability to launch on day one. All of those come together and obviously every factor would support your business trajectory. Okay. Just one clarification, Kedar. Rather two clarifications. One is on the global consumer business front. What is the profitability of that business or whether it has achieved breakeven or if not, then when do you think that it can be achieved? Secondly, on the depreciation side, see last few quarters, almost eight, nine quarters that it is in flat, although there is some or other kind of CapEx that is been continuing. Any specific reason? These two clarifications. Okay. Consumer business comprises the India and South Africa arm. South Africa is a very healthy and profitable business. The Indian part is incubation, but we do hope that we achieve a breakeven soon enough. I won't be able to tell you whether this quarter or this year, but the target is to get to a breakeven scenario soon enough on that. That's on the consumer business. Your second question was on depreciation. I think that line includes amortization as well. I think what is happening is there's an interplay of depreciation and amortization in that line. The fact that some of the acquired intangibles are running from the useful life, I think that gets over in the last two years maybe. Okay. That must be what's happening. I can check and come back. Sure. Thank you, Kedar. Wish you all the best. Thanks. Thank you. The next question is on the line of Foram Parekh from Choice Institutional Equity. Please go ahead. Hello, am I audible? Yes, ma'am. Yes. There is some background noise, but we can hear you. Yeah. Congratulations on a good set of numbers. I just wanted to understand on the North America side, like how we saw that albuterol has recorded good sales. I just wanted to understand with the entry of new competitor and all, how sustainable it will and even we can throw some color whether they are going to take a price cut or not, and what market share are we expecting? See, albuterol has an overall generic albuterol market is a large market. Okay. There is a meaningful headroom for us to grow even on the current base. Okay. That's where we are targeting. It will be tough to give you specific target in terms of market share, but you're seeing the traction every month over the last 14, 15 months we have launched the product. Okay. That would be over time. Okay. Sir, you spoke on the new launches in the next year in North America region. I just wanted to understand how much percentage of the sales would it be the new launches? We're not guiding to that, and it's extremely difficult because it takes timing and everything here. Okay. On the India business, I just wanted to know how much percentage of the branded portfolio would be of India's business? That would be upwards of 75% or so. Okay. That's helpful. Thanks a lot. Thank you. Ladies and gentlemen, we'll take the last question from the line of Krishnendu Saha from Quantum Asset Management. Please go ahead. Yeah. Hi. Thank you for taking the question. Kedar. Sir, I'm audible? Hello? Yes. Hello. You're audible. Yeah. Your audio is coming through muffled. May I request you to speak through the handset? Yeah, just a moment. Okay. Hello? Hello. Go ahead. Yeah. Just to get an understanding of the margin, sorry to come back to the margins again. If I look at the revenue, just on a quarter-on-quarter basis, it is just because of the COVID and the Indian business was doing well. Besides that, besides API a little bit probably, and every region is like sluggish or sluggish types. What I am trying to understand is the EBITDA margin and with the cost in manpower and the material, there is a shape up of 1.5%, 1%. Going ahead, just to understand the EBITDA margin a little bit more. Do we see, one, the costs being contained at the absolute level as it is right now at the EBITDA level? What happens if the COVID revenue starts falling in the next two quarters? How does it look? I know you said it's 22.5%-23% margins is what you're going to get. Is it because of a lot of being driven by cost or a lot of being driven by revenue? Is it a lot of because of that? Will the cost come back? That's what I'm trying to understand. Krishnendu, I'll give you two, three pointers to help you understand how it will evolve. Firstly, the gross margin of COVID products we have seen usually is lower than the overall company reported gross margin. Okay. That needs to be determined how much is this gross margin going forward. The OpEx includes a portion which is linked to sales. There are commissions and other discounts and some of the data feed, et cetera, which are linked to sales. I think to the extent sales move up or down, I think that portion of the OpEx would change. R&D is basically based upon the progress of respective molecules. I think that's how the P&L would get shaped up, Krishnendu, but I think like what Umang clarified, that our attempt is to despite not having as much COVID as last year, our attempt is to meet or exceed what we reported for the last year. Sure. Just last question, on the Brovana point because I got from a friend, you got an 11% market share. Do you think it's going to be a meaningful going ahead product for us? Yes. It will be. The proactive market share, by the way, is far higher than what gets reported obviously, because there's a lag effect, but it is an important product for us. In Proventil, what is the market share could you give us for that, if possible? I mean, it's healthy double digits. I can't give you the. More than fair share. Really, we have more than fair share in the market. Sure. Thanks. That's all. Thank you. Thank you. Thank you very much. I now hand the conference over to the management for closing comments. Thank you. Thank you so much everyone for joining us on the call today. In case you have any follow-on questions, you can reach out to us or write to us at investorrelations@cipla.com. Wishing all of you a great evening ahead. Thank you so much and stay safe. Thank you very much. On behalf of Kotak Securities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.