Ladies and gentlemen, good day and welcome to the Dr. Reddy's Q4 FY 2023 earnings conference call. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Richa Periwal. Thank you, and over to you, ma'am. Thank you. A very good morning and good evening to all of you, and thank you for joining us today for the Dr. Reddy's earnings conference call for the quarter and full year ended March 31, 2023. Earlier during the day, we've released our results and the same are also posted on our website. This call is being recorded and the playback and transcript shall be made available on our website soon. All the discussions and analysis of this call will be based on the IFRS consolidated financial statements. The discussion today contains certain non-GAAP financial measures. For a reconciliation of GAAP to non-GAAP measures, please refer to our press release. To discuss the release performance and outlook, we have the leadership team of Dr. Reddy's comprising Mr. G.V. Prasad, our Co-Chairman and Managing Director, Mr. Erez Israeli, our CEO, Mr. Parag Agarwal, our CFO, and the entire investor relations team. Please note that today's call is a copyrighted material of Dr. Reddy's and cannot be rebroadcasted or attributed in press or media outlet without the company's express written consent. Before I proceed with the call, I would like to remind everyone that the safe harbor contained in today's press release also pertains to this conference call. Now I hand over the call to Mr. G.V. Prasad. Over to you, sir. Thank you. Thank you very much. Good evening and good morning to all of you. Welcome to this annual earnings call. My best wishes to you. I am delighted to be here today along with the members of the executive team. As you may have seen in our published results, this year has been an outstanding year for the company, a year in which we set all-time highs in our reported sales, profits, and generated a healthy cash flow. We continue to strengthen our core businesses while investing and building businesses of the future. Our sustained investments are being made to drive manufacturing excellence, strengthen our pipelines, we continue to build efficiency and productivity in our R&D as well as operations, and continue to augment reaching customers by opening new markets and new channels. Looking beyond the financial performance, during the year we made great progress on multiple fronts and we were recognized for these achievements. Noteworthy among these are the recognition by CNBC-TV18 under the Masters of Risk - Healthcare and Pharma segment, and we secured leadership land scores from CDP for the action on climate change and supplier engagement. We also featured in the Bloomberg Gender Equality Index, the S&P Global Sustainability Yearbook, the DJSI Sustainability Index in Emerging Markets category, and we're also awarded by The Economic Times as being among the best organizations for women in the year 2023. Our largest finished dosages factory was recognized by the World Economic Forum as part of its Global Lighthouse Network. These recognitions are an endorsement of our commitment to building a sustainable, high-performance organization focused on the needs of patients as well as society. I'm excited about how far we have come in the past few years and the opportunities we have for the future as we continue to make efforts to bring to life our credo of "Good Health Can't Wait". With this, I'd like to hand over the call to Parag for taking you through the financial performance of the company. Thank you, Prasad. Greetings to all of you, and I hope all of you are doing well. I'm delighted to take you through our results for the quarter four and full year of fiscal 2023. FY 2023 has been a year of strong financial performance with the highest ever sales, record profitability, and robust cash flow generation from operations. Let me provide you with a quick rundown of our Q4 and FY 2023 financials. For this section, all the amounts are translated into U.S. dollar at a convenience translation rate of INR 82.19, which is the rate as of 31st March 2023. Consolidated revenues for the quarter stood at INR 6,297 crore, that is $766 million, and grew by 16% on year-on-year basis and declined by 7% on a sequential quarter basis. Year-on-year growth was driven by growth in both generics and PSAI businesses. This was further augmented with income from divestment of a few non-core brands in India. Quarter-on-quarter decline was primarily due to sales volatility in the energy business. The revenue for the financial year 2023 stood at INR 24,588 crore, that is, $2.99 billion and grew by 15%. The growth was mainly driven by new product launches, partly offset with price erosion. Consolidated gross profit margin for this quarter has been 57.2%, an increase of approximately 430 basis points over previous year and decline of 210 basis points on quarter-on-quarter basis. Year-on-year increase was driven by new product sales with higher growth margin and favorable foreign exchange. Quarter-on-quarter decline was primarily due to product mix and lower operating leverage, although partly offset by divestment income. Growth margin for the global generics and PSAI was 61.7% and 25.2% for the quarter. Growth margin for FY 2023 has been 56.7%, which is an increase of 360 basis points over FY 2022. The increase was driven by new product sales with higher growth margin, high government incentives, and favorable foreign exchange, partly offset with the impact of price erosion. Growth margin for the global generics and PSAI was 52.1% and 16.2% for the year. The SG&A spend for the quarter is INR 1,799 crore, that is $219 million, an increase by 15% YoY, while it remained flat quarter-on-quarter. The year-on-year increase is largely on account of sales and marketing investments and adverse impact of forex translation. The SG&A spend for the year is INR 6,803 crore, that is $808 million, and has grown by 10%. The SG&A cost as a percentage to sales was 27.7% and is lower by 130 basis points over previous year due to better operating leverage. The R&D spend for the quarter is INR 537 crore, that is $65 million, and is at 8.5% of sales. Our R&D efforts are focused towards building a healthy pipeline of new products across our markets, including biosimilars. The R&D spend for FY 2023 is INR 1,938 crore, that is $236 million. R&D percentage to sale for the year stood at 7.9%. The EBITDA for the quarter is INR 1,631 crore, that is $198 million, and the EBITDA margin is 25.9%. The EBITDA for the year is INR 7,308 crore, that is $889 million. EBITDA margin for the year is at 29.7%, which is ahead of our aspirational target of 25%. Our profit before tax for the quarter stood at INR 1,326 crore, that is $151 million, and that for the year stood at INR 6,037 crore, that is $734 million. Our profit before tax for the quarter grew by 434% year-on-year, and for the year it grew by 87%. Effective tax rate has been at 27.6% for the quarter, and at 25.3% for the year. The effective tax rate was lower in FY 2023, largely due to changes in the company's jurisdictional mix of earnings. We expect our normal ETR to be in the range of 24%-25%. Profit after tax for the quarter stood at INR 959 crore, that is $117 million, and that for the year stood at INR 4,507 crore, that is $548 million. Reported EPS for the quarter is INR 57.62, and that for the year is INR 270.85. Operating working capital reduced by INR 364 crore, which is $44 million, against that on December 31st, 2022, mainly supported by an improvement in receivables. Our capital investments stood at INR 258 crore, which is $31 million in this quarter, INR 1,132 crore, which is $138 million during the year. The free cash flow generated during this quarter was at INR 1,596 crore, which is $194 million. The free cash flow generated during this year was at INR 4,009 crore, which is $488 million. Consequently, we now have a net surplus cash of INR 5,046 crore, that is $614 million as on March 31st, 2023. Foreign currency cash flow hedges in the form of derivatives from the U.S. dollar are approximately $774 million, largely hedged around a range of INR 82.4-INR 84.5 to the dollar. RUB 7,380 million at the rate of INR 1.045 to the ruble, and AUD 4.2 million at the rate of INR 57.8 to Australian dollar maturing in the next 12 months. With this, I now request Erez to take you through the key business highlights. Thank you, Parag. Good morning and good evening to everyone. As Parag highlighted, we have delivered strong financial performance in FY 2023. We closed the financial year with double-digit top line and bottom line growth, with EBITDA and ROC margin exceeding the 25% levels. This impressive performance was reflected in our cash flow. We continue to have a strong balance sheet. We progress well on our strategic priorities. We're able to invest in our organic capabilities and business development opportunities to strive and deliver on our purpose over the long term. Let me take you through some of the key highlights of the year. We witnessed underlying growth momentum in FY 2023 across all businesses, adjusted for COVID products contribution during last year. Revenue in North America Generics and Branded Markets of India and EM crossed the $1 billion mark for the second consecutive year. We divested certain non-core brands in India to focus on strengthening the core. Our EBITDA is at 30% and our ROC is at 35%. We generated a strong free cash flow, leading to a net cash surplus of $640 million. We also see positive momentum on BD/M&As with acquisition of Novartis Cardiovascular brand business in India, Mayne Pharma U.S. generic prescription product portfolio, and Eton's branded and generic injectable products in the United States. Significant progress also made in our biosimilar businesses. We see a launch of biosimilar Stimufend, which is pegfilgrastim by Fresenius KABI in the U.S. We saw the completion of clinical studies of rituximab biosimilars, we already filed in U.S., Europe and the U.K. MHRA. We saw the completion of phase I study of biosimilar tocilizumab and global phase III study was initiated. Recently, we received approvals for three products in China, namely sevelamer, cetuximab and carboprost. Our partners got GA approval for misoprostol tablets. We are also progressing well in our digitalization as well as our ESG journey. Our diversified global presence, capability and strong balance sheet make us a partner of choice. We continue to work towards strengthening our position as a partner of choice, including in Horizon Two spaces. From Horizon 2 perspective, we signed some strategic licensing deal in FY 2023, including the below with CardiaCare for the wearable for atrial fibrillation treatment, with Theranica for the wearable in management of migraine, with the New Zealand-based WZTL to bring their third generation CAR-T asset for clinical trials in India. With Junshi Biosciences to bring toripalimab to India and other markets. We are investing in developing and trials of [bexPIX], CAR-T biosimilar asset in keeping with our stated Horizon 2 strategy. We see them as a future growth drivers. Now, let me take you through the key business highlights for the Q4 and FY 2023. Please note that all the reference to the numbers in these sections are in respective local currencies. Our North America generic business recorded sales of $312 million for the quarter, with a strong growth of 18% year-over-year and 17% decline on sequential basis. On a full year basis, we recorded sales of $1,268 million with a growth of 26% over the previous year. This growth is largely led by new product launches such as lenalidomide, sorafenib tablets and timolol gels and growing market share in certain key existing products, which more than offset increased price erosion. We launched 16 products during the quarter and overall 25 products during the year. We expect the launch momentum to further improve in FY 2024. Our Europe business recorded sales of EUR 56 million this quarter, with a year-over-year growth of 7% and sequential quarter decline of 9%. On a full year basis, the sales of EUR 210 million has grown by 9%, driven by base business volume and new product launches. We launched five new products during the quarter and certified for the full year in Europe across all markets. We expect this strong momentum to continue in FY 2024. Our emerging market business recorded sales of INR 1,114 crore with a year-over-year decline of 7% and sequential quarter decline of 15%. On a full year basis, emerging market sales has been roughly flat at INR 4,554 crore. However, the sales have grown in certain percent, adjusted for the COVID-related products and divestment income in FY 2022. We launched 10 new products during the quarter and 94 new products during the year across various countries of the emerging markets. Within the EM segments, the Russia business in Q4 declined by 34% on a year-over-year basis and 17% on a Q basis in constant currency. In FY 2023, Russia business declined by 9% in constant currency. The decline is attributed to divestment of non-core brand during the previous year. During the year, there has been normalization in the channel customer stocking level after the upticks seen in Q4 FY 2022. We have been navigating the evolving geopolitical uncertainties and have managed the ruble currency fluctuation with effective hedging. Our India business recorded Q4 sales of INR 1,283 crore, with a year-over-year growth of 32% and sequential increase of 14%. On a full year basis, our sales were INR 4,893 crore with a growth of 17%. Excluding the benefits of the divestment income and adjusted for COVID-19-related products, the year-over-year sales growth for the quarter has been 11% and for the full year has been 13%. As per our IQVIA report, we are ranked number 10 at MAT March 23 level. India remains our priority market, and we are committed to continue to grow this business at a healthy rate. Our PSAI business recorded sales of $95 million, with a year-over-year decline of 4% and flat sequentially. On a full year basis, the sales were $362 million with a decline of 12%. The decline was primarily due to high base effect of COVID-related products. We expect this business to grow during April 2024. Our R&D efforts are focused on developing value accretive products, including several generic injectable and biosimilars where there is a patient need. We have done 195 global generic filings, including 12 ANDAs filed in the U.S. and 130 Drug Master File filings globally, including 12 Drug Master Files in the U.S. During FY 2023, and we are on track to accelerate on this in April 2024. We are progressing well in development of our biosimilar products and working on some niche opportunities and our Horizon 2 initiatives. Our strong balance sheet provide us financial flexibility to support future growth, invest in this development opportunities, we will continue to maintain a disciplined approach to cash management and acquisitions. We continue to focus on optimizing workplace efficiency and productivity. We remain focused on strengthening our core generics and API business and delivering more and more strong foundation. We are building a pipeline of products to meet the evolving needs of patients and healthcare professionals through investment in internal R&D as well as strategic acquisitions. With this, I would like to open the floor for questions and answers. 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. The first question is from the line of Balaji Prasad from Barclays. Please go ahead. Hi, this is Mikhaila on for Balaji. Thanks for taking our question. Just wondering if you could provide a bit more detail around your deal with Junshi. Just discussing what the responsibilities will look like on both ends and just what else, what really convinced you about their asset and its potential? Thanks. Balaji, we were not able to hear you well. I am afraid you will have to repeat the question. Can you repeat, please? Can you slow? Sure. Is this better? Can you hear me better now? Yes, please. Okay. Hi, this is Mikhaila on for Balaji. Thank you for taking our question. Was just wondering if you could provide a bit more detail around your deal with Junshi, just discussing what responsibilities will look like on both ends. Also just wondering, what convinced you about just their asset and its potential. Thanks. No, thank you. Strategically, we are looking for unmet needs, especially in India, and we are in a great dialogue with the innovation industry in China. We are trying to bring products that we believe that we can bring value, and we believe that these products show very, very nice results, and can be absolutely considered standard of care. We can bring it to India in a very affordable price versus the alternatives. This is our purpose. We are trying to bring a great health in affordable terms, and that's what was the main incentive behind this deal. Thank you. The next question is from the line of Surya Patra from PhillipCapital. Please go ahead. Yeah, congratulations on the great set of numbers, sir. My first question is on the U.S. business front. Is it possible to share that, what is the sequential growth in the U.S. that we would have seen X of REVLIMID in the current quarter? We cannot give a guidance per product, with or without, you know, very well. What I can see and say that we are very consistent. Likely that you are going to continue to see growth in all of our spaces, including the United States, with and without the product. And it will be driven primarily for the organic activity, specifically for the United States. Besides the REVLIMID, we are going to launch somewhere between 25-30 products, as well as the contribution of our recent acquisitions, and likely that we will see also additional activity through the year. Sure, sir. Sir, is it possible to give some extra color on the the launch momentum that you have mentioned in your opening remark, for the U.S. market, which you believe that to be strong enough in the current financial year? Yeah, I think that the investment in R&D, and especially on products that hopefully are likely to have less competition than the others, is paying off. As well as the type of pattern clip that we will see in FY 2024, as well as the years after. Right now, that's the numbers that I mentioned, 25-30 products. Some are can be meaningful launches with lesser of a competition. We will continue to accumulate this kind of products also in the years after. It's absolutely our strategy in the U.S., and we will continue to focus on that. Okay. sir, my second question is on the a composite question, let's say. We are seeing a strong cash accumulation. and simultaneously, we are seeing multiple M&A activities by us to improve our focus on the domestic formulation business, which has now achieved around 20% of the total revenue base. We are mentioning that this is going to be one of the focus market for us. could you share your thought process or the kind of capital allocation to build this business in the near future? Ultimately, what is the kind of a business mix that you want to achieve for domestic formulation considering the potential growth and all that, if you can share? Yes, absolutely. In India, our primary growth will be, will come from, one, focusing on our brands. We identified the focus therapeutic areas as well as the focus brands, and we are double down on that, by increasing our footprint, by going to more cities, et cetera. This is one goals. Specifically to your question, the second one is that we are collaborating with the innovation industry in the United States, in Israel, in China and other places as well, of course, with companies and institutes in India, to bring innovation to India. We are doing it as both with our own internal R&D as well as with the external R&D. Some of the deals I mentioned in my script, and there more to come. We are doing it both on Horizon 1 as well as Horizon 2. Our path of growth is people see us as a very attractive partner, being compliant with all the international norms, given our reputation in the marketplace. We are leveraging it to bring more and more innovation into India. That's also a part of the capital allocation will go to deals like this. In addition, we are always looking for opportunity also for acquisitions. There is nothing that we can report at this stage, it is absolutely something that we are open to do all the time. For the initial part of the capital allocation, all of our spaces, including U.S. U.S., Europe, India, et cetera, our B2B business, we are looking for potential complementary deals. The type of deals that we are looking for is complementary. We are looking for products that we don't have or capabilities that we don't have. Unlikely that you are going to see mega deals or this kind of stuff. This is not our comfort zone. We are looking for primarily unmet needs or complementary products that will fit our portfolio in that way. Sure. Yeah, please. Yeah, sure, sir. That is really great to know. Just lastly, any color that you can add to the Xifaxan expectations and the progress post-launch? Sorry? Xifaxan. Yeah. The product, as you know, is marketed by [Fresenius]. I don't have any expectation or anything like that. We, as a partner, have a certain arrangement with them, and as they will be successful, we will be successful as well. Sure, sir. Wish you all the best. Thank you. Thank you. Thank you. The next question is from the line of Damayanti Kerai from HSBC. Please go ahead. Hi. Thank you for the opportunity. My first question is on the U.S. business. You have been obviously very consistent in terms of new launches, but can you talk a bit more about the kind of price erosion which we are seeing in your existing product? My second part of the question is, compared to oral solids, in injectables, what kind of price erosion you are witnessing? Yes. The nature of the U.S. did not change in the last quarter. It's a similar structure of the market and similar behavior of players. Specifically for the quarter, the mix of products that we had, we saw less of the price erosion that had been quarters before, the fundamental structure of the market did not change. Likely that when, you know, when we face competition in certain products, then we'll see an erosion. That's the nature. Specifically, we saw a better mix this time. Comparing injectables to overall solids, both are very competitive. It's more of a function of how many players are attracting the customers. Both injectable as well as overall solid can see a high level of erosion, but also from time to time product with the less competitive competition and therefore better pricing situation. Sure. thanks for that. My second question is, as you continue to invest, in your business and long-term growth drivers, how do you see R&D and SG&A costs moving from here on? You obviously have, I'll say, done better than your aspirational EBITDA margin for this year, but on a more sustained basis, how do you see this, like, margin trajectory moving? We are maintaining the 25/25 as a long term, we discussed it in previous meeting. There will be years and quarters that we will exceed it, where there will be maybe also years that it will be below, which what happened also in the past. We are very much there. What we are doing is that we are allocating the extra results that we invest, especially in R&D. The R&D likely to be somewhere between 8%-9% also going forward. It naturally nominal will grow because we are growing the sales, this is allowing us to invest in the biologics. It allow us to invest in our products that we are partners with other, we need to do some clinical trials. Of course, very important, on the generic R&D, especially focusing on products that matter, products that are likely to have less competition. Okay, thank you. I'll get back in the queue. Thank you. We have the next question from the line of Neha Manpuria from Bank of America. Please go ahead. Thanks for taking my question, sir. On the ROW markets, you know, historically, if I exclude the last year because of, you know, COVID impact, we have grown that market, north of, you know, 20% or 25%. As we go forward, you know, should we see the ROW market, you know, going back to those levels of growth? This is, you know, excluding Russia. That's my first question. Second, on the India business, you know, could you quantify the divestment income, you know, in the current quarter? Excluding that, you know, how should we look at growth? Is there more divestment that we see, from the India perspective? Or do you think this is a base on which we should grow? Do you think you can grow in line with the market in India? Hi, Neha. On the ROW question, yes, the answer is yes. you know, we are aiming for our traditional growth and also give or take with without guidance that range of growth that we saw. Indeed, when you are taking out all the one-offs and the fluctuation of currency, we are growing very, very nicely. This is primarily as we are accelerating the development and the filings of products in all these markets and also focusing on our footprint, especially on the hospital business. Yes, the answer is that we will see a growth and in some of those markets even accelerated growth versus the past. Actually, India, the divestment was INR 264 crore and that's the value we got. Specifically, if we see more, yes, from time to time, but nothing significant that we are growing. What we also very busy with is actually to bring more and more products, and we are enhancing the collaboration discussions and the BD deals that will be for India. It's a kind of organic plus inorganic, but most of the inorganic will come from collaboration rather than kind of M&A acquisitions of other companies. You know, just to extend the India question, do you think we can grow in line with the market, you know, keeping aside the collaborations, et cetera, because, you know, that would take time to reflect the numbers? Just from the effort that we've been putting in the business over the last few years, could we see Reddy's go back to or at least try to get in line with IPM growth? We believe that we should be better than the IPM growth. In FY 2024 itself? In FY 2024 and after. Understood. One last question, if I may. On the Russia business, I didn't quite catch, you know, what you mentioned, you know, in the quarter. Was there any specific impact, you know, from channel inventory being cleared in the quarter? I'm not sure what you mentioned. No. No, it is the, yeah, this is first. Neha, the impact is actually in the base. If you remember when the conflict started. Okay. Yeah, yeah. At that time, we had said that, yeah, there was upstocking, and to that extent, in Q4 same time last year, the base was high, and that's impacting the year-on-year growth. Okay. There's nothing specifically in this quarter? Yeah. Nothing specific happened in this quarter, and most of the sequential decline stuff is primarily timing of product. There is a specific timing of tenders of the biologic products and stuff like that. We can say that in Russia it's business as usual. Gotcha. Thank you so much. Thank you. The next question is from the line of Ankush Mahajan from Axis Securities. Please go ahead. Thanks for the opportunity, sir. My question is related to the gREVLIMID that has negative incremental revenue for U.S. business. Could you throw some light on it? What is the sustainability run rate for this molecule in upcoming quarters? Excluding the gREVLIMID, how do you see the EBITDA margins for the U.S. business? On the product itself, which going to continue to be a meaningful product for us, may fluctuate from quarter to quarter, but it is going to be there probably for the entire agreement timelines. The fluctuation is primarily patterns of ordering, but it's, as you know, a limited volume arrangement and we believe that it will serve us well to the entirety of the agreement. As for the activities outside of it's going to continue to grow. I mentioned also previous discussions, all the time we have products that have less competition than others. Naturally, this product is bigger than the others, but likely of course in the future we are going to see products like that, and that's what we are also focusing on. So the profitability as well as the growth of our U.S. markets will continue to be in the same range also in the years to come, in quarters to come. What are our EBITDA margins? Sustainable EBITDA margins? Like I mentioned, we are going to sustain the 25/25 on the long-term basis. We are not guiding directly the upper market, as you know. From time to time will be more than that, and will be many times about it. It's also a function of how much we want to put into the R&D. Likely that they will be higher through the time that we will have the element and the combination of other low competition products. If I do my calculations and excluding gREVLIMID, base business is still on the lower side in terms of growth. Any strategy for the base business? I don't share that observation. Thank you, sir. Thanks so much. Thank you. The next question is from the line of Kunal Dhamesha from Macquarie. Please go ahead. Yeah, thank you for taking my question. The first question on strategy to leverage our U.S. pending portfolio for Europe and other markets, we have seen significant growth in Europe geography over the last two, three years. In your view, how far along we are in that journey, I don't know, let's say in U.S. we have roughly around 140, 150 products. Don't know how many products you would have already launched in Europe, how many in pipeline, and if you can throw some light there, would be helpful. Yeah. We decided to focus on Europe, when we took the decision on the diversification. This is working well for us. In terms of where are we in the journey, somewhere in the beginning. I do see that most of the growth in Europe are ahead of us, and that we are planning to launch many products in Europe in the next coming years, as well as to make other moves, including inorganic. We see Europe as a focused market, especially around Germany. Germany will be the focal market and of course, the rest of the big countries in Europe, we believe that we have to offer, including biosimilar likely that you'll continue to see growth in Europe, also in the next coming years, including the next year. This liberating of portfolio, you know, when you launch same product, does it kind of become highly, you know, ROIC accretive in your view, even beyond what our aspirational target is or it helps us achieve that 25% ROIC target on a portfolio level? Yes, absolutely. I think it, because it's primarily leverage. That's. Obviously it's a piece in the puzzle. Europe is still relatively small compared to the other spaces, but over the time, it's getting more and more positive impact on the overall average. It's, yeah, it's okay. Sure. The second question on the CTO-I observation, what's the kind of nature of observation and, you know, have you submitted the response to U.S. FDA or are you in the process of submitting a response? Yeah, it's a minor observation. We will address it, and we did not submit it yet. We just got it. I think we have 15 days, if I'm not mistaken, so we will submit it in due time. I believe that this will be okay. Sure. Thank you and all the best. Thank you. Thank you. The next question is from the line of Madhav Marda from FIL Industries. Please go ahead. Hi. Good evening. Thank you so much for your time. Just had one question. Basically, you know, we've accumulated a lot of free cash flow in recent times, and I think have been doing some M&A activity already. Just wanted to understand, given, you know, I think in general, a lot of the peers have good free cash flows and net cash balance sheets in the industry. When we're looking at M&A, aren't good assets very aggressively bid, we've seen industry? Just want to understand that for a good asset, is it easy to get it at a good IRR or how should we think about M&A opportunities given we have a good cash pile available to us? If you recall, it's a part of our strategy to close the debts and accumulate cash, anticipating this situation, anticipating at the time the increase in the interest rate and inflation. We are now looking for opportunities that, one, will of course fit us strategically, and second, will be in good valuation. Now I think there are certain areas and certain type of products that potentially can get a good multiples, and that's what we are looking for. In addition to that, we are looking for, we are using this money for the type of licensing in and type of boosting the portfolio also for the future. The money will be used also for that. We are not the type of company that is seeking what you call transformational acquisitions, that unlikely that you'll see in our case. We will see hopefully more deals than we saw in the past. Basically our M&A will be more bolt-ons, the kind that we've done in recent times as well. That's the idea? Let's call it business development, which is including licensing and will including product acquisitions, collaboration with companies, and also M&A. Got it. Okay. Thank you. Thank you. The next question is from the line of Cyndrella Thomas Carvalho from JM Financial. Please go ahead. Ms. Carvalho, the line for you is open. Thanks for the opportunity. Am I audible? Yes, you are audible. Please go ahead. just wanted to clarify this on, sorry for asking on g REVLIMID again. Is the higher volume share reflected in this quarter, or will it be reflected next quarter? If you are talking about the lenalidomide, we cannot share quantity numbers. What is said is, it's continued to be meaningful to us and, in accordance to the agreement terms that we have. Okay. No, thank you. In your opening remarks, you highlighted about the Chinese product approvals that you have received. When and where should we start reflecting these into earnings, and what is our outlook here? If you can help us understand. Yes. This is a reflection of the efforts that we had through the years by submitting all the products in China, focusing on those products that we can get GA status and be one of the early entrant for the market. I think getting four approvals in less than two weeks, it's a big achievement for a company like us. What we see, we see pick up all the time as a significant impact on our results. We will see it more about, let's say from starting in April 2024, but more likely we see bigger numbers in 2025 and 2026 fiscal as the submissions and the approvals and the timing of those GOPs will take place. That's what we anticipate. Right now we are in the pace of 15 to 20 product submissions per year. Naturally, with the cycle of approvals that happens in China and the timing of the GOPs, it will be more meaningful. Let's say the strategy so far is working well because it's a levered strategy in which we have an outlet for a very, very important market we are very pleased from this approval. Thank you. This is helpful. Coming to the PSAI business, compared to your peers, we have not seen the top line growth. However, the gross margins have definitely improved QoQ. How should we see the outlook for this business? Have you been positive on growing this business? Does anything change here at this point in time, or is it some regional impact that we have seen in this quarter and we should start seeing growth from next fiscal onwards? Like, how should we read this? We will see both. We will see growth, and we will see improvement of profitability. For us, this market also in the past, and excluding also in this segment, we used to record also COVID sales. If I'm excluding the COVID, what we saw is, at the time it was a decrease in prices of some old portfolio as well as increase in some of the raw material. Now we see the reverse. What we see that we are launching new products, and most of the sales are to more territories, especially in Asia. We see also a better mix of products, and we see an ease on the supply chain and the to a certain extent, procurement. Actually now I see a positive momentum that is building on both growth as well as profitability. We should see this gross margin that is sustaining. I hope that it will be even enhanced, not just sustained for sure, but we are aiming for enhancement. The top line, any number that you would like to share, like only double digits, submit double digits, anything, any color would be helpful. No, we are aiming for double digits. We are not guiding, but we are aiming double digits for all of our markets, including PSAI. Thank you so much. I'll join back again. Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Thanks for the opportunity. Again, on North America sales, given that FY 2023 had certain strength-related exclusivity as well for generic Revlimid and competition to some extent kicking in FY in the coming quarters. Considering this aspect, just would like to understand, would we still grow in FY 2024 in U.S. sales, North America sales? I believe that we will grow not just because of the product. We will grow because we are also launching 25-30 products, and the combination of all that mix should grow us in the United States. Okay, sir. Thank you. Thank you. The next question is from the line of Ashish S. Thavkar from IIFL Asset Management. Please go ahead. Yeah, thanks for the opportunity. I had this question since we have been maintaining this 25% EBIT margin guidance. If you just try to strip off some one-time big opportunities and say some one-off non-recurring items, you know, the EBIT margins from the core business seem to be, you know, lower versus what we were earlier guiding for. Just if you could help us understand, you know, for FY 2024, as we go into FY 2024, would you like to provide some color as to directionally of what we as investors can expect? Yeah. First, I don't share the observation that it's less than what we guide. That's a starting point, and we may need to clarify it. I'm maintaining the 25/25 message on the long-term basis, in which we will allow us both to grow, give great return on the shareholders as well as to finance the future. What you see is that we are building a bigger and better portfolio as time goes by. Plus, the balance sheet is probably the best ever in terms of both cash flow as well as no additional substantial risk that exists in the balance sheet. This is of course allowing us, and much better also utilization of the working capital. This will allow us a better ROC also in the future. Yeah, fair enough. Lastly, on this India business, you did mention that, you know, FY 2024 you expect to beat the IPM growth. We have been acquiring assets, you know, trying to strengthen our portfolio. What gives you the confidence that FY 2024 we can beat the industry growth? Just wanted to have some understanding on that. I'm confident that we'll do it. We need to recall that for me, I know that we are looking at external sources like IQVIA, et cetera, but the most important for me is what is our bottom line growth. That should be very healthy. The answer is that I am confident, and I believe that we will grow the bottom line even faster than we'll grow the top line. Fair enough. Thanks. All the best. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital Advisors. Please go ahead. Thanks for taking my question. It is on the Mayne portfolio that we acquired in the U.S. Can you help give us some more color on what opportunities you see in that portfolio, or in terms of to grow the portfolio from the current size? Yes. It's a portfolio that has certain level of lower level of competition, especially in women health. We are... It allow us to get back to NuvaRing, something that was missing for us, as you know, through the years. It's also there were many products in the pipeline that Mayne did not launch, and something that we'll be able to do in the future. If you wish, we have triple impact. One, we believe that we can do well with this product. Second, we will be able to launch more products. Third, we can launch some of these products in other markets. Relatively, the economy of the deal is relatively attractive for us. We are very pleased so far with the progress of the Mayne acquisition. Right. I think it's fair to assume, given the new product launches that you have, opportunities that you have, we see possibilities for growing the business from where we acquired it. That's what we are aiming to, yeah. From a profitability perspective, you know, is it a business which is higher than our corporate profitability right now? I cannot share information about specific profitability of products, we believe that the nature of the products and the mix of the products that have less competition is always favorable versus those with a high level of competition. This is the nature of the business. Besides, this investment that you made in the U.S. generics, do we still are open to keep investing more money in U.S. generics by way of acquisition, or this is more of a, one of a special case transaction which came our way? We will continue to look for opportunities in the U.S. market, including generics. If it will fit the financials and if it will be complementary to what we do. We will continue to look for opportunities, both organic and inorganic in the U.S. Not just now, also in the future. It is a very important market for us. Okay. Thank you. Thank you. The next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead. Yeah. Hi, good evening. Thanks for the opportunity. Just, if I heard that right, just wanted to, you know, reconfirm that you mentioned that you expect double-digit growth from across markets, including the U.S. Would that be correct? I do. Not necessarily every quarter, not necessarily all the time, absolutely this is the long-term aspiration for us. Absolutely that's what we are aiming also in the short term, I cannot promise you that this will happen every quarter and every product and every situation always. Asking for fiscal 2024 specifically, sir. Specifically, that's what we are aiming. We are aiming for double digits. With the, excluding the acquisition with the base portfolio and some one-offs, it is possible as what you see? I believe that it's possible, yes. Okay. Okay. That is helpful. Just a follow-up on this, you know, the U.S. generic market. I mean, many companies have been talking about while price erosion remains more or less similar, there is a lot of volume opportunities that is coming, new business opportunities, et cetera. Would you say that we would have also got these in the last three to six months, given there are some U.S. FDA issues with the peers set? Yeah. I'm not sure I understand the FDA comment. Can you clarify that? What we heard from some of the peers is that they are getting some volume opportunities, like new business opportunities, NBOs, where they need to supply a few of the products where earlier they were not contracted, largely due to the U.S. FDA issues by the peers. Are we getting some volume-based opportunities to supply in the U.S. market? We do from time to time. I'm not considering it as a strategic issue, but we do from time to time have this situation. Give or take, if I saw correctly, about 10%-15% of the SKU in the United States in some sort of a shortage from all kinds of reasons, not just FDA, but all kinds of reason. In those situation, you know, always an opportunity for one-time buy and stuff like this. Would you have you seen anything, you know, incremental in the last quarter, is what I'm trying to get some color on. I mean, given we have seen some large companies having. Yeah. Nothing that I see as strategic. Okay. Okay. lastly- In general, we are not building ourselves on failures of others. Right. We are trying to build ourselves with our own capabilities. Fair enough. Fair Fair enough. Lastly, on the, you know, the run rate that we see in the past, it was, you know, $225 million, then it came back, you know, the base business side, $250 million, then we saw some, you know, big jumps. Now things are normalizing, and you still maintain it is going to be volatile, but material. I also understand that market share of these Revlimid are, you know, it changes, right? It increases every six, 12 months or maybe calendar year. Would it be fair to say that, you know, with the new launches that you spoke about and Revlimid continuing, and this is, you know, in addition to the first question, so that is the key to grow double digit, would that be a fair assessment, that on that REVLIMID base also you will grow? The growth of the United States will be from new products, as well as volume from other products, as well as better costing. All of that will contribute, absolutely. I cannot guide you on with and without, or this kind of stuff. I will not be able to do that. Okay. Okay. Lovely. Lastly, on the values you spoke about growth across markets, would you say that this kind of launch and product visibility across markets, these kind of margins could be sustainable? Yes, I believe so. I believe that that's why we are guiding for the 25/25, which will enable us even to finance Horizon 2. If you recall, we said that about 50 basis points -100 basis points on Horizon 2, and we are able to cater that within the margins. We are strategically positioned well that we are able to finance our future and at the same time to provide these margins and ROCE to the shareholders. No, but we are doing better than what we are guiding, right? I mean, that's what I'm asking. Will we able to continue with this kind of performance? Now we are doing better and, maybe there will be also period of time that will be not, better. Right now we are doing better, yes. Okay, lovely. Thank you and all the best. Thank you. Thank you. We will take that as our last question for today, ladies and gentlemen. I would now like to hand the conference over to Ms. Richa Periwal for closing comments. Over to you, ma'am. Thank you. Thank you everyone for joining us today for the earnings call. For any further queries, please reach out to the investor relations team. Thank you. Have a great day. Thank you. On behalf of Dr. Reddy's Laboratories Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.