Gentlemen, welcome to the Q4 FY 2023 Results Conference Call of Glenmark Pharmaceuticals Limited. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. If you need assistance during the conference call, please signal an operator by pressing star then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Utkarsh Gandhi, General Manager, Investor Relations, Glenmark Pharmaceuticals. Thank you. Over to you, sir. Thank you, Lizanne. Good morning, everyone, and welcome to the Q4 FY 2023 Results Conference Call of Glenmark Pharmaceuticals Limited. Before we begin the Q&A, let's review the overall performance of the company for the quarter ending March 31st, 2023. For the fourth quarter of FY 2023, Glenmark's consolidated revenue was at INR 33,737 million as against INR 30,191 million in the corresponding quarter last year, recording a YoY growth of 11.7%. For the 12 months of FY 2023, Glenmark's consolidated revenue from operations was at INR 129,901 million, as against INR 123,049 million, recording an overall growth of 5.6% on a YoY basis. In terms of key highlights for the financial year FY 23, as per IQVIA MAT March 2023, Glenmark is now ranked second in the respiratory segment of the India market, with 1.5x higher value growth compared to the overall respiratory market. Glenmark is now ranked second across dermatology and respiratory, which are the two of the key therapy areas for Glenmark in the India market. Glenmark's Europe business recorded revenues of $225 million, continuing the strong growth momentum over the last couple of years. Glenmark's ROW business also recorded 20%+ growth across all the sub-regions. This was driven by key product launches across respiratory and dermatology. Ryaltris was approved in the U.S. and was launched by Hikma, Glenmark's commercial partner. In FY 2023, Ryaltris was launched in 12 markets, either on our own or through our commercial partners. In totality, Ryaltris is now being commercialized across 27 markets in the world. Proof-of-concept studies were also initiated for four clinical oncology assets, which are part of the Glenmark and the Ichnos development pipeline. Study readouts for all four molecules are expected in FY 2024. Ichnos' partner asset in immunology, ISB 880, progressed to phase I studies, these were initiated by development partner, Almirall. We'll just review each of the key businesses on the formulation side, starting with India. Sales for the formulation business in India for the fourth quarter of FY 2023 were at INR 8,284 million as against INR 8,847 million in the previous corresponding quarter, recording a decline of 6.4%. The decline was mainly on account of impact of divestment of few non-core brands, some impact of the NLEM price revision, as well as return of COVID-related products. Adjusted for these impacts, the India business recorded a YoY growth of 5.1% in Q4 FY 2023. India business concentration was at 31% for the full year FY 2023 compared to 30% last year. Glenmark's India business continues to significantly outperform industry growth rates as per IQVIA Q4 data. Glenmark's India formulation business recorded a growth of 18.2% compared to the industry growth of 14.4%. As per IQVIA MAT March 2023, excluding COVID portfolio, Glenmark's India business grew by 12.3% compared to overall industry growth of 9.5%. Glenmark's India business continues to be ranked 14th with a market share of 2.12% as per IQVIA MAT March 2023. In terms of key therapeutic areas, as mentioned before, Glenmark is now ranked second in the respiratory segment, continues to be ranked second in dermatology, fifth in the cardiac segment, and 14th in diabetes. Glenmark continues to have nine brands in the IPM top 300 brands in the country. During the quarter, Glenmark's India business also improved its market share across key therapeutic areas. As per MAT March 2023 IQVIA data, dermatology market share increased to 7.85%. The company's market share in respiratory increased to 5.59%, while the cardiac market share increased to 5.17%. Glenmark's share in the diabetes market is 2.31%. The company launched multiple new products during the quarter and continues to gain share in some of its key launches across segments. In Q4, Glenmark became the first company to launch lobeglitazone metformin combination brand named LOBG-M in India for the treatment of type two diabetes in adults, particularly for insulin-resistant diabetic individuals. Earlier in FY 2023, Glenmark also launched FDCs of linagliptin, pioglitazone, metformin under the brand name Zita-PioMet. Glenmark has also launched FDCs of linagliptin, including its combinations with pioglitazone and dapagliflozin, as well as the sitagliptin and a range of sitagliptin FDCs, as well as lobeglitazone. This emphasizes Glenmark's overall focus on the diabetes segment. In the cardiac segment also, Glenmark launched sacubitril valsartan under the brand name SacuV for the treatment of heart failure. This product is a combination of belonging to the class angiotensin receptor neprilysin inhibitors. This drug helps reduce the risk of cardiovascular related deaths and hospitalizations. Company continues to have an overall healthy pipeline of differentiated products across key therapeutic areas, which it plans to launch in the market going forward. Consumer care business. Primary sales for the GCC business in Q4 were INR 672 million, with a growth of 9%, which was mirrored by strong double-digit revenue growth of 15%. This was driven by increasing volume growth for key brand Candid Powder and La Shield. Our new product introductions, such as La Shield Pollution Protect, La Shield Probiotic Moisturizer, and Scalpe Pro Shampoo also contributed to the growth. For the 12 months of FY 2023, GCC revenue stands at INR 2,350 million, with a YTD growth of 30+%. Flagship brand Candid delivered revenue growth of 17% in FY 2023. La Shield delivered 53% growth in Q4 and 70+% growth in FY 2023, and Scalpe portfolio recorded growth in Q4 as well as in FY 2023. Moving on to North America. The North America business registered revenue of INR 8,507 million for the full quarter of FY 2023, as against revenue of INR 8,373 million for the third quarter of FY 2023, recording a quarter-on-quarter growth of 1.6%. YoY growth for the North American business was 15.3%. For the 12 months of FY 2023, North America business contribution was at 22%, compared to 25% in FY 2022. In FY 2023, Glenmark was granted approval for 10 ANDAs, comprising of six final approvals, two tentative approvals and two prior approval supplements. Some of the notable approvals included sodium phenylbutyrate tablets, nicardipine hydrochloride capsules, vancomycin hydrochloride capsules. The company filed three ANDAs in the fourth quarter of FY 2023 and eight ANDA applications throughout the fiscal year 2023. The company plans to file two to three applications in the forthcoming quarter and a total of 10 to 12 ANDAs in FY 2024. Glenmark successfully launched three new products during the fiscal year 2023 in the North American market, consisting of a mix of immediate release oral solids as well as an injectable product. Notable launches included azithromycin tablet USP, abiraterone tablets USP, fingolimod capsules, sodium phenylbutyrate, nicardipine. In the fourth quarter, Glenmark also launched bumetanide injection, single-dose vial and multi-dose vial, as well as teriflunomide tablet. Glenmark was one of the first generics to launch the benefit of teriflunomide tablets. During the quarter, Glenmark also announced ex-exclusive distribution agreement for the U.S. FDA-approved mixed amphetamines immediate release tablets. Glenmark's marketing portfolio in the U.S. consists of 183 generic products authorized for distribution. The company has 45 applications pending at various stages of the approval process, of which 21 are Para IV filings. The company and its U.S. subsidiary, Glenmark Pharmaceuticals Inc. Have, subject to final documentation and approval of the court, after the end of the accounting year FY 2023, arrived at a settlement with three plaintiff groups collectively representing all of the claims against the company and Merck in relation to multiple antitrust and consumer protection lawsuits, including a class action consolidated in the Eastern District of Virginia, the U.S., for a total amount of $87.5 million, which is payable over two financial years. The financial settlements will be in accordance with the agreed agreement entered into with each of the plaintiff groups and will be subject to final approval by the court. The settlements will make clear that the co-company denies each and every of the allegations against it, and the settlements are not on the basis of the company having conceded or admitted any liability, offense, wrongdoing, or illegality. Moving on to Europe. Glenmark's Europe operations for the fourth quarter of FY2023 was at INR 6,078 million, as against INR 4,968 million, recording a growth of 22.3%. For the 12 months of FY2023, Europe business contribution was 15% of the total revenue as compared to 12% in FY2022. Strong European business growth was driven by markets in both Western Europe as well as Central and Eastern Europe. Key markets in the CEE, such as Czech, recorded strong secondary sales growth of 20+% during the quarter. Growth was driven by an uptick in the base business as well as new product launches. The Western European business saw high double-digit growth for Q4, with markets like the United Kingdom and Spain growing significantly. The U.K. recorded strong growth on the back of key launches in the generic business, as well as an uptick in the branded business as well. Glenmark ranks amongst the top 15 companies in the generic market of Germany. The respiratory portfolio launched by Glenmark in Europe also continues to do well. Key brands such as Ryaltris and Salix continue to sustain their market share both in value terms as well as volume terms across all CEE markets. In addition to these, company has also filed four additional respiratory products in the EU markets in FY 2023, which should be launched over the next two to three years. Glenmark has also entered the Italian market and will be expanding across Italy in the coming quarters. Moving on to the ROW region, which consists of Asia, Middle East, Latin America and Russia CIS. For the fourth quarter of FY 2023, revenue from the consolidated ROW region was INR 6,856 million, as against INR 5,469 million for the previous corresponding quarter, recording a growth of 25.1%. For the 12 months of FY 2023, the ROW business contribution was at 18%, similar to FY 2022. The company witnessed healthy growth on the base business across all sub-regions of the ROW markets. In Russia, as per the YTD March and MAT March, IQVIA data, Glenmark Russia business recorded growth of 10.3% in value versus overall regional market growth of about 2%. This has been driven by all key brands, including Ascoril, Ryaltris and Montlezir. Ryaltris also continues to sustain its momentum and is gaining further share in the market. Amongst. Across the year, four new products were introduced in the market. In terms of key therapeutic areas, Glenmark recorded growth of 12% in value in the dermatology segment versus the overall dermatology market growth of about 6.7%. Amongst the dermatology companies in Russia, Glenmark ranks 11th as per IQVIA MAT March 2023. Among the companies present in the expectorant market in Russia, Glenmark continues to maintain a strong position in fifth second as per the MAT March 2023 data. Moving on to Asia, the overall environment remained challenging across some of the Asian markets like Sri Lanka, Myanmar, Vietnam. Amongst the key markets, the Philippines continued to record a double-digit growth, secondary sales growth for Glenmark. Dermatology and respiratory remain key therapy areas for Glenmark in Asia, contributing significantly to the overall sales. Ryaltris continues to do well, was launched by Glenmark in the Malaysian market in quarter four. It continues to gain value share in Australia through our commercial partner with 18.1% share across top allergic rhinitis products. Launched in South Korea in Q3 by Yuhan Corporation, Glenmark's partner, Ryaltris has also shown strong take-up in a short time span with a double-digit market share already in the allergic rhinitis combinations market. Middle East Africa recorded 20+% growth in secondary sales during the fourth quarter. During the financial year 2023, Kenya market was impacted by macroeconomic instability. Glenmark's business remained resilient as the company continues to gain share in the overall Kenya pharma market. The company continued to achieve strong secondary sales growth in South Africa and Saudi Arabia. Respiratory and dermatology again, are key therapy areas, contributing more than 60% to the overall sales of the EMEA region. Ryaltris again is further expected to drive growth in the respiratory segment in this region as the product gets launched across multiple markets in the first half of FY 2024. Finally, Latin America witnessed strong growth in Q4 as well as for the full year. Respiratory portfolio remains key contributor for Glenmark in the Latin market. Glenmark Brazil achieved the highest growth rate amongst top 20 companies in its covered market. Company maintains its rank amongst the top companies in the covered market of the chronic respiratory segment in Brazil as per IQVIA MAT data. Secondary sales growth remains strong in Mexico as well, with Glenmark's business growing by 16% in value while the overall Mexican market growth was close to 7%. We just covered some of the key products in respiratory, starting with Ryaltris. For Ryaltris, as of the end of fourth quarter of FY 2023, marketing applications have been filed in more than 70 countries across the world. The product has been commercialized in 27 markets, including some of the major markets like the U.S., Europe, Australia, Russia, South Africa and South Korea. This has been done by Glenmark through its own commercial channel or through our partners. Glenmark's partner in the EU, Menarini, initiated the commercial launch of Ryaltris in Austria, Belgium, France and Spain in the first quarter of FY 2023, and intends to launch the product in additional EU markets in FY 2024. Glenmark's commercial partner in the U.S., Hikma, continued to see strong new prescription and refill prescription growth as the allergy season progresses through the country. Hikma also recently held a key sales advisory board and received positive feedback on Ryaltris from some of the senior allergy physicians in the U.S. Glenmark's Canadian partner, Bausch Health, launched Ryaltris in April 2023. Glenmark's partner in Mainland China, Grand Pharma, aims to complete the ongoing phase III trial and submit the marketing authorization in the second half of fiscal year 2024. Some of the market shares that Ryaltris has gained over the key geographies are mentioned in the MD&A. Key being Australia with 18.1%, South Africa with 10.3%, Czech Republic with more than 15%, and Poland around 6%. In terms of other key respiratory products, clinical trial is continuous for generic Flovent pMDI, and we expect to file the NDA in FY 2024. We plan to file one more generic respiratory pMDI in the U.S. in FY 2024 and continue our filing momentum beyond that. Innovative R&D pipeline for Glenmark, GRC 54276. GRC 54276 is a HPK1 inhibitor being developed as an orally administered immunotherapy agent for patients with solid tumors. GRC 54276 is a novel orally active HPK1 inhibitor. In pre-preclinical studies when administered alone, it has demonstrated substantial anti-tumor effects, which are further enhanced when it's administered in combination with currently available immunotherapy. GRC 54276 is being developed and is being evaluated in a first-in-human phase I clinical study. Part I-A monotherapy phase of the study is ongoing in India since July 2022, and no dose-limiting toxicities have been observed during this period to date. Acceptance of the IND by U.S. FDA was received in the quarter four of FY 2023. Initiation of the Part I-B of the study for GRC 54276 in combination with pembrolizumab and atezolizumab in India and in the U.S. is planned in the first quarter of FY 2024. GRC 39815 is a ROR gamma inhibitor with the company's respiratory pipeline asset being developed as an inhaled therapy for mild-to-moderate COPD. It is currently under phase I development in the U.S. Moving on to Glenmark Life Sciences. Revenue from operations including external sales for Glenmark Life Sciences in Q4 FY2023 were at INR 3,831 million, as against INR 3,283 million in Q4 FY2022, recording a growth of 16.7%. For further updates on GLS, you can log on to their website, glenmarklifesciences.com. Ichnos Sciences, Glenmark invested INR 1,906 million, which is about $24 million in the fourth quarter of FY2023, compared to INR 1,640 million, which is equivalent to $22 million in the corresponding quarter last year. For the 12 months of FY 2023, Glenmark invested INR 6,833 million, equivalent to $85.2 million, compared to INR 6,627 million, which is equivalent to $89.1 million, which was invested in FY 2022. For further updates on the pipeline and on Ichnos, please log on to their website, ichnosciences.com. The pipeline update for the fourth quarter of FY 2023 has been published on their website. We would just like to state some of the key objectives for FY 2024 that we've outlined. Consolidated revenue growth is targeted to be 10%-7%. Consolidated R&D investment would be targeted to be 8%-8.5% of total sales. Consolidated EBITDA margin of 19%-20%+. Consolidated CapEx of INR 67 billion. priority remains to enhance free cash generation for further debt reduction, and we plan to close out at least one outsourcing deal in our innovation pipeline. Some notes on the results before we open the Q&A. Forex loss for the quarter was at INR 78 crores, which is recorded in other income. Forex gain for FY 2023 full year was at INR 216 crores. Please refer to the note five of the consolidated financial statements pertaining to the exceptional loss with regards to settlement of the generic Zetia litigation in the U.S., as well as the divestment of select tail brands for India, for both Q4 as well as for the full year of FY 2023. In terms of working capital, inventory for the period ended March 31st, 2023, was at INR 2,978 crores as against INR 2,499 crores as of March 31st, 2022. Receivables as of March 31st, 2023, was at INR 4,098 crores as against INR 3,101 crores as of March 31st, 2022. Payables as of March 31st, 2023, was at INR 2,392 crores compared to INR 2,289 crores last year. Total asset addition in the quarter was INR 190.5 crores, of which tangible asset addition was about 151 crores. Total asset addition for the full year FY 2023 was INR 632.7 crores, of which tangible asset addition was around INR 531 crores. Loss for the period ended March 31, 2023, was at INR 2,348 crores as against INR 3,670 crores as of March 31, 2022. Our debt for the period ended March 31, 2023, was at INR 2,905 crores as against INR 2,260 crores as of March 31, 2022. Total R&D expenditure in Q4 was around INR 336 crores, which is 10% of revenue for operations for the fourth quarter. For the full year, R&D expenditure was at INR 1,240 crores, which is about 9.5% of revenue for operations for the full year of FY 2023. Before we open the floor up for Q&A, I would like to introduce the management of Glenmark Pharmaceuticals Limited on the call today. We have with us Mr. Glenn Saldanha, Chairman and Managing Director, Mr. V.S. Mani, Executive Director and Global Chief Financial Officer, and Mr. Brendan O'Grady, Chief Executive Officer, Global Formulations Business. With that, we'd like to open the floor up for Q&A. Over to you, moderator. Thank you. Ladies and gentlemen, we will now begin for the question and answer session. Anyone wishing to ask a question, please press star then one on your touchtone telephone. If you wish to remove yourself from the question queue, you may press star then two. Please submit your question to your handset while asking your question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. First question is from the line of Tarang Agarwal from Old Bridge Capital. Please go ahead. Hi, good morning. Three bookkeeping questions from my side. One, what's the breakdown of the exceptional item in the standalone business? It's about negative INR 485 crores. Second, if you could give me the equity investment amount and the loan investment amount in GHSA Switzerland as on March 31st 2023. Third, what was the remediation cost for FY 2023, and how has it been accounted? Okay. Thank you. I'll answer question by question. First is obviously the exceptional items that you wanted. In terms of the exceptional items, the remediation cost for the quarter is INR 91 crores. The legal cost is about INR 137 crores during the quarter, okay? This is about INR 228 crores. Also, the cost of the transaction that we did, there was a cost against that, about INR 111 crores, okay? The remediation cost for the full year is about INR 219 crores. This covers both India and the U.S. sites, okay, both put together. Mani, just one question. I mean, if remediation has been accounted for under exceptional item in the P&L, then how, why does it show up in the cash flow when I say the sale of intangibles net of remediation cost? There was some line item where I had to show it. Obviously, if you are looking at even, if you look at it in the balance sheet also, if you also see the cash flow also, you will see there is a INR 57 crore line item. In that line item you had these two brand assets sold during the year. These two came to about INR 650 crores. Against that, the transactions cost came to about INR 260 crores. The balance, as I explained, was about remediation cost itself was about roughly about INR 228 crores. And the legal cost was INR 137 crore. Net of all this you got about a INR 30-40 crore gap. And you had sale of some small assets and such. That's how it came to INR 57 crores. The INR 228 crore is on the cash flow, plus there is about INR 219 crores on the exceptional items in the P&L. Is that the right way to look at it? Both are the same, practically. Both are the same. There is nothing different. Both are the same, 220 and broadly 228, both. I mean, the exceptional item for remediation is INR 220 crores. For the quarter, if you look at it, the exception including legal is INR 228 crores. Numbers look very close, but they are different, okay? The remediation cost for the year has been INR 220 crores. The legal cost, which is an exception item, is INR 137 crores. Okay. I might need some clarification. I'll probably take it offline Sir. The second is the equity investment and loan investment in GHSA as on March 31st 2023. Can I just respond to that? Give me a couple of minutes. I'll give you the answer, okay? No issues. Okay. Yeah.Can we take the next question. I'll come back to this, okay? Sure. Thank you. We'll move on to the next question. That is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Yeah, thanks for the opportunity. Just on the remediation cost, if you could explain, you know, in terms of this INR 220 crores or INR 91 crores, where is it in more of infrastructure investment or. If you could just elaborate on the quality of this remediation. Yeah, I'll elaborate on that. See, obviously, we had both the sites, okay, both in India as well as in the U.S. When you look at it, assuming for a full year, we are running 12 people, you know, across the line. Just the cost of maintaining the consultant itself will be almost $12 million, okay. That is there. In a way, if you look at it in the U.S. itself, we have spent about $22 million during the year. Plus you'll obviously have other costs associated because you're using very big consultants, et cetera. Obviously those will all add to it, okay? You add a portion in India also about INR 36 crores or INR 30+ crores during the quarter, and you may have little more in the coming quarter, but broadly this is where it is. It's all written to the consultants and people, and the consultant and the people who come and work with us for that. Effectively this is more like only a yearly phenomenon or should we expect more in future? Actually, Tushar, it's more like a one-off, right? We had to do the remediation of Monroe, which is pretty much done now. In Q1 onwards it will taper down. Likewise, you know, we had remediation costs hitting our Goa facility and the Baddi facility this year. I think in FY2024 you'll see very little of remediation costs, right? It'll come off significantly. Understood, sir. Sir, how much would be the Ryaltris sale, overall across the markets in FY 2023? I mean, the, we did about I think INR 20 million, INR 25 million last year. This year, you know, we see that number going to about INR 40 million, INR 45 million, right, somewhere thereabouts. Understood. Thanks a lot. Thanks for your time. Thank you. The next question is from the line of Amit Khetan from Laburnum Capital. Please go ahead. Hi. Thanks for taking my questions. My first question is on debt. In the Q3 call, Mani, you specifically mentioned that you should see a reduction in net debt next quarter, that actually increased by about INR 300 crores. What's driving this? Just continuing on that, we have a plan to see net debt by FY 2026. Can you lay out a broad intermediate path in terms of where it should be expected for us to be at the end of FY 2024 and 2025? Also how much of the INR 3,000 crore net debt reduction is contingent on either partial or a full divestment of GLS or any further non-core assets that you might sell? One second. I'll give you the answer. In terms of the net debt, yes, I mean, if you look at it, during this quarter, there has been a increase in the working capital cycle. Okay? That is probably the primary reason why it went up. One of the big reason has been the in the movement in the debt as well. Okay? Obviously, during the, you know, a few months, if you see the, there is a change in the geographic mix. Obviously there's more sale out of EU and ROW and it's lesser from India, hence that is the reason why the head case has been higher in these quarters. Besides that, obviously there has been, you know, in data, there has been also a movement because of the currency also, almost INR 150 crores, because as you can imagine, the rupee also moved up. Because of the credit case, that is why the reason, I mean, basically debtors and to some extent inventory, that is why we, basically, the debt has moved up. In terms of our 2023 guidance, we continue to hold that. Obviously as you can see, we have reached a certain critical mass, okay. We are almost at INR 13,000 crores. We anticipate to grow further. During the current year obviously we had a few of the things like, you know, exceptional legal costs in terms of exceptional separation costs, et cetera. Some of these have played out. Therefore, I would assume that when we look at it over the next three years, we believe that with the growth in the business, there should be decent cash flows to play down most of these debts, okay. At least at a net debt level, we should be, you know, positive. That's what I feel. Is there a broad range you can give of where we should expect this to be at the end of the next year and the year after that? Year-wise it may not be so straight to give. It'll obviously be a cascading one. The first year may be little lower, the second year will be higher. As you can also see, some of the products are doing better, some of the markets are doing better. The EU market is doing well, Ryaltris is doing well, U.S. business is picking up. Obviously, there will be a momentum that will take. I would assume that even this net debt, what we have today of almost INR 3,000 crore or whatever, we should see some way by which in the three-year timeframe that we are thinking about, we should be able to take out most of it, okay. That's how I see. The momentum I can't break it up year-wise, but in a broad trajectory what I look at it looks like there is a possibility with the business growth and not having some of the issues that we had in the current year of exceptional items, it should not be there. Yeah. Okay. How much of this INR 3,000 crore debt is contingent on divestment of GLS or of other non-core brands that you might divest? I think clearly, I mean, the GLS divestment up to 7% at least that we are required by law will be important to meet our net debt guidance. Obviously, also keep in mind when we put out this guidance, we had no visibility around the U.S. settlement that we did. Outside of the U.S. settlement, clearly, you know, we still maintain that the business cash flows will continue to be strong to take us to net debt zero. I think now with the U.S. settlement and the quantum of U.S. settlement that we did along for that year, it's gonna be critical to take some of the GLS divestment into that to achieve a net debt zero. Understood. Understood. And just following up on the working capital part, right? Building about INR 1,000 crores increase in receivables. I'm not able to fully understand given that branded formulations are typically a low working capital type of business. How is India and the rest of the world driving this increase? Yeah, you're right. It's not like this is just a sudden change in the mix of the geographies in which we sell. Obviously, that is a one time that always happened. Change in mix, you know, and more sales in EU and ROW markets, the receivable days are definitely higher there. That is why it played out. Also, there is a currency movement, you know. As you can know that in October, November, the rupee also moved up from 79 to 82. There is about INR 150 crore. I would assume, to answer you well, going forward in the coming quarters, we should see it move down. Okay? We should definitely see it move down. As India also, you know, shows a bigger growth, which is there anyway in the underlying business, it should go down. We are looking at it up to 100 days or things like this. Historically we had a good working capital. Last year it was a little bit challenging due to the change in the sales mix and also some supply chain issues. Otherwise, broadly we see the trajectory being down. Lastly, on the India business, in the presentation we see that the decline is on account of price revisions and return of COVID treatments and divested brands. Can you quantify the impact of each of these factors? My understanding was that COVID returns were already done last year. I mean last quarter, right? End of last quarter we were through with the COVID returns. The numbers overall. Look, I mean, I think India, the way to read it, right, is in-market growth is still very, very strong, right, for the entire franchise. Right. I think, you know, between the three plus we also had some changes in terms of the business model where, you know, in oncology and some of these segments, right, oncology institutions, some of these segments, we were able, you know, we took down some of our sales to maintain our margins. I think it's a host of two or three different aspects, right. I mean, it's hard to give you a breakup of each of these segments, but broadly we think, you know, without this, right, we would be, you know, close to, you know, the 5% that we mentioned in the MD&A. You could add some amount through the changes on account of the business model. India continues to be a strong business for us, right? Continues to do well, quarter on quarter. Fully year actually, just to add, full year, Amit, if you just take out all these one-off impacts, plus we add this COVID impact in the first quarter, actually the business has grown 12%+ on a recorded basis. Base business growth remains strong. There are obviously these some quarterly impacts that we have had. Mm-hmm. Got it. Got it. Just one more question, on Ichnos, you know, we've spent approximately $24 million this quarter. How confident are we of keeping this contain to the $60 million target that we have for FY 2024, and is there any revision to the guidance? See, there are two, three things, okay? Obviously, during the current quarter, as we had said that we are right sizing, you know, at some stage. Obviously there were some severance costs, et cetera, which have formed part of this current quarter. Going forward, we pretty much see it on the ballpark what we spoke about, INR 60 million+ for the year. It should be quarterly more or less somewhere close to that, yeah. About INR 15, 17 million or quarter. If you see the Ichnos MDA, they've also alluded to the fact that, you know, the number of employees have gone down substantially, right? On account of the downsizing that we did in, you know, Luzerne facility. All that will start, you know, become visible from Q1 onwards. Fair enough. Fair enough. Well, thank you, and over to next. Thank you. A reminder to the participants, anyone wishing to ask a question, you please press star then one. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. Thanks for taking my question. Mani, on the, you know, on the working capital, we are about 130 days as of FY 2023 end. We were about 100 in FY 2022, mid-80s in FY 2019, 2021. There's been like a, you know, like a 50, 45 to 50 increase has come through over the last two years. I mean, next year, next year and a half, where do we see this number finally settling on a sustainable basis for us? Nitin, just to set the record, we were at about, closer to eight or nine days during the two years back. Obviously in the last two years, there have been few key changes, Nitin, and, looking at it. Some on the inventory side, obviously there has been a lot that went in terms of the supply chain issues, et cetera. I think in the year 2017 to 2021, we were pretty efficient in the way we looked at inventory and things like that. Some last two years, we definitely realized that we need inventory across geographies to do a better job in terms of managing the business requirements, et cetera. As cash flows go, obviously it's suddenly gone up, but that is because as I explained in the earlier thing also, the reason that because of the change in the sales geography mix touching that. Some portion was also on the currency side because as you can see between the cash flow and the balance sheet, there is a difference of almost INR 141 crore. Going forward, Nitin, I definitely see this, you know, when you see then about the 15 days or so coming down in the debtor side. Working I mean, inventory, we'll see how it goes along. I think, we'll come closer to... I mean, obviously there are some changes in the way the business model works, and because of that there will be some leeway in terms of the working capital going up and also, probably, you know, people look more at the safety of supply than, more than, the efficiency a little less. Like I said, definitely it will come down to around 15 days. We'll be closer to 100 in the next couple of quarters. That should be the 100 days letter. Should these are more sustainable number. Yeah, more sustainable number, Nitin. Yes, a more sustainable number. In inventory, I think about 85 odd days is where you should probably see it holding. Not yet, Nitin. I mean, I don't think we can, we would like to go below that because most geographies we realize there is an opportunity and we don't wanna miss that. Okay. That's helpful. Secondly, on the legal costs that you mentioned about INR 137 crores, what is this cost you got? This is basically we had these large trials going on, I mean, for Zetia. Obviously, as you know, we settled, I mean, we are almost settled during the April month for which we have taken a write down. Barring, I mean, this was majorly for that. We had to spend for that. Okay. Sir, you've also broken this down earlier, but if you just help me understand the INR 650 crores- INR 57 crores which is there on the asset sale, on the brand sales, can you just repeat that please? Sure. I can walk you through that. Nitin, simply speaking, within the INR 650 crores, we had a transaction cost of almost INR 260 crores, okay. Basically these were all the, you know, whatever that was related to the banking, bankers and something on inventory, all those came down. That is one part. Barring that, obviously one line item which is not linked to that, but which is obviously part of the exceptional item that is why it all comes together, is this legal cost of INR 137 crores and all put together, the remediation costing about INR 220 crores, mainly in the U.S. and some part in India as well. Nitin, as you're aware, we are remediating across three sites and as I explained to one of the earlier participants that, obviously running so many consultants and also having people from them on board, it costs quite a lot, okay? Sir, lastly on this transaction cost that you mentioned on the India brand, sale and brand transactions, is this a ballpark that we should assume, you know, some rule says about a third or a third of the realization will go towards transaction costs in these assets, as any this kind of asset sales happen? Nitin, transaction to transaction it will be different, I agree. It will not be the same. I'm not forcing an immediate transaction right now as I said, okay? Therefore I would not assume that. Yes, there is definitely some cost that goes into when you do the transaction. You have banks, so you pay people off for going away. You also have some of these other costs. All put together, this is that. It could vary from something from each transaction. Okay. Thank you. Lastly on the India business, Glenn, you know, with these divestments happening this year, w hat is, you know, on a adjusted base which is there for this year, what kind of growth we can assume given the fact that we'll have a slightly lower the whole investment actually comes through for next year? This is Brendan. I think, you know, when we look at the India business, we're, as Glenn mentioned before, we're very happy where it's going. We're outgrowing the market by about 1.3x. I think as we head into this year, you know, we have continued launches that we'll do. We have a lot of launches that we did last year that will propel the growth. I think that this year we'll grow in the high single digits in the 8%, 9% range. You know, we're happy with where we're headed with the India business. It's doing very well and we're looking for continued growth. Thanks, Brendan. Sure. Thank you. The next question is from the line of Vikas Sharda from NT Assets. Please go ahead. Yeah. Hi, good morning. Just a question on the tax rate that what's the outlook for next year? This year when I look at the cash tax rate and the cash flow statement, it's even higher than what is reported in the P&L. How should one look at that? Just to explain, Vikas, if you look at the full year, we, before this exceptional item that we had, the PBT was about INR 1,634 crores. The cash tax was INR 866, okay? This is tax, if we are not taking the INR 280 crore, it would be about INR 200 odd crores, okay? What we have to also look at is that we paid GLS dividend, okay? I mean, GLS paid us a dividend, so on that we had to pay tax. Being a related party transaction, the contra goes up and the tax is there. For the current quarter we got about INR 216 crores, and earlier also we got about INR 100 odd crores. About INR 760 crores is on that. Besides that, the on the brand also when we did a divestment, we had about almost an INR 65 crore-INR 70 crore tax on that. If I remove the exceptions out, I get a current, I mean, an ATR of about 30%-39%. If I were to remove out even in this, when we do all this, we also when you look at this cash tax, you'll get about 31%. Okay? This is where it is. Going forward next year also, we should look at 30% or 39% and a 31% broadly. That's where we should be barring for any exceptional items. Got it. When do you expect it to normalize to like, say, the 25%-26% kind of ATR? It should be in less than two years, okay. I still have the MAT credit in my books almost till last year it was almost INR 1,000. This year they're down to INR 700. In the next two years it should be off. Within the next two years time it should be off. Also as we prune down our expenses in Ichnos because that's a big part where we don't get a set off in tax jurisdiction in Switzerland. As we prune down the expenses, it should also add to it, okay. I would assume broadly next year about 30%, the year after that should be lower and the year after that should be back to where it used to be historically. All right. Thank you. Thank you. The next question is from the line of Tarang Agarwal from Old Bridge Capital. Please go ahead. Hi, sorry for harping on this again. The $22 million remediation figure, right? My sense is it's almost 15% or more of the gross block in that business there. I mean, if you could just elucidate the nature of this. I mean, have there been substantial changes, in terms of, our lines or something to that order, or this is largely consultancy cost, from consultants? Tarang, I don't think it is 15%. Anyway, that's a separate discussion. All I'm saying is the $22 million is purely consultant cost, okay? Okay. Consultants are over the year plus when we add multiple consultants and that's the way it is required. These are the costs that are borne into it, okay? So- I also explained if, even if you have 12 people, even to maintain them costs you INR 12 crore, INR 12 million a year, okay? Because they are costly people and then they have to travel everything put together. Besides that obviously the consultancy that goes into it. I understand. There is not too much of infrastructure into this. It may be INR 1 million, INR 2 million, but their big cost is the consultants, okay? I understand. This is standard and almost to. This is where the cross will just be, okay? Most people when they do these kinds of remediation, all things this kind of expenses. I understand, sir. How what would be the gross block for that plant? It should be closer to about INR 250 million, yeah. Okay. Got it. I just wanted a follow-up on the GHSA question, sir. Just give me 2 minutes. I'll give you the answer, yeah. Just wait. I'm just searching for the answer. Okay. Thank you. Thank you. The next question is on the line of Prakash Agarwal from Axis Capital. Please go ahead. Yeah. Hi. Good morning. India business, just a clarification here. The total sales which are affected or which have been, you know, sold, assets which have been sold, what is the number again, please? About INR 150 crores, annualized across the two divestments. This is across assets, right? Yeah, across both the divestments that we have, as well as the dermatology assets. Okay. COVID, I think this is the last quarter it's all there is any case, right? I mean. That's correct. Okay. How is the response in sacubitril, valsartan normally in cardiac we see a very good leading position. Somehow don't see your name in the top five. What is happening there? Sorry, I missed that last part. Yes. it's on sacubitril. Okay. Can you just repeat that, Prakash, your last part of your question? Yeah, no, Sacu V was well done. I think cardiac, you are very strong. Yeah. Normally, you are among the top five, top seven players. How has been the response? I don't see your name in the top five. Yes. As you mentioned, cardiology is a strong area for us. We're number five now in the cardiology segment. Sacu V we launched last year, we're continuing to promote it, and we're continuing to see market acceptance of the product. We think it will be a good product. It continues to do well. Overall cardiology is strong for us as is, respiratory and dermatology. Prakash, keep in mind, in heart failure, we have a brand called Heptis, right, which is among the leaders there. Okay. I think we look at the whole franchise, okay, between Sacu V and Hepti s, right? We're clearly among the leaders in heart failure, right, in that space. In addition to, of course, antihypertensives, which is the whole Telma franchise, right, which is massive. I'm just trying to understand, have we downgraded in terms of promotion, overall? No, in fact, I think, I mean, our India business, we are really doing well in the four or five segments that we operate, right? Whether it's derm, respiratory, cardiovascular, these three are clearly outperforming the market. It's diabetes where we're probably not doing as well, and that's purely because of the pressure on brands like, you know, your Teneligliptin and your Remo, right? compared to some of the new launches that have happened. Sure. In the diabetes segment with the number of products we launched last year, you know, we'll gain share as we go through this year. They'll be accretive. I think as we move to the second half of this year, the diabetes franchise will be a little bit more. Yeah, exactly. Okay. Did I hear right? On an imported basis, we are looking at 8%-10% kind of growth? That's correct. That's correct. After accounting for INR 250 crore revenue not being there, right? Yeah. That's correct. Okay, lovely. On the MR side, what is the count now? It's about 4,800, Prakash. Okay. This is after we would have let some MRs go with the franchise, right? This is the revised number. Yeah. Yeah. Yeah. Okay. The other question on the gross margin side. Normally Q4 we have a, you know, a 200 basis point normally higher gross margins. Is this getting normalized? There's no Q4 phenomena seasonality or anything to read into it? Yeah. Partly because India sales are a little lower, the margins are better in that. Obviously that has its own impact there. On the mix. It's a mix. On a full year we did well considering that the first half was really tough in terms of the, you know, input costs, et cetera. Okay. I missed your comment in the U.S. also. You did okay-ish. I mean, I didn't see any large products. Is it the seasonality which is playing out or, you know, you got one time contracts or what is playing out in the U.S. and what is the outlook there? No. I think, you know, if you look at the U.S., we saw pretty good improvement last year, quarter-over-quarter growth. It's not really any one specific thing. It's really a combination of a few things. First of all, our service levels are improving, which is leading to volume growth. I think we're doing a good job on new product launch execution. We have probably 12 to 15 products this year that we'll launch. We've been able to take advantage of some market disruption, which has a positive pricing impact. Some of the existing pricing erosion has eased a little bit and, just generally improved execution by the team. I think if you take all of those things into account, that's leading to the stabilization and the growth in the U.S. We expect that to continue into this year. I think we'll see growth in the 4%-6% range. I think we said five in the NDA. mid-single digits. Okay. One more, if I may, on the plants. You mentioned the substantial, you know, expenses and on consultation, et cetera. You know, what is the status of all the three plants and when do we expect, you know...? I understand remediation is over. Have you invited FDA for inspection of those three facilities? What is the expense that you're looking for this year? I think, you know, if I go through each of them, right? Monroe, now we are, as we mentioned, we are pretty much done with the remediation, right? We are now gonna start taking batches in Q2, and I'm guessing in parallel FDA should show up around anytime Q2 and beyond, right? That's, that's on. Hopefully, in second half of this year, we should have commercial sales coming out of Monroe, right? The Goa and the Baddi facilities, I think the bulk of the remediation work will get over in Q1. This quarter will be pretty much done with most of the remediation work. I think post that, I think the agency, we will invite the agency. Okay. first half you will kind of continue to see the consultation expenses? Not for Monroe, but to a small extent, in some of the Nalagarh sites. Okay, great. One more, if I may, on the balance sheet side, there's other current financial liabilities. If you could explain what is that related to? Yeah, yeah. Prakash, this is basically the INR 800 crore provision that we have made that has to... I mean, obviously, this is just a provision. Next year is when we'll pay all that. That is why it is there. What is sitting there, sir? It is the INR 800 crore that liability for the debt year that we have provided, exceptional item. Last year also there was a number of INR 400 crore. No, no, no. This is INR 800 crore this year. I mean, we are asking what all are sitting there. Yes. Basically this is the major one that has got added this year. I'll just answer the other one also. You'll have actual expenses there. You will have interest accrued, but not due. You will have unclaimed dividend there. You will have some employee dues there. You'll have contributor for capital goods. These are the things that come in a normal balance sheet. Accrued expenses related to what, sir? Normally, your company has expenses no, which you will provide for the date of the year. Obviously, you may not have received all the bills, et cetera. You provide for it at the end of the year. That will be a provision. Whenever there are provisions, they will find themselves into the liability because they're not paid for them still. Once you pay for them, the liability disappears. What is the amount? The total accrued expenses would be roughly about INR 400 crores across all geographies. Okay. Thank you. Thank you. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead. Hi. Good morning. Thank you for taking my question. Just one on the Europe business. We've seen like a good QoQ growth. I think it's the opening remarks, but just wanted some additional detail around this and what's the kind of sustainable run rate for Europe. Thanks for the question. If you look at the European business, last year, we grew over 20%. I think that we'll continue to see that kind of growth this year in Europe. We're doing well across both the generic and the specialty segments. The respiratory business is particularly strong for us in Europe across all markets. We have launched Ryaltris in numerous markets, either directly ourselves or through our partner, Menarini, which also does extremely well. We've had some opportunities to take advantage of some pricing disruption in some markets, and we're expanding into Italy, I think, as you know. All of those things are driving the growth in Europe, and as I said, we expect that to continue this year in probably the 20% range. Some results coming from Europe, good growth, market for us, which will add to the overall growth of the formulations business. Also- 20% growth for full year Europe, you're saying is a good estimate? In that range. In that range. Yeah. Just the second question is on... Shyam, just one more point to add to what Brendan is saying. Europe, you know, we had four respiratory filings in Q4, right, which will be really big for us in FY20 25 and beyond. I think there is a great runway for us that we are seeing in the European market. Got it. Just a second question, on Ryaltris. I think you called out like maybe INR 25 million of annual sales from the first year, like for about 2023. Yeah. Let's assume. What, so Brendan, just what are some of the lessons you have learned? This has been our first large product and it's global. You're filing it in many places. Anything that we have picked up, some, maybe some challenges. Just your learnings from Ryaltris so far. Thanks. I think Ryaltris, obviously, the biggest challenge has been the regulatory side of things, right? Understanding the regulatory requirements in different markets, putting together some kind of a launch runway, reference pricing in different markets and how do you make sure you launch the products in the right markets at the right time? I think these are some of the big learnings for us on Ryaltris. Although the product continues to do exceedingly well overall. In fact, it's beating all our estimates, right, in all the markets that we are selling it in. Even this INR 40 million, INR 35 million that we guided to doesn't include markets like China, markets like Brazil. Many of the big markets, right, we've not even launched in these markets, right? The U.S., we're just launching going. Exactly. It's very early days. Even this year will be very early days for Ryaltris. Wherever we've launched, the product seems to be doing exceedingly well. Thank you. All the best. Thank you. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Please go ahead. Thanks. On the interest cost, you know, how should we look at interest cost from here on, given the fact we are in a rising interest rate situation? What is it that we should work with, number? Broadly in the last quarter, if you look at Nitin, we looked at about INR 109 crores. Plus or minus 5%-7% is what we will look at. I think broadly that is where we look at next year. Then as we obviously bring down our loan component, it will definitely come down. Almost all of our, this INR 4,000 odd crores debt you just said, is in U.S., right? Yes, broadly borrowing some INR 300 odd crores, which is short term in nature. Rest of it is all, dollar denominated. Our effective cost comes to about 10% on the gross, then. That's the reason why, because of, you know, now putting LIBOR has gone up and few are in fixed rate. Most of them are in floating, so obviously you have a higher interest cost outgo now. Again, on the U.S., how many products do you see launching this year? You know, give it whatever is happening on the, on the regulation of the various sites. I think it will probably launch somewhere in the range of 12 to 15 products this year in the U.S., maybe slightly more, depending upon approvals and so forth. Probably in the 12-15 range for new product launches in the U.S. Also I think to add to what Brendan is saying, there are, we still have, you know, Monroe will re-commercialize, right? Hopefully in the second half of this year. We also have some site transfers that we're doing for some of the building products, right? Which should kick in the second half. I think, we have a reasonable runway to the U.S. pipeline for the year. Okay. Thanks. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Utkarsh Gandhi for closing comments. Yeah, thanks. We'll just read the disclaimer before we end the call. The document and the results discussion has been prepared by Glenmark Pharmaceuticals Limited, the information, statements and analysis made in the documents describing the company or its affiliates, objectives, projections and estimates are forward-looking statements. These statements are based on current expectations, forecasts and assumptions that are subject to risk and uncertainties, which could cause actual outcomes to differ and results to differ materially from these statements, depending upon economic conditions, government policies and other incidental factors. No representation or warranty, either expressed or implied, is provided in relation to these documents. The documents should not be regarded by recipients as a substitute for the exercise of their own judgment. The company undertakes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. With this, we can end today's call. We thank you for joining us today. Thank you. Ladies and gentlemen, on behalf of Glenmark Pharmaceuticals Limited, this concludes this conference call. Thank you for joining us. You may now disconnect your lines. Thank you.