Ladies and gentlemen, good day. Welcome to the Indoco Remedies Limited Q4 FY 2023 earnings conference call hosted by JM Financial. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions, and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in a listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please email 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. Cinderella Carvalho from JM Financial. Thank you. Over to you, ma'am. Thanks, Nico. Good afternoon, everyone. I'm Cinderella Carvalho. On behalf of JM Financial, welcome you all on the Q4 FY 2023 earnings conference call of Indoco Remedies. At the outset, I thank the management of Indoco Remedies for giving us this opportunity to host this call. I'm looking forward to have an insightful interaction on the earnings with the management. Today from the management team we have with us Ms. Aditi Panandikar, Managing Director; Mr. Sundeep Bambolkar, Joint Managing Director; Mr. Pramod Ghorpade, Chief Financial Officer. I now hand over the floor to the management for the opening remarks. Over to you, Ms. Aditi. Thank you, Cinderella. Thank you all of you for joining us this afternoon. The year 2020-2023 has been an eventful year for us at Indoco. Across businesses and geographies at Indoco, several new initiatives are underway to make the company future-ready. In the domestic space, several positives, including a spectacular new launch performance and a stellar growth by Cyclopam, our key brand, were unable to overcome the high base effect of a few category COVID product sales of last year. Consequently, we ended the year on a flat note. New introductions have generated sales in excess of INR 30 crore this year and now contribute close to 2.6% of our India sales. Dapsone, Noxa, and Cital, each at INR 10 crore, INR 9 crore, and INR 8 crore, have been featured in the top 20 new launches this year. The newest launch, MIDAX, is the first-time-in-India launch of an anticoagulant coma product and has already clocked INR 1 crore in four days of launch. Almost all top 20 brands for the company are showing robust double-digit prescription growth. This augurs well for future sales. Two of our brands feature amongst the top 300 brands each year. Cyclopam has jumped 27 ranks this year in the list. We now have three brands over INR 100 crore and another four between INR 50 crore-INR 100 crore. The focus at Indoco is to make big brands bigger while we succeed with our new launches. While the company is ranked 27th or 28th in retail audits for the 2021 season, our rank in prescription audits is 20th. There is therefore an urgent need to get more out of our prescriptions, especially for those products which have an OPEX element in their sales. Accordingly, this year we have launched a direct-to-consumer division primarily focusing on a few dental products. Digital marketing on social media has also begun for these products. These initiatives will allow us to create better product availability and to keep the patients better informed of the therapeutic choices they have. Coming to international business. As some of you are already aware, a warning letter on plant one has been lifted. The EIR for the plant was received and the inspection is classified as EIR. Plant one Part C is now available for supply of products to U.S. We expect quick approval of products already filed from this site and will also now have an opportunity to file more products from here for the U.S. market. In Europe this year, key highlights include garnering a 50% market share for Lacosamide tablets and a 20% market share for Lacosamide injections, both of which were first generics in the market. In Germany, our Allopurinol has 70% market share thanks to our second year in a row grant of AOK status. Across the company, several initiatives where automation is being looked at to accelerate performance are being considered. Our field sales officers in India have been given iPads for detailing to doctors. This is expected to improve both effectiveness and efficiency with the doctor chamber. Pan-India, our SAP S/4HANA, DMS, the document management system, and TrackWise are some of the successful implementations resulting in better systems and enhanced effectiveness and speed. Many such other interventions, especially in manufacturing operations, are also on the anvil. Beyond business. Indoco recently successfully completed the SMETA or Sedex Members Ethical Trade Audit. The Sedex Members Ethical Trade Audit methodology focuses on four pillars: labor standards, health and safety, environmental performance, and business ethics. The successful SMETA four-pillar audit at Indoco Goa Plant One showcases the company's unwavering commitment to responsible manufacturing practices. Indoco's dedication to labor standards, health and safety, and environmental performance in the district has earned it recognition as a socially responsible organization. Earlier this year, we entered into a share purchase and shareholders agreement along with the power purchase agreement to acquire 26% stake each in Kanakal Wind Energy Private Limited and Jalansar Wind Energy Private Limited for setting up solar power plants at Satpur, Nashik district in Maharashtra. This is in compliance with the regulatory requirements to being a captive user under the Electricity Act, 2003. Protecting our environment is of utmost importance to us. It is our constant endeavor to conserve and promote green energy. This arrangement will help us save electricity costs on a recurring basis at our R&D center at Navi Mumbai as well as at API plant at Vadodara. The company's core corporate responsibility is to practice its corporate values through a commitment to grow in a socially and environmentally responsible way while meeting the interests of its stakeholders. We are exploring many such other energy-saving opportunities at our other sites as well. That is all from me. I now hand over the call to Mr. Sundeep Bambolkar, Joint MD, to take you through the financials of quarter four and full year. Thank you, Aditi. Good afternoon, all the participants. Hope you all are doing fine. Let me first begin with the business highlights. Net revenues of the company for the fourth quarter grew by 6.9% at INR 428 crores compared to INR 420 crores. For the year ending March 2023, revenues grew by 9% at INR 1,638 crores as against INR 1,502 crores. EBITDA to net sales for the quarter is 15% at INR 64.2 crores compared to 20.1% at INR 80 crores. EBITDA for the year is at 17.4% at INR 284.9 crores compared to 21.8% at INR 327 crores. The year 2023, 2024 witnessed business activities swinging back into action very much similar to pre-COVID times, wherein business travel, marketing expenses, business promotion, et cetera, have increased considerably as compared to previous year. Profit after tax from net sales for the quarter is 6.9% at INR 29.7 crores compared to 8.9% at INR 35.6 crores. For the year, PAT is 8.7% at INR 142.8 crores compared to 9.9% at INR 149.2 crores. EPS is INR 2.75 for the quarter compared to INR 4.38, and for the year, EPS stands at INR 15.34 compared to INR 16.77. Our solid dosage facility at Goa, that is Plant One, has received the Establishment Inspection Report with voluntary action initiated letters from the U.S. FDA. We have also forayed into digital marketing space for our domestic business with focus on direct branded portfolio alongside traditional and ethical marketing strategies. New product launches in domestic market, Ninaf cream in dermatology and Ladyboon in hormonal segment, have provided substantial growth in domestic revenue generation. Onto the Indian pharma industry. Indian pharma market is valued at INR 44,138 crores and has registered a growth of 11% during the fourth quarter of FY 2022-2023 against similar fourth quarter of last year. During this quarter, Indoco has registered sales of INR 299 crores with a growth of 13.6%. In the IPM, Indoco ranks at 27th position in Q4 FY 2023 with a market share of 0.68%. The source is AIOCD AWACS for April to March 2023. Domestic formulation business. Revenues from domestic formulation business for the quarter did grow by 4.3% at INR 184.5 crores compared to INR 182.9 crores. Major therapeutic segments, namely urology, dermatology, and gastrointestinals, performed well during the quarter as compared to the previous corresponding quarter of last financial year. For the year, revenues did grow by 0.8% at INR 796.7 crores against INR 803.1 crores. Onto the international formulation front. Revenues from international formulation business witnessed a growth of 14.1% at INR 216 crores compared to INR 189.5 crores. For the year, revenues grew by 21.5% at INR 753.7 crores as against INR 620.5 crores. Revenues from reg markets for the quarter grew by 5.3% at INR 163.4 crores against INR 155.2 crores. For the year, revenues grew by 21.2% at INR 610.5 crores against INR 503.6 crores. Revenues from U.S. business for the quarter grew by 2.6% at INR 71.3 crores as against INR 69.6 crores. For the year, revenues grew by 25% at INR 265.9 crores as against INR 212.7 crores. In Europe, revenues for the quarter grew by 3% at INR 82.1 crores against INR 79.7 crores for the same quarter last year. For the year, revenues grew by 17.5% at INR 320.5 crores as against INR 272.8 crores. South Africa, Australia, New Zealand for the quarter grew by 70% at INR 10 crores against INR 5.9 crores. For the year, the revenues grew by 33.6% at INR 24 crore against INR 18 crore. The emerging markets for the quarter grew by 53.6% at INR 52.8 crores against INR 34.3 crores. For the year, the revenues grew by 22.5% at INR 143 crore against INR 117 crore. The API business for the quarter grew by 74.3% at INR 22.8 crore against INR 13.1 crore. For the year, the revenues grew by 11.5% at INR 71 crore against INR 63 crore. Revenues from NSI, CRO and Indoco Analytical Solutions for the quarter recorded a sale of INR four and a half crore against INR 4.8 crore. For the year, INR 17 crore against INR 15.7 crore. That's all about the business highlights for the fourth quarter and the annual highlights. I now request questions from all the participants. Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. In order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one or two questions per participant. Should you have a follow-up question, we would request you to rejoin the queue. Thank you. Our first question is on the line of Mitesh Shah from Nirmal Bang Securities. Please go ahead. Thanks for taking my question. My question is regarding domestic market. First of the three growth excluding the COVID quarter and the year end. The second question, I just take all the questions together. As you guys also we've missed our guidance of INR 280 crore-INR 285 crore. That's what is the reason for this and what will be the expectations. Also on the margin front, the effect will be somewhat bit high. Any explain for that as well? I'll just take the first question. We'll go one by one. I think your question was about the COVID impact. If you recall from my earlier calls, I had explained it correctly, I think, that Hiten and Paracetamol together really impacted to the extent of around INR 40 crore. If you take those two products alone, the impact is close to INR 45 crore on an annual basis. This has been mostly recovered by around INR 15 crore coming incrementally from the new launches this year. Another INR 14 crore coming from Cyclopam, and the rest of the INR 10 crore has come from other brands. It was the negative impact of the COVID product which did not allow us to grow. Coming to your second question, I think on U.S. markets and guidance, I think Mr. Sundeep Bambolkar would like to answer. Yeah. Coming to the U.S. market, you are right, we have guided for between INR 280 and INR 285 crores. However, you are aware that plant one had a warning letter which has been lifted subsequently. Now we will be in a position to ship existing products from plant three into plant one and ship it to U.S. Capacity will no longer be a constraint and, you know, shipments will be very, very regular and hence, there won't be any disruptions this year. It's about the expense, the expense ratio. Yeah, other expenditures for the year, you know. Quarter. Yeah, yeah. The heads which are, you know, extraordinarily high are advertising and sales promotion, repairs, traveling and legal and professional. Of these, legal and professional and traveling is small, but legal and professional and repairs is definitely not a one-time thing and we not expect such high amounts going forward. Regarding advertising and sales promotion, it is, sort of, you know, some of it's especially related to India business is in sync with growth of sales. Last year we had a very, very good, you know, sales in India business and that's why the advertising and sales promotion this year is somehow high. Coming year completed, India business should perform very well, so I don't expect this spend in the next years to be much higher. Does that answer your question? Thanks. Thanks so much. I have a few more. I'll come back on to you. Thank you. Our next question is from the line of Rashmi Shetty from Dolat Capital. Please go ahead. Yeah, thanks for the opportunity. Ma'am, could you give us the confirm, you know, what was your, how much was your legal and professional one-time charges included in the other expenses? Of course, this advertising and marketing sales related to domestic business, which is included in the application, which I believe would be recurring in nature every quarter, right? If you can give the confirm, it will be helpful for us, you know, to model in the future. Yeah, it's me Pramod here. Yeah. As madam explained, the legal and professional is close to about INR 5 crore. Of that, almost about 90%-95% is a one-time cost. It is not recurring in nature as such. Secondly about the sales promotion activities. Out of the sales promotion activities, certain portion is basically on the strategic initiatives in terms of, you know, going for a different, you know, kind of models. Again, that component becomes a, you know, one kind of one-time cost, while others are in, I would say, investment for the future, you know, revenue. We have, as you know, as accounting standard, we have to take the cost in this particular period, while revenues will follow in following quarters. Okay. Could you give amount for this investment related to the domestic business? In terms of value, of course, we don't bifurcate that whether it is a one time or a recurring. A large component of this, close to about, as I said, in terms of percentage is, you know, investment for the future business. Okay. Which I think 20%-25% of the whole. Understood. Again, you know, on the U.S. business, has it booked any profit share from Benzelamine and Combigan in this quarter? Yes. What was that amount and, where was it sitting? It's a part of our total sales already. Rashmi, as such, it is not separately. It is inside the US sales only. Total US. Okay. What was that amount? Around INR 16 crores. INR 16 crores this quarter. Okay. How do you see EBITDA margins in FY 2024 and 2025, given that, you know, our advertising sales commission costs have gone up and we have seen that R&D has also picked up, during the quarter. If you can give some guidelines on operating margin side. Yeah. Rashmi, we are confident of doing between 18%-19% EBITDA. Okay. For FY 2024. Yeah. Okay. One last question, you know, on India business. You know, while we see the peers secondary sales performance, we are seeing that this quarter, you know, anti-infective and respiratory has really done well. When I see Zydus Cadila's performance, you know, I understand that there was a high base effect sitting, but still, you know, we have completely shown negative growth. How should we look this forward in FY 2024 and 2025? Is it that, you know, we are losing market share in anti-infective and respiratory because of the competition or this is something was, you know, purely COVID related? Yeah. Rashmi, thank you for that question. It helps me explain a lot. First and foremost, for the market, what is anti-infective, and this is a key molecule for the anti-infective driving the market is Amoxicillin. For us, our anti-infectives are primarily driven by Oxipod, which is cefpodoxime and Azithromycin, which is ZTM. The market that shows an extraordinary high increase in anti-infective sales is from a very different molecule than ours. Secondly, when it comes to respiratory, again, most of the respiratory products that are doing very well are in the anti-asthma and inhalant category. Our respiratory really within Indoco is driven by Karvol Plus or preparations of and cold as a red flag. If you look at us within this broader market, we actually get an extraordinary impact of the contribution of Karvol Plus to our segment, because Karvol is 90% of the entire market numbers. Okay? It is not comparable. I want to bring your attention to another sort of thing. If you actually look at our performance as indicated by AWACS or IQVIA, you will see that we are doing double-digit growth in India business for the quarter and for that matter for the year also. You might wonder why the difference between our secondary performance, which is indicated by IQVIA and AWACS and our internal stream. The answer to that is pretty clear in the last quarter. You know, typically when you have a lot of field force who are not going to achieve targets, you have a lot of primary sales which get postponed. At a secondary level, there is no impact of this. When you look at our performance as indicated by IQVIA for the month of March, we were the fastest growing company in the top 30. For the quarter also we are in double-digit growth, which simply shows a kind of disconnect between primaries and secondaries. To me this is not uncommon in the abuse category. When season comes, you see a lot of primary beyond what the real secondary is. When the season drops, you see a drop in primary beyond the actual consumption. These kind of things are there, but they get ironed out generally over a couple of quarters. Does that answer your question? Okay, ma'am. Finally, guidance you gave for India this year in 2025. FY 2024, 2025, finally I think is free of all COVID issues. I hope it. I'm pretty sure now. Looking at the kind of, you know, looking at all the, you know, fundamentally all the things that we have done in this pretext to make the business solid, I'm pretty confident of minimum of 15% growth. Okay. Okay, ma'am. Thank you. Welcome, ma'am. Thank you. Before we take the next question, a reminder to all participants that you may press star and one to ask a question. Our next question is from the line of Sudarshan Padmanabhan from JM Financial PMS. Please go ahead. Yeah. Thank you for taking my question. My first question is on the US business. If I, you know, remove the INR 16 crores of, you know, sharing out and primarily looking at it on a comparable basis on a quarter-on-quarter basis, we have seen the US business eroding consistently. I mean, if I'm just looking at the trend. With the mix that I've seen here, I mean, where do you see this part of the business picking up? If you can give some color with respect to, you know, what the kind of launches or the action that we can see. From the current year, what is the kind of growth that one can expect? In U.S., we have an extremely healthy order book. That's the first point I should tell you. We are extremely confident of a growth between 25%-30% this year. That is the second point. Coming to the products, Allopurinol is our product in U.S., which is doing extremely well. Currently, we should easily be doing INR 60 crores with that one single product. The bottleneck was in supply because it was being supplied from Plant Three in Goa. That Plant One is free of the warning letter, it will be supplied from Plant One also. With the result that the market will be flooded with supplies from Indoco and more and more orders will come in. There's no problem of supply because there's no bottleneck now in manufacturing capacity. Coming to our injectables and ophthalmics, that is from sterile plant, which is going on in full swing. Our future concentration is on complex injectables, a portion of ophthalmics mainly, and niche solids. Sure. One of the key question we asked quarter, you know, when we talk about products, I mean, I was under the impression that this entire amount, you know, that basically the difference between, you know, whether it's the euro, or whether it's the GBP and the rupee dollar, whatever the depreciation happened between the second quarter and the third quarter would have been completely provided. This quarter again, we are seeing, you know, some kind of additional provision in the products. When I'm looking at these products, there has not been a real change. What is this, you know, driving again the product loss then? I mean, is it the end of the product loss or do you again at this point? Forex loss happens because of, you know, MTM, mark to market. That is conditions beyond our control. This quarter, the MTM loss has been only INR 50 lakhs. Last quarter, it was a heavy loss on account of MTM, but not this quarter. As regards the hedging of currency is concerned, we are well placed. For example, euro is right now market is ruling around EUR 89.5, and we have hedged at EUR 93, EUR 93.5. Pound, we have hedged at GBP 105-GBP 106, and the market is ruling around GBP 102. Hedging-wise, there's no problem at all. This is MTM, mark to market, which is totally beyond our control. Still in this quarter the loss has been very limited. Sure. One final question before I come back to you. I mean, you know, when I'm looking at the absolute cost between, you know, 1 quarter, the 3rd quarter and the 4th quarter, there is about, you know, INR 25 crores, you know, additional depreciation being accrued in this quarter. I would assume that partially, you know, as you explained this, partially it is mark down up. I mean, the investments you are doing, number one, in terms of itself, I mean, even if I assume that out of this INR 25 crores, you know, half of it, you know, on a fully year basis it comes about INR 40 odd crores. To absorb this INR 40 odd crores, you might have to do something around INR 50 crores-INR 60 crores kind of, you know what I mean, you know, given our gross margins is 40%-70%. Are we looking, number one, to absorb this cost say in the next couple of, you know, quarters? I'm just trying to understand, you know, how do you see the margin trajectory absorbing this additional cost over the next few quarters? Yeah. You are rightly said, there are two components. One is about the recurring and second is about the one time. If you remove, one time kind of a mix cost, then approximately about, you know, INR 5 crores-INR 10 crores, that is what the additional cost which we feel that, you know, will be recurring on a quarter-on-quarter basis. While there will be incremental sales as we discussed in terms of domestic as well as to some extent, certain portion of expenses related to export, will be recovered from the incremental sales in export as well. We are very much confident to recover this extra or incremental cost which is going to be, on a recurring basis. Sure. I have no question to ask. Thank you. Thank you. The next question is from the line of Nikhil from SIMPL. Please go ahead. Yeah. Hi. good evening. I hope I'm audible. Yes. Yeah. Go ahead. My question is on domestic market. Now, in various discussion, ma'am, you've mentioned that on the legacy portfolio and the newer portfolio that we are launching. Now, if we have to understand the products which we have launched in last three years, what percentage of our current business is coming from those, and what is the kind of market share we've achieved in those products? The products we launched in last three years. Yeah, yeah. As I said earlier, the three last two years I can give you, because that is how we classify new products. A total of 2.5%- 2.6% of our sales are now coming from the products we have launched in the last two years. In these, happy to share that Noxa, which is Ozenoxacin cream, we continue to be market leaders despite being the fifth product to be launched in that market. Drotin, also we are fast gaining market share. The third product, Vicitral, which is a super itraconazole, we are very confident with this new launch of Minax, which is an azole allylamine antifungal, which works very well with an itraconazole. We are hoping and very sure that both, Vicitral and Minax will continue to do well from here on. New products have definitely added value and will continue to do so. Our key brands continue to grow at high numbers. Miclocom grew 70% in primary and around 50% in prescriptions. Febrex Plus was impacted by last year’s COVID base but has growth potential. Oxipod (terpin codeine antitussive) has recovered from the lull when Azithromycin performed well. In this year Oxipod has done exceedingly well. I am confident it will continue to do well. Other than that, Cital and Cital UTI, both products to be used in summer, one for urinary tract infection and the other for, you know, as a disodium hydrogen citrate for dehydration and in summer months. Both these products are doing very well for the company. In fact, if you look at the top 20, and of course I cannot forget the dental products, both the toothpaste Sensodent-K, Glensil Lens mouthwash, all these products are doing very well. Cheerogent is also doing well. Apart from one or two brands, that is ATM, Karvol Plus and Febrex Plus, all three sort of recovering from the COVID base. These are the three products not doing well. Otherwise, all our key brands have done well. I feel very confident going ahead. In addition to that, if you have heard me speak of the direct to consumer, we are expecting our toothpaste to begin to do better than they are doing currently, because we will get an impact coming from, you know, from the kind of availability that we are getting for our product. Hope that answered your question. Yeah. Thanks for this elaborate answer. What I'm trying to understand is that in last three years, if one follows your calls, you've spent a lot of energy and investment in growing the domestic business. Brought about organizational changes also. If we have to compare our performance of our key brands in the last three years, although there is COVID, let's only focus on one year versus what it was in 19-20. Have you seen a sea change in the terms of the growth of this business? If you can just share some numbers like how is the prescription grown for our top brands post we bringing those organizational changes, sales changes for these brands. Yeah. The toothpastes have done very well compared to pre-COVID times. But on some other products, yes, the COVID levels are yet pre-COVID levels are yet to be completely achieved. I'm very confident. Basically the kind of... I think you are back of your mind is the flat growth that we have given this year. As I said, 45 CR almost was impact of the COVID product. Apart from that, certain changes also are being done. If you are aware, we sort of brought two of our specialty divisions together, CMD and Focus, into a new division called Synergy. Consequence of that, there has been a letting go of certain products, like a tail of, you know, brands. We have been shedding products also as we have gone ahead. What is important is that fundamentally we focus on products which have a future and which can be grown. Apart from one or two brands, I have no concern for products to go back to their pre-COVID levels. In fact, even a product like Karvol Plus, about which we have been, you know, discussing for some time now. The setback it has given during COVID. I actually went back and did a time of an analysis of how it performed pre-COVID. You'll be surprised that in the year 2018-2019, it was giving us 2% contribution in Q4 and the sale was INR 2.6 crore. This year, post-COVID, it is giving us 3% contribution with a sale of INR 5.67 crore. All said and done, even Karvol Plus has doubled. It has just come down from its 10X levels that it sold during COVID. I hope you, this answers your question. Yeah. Specifically, there was some amount of attrition also at the MR level between some specific geographies for which we were working. How are things there? Are we seeing some improvement or some stabilization? Some improvement is definitely there. With certain divisions and some we continue to have attrition and we are focusing on efforts to bring that down, including impact of vacancy to come all our businesses. I feel confident this year with all our initiatives, we will be able to nullify that impact. Okay. Last question on the U.S. Now if we go through our calls for last two years, our guidance and actual reporting there always is a disappointment which comes up. When would you say that most of the things are now setting place even considering now the U.S. FDA things and the inspections and everything. Where do you believe that now probably we are more set in terms of the infrastructure and ability to meet the demand? How confident you feel that now, probably what we see, what the potential of the products are, we would be able to achieve it? Well, I don't know why you are disappointed. INR 285 crore is what we had guided, and we did INR 268.5. We've missed our guiding. We have shown a growth. We have registered a growth of 25% in the U.S. business, which is one of our most profitable businesses. That is the first point. Second point is, we have done a number of launches in U.S. which are profitable for the organization. We have ophthalmic suspensions, we have complex injectables, we have niche products in the U.S., and this is not the end of it. If you want to show the jump, you know, in 2019-2020, we did INR 66.5 crore. In 2020-2021 we did INR 158 crore. In 2021-2022 we did INR 212 crore. In 2022-2023 we have done INR 266 crore. Aactually, you know, maybe if I'm to synthesize with you, again, guidance, I guess we have to be little bit cautious now while giving guidances because U.S. is that kind of market. If you are aware of what is happening with many of our peers, I think at Indoco, one thing you can rest upon, we are careful with our product submissions and would like to play in this market to make money. Some of our decisions to postpone or not launch products which might result in some kind of a deviation from expected numbers would be guided by some definite business fundamentals. Okay? ... Coming back to capacity, as I said, up till now we had only one plant giving us solid orals that was Plant Three, which is also a small capacity. Plant One from where we were manufacturing three products, while we were supplying products, we were not able to transfer any additional products there, and neither were we getting any new approvals for that site. Plant One is today our largest site for solid orals, and that will all now become available for U.S. I don't commit that in one quarter you will see any kind of big change because it will involve filing approvals, company, et cetera. I'm very confident by end of two quarters you will see a big upside coming from supply happening out of Plant One. Sure, I'll come back in the queue. Thanks for the elaborate answer. Thank you. Our next question is from the line of Vishal Manchanda from Systematix. Please go ahead. Good evening. Thanks for the opportunity. Regarding the Allopurinol overnment tender, can you guide when it is up for renewal? We have just won it for the second time. For the last two years we supplied, that was the first time we won the tender. Now, from January we have won it for the second time. For the entire 2023 and entire 2024, Indoco will be the supplier. It will be up for renewal in January 2025. Okay. Would it be similar quantities as the previous time or this time around there are larger quantities and the same price? Larger. The quantities are larger. Last time we averaged INR 65 crores per year. This time we should average between INR 75 crores-INR 80 crores per year. Okay. Second one on, how many approvals are we expecting in the U.S. during the year? U.S. approvals, about three to four in the current year. How many of these would be ophthalmic and injectable? Most of them are ophthalmic. Okay. Would any of these be prescription? Yes, at least one. Okay. Can you talk about the market size for that compression product? Not at this stage, because as the launch comes closer, then we could talk about it in the second quarter results. Could you say, kind of, how limited competition market is that? Whether it's a three-player, two-player market. Yeah, we'll give you all the details, during the second quarter meeting. The emerging markets performance was very strong during the quarter. In fact, the new date confirmation, or there was an exception. Yeah. Likely it's an average of during the first quarter. That's from second quarter onwards, you'll see consistent numbers. Q2 and Q3 were a bit of a lull for emerging this year. There's been a lot of catching up for some products. I guess that is why Satish said that Q4 may not be on this high. Next thing it will be better than earlier years. Abhilash, can you talk about the average price increase that you have taken on a Indian branded portfolio during the year? Around 5%-6%. Okay. Are we hoping to get the same price increase this year as well? Yeah, yeah. Okay. Would this come down to third quarter or you would have already taken that for the year? We have different products coming up for pricing different times in the year. Each product takes a different time cycle on an annual basis. It's very difficult. That is how it works through 5%-6% at any given time actually. This is not average for the 12 months. This will only be probably only for six or nine months, that 5%-6% price increase. No, no. I mean, at any given time you'll have one or the other product taking a price increase. We don't take at one time across all our products. Otherwise, you would have seen the 10%, right? Okay. Understood. Understood. Yeah. Could you clarify, specifically on the U.S. profit share number, is that entirely attributable to Bendamustine? No, not entirely to Bendamustine. In fact, the entire quarter, although we did say around 16, out of that two can be two of those are for Europe, and it is 14 coming from U.S. If I'm not mistaken, it is benefit of at least two, three products. Yes, yes. Okay. Would this be 16 quarterly numbers or would this be a recurring annual number, so INR 16 crore-INR 18 crore number from the US? If I remember correctly, in this call, I said that we will do close to 10- 12 on a quarter basis. CD, I feel confident to maintain that because for quite a lot of products we are now keeping IP for ourselves. In that case, we may not license out initially, meaning, we may not collect our GRC or whatever, and profits may come directly in sales. We are not actually looking at increasing the amounts coming from profit share from future molecules. Okay. Okay. Just one final one on Bendake Combigan. Our partners, Teva has lost market share this quarter. Can you give some color on that? Yeah. We're more ready to follow what you're talking about. Combigan? Yes, Combigan. Yes. Yeah. We had some challenges to resolve, the resolution will be done by October. October the supply should begin. Thank you. Mr. Vishal, may we request that you return to the question queue for follow-up questions, as there are several participants waiting for their turn. Thank you. Our next question is from the line of Aditya Singhania from InCred Asset Management. Please go ahead. Thanks for the opportunity. I think that average price increase of 5%- 6% in India and next forward our India business growth is actually 5%- 6%. Zero volume growth? There has been a volume growth of 1%, Aditya, if you actually want to know. That is what we are targeting for? We are satisfied? I'm sorry. I'm sorry? That is what we are targeting for, 1% volume growth? That is where we should be? No, This is for the year run by island. Yeah, I mean, I my question is, what went wrong or was this the number we are targeting? We didn't target 1% growth. If you remember my calls clearly, I was pretty positive at least in the second half of the year to be able to post a higher single-digit growth. If you heard my answer in some of the earlier calls, typically, with the March performance being what it was, it has caught up with us. If you look at our numbers as per AWACS shows us growing on a year-over-year basis, at least at 20.7%. For the quarter quarter-over-quarter, we are -3%, but the market is -10%. you know, but the market is also -4%. We are going in tandem with what is happening in the market at this time, Aditya. We were not targeting a 1% growth, certainly not. This year as I have guided, we will do close to 15%. That is our attempt. With 5%, price rise and maybe 1% or 2% coming from new products, we will have to do the rest of it, in terms of volumes only. I can't say any other way, right? How do we get there? What should we do different this year compared to what we did last year? You will see it when it happens. Isn't it? A lot of things are happening across the organization. I'm very confident, especially, in some of the segments where we have key products that we will be able to do exceedingly well. Ma'am, MR is missing their incentives and therefore not selling in March so that they can sell it in April. I understand those dynamics. That is something that can be recurring in nature, because if your targets are always 15% and you are always going to achieve 8%, 10%, MRs are going to miss their incentives and they'll keep postponing their sales. Somewhere in the organization, the incentives of the MR versus the reality of the market is probably not gelling or not telling the people well. That also links to another question which another participant asked on the attrition. If the MR is going to miss incentives, you will have attrition on your doorstep, right? Which itself is a cancer. As, as a manager, how do you deal with this conundrum? The first key is of course to see that the MR perform. It is not a year-on-year phenomena that March happens and people don't achieve and they leave. Last year we had some very good performances coming in, of course buoyed with the, with the COVID season. Sometimes alternatively, this is seen, but it is being corrected through some very fundamentally corrective measures that are being taken in the organization. If you look at our acute division, if you look at the two retail division, we have several key products which, you know, are have been established very well with very strong prescription growth. If you see the prescription fundamentals, there is no reasons why primary should not come. Yes, attrition in the field, you understand the dynamics as what it be. When a man goes away, the local shopkeeper probably does not feel very confident placing the next order. We are working out various ways in which we can use our managers to cover these areas so that that kind of dip is corrected. Operationally, a lot of corrections being brought in every day. I would prefer to speak about them these only after the results start coming in. This is first quarter or second quarter, ma'am? If I have to tell you that this year's first quarter was bad, tomorrow first quarter will be good. If you basis on whether your decision grows or actual deliverables, you know. Let us stick to fundamentals. I am very confident new products will continue to do very well. Key brands will grow. Attrition has come much under control compared to earlier. Several initiatives are being done through regional, you know, learning and OT initiatives to try and bring this under control. These things cannot be tried to say that it'll happen in one quarter, two quarters. Very clearly there is a leverage for us because even when our division achieves 95% target, we see that around 60% people would have done their target. There is a lot of, you know, number of people who have to get into sales excellence and give us deliverables. There are a lot of geographies which are not coming up to our expectations. It is not possible for the organization to keep, you know. It is very important in the India business to get a decent return of a man before you have to put in more people. We are balancing these things, and I feel very confident, like, many of the initiatives we are taking will give us returns in the coming years. Everything that your India business is possibly people would be in line with peers of your size, right? In line or better or lower? I mean, I think in line, given our acute portfolio. In line with the acute portfolio that you guys- Yes. That brings me to use of this, if everything Ma'am's India business is in line with peers, then at the EBITDA level, the contribution of its business is close to nothing, right? How can you say that your business is profitable? What about the year of INR 57 million? Because everything that we consolidated and this directly impact business apart from that, there's nothing much left there to show for. EBITDA depend on number of, you know, parameters. Which are? NBT shooting up is one of the parameters where EBITDA can go down for any business. Right. Right. Have you launched the Brinzox the bigger SKU? I understand from the previous call you said that in Brinzox the smaller SKU was ready, but the larger SKU you are yet to launch. Has that been launched in this quarter? Yes, yes. Just launched. Just launched as in in March or in May? Yeah, this quarter, I mean, the quarter which is going to April. It was launched sometime in April. Right. In that context, I'm sorry, before I get to that. Comvigen you said there were certain issues and you're expecting to resolve by October. What were the issues? It's technical in nature, so. Manufacturing one. Yeah, yeah. Manufacturing basics basically. Related to technical issue, yeah. Okay, technicals. That also brings a slight question on the quality of the manufacturing and technical expertise we are owning, right? I mean, we have seen through last five to six years, we have gone through two warning letters, resolved them. We've had quite a bit of a jump in R&D expenditure. Yet we are assessing some of our largest products, the Brinzol, Rajah SKU, Combigan, opportunity, facing execution hiccups. Where do you feel the gap is? Is it manpower? Is it R&D expertise? Is it the quality of manpower at the manufacturing point? Something is clearly not aligning, right? I mean, some of our largest opportunities, there are hiccups, which seem to, at least as an outsider, trying to tell me that there is something which is not functioning properly. Have you been able to identify that and what corrective actions are we taking? Aditya, let me answer that one by one, because you pose lots of questions. I'm a little bit amused to see the kind of deductions you have made because of various issues which are nothing to do with each other. The warning letters at the plant have to do with the quality management system and the compliance and systems at plant and have nothing to do with the product. I think in this quarter you would appreciate us for our warning letter being lifted. Instead, you want to remind us about the lapses in our warning letter 5 years and which nobody is in. Let me come back straight to the manufacturing related problems on Combigan that you may be talking about. You have to understand that on a call like this, we are not able to speak with complete clarity on products which are actually owned by Teva, whatever it may be. Also for these products, there are quality teams of Teva and regulatory teams of Teva sitting on our shoulders and heads enforcing certain things for us to do, which may not entirely be in our hands. All said and done, I think now that we have enough experience and exposure of sterile products, both ophthalmic, difficult to do ophthalmic, difficult to do injectables. It is not a child's play, and it is a very difficult manufacturing. Yes, where are we? Have we learned? Safe to assure you that we have learned more than any of our peers on what can go wrong, especially matters beyond our control in the regulatory space. If you take ophthalmic products alone, and this I speak of generally and not specifically for any product. From the link retention in the container closure system that FDA enforced a change on and made us do batches again and file everything all over again. Each of those products were again owned by Teva and not by us, so we had to go as per their guidances. I think it is a totally different kind of ballgame than vanilla manufacturing. We've had several such issues, but I feel we have still managed to spurge through most of them very effectively. Coming to what is not going right or what is going wrong, typically these products are by very nature, initially to be taken in small batch sizes, and batch sizes can only be enhanced later as the volume picks up. Therefore, you know, you generally eat up capacity. That has meant that we've not always been able to supply products on a timely manner, you know, to all geographies, giving U.S. preference over all others. Many of these things are now being streamlined and aligned. Coming to the people managing our sites, you'll be happy to know that today at Zydus, about five years ago, we had elevated the plant head position to AVP from GM. This year we have now got one head sterile and one head solid orals and liquid orals, etcetera. As and when expertise or skill sets are needed, we have actually done that. As a company which is very conscious about the backlashes of FDA though, we have been extremely careful about what is being allowed to be manufactured in what fashion and not. The way I look at it is these four, five years have been a huge learning for us as a company. Going forward from here on, I'm very confident that we will be able to perform and post a much better performance. You were asking in one of my earlier calls that if I got XYZ number of observations on solid orals, then how do I expect to do well on sterile? After that, subsequent to that, I think you know that I got less than half those observations in sterile. I would be very happy if, you know, let's be very frank and look at things the way they are and not unless you're joining the dots which don't need to be done. Fair enough, ma'am. As an outsider, these are the questions I had. Obviously the responses are elaborate. Ma'am, have you received the classification for the sterile plant authorization where we got half of those observations? No, no. Based on what we got for solid orals, we expect it to be by sometime by June. By June. Right. One last question, ma'am. What is the CapEx plan for FY 24 and 25? Aditya, our CapEx plan is in line with, you know, our last guidance in terms of overall about INR 120 crore is the CapEx which, you know, we are planning for coming year. Thank you. We move to the next question. Our next question is from the line of Ejaz A. Lathani from Unifi Capital. Please go ahead. Yeah. Hi. Thanks for the opportunity. These are my question in regards to the INR 14 crore profit share. In the last quarter call you had mentioned that Brinzolamide, the visit which is the smaller, is the one where we were expecting profit shares. You have mentioned today that, you know, you have a larger dosage that you're launching now in the first quarter, and you mentioned Comvigen will come in October. Could you please tell me what contributed to the profit share except for Indapamide, the old, dosage? You said there were two, three products. Yeah. We have not given out names of the products. In U.S., we are generally following the first option with any partner with profit share for Indoco. There are four or five products where we have got profit share, and that is the result of that INR 14 crores number which you have seen. Okay. sir, just help me bridge the gap here. Whatever is right now coming in this, in the form of profit shares is the steady-state profit shares you are expecting that comes through FY 2024 as well on a quarterly basis. On top of this, you will build the Indapamide, you know, larger dosage then and Comvigen in 2024. Is my understanding correct? Yes, yes. Okay. When you are launching Indapamide now in this quarter, again, it'll take two quarters for the profit shares to start kicking in and similarly for Combigan. That is correct. Okay. Okay. Sir, you had last quarter you were focusing on modified release cardiac product. Is that launched? No, no, not yet. Okay. You had also, mentioned about, you know, key product launch that got delayed, because of which there was a profit share which was expected in December, which was going to get, you know, attuned to April, you know. Is it on course? Which product? For US market or which one? Yes, sir. You had mentioned for the U.S. market that, you know, there are some key launches with two partners which again got delayed and there were profit share expected in December. Now you had said that because quarter they'll come through. We check our. Yeah, we'll just check that out. Okay. Sir, the guidance of... Sir, again, just one last thing which does not, I'm not able to triangulate, that is, you know, your U.S. revenue X of the profit share, are you saying that there has been a sequential decline because of production not being available? Is that what you've been saying? For the base business. There's no decline. I fail to understand where you are seeing the decline. No, no, sir. I'm asking that the base business, which is X of the profit share, could you just call out what is that base business number for FY 23 and what was the corresponding number for 22? I think you're getting a little confused because there are two elements beyond sales. One is what we call the year income, which is when we license out a product, and the second is what we call profit share. In this quarter in particular, while we got profit share, there were no out-licensed those years because as I mentioned earlier, we are now keeping much of the those years for our own filing. Which is why you are getting confused. Same quarter last year, for instance, we had a very heavy income from those years. It is just that it's lifetime everything that got sold in U.S. for what commercial. Okay? Got it. When you had called out the those year income last quarter, I think it was closer to some INR 6 crore. It's a similar number that was there. Fourth quarter last year, those year income was, over INR 17 crore, which is being right now. Thank you. We move to the next question. Our next question is from the line of Vishal Manchanda from Systematix. Please go ahead. On your Europe business, are we targeting more tenders on new products? Can you elaborate are we looking at more tender wins in Europe? We are going to file the tenders, but the results will come out only in July or August. Okay. Earlier you had guided about some high value markets that you are making in Europe and about oncology, some high potency ingredients which added to your manufacturing setup. Those products are any time due for approval. Once we get approval, the business will start. Approval is expected this year, in FY 24, or it can take longer? Early second quarter in this year. Any sense on the contribution that we should expect from these launches? Now it's too early. We can talk about it in the second quarter. Okay. Thank you. Thank you. That was the last question of the question and answer session. I now hand the conference over to the management for closing comments. Yeah. Thank you all for your numerous questions. It always keeps us on our toes and allows us to elaborate on our strategies and thought process. Thank you very much and thank you once again. Thank you. On behalf of JM Financial, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.