...Ladies and gentlemen, good day and welcome to Indoco Remedies Limited Q4 FY 2024 earnings conference call, hosted by Nirmal Bang Institutional Equities Private Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing the star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Umesh from Nirmal Bang Institutional Equities. Thank you, and over to you, sir. Thank you, Steve. Good afternoon, everyone. On behalf of Nirmal Bang Institutional Equities, I welcome you all to the Q4 FY 2024 earnings conference call of Indoco Remedies. I would like to thank the management of Indoco Remedies for giving us this opportunity to host the call. Today, from the management, we have with us Ms. Aditi Panandikar, Managing Director; Mr. Sundeep V. Bambolkar, Joint MD; and Mr. Pramod Ghorpade, CFO. I now hand over the call to management for their opening remarks, after which we will open up Q&A. Over to the management. Thank you, Mr. Umesh. I am Pramod Ghorpade. Good afternoon, everyone. Thank you all for joining this call today. Let me draw your attention to the fact that on this call, our discussion will include certain forward-looking statements, which are projections or estimates about our future events. These estimates reflect the management's current expectation of the future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied. Indoco does not undertake any obligation to publicly update any forward-looking statement, whether as a result of new confirmation, future events, or otherwise. Thank you very much. I will hand over mic to, Aditi Madam for her opening remarks. Good afternoon, everybody, and thank you for joining us. It is our pleasure to discuss with you the performance of the company this quarter, as well as for the financial year, whole of the financial year 2023-2024. To sum up in a sentence, this has been a year for Indoco of many hits and a few misses, and since the few misses seem to overrule our financial performance, I would like to speak about the various pluses that we've had this year. To start with, in the month of March, we commenced manufacturing in our 100% subsidiary, Warren Remedies Private Limited. Earlier in the month of January this year, the largest brand of the company, Cyclopam, crossed INR 150 crore revenues as per IQVIA. Other two brands of the company, Oxipod and Cital, have each also crossed INR 100 crore marks for the company. In addition to that, given the company's philosophy to increase sales from subchronic segments, this year we have launched a second division for ophthalmology called Vision in a pan-India manner. Launch of Vision will allow us to launch products in the anti-glaucoma therapy in the Indian market. In addition to all this, this year, happy to share that the organization has received the Digital Health Innovator Company of the Year award for the 360-degree promotion of Sensodent- K brand through comprehensive digital strategies at DigiPharma X 2024 event. In addition to digital promotion, we are happy to share that earlier this month, Sensodent- K has also gone live on television channels to establish a broader reach to our end consumers. API division of the organization has registered a year-on-year growth of 79% at INR 126 crore. The organization continues to keep its focus on IT-enabled services, and this year we have executed the HRMS software, SAP SuccessFactors, which will help us improve systems and controls across the organization. And most importantly, and this is very, very new news, as of two hours ago, happy to share that our API kilo lab manufacturing facility and Indoco Analytical Solutions testing lab has successfully cleared the U.S. FDA audit with zero 483s. Thank you. That is all from me. I now hand over to Mr. Sundeep to share financial highlights for the quarter and year. Good afternoon, everyone. Hope you all are doing fine. Let me begin with the business highlights. Net revenues of the company for the fourth quarter, FY 2023-24, grew by 1.7%, at INR 435.1 million, compared to INR 428.0 million, same quarter last year. For the year, revenues grew by 7.6% at INR 17,619 million, as against INR 16,381 million. EBITDA to net sales for the quarter is 13.2%, at INR 574 million, compared to 15% at INR 642 million. EBITDA to net sales for the year is 14.6% at INR 2580 million, compared to 17.4% at INR 2849 million. Profit after tax to net sales for the quarter is 8.6% at INR 376 million, compared to 5.9% at INR 254 million same quarter last year. PAT to net sales for the year is 6.6% at INR 1166 million, compared to 8.6% at INR 1414 million. Earnings per share for the quarter is INR 4.07, compared to INR 2.75. EPS for the year is INR 12.64, compared to INR 15.32. Above numbers are on standalone basis. We have declared results with consolidation, which include results of subsidiaries. Domestic formulation business. Revenues from domestic formulation business for the quarter grew by 3.6% at INR 1,911 million, as compared to INR 1,845 million. Major therapeutic segments, namely dermatology, ophthalmology, vitamins, urology, and cardiac, performed well during the quarter as compared to the same quarter last year. On the international formulation business front, revenues from this business witnessed a degrowth by 1% at INR 2,140 million, compared to INR 2,162 million. Revenues from regulated markets for the quarter are at INR 1,458 million, as against INR 1,634 million. Revenues from U.S. business for the quarter are at INR 675 million, against INR 713 million. Revenues from Europe for the quarter are at INR 765 million, against INR 821 million. Revenues from emerging markets for the quarter grew by 29.1% at INR 682 million, as against INR 528 million. Revenues from API business for the quarter are at INR 217 million, as against INR 228 million. Revenues from AnaCipher CRO and Indoco Analytical Solutions for the quarter grew by 85% at INR 83 million, against INR 45 million. That's all about the business highlights and the financial numbers. I now request all the participants to put forth their questions. Thank you. Thank you very much, sir. 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 handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants are requested to press star and one to ask a question. Thank you. The first question is from the line of Rohan Shukla from Anand Rathi. Please go ahead. Hello, am I audible? Yes. Thank you for giving me this opportunity. So I just had one question regarding FY 2025, about what will be the CapEx plan or the R&D plan that you have? Is there any ballpark figure that you can maybe provide? Your voice was a little blurred. You're talking about CapEx, and which other plan? R&D, like, any particular amount that you have planned, any ballpark figure? Okay. For R&D. Yeah. Yeah, go ahead. R&D, roughly, the company has been investing in the range of 5%-6% of its sales. We shall continue that. Regarding CapEx, including our, you know, various manufacturing sites, maintenance CapEx, as well as any other, repairs and a few additions, we should be able to edge within, about INR 250 crores. Okay. And my second question is about the sustainable EBITDA margins going ahead, in the next few years by FY 2025, are these EBITDA margins going to be at the same level, or is it going to fluctuate? So they have to improve from here, quite honestly. This year was a one-off year for us. If you look at our performance in India business, only two therapeutic categories, anti-infectives and respiratory, pulled us down. And that has been the case in the covered market as well as for IPM. Given that we have such a large contribution coming from those therapies, therapy areas, we have been impacted. But company has taken many strategic initiatives to reduce dependence on pure acute therapy, and I'm confident going forward, we will see more and more contributions coming from subchronic and chronic. ... So, that should help us post better EBITDA. In addition to that, for international business also, there is a master manufacturing efficiency improvement plan which is under execution. We expect by the end of first quarter this year or halfway through the second quarter at least, we will start seeing impact of that. That would also help us to improve margins on our international business. So therefore, going forward, I feel very confident we'll be able to improve our EBITDA. Okay, that answers my question. Thank you. I'll get back in the queue. Thank you. Ladies and gentlemen, who wish to ask a question may press star and one. Participants who wish to ask question, may please press star and one at this time. The next question is from the line of Rashmi Shetty from Dolat Capital. Please go ahead. Yeah, thanks for the opportunity. Just want to know that in this quarter, our other expenses was pretty high. So if you can call out what was the remediation expense and, excluding remediation expense, you know, whether the other expenses was high, then what is the reason for that? And, gross margin was, you know, on quarter-on-quarter basis, it has actually come down. So if you can explain the reason for, you know, lower gross margin also. So, remediation expenses are in the range of around INR 5 crore, which is what typically we've been doing every quarter. I think the rest of your question was on other expenses. Yeah. Excluding the remediation expenses, you know, why the other expenses is- Yeah, yeah, yeah. So as I mentioned in my opening remarks, this year we have gone all out, with promotion of Sensodent- K. Okay. Hello, ma'am, your voice is not audible. Ladies and gentlemen, we have lost the line for the management. Please wait while we reconnect them. Thank you. Ladies and gentlemen, thank you for holding. We have the management line back with us. Hello, Rashmi. Are you there on the line? Yes, I'm there. Okay. Maybe we can move to the next question. Okay, ma'am. ... Hello? Yes. Yeah. So, ma'am, just want to know about the other expenses. You know, I was waiting for the answer, but excluding remediation expenses also, the other expenses were pretty up. So you mentioned, you were talking about promotion of Sensodent, and then the call got, cut. Okay. I'm sorry, I just repeated the whole thing. Maybe you were not logged in at that stage. Yeah. I said we have spent more on sales promotion because of the reach we have tried to create through digital media, and that has also caused the increase in other expenses. Got it. And ma'am, the reason for lower gross margin? Lower gross margin. Gross margin. All this has contributed- Yeah, yeah. All this has contributed to lower gross margins. Rashmi, in India, business sales, you know, today, Indoco operations are of a stature where we have to get a minimum, certain degree of top line to be able to, get returns. So, principally for India business, we have got impacted in the respiratory and anti-infectives, area, because of which Febrex Plus, ATM, Oxipod have not done well. Okay. In international business, in particular, the organization for the U.S. market, as you know, we have acquired FPP, and there has been a kind of shift in our business model in U.S. So historically, in the past, we used to license out our dossiers and collect milestones against it. So, when you collect milestones, naturally, that does accrue into your margin immediately. So this year, what you see is more of the IP has been kept for ourselves. I'm very confident, in future, as time goes by and as we launch these products on our own through FPP, Indoco will be able to show much better margins. Okay. And ma'am, next question is on Europe business and U.S. business. U.S., I understand that, you know, you did well this quarter also, and we have actually achieved the guidance of around INR 300 crore. But in Europe, you know, in quarter four, you know, the growth was, I mean, we have actually shown a decline. So if you can... And we have not achieved the guidance also. So, you know, this particular segment, what is the reason, what challenges we have faced during the quarter, and what are you expecting for FY 2025? Yeah. Yeah. So, Rashmi, if you look at Europe's performance on a sequential quarter, basis, we have actually improved. You might have heard us in our earlier, conversations also, that this year, we had, certain disruption, for paracetamol orders to U.K. Although there is revival, we have not been able to completely catch up. So when you compare this quarter four with last year, quarter four, you will see a dip. But if you study performance over quarter three, there is a substantial growth. What is the number for Europe sales, if you can give, because that is not there in the presentation? Okay. For the whole year, quarter four, is INR 76.4 crores. INR 76.4 crore in Europe, and, for whole year, is it? For whole year, it is INR 277 crore. Okay, ma'am. How are we looking at it for FY 2025? We should be able to post around 15%-20% growth. Got it, ma'am. Any guidance you can give on the overall sales figure for FY 2025? Like, you know, we are expecting recovery across businesses. You know, the business should come back on track. EBITDA margin, we have posted 13% versus earlier, what we used to do more than 17%-18%. Taking into account that, you know, we will be doing the remediation activities, also, remediation expenses, promotional expenses. Based on that, you know, what do you expect, how many basis points can we improve from here on? So, Rashmi, I do not give guidance anymore, not for sales and not also for margin. Okay. But, as myself said, I think you have listed out the various reasons why our EBITDA margins should improve going forward. So, as I said, there is one product, Febrex Plus, in particular, which de-grew by 10% in the year, has impacted- Mm ... India business performance. Otherwise, we would be doing much better than this. One product, paracetamol, has impacted Europe performance, and the shift in business, in U.S., which I explained earlier, has resulted in a lower margin overall for the international business. But going forward, as we get more and more sales coming from Florida Pharma against our own products, as our corporate in India is able to give better performances from other subchronic products. In addition to, you know, we have got some very robust brands in India business, in Acute also. For example, Cital and Cital UTI, its brand extension. Totally now the brand is more than INR 100 crore. It has grown by 19% this year. Cyclopam, the parent brand, has grown by 3%, but actually, we have rejuvenated the brand this year. So there are many things going on, and I feel very confident that we will be able to, you know, post a decent growth and show very good improvement in margin going forward. Okay, ma'am. Thank you. That's it from my side. Thank you. Ladies and gentlemen, who wish to ask a question, may please press star and one at this time. Participants who wish to ask question, may please press star and one. Thank you. The next question is from the line of Aditya Khemka from InCred PMS. Please go ahead. Yeah, hi. Thanks for the opportunity. Am I audible? Yes. Okay. Thank you, ma'am. Hi, hi, Sundeep, sir. So, two questions. Firstly, in the India business, if you exclude Febrex Plus, what were the other brands going around, a ballpark number? So, I will give you the top five, six brands off my head. Cyclopam grew by 3%, Sensodent- K by close to 16%, KF by 18%, Cital 18.5%. Rexidin mouthwash, Kidodent, everything is in double-digit growth, Aditya, all except Febrex Plus, and within that also, it is the Febrex Plus suspension which has de-grown heavily. And that is the character of the entire therapy basket for the covered market. In addition to that, ATM has shown a single-digit de-growth, and Oxipod has also not grown well. So it is just these three brands. Understood. And Ma'am, for these three brands, Cyclopam, Febrex, and Oxipod, are we, market share-wise, are we sustaining market share, losing market share to competition? No, we are sustaining. Sustaining. Understood. And, a question on the U.S. business, Ma'am. So you said obviously because of the middleman is no longer being there as we have our own subsidiary. But, you know, so how, how do we... So when we transfer products to our own subsidiary and they then sell into the U.S. market, our realization, our realizations should have actually gone up, right? Because we are no longer parting with the margin that we used to pay to the front-end partner. So Aditya- Yeah. ... FPP has only started selling our products just recently. We have not got much impact for the whole year yet. And, that would come in the consolidated. Right. So I am confident that next year we will see impact of that. So you will see us, transfer the product at a certain price to FPP, and then FPP would further sell. And for FPP to sell them for the entire year, then we will see the impact. Understood. Sundeep, sir, on the European business, what is the utilization that you stand on for the Micro Labs plant, that plant that we acquired? It's around 50%. 50. How many products do we currently sell in the European region, and how many new launches do we plan to do in the next year? We are selling about 10 products in the European region, and next year we should be adding another four. Another four. Okay. And would you have a number in terms of how much utilization can improve for the Micro Labs plant? Aditya, the 50% utilization of capacity is also because of paracetamol orders not coming to that scale this year. Otherwise, we were doing in excess of 70%. Yes, yes. And do we have visibility back on the paracetamol trend up, as to whether the volumes should come back or are they gone for good? What is exactly happening in the end market? They're not gone for good. They're not gone for good. We have visibility. Orders have started coming in, and they should accelerate within 15 days to one month. Understood. Understood. Two more questions, ma'am, both relating to the U.S. business. What is the situation with Combigan and brinzolamide, I mean, market share-wise, utilization-wise, where do we stand on those two products? Currently, Aditya, lines are under refurbishment. So, all this refurbishment business will get over by, late August or mid-September. As you know, we were under, we are under OAI status, and to correct that, we have to do all the refurbishment of all the lines. So once this is over, we'll be back in business. You expect the refurbishment to be finished by mid-August or late September? Yeah. Okay. August or September. Last question on the U.S. business. So, with the U.S. FDA, the conversations around reinspection, would that only happen once you've done the refurbishment, or can it happen again also? So on a regular basis, Aditya, we send updates to U.S. FDA, because there are various things which we have committed as part of the plan. And as and when they get executed and as data gets generated, it is regularly updated. Of course, the completion of the last update is likely to be around July, August, after which, I believe they will, you know, plan a date for visit. Understood. That's all for now, thank you, sir, and thank you, ma'am. All the best. Thank you. Thank you. A reminder to all participants that you may press star and one to ask a question. The next question is from the line of Umesh Laddha from Nirmal Bang Equities. Please go ahead. Hello? Yeah. Yeah, so ma'am, you said that you have increased your distribution, or rather your penetration into the Indian market. So are we looking for any distribution agreements with any of the company for their brands? No, no, no, I think you didn't get me right. 95% of our sale in India currently comes against ethical sales, that is promotion to doctors and generation of prescription. I said for two brands in the dental segment this year, we have gone beyond promotion to doctors to try and create a reach to the consumer directly, for which we have undertaken digital marketing to reach the consumer. Because going ahead, for products like desensitizing toothpaste, there is enough evidence of how a market beyond ethical market has been created by certain other players, like Sensodyne. And that is a much larger market, and we now aspire to get a pie of that. Okay, ma'am. Got it. And, also, ma'am, one more thing. You mentioned about the four new launches in European market. So, can you give an idea or rather a picture onto it? In terms of what? In terms of the market sizing and, what could be, you know, the contribution into our sales, from those orders. I'll tell you something. Our endeavor is to reduce our dependence on paracetamol. That is the main thing. So we are launching various products in various therapeutic categories, whose margins are far, far better than paracetamol. That's the main aim. And capture maximum market share from all these. So I think more details we'll divulge as and when the right time comes. Okay, sir. Got it. And, also, sir, one more thing I wanted to ask is that, are we facing some pricing pressure, when it comes to export markets? Not really. Not really, not evidently. Of course, there is competition, but there's no evident pricing pressure. Okay. And, do you expect the same situation to play out for the FY 2025? At least as far as U.S. market is concerned, you know, knowledgeable sources say that prices have bottomed out. So from here on, things should only improve. Okay. We have several strategies in place for U.S., Europe, everything, but we will divulge it at the right time. Okay, sir. Got it. And so just one last question. Are we going to focus more on the chronic or like targeting some particular segment? Or we will just be focusing more on subchronic segments and into digital promotions? Actually, we've been doing various things parallelly. So there is our division Synergy, which focuses on chronic areas of diabetology, cardiology. This year we have actually expanded its presence by adding another 120 people and creating better coverage in metros. So we are very much focused on chronic. We are also focused on subchronic. And in acute also, I'm not saying acute products are not good or anything, but given that there is so much dependence on seasonality and external factors, it is strategically that we have decided that contributions from subchronic and chronic going forward will be increased. Okay, ma'am. Thank you, ma'am. Thank you. The next question is from the line of Vishal from Systematix Group. Please go ahead. Thanks for the opportunity, and good evening, everyone. With respect to your out licensed products in the U.S., so, will all these out licensed products shift to your front end going forward? Or, the ones that are already out licensed will remain out licensed, and only the new products will shift to the front end? Yeah, the old relationships continue as it is, and all the new introductions will be, of course, through FPP. Got it. Got it. And, any guidance on the number of approvals that you expect in the U.S. in FY 2025? And would all of these be oral solids? Three to four we should get. And while we hope a few come in the sterile also, given if FDA is able to come down, audit, and change the status, we can hope for that, but otherwise, yes, largely oral solids. Okay. In the emerging markets, could you share some color on why the emerging market was so strong this quarter? Would this remain so if for the coming quarters? Yeah. It's a sustainable business model. So we are doing business in Africa, Southeast Asia, Latin America, and to some extent, CIS and Middle East. But the main strong points are Africa and Southeast Asia and Latin. So these are sustainable countries, and we have been growing continuously and sustainably, notably Africa, French West Africa, Kenya, Tanzania. There, the growth has been very good. And emerging market growth has been CAGR for the last four years has been 24%. So numbers should talk for themselves. And this geography we will continuously focus on, and there is a specialized team dealing with this geography. We have medical reps on the ground, more than 115 French West Africa in eight countries.... In Kenya also, we have 32 medical reps, in Sri Lanka, 22. So we are promoting brands. That is the beauty of this business, so it has to be predictable. You've been adding MR or this, this number, that number has remained constant this year? This number is sustainable. I think this year we will not add any MRs. Okay. And specifically, is it, is it the French West Africa market that contributed to the strong growth in the emerging market region? Yes, to some extent. French West Africa, Kenya, Tanzania, Sri Lanka, and Myanmar were the main countries, and in Latin America it was, Chile, Bolivia, Colombia, these three countries. Latin has opened up for you now, or you have been in Latin for a long time? We have been in Latin since four, five years. Okay. So, can we assume, like, so INR 68 crore this quarter, should we assume a similar run rate for the upcoming quarters, or this will be volatile? So, generally, emerging markets is about primaries being done from here, and then secondaries and tertiaries happening in those markets. And, as you know, for year-end, there is certain amount of, pressure from the sales guys, so we do get little elevated primary. But, I think we should comfortably. If you look at the, previous quarters, we had done, INR 47 crore, and the one before that was INR 45 crore. So from there, I think, easily a rate of around INR 50 crore-INR 55 crore can be got per quarter. Got it. Got it, ma'am. Thank you. Thank you. That's all from me. Thank you. The next question is from the line of Madhur Rathi from Counter Cyclical Investments. Please go ahead. Thank you for the opportunity. I wanted to understand what, what was your paracetamol revenue for, Q4 and FY 2024? Exactly paracetamol, just give us a minute. Do you have any other questions? Yeah, after, I wanted to understand, you are not giving any guidance, ma'am, but if you could just give a broad path range, where do we see our margin going forward, forward the next two to three years? Not exactly, but the next three years, where do we see our margin going? A broad range would work. Yeah, let me answer your paracetamol question first. So in the first quarter, we did— In the fourth quarter, we did INR 37 crore from paracetamol, and same last year was INR 46 crore. So there was a dip. Okay? But it was superior to the INR 30 crore in the immediate previous quarter. Okay. What was the second part of your question? I'm sorry. I wanted to understand our margin guidance, not particular guidance, but a range where we see our margins going in a steady state basis. Okay, okay. So pre-COVID, we, we had done EBITDAs of 18%, rather 17%. During COVID, because there was less sales promotion, there was no travel, and a lot of other expenses were limited, we did very good EBITDAs in excess of 18.5%, 19% also. After that, it came down to 17%, and this year in particular, it further came down, because of all the things that we have discussed till now. I feel very confident that we should be able to bounce back to 17%-18% over the next three years. Okay. Thank you, and all the best. Yeah. Thank you. A reminder to all participants that you may press star and one at this time to ask any questions. Thank you. As there are no further questions, I would like to hand the conference over to the management for closing comments. Yeah. Thank you very much, everybody, for joining us on this call. As I mentioned before, and because I got no, no questions on it, let me reiterate, and because we are very excited, we just closed out a U.S. FDA audit of our API kilo manufacturing facility and our Indoco Analytical Solutions, the services, U.S. FDA approved public testing lab at Navi Mumbai, and with zero 483s. Thank you very much. Have a good evening and the rest of the weekend. Thank you. Thank you. you. Thank you. On behalf of Nirmal Bang Institutional Equities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you. Thank you so much.