Ladies and gentlemen, good day and welcome to Indoco Remedies Limited Q1 FY 2025 Earnings Conference Call. 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 press star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Rashmi Sancheti from Dolat Capital. Thank you, and over to you. Thank you, Ben. Good afternoon, everyone. I, Rashmi Sancheti, on behalf of Dolat Capital, welcome you all on the Q1 FY 2025 Earnings Con 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 team, we have with us Ms. Aditi Panandikar, Managing Director, Mr. Sundeep Bambolkar, Joint MD, and Mr. Pramod Ghorpade, CFO. I now hand over the call to the management for their opening remarks. Over to you, sir. Thank you, Rashmi. 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. I'll request Aditi Madam for her opening comments now. Thank you, Pramod. Thank you, ladies and gentlemen, for joining us this afternoon on our call to discuss the quarter-one performance of the company. At Indoco, Q1 has been a mix of many wins and a few losses. I would like to start with the wins for the organization. Our number one and largest brand, Cyclopam, which crossed a milestone turnover of INR 100 crore last year and then exceeding well in the 1st quarter, has grown quarter-on-quarter by 32% and 60% growth on the immediate preceding quarter. Similarly, other brands like Cital and Karvol Plus have also grown in higher double digits for the company. This quarter, Indoco received the final ANDA approval from USFDA for pregabalin capsules. We have also received a tentative ANDA approval from the USFDA for canagliflozin and metformin hydrochloride tablets, which are used to treat Type 2 diabetes, the SGLT2 inhibitor combination. USFDA also successfully completed the inspection at API Kilo manufacturing plant, as well as at the Indoco Analytical Solutions public testing lab, both of these with zero observation. This quarter, Indoco launched a revolutionary treatment for uncomplicated urinary tract infections with the brand FosHS. FosHS offers gynecologists a reliable solution to address UTIs and provide optimal care to the patient in a cost-effective manner. Some of our other new product launches this quarter include Hylupro, Brimigan, and Olarchek eye drops, Kidodent bubble gum mouthwash, and Calaid XT tablets. Meanwhile, this quarter, the cosmetic variants of Sensodent K and Sensodent KF have also made a good entrance into the OTC market through our 100% subsidiary Warren Remedies. Also, Sensodent K has won the Golden Mikes Silver Award for the best single commercial at the E4M Golden Mikes Radio and Audio Awards 2024. Also, across all our manufacturing sites, the master manufacturing plan is in progress in a phase-wise manner, supported with automation, upgradation, capacity increase, and aimed at improving efficiency of manufacturing at various sites. Coming to misses, in the India business, a very slow revival of the anti-infective and respiratory portfolio, and in particular, a negative growth yet as of yet for the period completed of Febrex Plus, has created a bit of dampness. In the international business, the remediation in the lines of manufacturing at Goa Plant 2, where the sterile ophthalmics and injectables are manufactured, has also meant we have not been able to give an optimal supply of product to the U.S. market. I look forward to taking your calls later today after Mr. Sundeep has briefed you on the financial performance. Over to you, Sundeep. Yeah. Thank you, Aditi. Good afternoon, everyone. Hope you all are doing fine. Let me first begin with the business highlights. Net revenues of the company for the 1st quarter did grow by 4.6% at INR 3,942 million compared to INR 4,132 million for the same quarter last year. EBITDA to net sales for the quarter is at 13.1% at INR 516 million compared to 15.2% at INR 629 million. Add to net sales for the quarter is 3.8% at INR 150 million compared to 6.3% at INR 259 million. Earnings per share for the quarter is INR 1.62 compared to INR 2.81 for the same quarter last year. The above numbers are on standalone basis. We have declared results with consolidation, which include results of our subsidiaries. On the domestic formulation business, revenues from domestic formulation business for the quarter are at INR 2,002 million as compared to INR 2,130 million. Major therapeutic segments, namely gastrointestinal, urology, and anti-infectives, performed well during the quarter as compared to the same quarter last year. On the international business front, revenues from international formulations are at INR 1,571 million compared to INR 1,597 million. Revenues from regulated markets for the quarter are at INR 1,273 million against INR 1,344 million. Revenues from U.S. business stand at INR 487 million as against INR 512 million. Revenues from Europe for the quarter are at INR 754 million against INR 794 million. South Africa, Australia, and New Zealand are at INR 32 million compared to INR 38 million. Emerging markets at INR 298 million against INR 253 million. For the API business, we have recorded a revenue of INR 312 million as against INR 357 million. Revenues from AnaCipher for CRO and Indoco Analytical Solutions grew by about 20% at INR 57 million against INR 48 million. That's all about the business highlights for the quarter, and I now request the participants to put forth their questions. Thank you. Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch tone tele phone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Nigel from Everflow Partners. Please go ahead. Good afternoon. I hope I'm audible. Yes. Great. So my question was about the growth outlook for your regulated markets, specifically Europe and USA for this year. If you could please share some light on that? Currently, as Aditi already mentioned, our plants are under refurbishment. The solid dosage plants are undergoing automation, and the sterile plant, we are doing complete refurbishment in response to the FDA observations. So the product availability in the market has been a little bit of a problem. So we are trying our best to do whatever is within our control. But it would be rather difficult to put a number at this point in time. But most of the plant-related corrections would get completed in the 2nd quarter. So we expect from Q3 to be able to have consistent supply. All right. How about in the longer run, let's say five years ahead? How about then? How would the growth outlook be then? So 5 years is a long period, frankly, when you look at the life of an organization, which has to declare results every quarter. But to be honest, there has been such a lot of R&D, which has been done by us in the past decade, which has resulted in close to 50+ ANDAs, which are at various stages of approval. That is in U.S. In Europe also, from a contract manufacturing player, we have migrated to a company which owns its own MAs, and we have front-end presence in some of these markets. So all this work that is done, obviously, at the point of when we can commercialize it fully, has to give the organization good upside. So over a period of 5 years, I expect the Europe business to consistently give us a CAGR of close to 20%. U.S., quite frankly, it's all about timing and new approvals and how fast we are able to come out of the slack that we have right now on product supply. But from next year onwards, I feel clearly close to 30% can be expected from U.S. Got it. Thank you. Thank you. The next question is from the line of Sudarshan from JM Financial. Please go ahead, sir. Yeah. Thank you for taking my question. I would like to understand a little bit more detail about the misses on the domestic brands in the 1st quarter. Because if I look at the PPT, the subtherapies look good. I mean, and also when I look at the AIOCD data, we didn't think that there could be a decline in this quarter. Yeah. Yeah. So thank you for asking that question. So if you look at the sales as they appear for last quarter this year for India business, there is a quantum of sales which is coming from drug products, Sensodent K and Sensodent KF, which is there in the base. For this quarter, we have launched a cosmetic variant of the two products through the OTC segment through Warren Remedies. So that doesn't come in Indoco standalone. If you look at consolidated, and we have given that intentionally so everybody understands. If you take the impact of the toothpaste into picture, then we are growing at 6%+, which may not reflect an AIOCD picture, but it definitely reflects the IQVIA picture for the organization. Coming back to your question on a few brands, like I said, Cyclopam internally has grown by 30%, Cital by 20%, Sensoform by 30%, Karvol Plus by 40%. So the question of brands not doing well doesn't arise. It is just one brand, Febrex Plus, which is -8% internally. And if I'm not mistaken, in IQVIA, it would be -12%, which is in keeping with how the segment and therapy market has performed. How do you see that for the full year? I mean, are we seeing the revival happening with the onset of monsoon, etc.? Yeah. So we had a revival in the last 10 days of June, to be very honest. Last 10 days of June, we saw a pickup in the antibiotic segment. So we have two large brands. One is Oxipod, which is a cephalosporin, and ATM, which is azithromycin. These two brands picked up. Febrex Plus has also picked up in the last 10 days. But the deficit in the first two months was so high that we were not able to recover into positive. Fortunately, the rains are on time this year, and it looks like a good season for respiratory and antibiotics both. So Q2, I'm expecting for these brands also to start contributing. And that will help us show a very robust performance for India business. Sure. Coming to the cost structure, I mean, we have seen on the gross margin side, there has been a decline both year-on-year and QoQ. And also on the other cost, I mean, how much of remediation cost was seen in this quarter? And how do we see both the gross margins and if I can also add on the employee cost, because you will also see a ramp-up on the domestic business. So the MR productivity in the 2nd half should look much better. So a little bit on the margin side now. Right. So I'll answer your question the way you asked it. First, on the gross margins this quarter. So like I said, the gross margins this quarter are more a function of the business product contribution kind of composition. Because we are short of close to INR 20 crore in supply to U.S. market, which is second to India, the most profitable business of the company. As a consequence, contribution of Europe to the whole business looks high. Also, as I explained with the pastes, which are also quite profitable, we are seeing those move into a different company and lose on that. So on a comparative basis, you see the gross margins fall. As regards to the contribution to gross margins coming from U.S. business, I expect this to ramp up soon. Also, if you have not heard me on the previous call, our organization is in the process of transitioning from a company which used to license our products in U.S. to other selling partners to one which now has a front end of our own as an FEP. Having done that, the kind of milestones or upfront payments, royalties we would collect is now going to change going forward. So in the interim, we can expect therefore some compression on margins. But with India business doing well, with U.S. numbers coming back from Q3 onwards, I expect a larger amount of the gross margin to get corrected. I think one of the other questions was. I'm trying to remember the second part of the question was on the operating other expenses. So if you look at other expenses in particular and staff costs, in absolute terms, actually, we are able to contain them. If you're looking at it as a percentage of sales, then they look to be a little bit on the higher side. That is largely because the sales haven't come in this quarter to our expectation. On consumables, job work, power fuel, rent, and many of the things that are related to getting operational efficiency, in fact, we have done well. There are certain one-off costs that are coming by way of remediation and also certain returns of products in emerging markets, which must have resulted in some big expenses for us. How much was those one-offs, ma'am? Remediation cost and the one-off? I cannot directly quantify everything, but I can roughly tell you that you can expect, I think, other expenses in total, we'll be able to maintain in the margin of INR 110 crore-INR 120 crore for a quarter going forward. Sure, ma'am. And how much do we see the margin for the full year, given that domestic business will start contributing on operating leverage? So I think we'll meet at the end of 2nd quarter weekly. And I always say this, that no one should ask me about performance before the Q2, in the middle of Q2. After the 1st half of the year is a good time to start making some kind of judgment call. But from here on, we only have to improve, quite frankly. Another quarter of the U.S. supply is under constraint, but otherwise, everything else will come on track. So I expect margins to start normalizing from Q3. Sure. And one question before I join back the queue is on the Goa 2 lines. I mean, one is on the remediation that we have done, where are we, and when should we expect the U.S. FDA for inspection there? So, the lines—we had made commitments to the FDA. We have 4 packing lines, manufacturing packing lines. We have given timelines for when each line is going to undergo remediation, correction, repair, etc., etc. And accordingly, we have been giving regular updates to the U.S. FDA. So they are aware of when and how we are going to complete. According to me, if I'm not mistaken, by October, we will be completely ready with all lines remediated and running. And after that, we'll be able to be able to give product from the plant at full potential. Thanks a lot, ma'am, and join back the queue. Thank you. A reminder to all the participants, please restrict yourselves to two questions. The next question is from the line of Hemant Agarwal from Leo Capital. Please go ahead. Hi, am I audible? Yes. Yeah. Thank you. So could you please talk about your API CapEx that we're going to do? And will that be for in-house consumption or external sales? Okay. For API, all right. So API, as you know, we have three manufacturing sites in IRL today, Indoco Remedies Limited. One is a small kilo manufacturing site. One is a site for making intermediates. And the third is a large finished API site at Patalganga. All these sites are today running at decent capacity. And we are in need of higher capacity, especially for our intermediate products, which can be finished in the Patalganga plant. So Warren Remedies, which is a 100% subsidiary of Indoco, at its new site in AURIC, is investing in putting up facilities for API. As of now, we have invested close to about INR 100 crore in the API facility through Warren Remedies. With this investment, I feel co`nfident that we'll be able to more than double our API business going forward. All right. All right. So could you also talk about? Internal consumption. Yeah. consumption. Yeah. Internal consumption. Yeah. Yeah. Yeah. So till last year, we had 60% of quantity of API we produce being consumed internally. And we used to sell the remaining 40%, which appears as API sales in the books of the company. From this year, we are flipping the ratio and expect to be able to sell around 60% of what we manufacture. All right. Could you also just throw some light on the revenues and margins that we'll be expecting from this CapEx? From the CapEx? Yeah. So as you know, the plant is under sort of being built right now. Once it is ready, you have to then take the validation batches, file them with the authorities, then they come down, inspect after stability, then they approve for the reg markets. And quite frankly, that is when you start really making money on the product that you laid there. So therefore, the real margins on what we make at AURIC and finish at Patalganga, incrementally to what we are doing today, we can only expect at the end of another 6-8 months, not before that. But even today, API division by itself, we call it a boutique division because priority is always given to internal consumption first and then to what else we can make and sell outside, is giving us very decent EBITDA margins as of now. Okay. Okay. So my last question would be, what sort of growth rate do you expect in the emerging market business for the current year and probably next two to three years? Okay. I think 18%-20% is a good expectation to keep from the emerging business for the next couple of years. Okay. This is on a CAGR basis, right? I'm sorry? The 18%-20% would be on a CAGR basis, is it? Yeah. Yeah. All right. All right. Thank you. I'll join the queue now. Thank you. The next question is from the line of Ankeet Pandya from InCred Asset Management. Please go ahead. Hello, and thank you for the opportunity. Ma'am, just two, three questions. So firstly, you have already mentioned that there are certain one-off expenses during the quarter. But sequentially, if I go to see, it has come down from almost INR 148 crore -INR 120 crore. So any particular reason for that? Because if I remember, the remediation cost is also expected to continue till at least 2nd quarter. And previously, we have been investing in advertising and promotional activities for Sensodent K. So anything that has changed materially sequentially? I'll just take this one at a time. As you correctly said, from a base of not base, a one-off of INR 140+ in the last quarter, we are now at INR 100. And as I said, we expect it to stabilize around INR 120. So this drop in expenses is largely because of, as I said, there are lots of projects underway at various manufacturing sites to bring in more efficiency in manufacturing. That has resulted in better containment of cost. And that has helped us. Coming back to the Sensodent K and Sensodent KF, last year's base has the kind of investment we did on the brand for digital presence in social media. Now that those two cosmetic variants are with Warren Remedies, that base of investment has also gone to that company. So naturally, that is not here. So that's the correct assumption. Okay. So INR 120, what you said, this is for the remaining quarters, we can expect that at a steady state between INR 120 and INR 130 correct? Yes. Yes. Okay. And And secondly, on your European geography, we have been facing the paracetamol challenge. So how has that been? And how should we look at the geography for the coming quarters, for the next 2, 3 quarters, with new launches and ramp-up in paracetamol? How has the situation been? Yeah. We are not only depending on paracetamol. Of course, paracetamol is a big contributor to the European geography, particularly to the U.K. But we have developed and filed many more products which are either approved or about to be approved. So as a result, paracetamol, of course, has bounced back. And you'll see better results in Q2, Q3, and Q4. And last year, definitely, we took a hit on European business, but we will definitely do better than last year's figure. So we'll see at least growth in FY 2025 in the European region? Yes. Yes. Definitely. Okay. Just on the CapEx fund, we had guided earlier for INR 250 crore of CapEx in FY 2025. INR 100 crore is towards this Warren Remedies. Any change in that, or will it still be maintained, the INR 250 crore CapEx guidance for the result? We'll be able to maintain as per commitment. Okay. Just lastly, ma'am, just wanted to reconfirm. You mentioned that 30% growth in the U.S. market, or you said something 30% or something for the U.S. market? Yeah. 30% growth in U.S. That's in FY 2026? Yeah. We said over the next two years on a CAGR basis. On the CAGR basis. Okay. Fine. Okay. Yeah. That's it from my side. Thank you. Thank you. The next question is from Vipul Kumar Shah from Sumangal Investments. Please go ahead. Hi. Thanks for the opportunity. So my question relates to this new launch FosHS. So what is the size of this market? How many players are there, and what type of market share we are targeting there? Right. So FosHS is a brand of fosfomycin. It is a single-dose treatment for treating urinary tract infection. So typically, UTI is a very common problem per se, but it is more common among women and back to women in the age group of 50 onwards. And typically, they get recurring urinary tract infections. And then you have to waste 48 hours to do urine culture to decide which antibiotic is going to work. What FosHS does is that it deals with all kinds of bacteria and therefore can be taken immediately upon diagnosis without wasting any time. And it is a one sachet; there are granules to be taken directly or with water. And it is a one sachet kind of a treatment only. I'm quickly trying here to look at the market size ahead of somewhere. There are already quite a few players in the market. For us, it is a first kind of a launch for us. Okay. And then my second question means it's an observation. So since last two years, our EBITDA margins are falling very rapidly. So it's a story of one step forward and two steps backwards. So why are our performances suffering since the last two years? We are not able to report any consistent performance. Correct. Correct. Correct. Thank you for that question, actually. Being such an open question, it allows me to explain. So as I said earlier, as an organization, we are trying to make major strategic changes in keeping with market conditions. Then sometimes we have to take turns. Sometimes U-turns, sometimes right-angle turns. And while taking turns, it is not possible to keep the speed intact. So what you see today really is a work in progress of the company. In U.S., as I mentioned earlier, until last year, we had quite a substantial portion of income coming through what is known as outlicensing fees or milestones, which are today absolutely near nil. And we are keeping instead all the intellectual property for ourselves because we would like to collect them in margins going forward as the opportunities come up. And therefore, it is a matter of letting go of immediate gain for much better margins of a recurring nature in the future. Coming to India business, as we explained, we see an opportunity for a toothpaste to compete in a much larger market size of OTC. And therefore, the organization has decided to incur the kind of expenditure that might be required. Today, our advertisements are seen on television. We are there on sort of physical media, on bus stops and buses and wherever. We are also spending on social media. And this is a lot of upfront investment in order to build a product which can grow many times in the much larger market size. These are two of the main reasons. The number three is that the reason we are incurring these kinds of strategic changes is to actually overcome the very nature of what has been happening. Over the last two years, a minor issue here and there seems to impact our margins to a very large sort of effect. And therefore, the kind of efficiency-building measures we are taking at all our sites, whether it is increasing batch sizes, whether it is replacing old machines with new ones, all of that is going to help us improve our margins going forward. But all of that comes at a cost. So we are not able to postpone investments or costs today, all which are meant to improve performance of the future. I hope that I've explained. Yeah. So can you put any timeline by which all these initiatives will be completed and what will be the expenditure for all these initiatives? The expenditures, sir, have already been, as you heard on the previous caller who asked the question, last quarter itself, we have said in total, we will not spend more than INR 250 crore this year, and we are very much in line with that. When it comes to timelines, most of the measures that have been taken in all our plans for increasing efficiency should be over by the end of Q2 or early Q3. For U.S., in particular, the changes in the lines should also. So Q3, as per me, will be a good time to start looking at many of these efficiencies to start coming into the numbers. So ma'am, so 2-3 quarters down the line, can we reach our earlier EBITDA margins, which were around 20%-21%? I don't think we can go from 13%-21% immediately. But by 3rd quarter, I'm looking at a minimum of 15%, if not more. Okay, madam. Thank you for a very elaborate answer and all the best for the future. Thank you. The next question is from the line of Avinash from Brookfield State Private Limited. Please go ahead. Hello, ma'am. This question is more broadly to understand the company. If I look, I think when the company reached around INR 1,000 crore in FY 2016, INR 1,000 crore turnover, since then, I think the company has done CapEx of more than INR 1,500 crore. But somehow or the other, I don't think most of the CapEx has kind of translated into incremental sales. So would that be an accurate observation that a lot of that CapEx is not yet translated to sales and hence profitability of the company? So we have different models, as you know. Largely, 55% of our top line comes from India business, which is not really very CapEx-heavy. Their investment is in terms of number of people. And from that time till today, we probably have done the maximum addition of people in this year, which is 300. Coming to the facilities and the kind of investments you talk of, as you know, U.S. is a market which has a pretty long-term gestation period for getting returns. Many of these investments have happened in the sterile site for products which were filed at that time. And then we had, actually, that very year had a setback with the regulators, if you remember. So we lost a couple of years in that. But now, with this last remediation, we feel very confident we will be able to sort of give returns. Coming to returns based on the CapEx made, we have in the reg market, we have both U.S. and Europe. For the longest time, European business was pure contract manufacturing. That too of very commoditized products like paracetamol. We were parking the capacity with paracetamol simply because we wanted to then eventually use it for U.S. The regulatory challenges in the interim have meant that many of those products were postponed in approval and things got delayed. But I'm happy to note today that Europe by itself is now sort of able to sustain in a manner that we can get better margins even in the contract manufacturing business. There's one thing about how much investment you do, and another of that investment, whether last year we got into a master manufacturing plan when we realized that these mean investments in various sites, although they have helped us get to a particular level, we need better rationalizing of portfolios, bringing a lot of same product at one place, increasing batch sizes, all of that which is getting concluded now. A large part of that investment which you talk about has actually happened in the last two years. I hope that answers your question. Yes, ma'am. I'm saying if I exclude the last sector, which is INR 400 crore, but if I just take from broadly, if I just cumulatively add the CapEx of eight, 10 years, it comes to around INR 800 crore. And since then, the revenue has not even doubled. So that's what I just wanted to understand what are the challenges that the company experiences. And generally, in terms of CapEx, how does the management look in terms of how much the payback period should be generally in the ballpark? When the CapEx happens, obviously, it may or may not kind of work out. We are going to need a minimum of two years for payback from here on. So even this Warren Remedies, the CapEx that you have, so that would pay the company back in maybe 2-3 years. Is that what you're indicating? Yes. Yes. Yes. Yes. Understood. We have expanded our market by taking the toothpaste OTC. That alone, with the kind of efforts we are doing in the marketing, has to grow our sales in that manner. Noted, ma'am. Thank you. Thanks. Thank you. The next question is from the line of Surya from Himalaya Investments Advisors. Please go ahead. Hi, am I audible? Hello? Yes, ma'am. Am Am I audible? Yeah, I'm getting a bit of an echo, but it doesn't matter. Yeah, go ahead. Yes, ma'am. So as of now, on Goa Plant 2, are you able to make new funding for the sterile products? And what about Plant 1? Or under the same current plant approval? Actually, I'm sorry, I couldn't get that at all because what did you say about? I'm sorry, can you repeat that? Yes, ma'am. Can you hear me now? Is it clear? Yeah. Yeah. Yeah. Clear. Yeah. Yes. So as of now, on Goa Line 2, are you able to make new filings for the sterile products? And what about Plant 1? Or under the current plant status, can't we do that? Plant 1 is clean. It is under VAI. We have no issues in Plant 1. But we barely have 3-4 solid orals only in U.S. For U.S. solid oral business to pick up and ramp up, there is still time from Plant 1. Coming to Plant 2, which is a sterile unit, yes, we are continuously filing and making new products there and filing with the FDA. But that is a site which is under VAI, OAI. From that side, our approvals will only come in after our status gets cleared. Does that answer your question? Okay. Okay. Got it. So ma'am, as you mentioned that the U.S. FDA made a couple of inspections with zero observation, how much were the expenses towards this remediation this quarter? And till when do you expect these to continue? Yeah. So the remediation or the repairing or whatever is going on is happening in Plant 2. The 483s came for the API manufacturing site and the testing lab. Typically, our remediation has been about INR 4 crores per quarter. We are maintaining the same run rate. Okay. So till when do you expect these to function now? We'll have to wait until the status changes of the site. I expect at least another quarter to have the same. Okay. Okay. And one last question, ma'am. And why have you not been able to grow in the European market and we don't have any plant issues there? Why is that we've not been able to scale that business? We don't have any? I'm sorry? Plant issues there? Plant issues. Plant issues. Okay. Okay. So what we have done is we did not want to have too many geographies inside one plant. So our two manufacturing sites at Baddi are the ones which make European product. We also make a couple of products of EU in our Plant 1 at Goa. And actually, European business has a very healthy order book position right now. And I feel very confident once the sort of master manufacturing plan is completed by end of Q2, Europe will be the division with maximum benefit coming out of it. And then we can freely manufacture a lot of products for Europe. Got it. Got it. Thank you, ma'am. Thank you. The next question is from Gautam Rajesh, an individual investor. Please go ahead. Hi. Good evening. Am I audible? Yes. Yeah. So my first question was, so you have mentioned the CapEx for 2025. So for the next three years, how much can we expect in terms of CapEx? Because we are already running way below our capacity. And given this CapEx, what sort of peak net debt do we expect from the company? So once this round of CapEx is done, we are not expecting any more CapEx for the company. What we will need is some kind of maintenance CapEx, which is a routine across sites. Coming to debt, today, maybe Pramod would like to take that? Yeah, sure. So your question on CapEx, just one more addition. So these lines which are ordered, certain cash flow will flow to next year. That is what the regular CapEx plus certain cash flow for this line fine line says. As regards to debt, the current position as regards to short-term debt is about INR 350. And long-term is about INR 250 now. Long-term is INR 250, if I'm right? If I heard you right. Net debt is basically INR 284. Term loan is INR 254. Okay. INR 280 and INR 250, right? Yes. Yes. Just one last question. How is the D2C oral care business shaping up a little bit more? Any sense on the quantum of revenues that you can give and expectations going forward? What is the CapEx that has technically gone into it? So we have set up a manufacturing unit at AURIC in Aurangabad for making, as you know, with all the things that are going on in the media, that we are not allowed to make drugs and cosmetic products in the same facility. So we built up a cosmetic facility. And we have actually put in one line today for manufacturing and packing, but built a facility large enough to expand to two more lines, including mouthwashes. But that will be in the future. And coming to how is the OTC business doing as of now, so this has only been the 1st quarter. We've had to look at a separate channel for distribution, which includes SDs, super distributors, and a different kind of chain that typically is required to reach beyond retailers, even to grocers and modern trade. A lot of spadework going on there. As of now, standalone, these two toothpastes over the same period last year are growing at around 18%-20%. So how much would that be if? I think this quarter, in total, we have done close to INR 25 crore from the two variants. From the two variants, INR 25 crore. Okay. And the CapEx for it that's gone into this for the oral D2C business, can you explain? Around INR 100 crore. Okay. Thank you so much. I'll join the team. Thank you. The next question is from the line of Sajal Kapoor and individual investor. Please go ahead. Yeah. Thanks for taking my questions. Aditi, a lot of other participants have also alluded to this area. I would like to just seek your guidance and help to zoom into this with the benefit of hindsight, of course. I mean, is it fair to acknowledge our capital allocation mistakes over the last 10 years and the fact that a much lower amount of capital investments and a much lower R&D would have generated far stronger cash flows and return ratios if we were focused more on the branded India and emerging markets, exactly like some of our peers like RPG Life Sciences, Ajanta Pharma, etc., have been doing over the years? I mean, when we look at their return ratios and cash flows, I mean, Indoco, although with a stronger science, has got a much inferior return ratios and cash flows because our capital allocation. Right. I see. Yeah. Right. I see. Yeah. Right. I see. Yeah. Right. I see. Yeah. Yeah. Yeah. Thank you. Let me answer that in two ways. In hindsight, of course, there is so much we can say, right? Kind of. I remember classically a period when we got listed in 2005 when our top line was INR 150 crore coming from India. Every time I spoke of my brand, they asked me how many ANDAs I have. And today, you ask me why we are more focused or investing so much in the U.S. Let me tell you very clearly that our strategy is correct. The decisions we made are also correct. Although some of the decisions have come in at a time when there have been massive headwinds that we had from the markets, whether regulatory or otherwise. And therefore, there has been postponement in getting returns from them. But certainly, I agree with you that there are some other companies which you thought of listed out who are doing much better with their numbers. But looking at the fundamental strength of our brands in India, of our India business, and fundamentally how the U.S. business is planned today, I feel over a period of time, we will be able to do better than this. Sure, ma'am. And then second question is, after this remediation is over in October, surely we would have to wait for U.S. FDA's physical inspection and an EIR before any shipment can start from that plant to the U.S., correct? Our current OAI does not allow us in any way to stop shipping. We have been shipping. The reason this quarter U.S. was impacted is because we took planned shutdown in our lines. Does that answer your question? Right. So which means that after the October remediation is over, we can straight away start and. Yes. Yes. Yes. Okay. Okay. So does that mean that next fiscal FY 2026 should be materially different, better compared to this fiscal? Has to be. Okay. Okay. Understood. Thank you, ma'am. All the very best. Thank you. Thank you. The next question is from the line of Abhishek and individual investor. Please go ahead. Yeah. Am I audible? Yes. My question has been answered. Just now. It's actually that. Thank you. Timely and only. Thank you. Thank you. The next question is from the line of Hemant Agarwal from Leo Capital. Please go ahead. Hi. All my questions are fine. Thank you. Thank you. The next question is from the line of V.P. Rajesh from Banyan Capital. Please go ahead. Yeah. Hi. Thanks for the opportunity. So just two quick questions because most of them have been asked earlier. On the debt side, what will be your peak debt? Is this what the numbers you just shared? Is that the peak debt, or are we expecting it to go even higher? The debt? I think we will require to borrow close to another INR 100 crore to meet with all the commitments we have made for CapEx. Okay. So this number plus INR 100, or some of this will be paid down? So I'm just trying to get an absolute number. No. INR 100 is incremental beyond what the cash flow is in this. Okay. And then the second question on the remediation of the U.S. line that you just talked about, I thought you said earlier that this will be up and running in Q3, right? So I just wanted to make sure in Q3, we can see strong revenues from the U.S. side. Yes. Yes. Certainly. Certainly. Okay. And then when you talked about the EBITDA margin of 15% or higher in Q3, what is your sense for the whole year? I see by Q3, if I'm going to say 15%, we are still looking at a year when we are barely managing to stay at the 15% level. I can be frank about that. We will be trying very hard to do better than that. But one can expect minimum 15% for the whole year. Okay. So therefore, your Q4 will be even stronger than Q3. Is that what you're saying? Yes. Yes. From a management perspective? Yes. Okay. All right. Got it. Thank you. And all the best. Thank you. Thank you. Ladies and gentlemen, that was the last question for today. We have reached the end of question and answer session. I would now like to hand the conference over to the management for closing comments. Yeah. Thank you, everybody, for your very active participation and very intelligent questions, which has allowed us to express ourselves. Thank you very much. Have a good week ahead. Thank you. On behalf of Indoco Remedies, that concludes this conference. Thank you for joining us, and you may now disconnect your line.