Ladies and gentlemen, good day and welcome to the Ipca Laboratories Q3 FY 2022 earnings conference call hosted by DAM Capital Advisors 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 star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal from DAM Capital Advisors Limited. Thank you, and over to you, sir. Thank you, Vivian. And good afternoon, everyone, and a very warm welcome to Ipca Laboratories Q3 FY 2022 post-earnings call hosted by DAM Capital Advisors Limited. On the call today we have representing Ipca Laboratories management, Mr. A. K. Jain, Joint Managing Director, and Mr. Harish Kamath, Corporate Counsel and Company Secretary. I will hand over the call to Mr. Jain for opening comments, and then we'll open the floor for questions and answers. Mr. Jain, please go ahead, sir. Yeah. Thanks, Nitin, and DAM Capital for organizing this call. Good afternoon to all participants, and thanks for taking out time and joining us for Q3 FY 2022 earnings call. Today's earnings call and discussions and answer given may include forward-looking statement based on our current business expectations. They must be viewed in conjunction with risk that pharmaceutical business faces. Our actual future financial performance may differ from what is projected or perceived. You may use your own judgment on the information given during the call. Excluding the exceptional business for the last financial year, in first nine months of the current year we have achieved, on the standalone basis, a growth of almost around 13%. Our branded domestic and ROW market recorded a very strong performance in this quarter. API, institutional, and generic business recorded a decline in the business in this quarter. Domestic formulation business delivered almost around 23% growth for the quarter from INR 523 crore to around INR 645 crore for the quarter. Domestic API business delivered around 16% growth from INR 71 crore to INR 86 crore for the quarter. ROW promotional market formulation business recorded a growth of almost around 41% from INR 78 crore to almost around INR 109 crore in this particular quarter. Overall generics business was around at INR 179 crore as against INR 218 crore last year, a decline of almost around 17%. Institutional business also declined in this quarter to INR 59 crore from INR 139 crore last year, which also included. Last year's figure also included certain kind of exceptional business of around INR 35 crore. In export API business is around INR 224 crore for the quarter as against INR 278 crore in last financial year. The generics business in U.K. is mainly impacted with much lower shipment to our distributors in U.K. We have started our own distribution arm in that country. Building sustainable business now in U.K. will take some more time. Institutional business is impacted by the lower shipment in the quarter and exceptional business in last financial year in Q3. However, for the full financial year, we are confident that we will achieve our guidelines of around INR 350 crore on institutional business. On API business, for the quarter is mainly impacted because of two reasons. One was the current issue of azido impurity on sartans, which we have resolved now. We have filed the process and started production. Business stabilization will take some more time. Probably some business will get even impacted in Q4 FY 2022, but we expect that business should get normalized from the first quarter of next financial year. The second reason was the exceptional business of hydroxychloroquine, chloroquine, what we had in last financial year. That has impacted this business. Overall domestic business highlight is that most therapeutic areas have delivered very strong growth. In pain, we have for the quarter growth of almost around 32%. Cardio-diabetes growth is around 14%. Anti-bacterials has almost around 20% growth for the quarter. Anti-malarials has significant growth in this quarter, around 34% from INR 19 crore to INR 26 crore. Cough and cold was the therapy in which everybody has grown very well in this quarter. Business from INR 24 crore has gone to INR 36 crore, almost around 51% kind of growth. Derma has also delivered around 32% growth, CNS 29%, and urology 42%. Overall, domestic business has delivered very good growth in this particular quarter. In first nine months of the current year, the domestic business has also recorded a significant growth overall. Overall pain portfolio contributes almost around 48%. Now in the overall business, cardio-diabetes contributes almost around 17%. Anti-bacterials overall, in the pie it has gone up to around 8% now. Anti-malarials around 6%. Derma has added more business, so it is now contributing almost around 5%. Cough and cold is contributing around 5%. CNS and urology both are contributing around 3% in the overall pie. On margin front on standalone accounts, if you look at, in Q3 we have delivered a gross margin of almost around 67.5% as against first nine months gross margin of 67%. EBITDA before Forex gain and loss is almost around 23.49% as against 25% in first nine months of the current year. In spite of elevated raw materials rates, the gross margin remained at 67% plus, is due to the better product mix sales with higher margins. However, the PBT, profit before tax, got impacted due to higher energy costs, higher shipping and logistic costs, higher maintenance costs, the overall inflation and higher marketing costs with full return of marketing and promotional costs post-COVID. Having given the brief overall background, I now invite the question- answer. Thank you very much, sir. Ladies and gentlemen, we will now begin the question- and- answer session. Participants who wish to ask a question may kindly press star one on your touch-tone telephone. If you wish to withdraw yourself from the question queue you may press star and two. Participants are requested to use handsets while asking the question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants are requested to restrict their questions to two per participant. Now the first question from the line of Naresh Goswami from Sameeksha Capital. Kindly proceed. First question, what would be the reasonable growth guidance for FY 2023 for export formulation and export API business, considering the capacities and approvals which we have or which you are expecting over next week? If you can break this up between generics, institutional and branded generics, it will help. I think overall for next financial year we will give growth guidelines only after our budget exercise is currently going on. After the budget exercise is complete we will give growth guidelines after the fourth quarter results around that time we will give the guidelines of both overall revenue as well as on EBITDA front. As far as the fourth quarter is concerned, we are likely to grow around 20% in the fourth quarter on a standalone basis. Okay. As far as margin is concerned, you mentioned because of better mix we are maintaining the margins. I have two, three questions over here. One is have you started taking price increases? Does this include the increase in freight and power cost as well? How soon we can expect this margin to return back to our guided range of 25%-26%? Let's say, as far as the domestic market pricing is concerned, we are on continuous basis. Whenever the month on which the prices are due to be taken because the 12-month cycle needs to be seen. You can't increase prices before that period is over. You can increase only after the 12-month cycle is completed. That we are on continuous basis, we are taking the prices. As far as generics are concerned, pricing is a regular phenomenon depending on how the prices of APIs are behaving and negotiations with the buyers. In this particular period, the price increase has been minimum because the number one, Europe, itself was getting impacted and there was higher inventories in the market and demand was slow and therefore the price increases even of those API prices has gone up. Price increases were not to that extent. As far as API markets are concerned, the price increases are regularly taken only after the existing orders are released. If you look at the material costs trend wise, if you look at let's say overall, the crude prices have gone up because of that solvent prices are still continuing to rise. So that's the one major cost continuously increasing. As far as other material costs are concerned, more or less I would say that they are not going down and they are not going up. More or less, it's an elevated level which we have seen in earlier quarter; t hat's continuing. What we are hearing from market and our talk with a lot of Chinese manufacturers and others, we see that little demand is going up because most players in the market has covered the requirements up to the first quarter of the next financial year because a lot of uncertainties, Olympics, energy crisis in China and all that. Their demands are little going down. It appears that probably from the first quarter or so the prices, raw material prices trend may little come down. Solvent doesn't constitute much, i t's only 10%-15% of overall API cost, so that's rising. Another cost which is rising is paper, but that's all again a small part of overall cost. I would see that overall I think next financial year, the overall prices trend may little come down. The prices of let's say on antibacterial front is rising because of Penicillin G shortage and Penicillin G prices are still going up, but we are not getting impacted. Maybe cephalosporins and other all the beta-lactam products prices may go up. But we are not impacted because we are not a large player as far as the anti-bacterials are concerned. Okay. Considering what all the scenarios which you mentioned, can we reasonably say that this quarter's margin have kind of bottomed and it should trend upwards from here, or is it still difficult to assess that? If you look at overall gross margin levels, I think probably we would be remaining at the similar kind of level. I think we have achieved almost around 67% in current quarter, and probably margin levels would remain at the similar level. On expenditure front, yes, t here is a significant amount of inflation there, and the costs are everywhere rising. We are facing this year the coal costs or maybe energy costs going up almost by around 55%, significant cost. Freight costs have more than doubled, so those logistic costs are significantly higher. We don't see it still coming down. Overall, all the chemicals for testing and other we buy, practically every cost has gone up significantly. Those costs also has gone up in this year by almost around 20%-25%. Practically, marketing cost has returned back. All the costs are returned back because now we have in last financial year, half of the year, people were sitting at home and we were paying them salaries. They were not working because of the COVID scenario. Now their travels and all are on, so all the promotional costs practically have returned back. We are currently at the full cost, which we are hitherto incurring on the promotional side and on the field staff side. That cost will be there. Overall, gross margin level will continue to remain at around 67% or so. The other cost is definitely on the rise. Okay. Last question on the tax. I want to know what is your tax— Sorry to interrupt, sir, but we request you to return to the queue for follow-up questions. Sure. Thank you. Thank you. Participants, kindly restrict your questions to two per participant. We have the next question from the line of Prakash Agarwal from Axis Capital. Kindly proceed. Yeah, thanks for the opportunity. First one is on the sartan. What I heard was it is now stabilizing, but in Q4 the impact would be there and it would normalize by Q1. Yeah. What is it, sir, it's taking so long? I mean, you mentioned in the last call that Q2, Q3 will be done. I mean, if you could just remind us what was the issue and why is it taking long? Let's say when this issue came, I think, when we had a call around that time, the newer process validations has got started. It was already one month passed subsequently with that, in this particular quarter. After the validations only then you again start sampling and lot of those issues, the documents and all sent to the parties and also, those issues are there. Thereafter the production stabilizations based on the newer process has started. We are again, working on, and in this process some kind of our capacities are going down because additional steps of purifications are introduced. We are working on some kind of new process which is again under validation right now, which will also further increase our overall production to the earlier level. Some kind of productions has also gone down in this particular period, and impact has continued in it for half of this quarter. The business, somewhere where you lost business, gaining it again will take some more time. Therefore, from, I think, overall from next financial year first quarter itself, we already started signing the long-term contracts with the buyers and all that. Long-term means yearly contract with buyers. The business volumes are returning back, I would say that. We are not concerned that volumes will go anywhere else. We will definitely be able to have our volumes back in the next financial year. Business will remain impacted in the fourth quarter of the current year. Okay. Just a follow-up here. These are related to the API business in Europe or the generics business or both? It's basically e verything what I'm talking is about the API losartan. Okay. Okay. When this returns, your gross margin is likely to improve since it was higher margin business for us? Overall API margins are not that higher compared to the overall formulation margin. Margins would more or less will remain at around the gross margin levels it would remain around 67%. Yeah, that is very clear. The second question was on the cost side, which you mentioned that, you know, while gross margin will remain 67%, but with the cost, what you're hinting is costs are still on the rise. It is not stabilizing at least for Q4, and in Q1 there is an expectation. Yeah, costs are definitely on the rising trend because of overall inflation in Indian economy and lot of chemical costs and solvent costs and all logistic costs, container costs, everything has gone up. Yes, everything has gone up. This you expect to come down by Q1, or you were just mentioning about the input cost? Still there are no signs coming that your logistics costs are coming down. Coal cost has somewhat a little come down, but it's still almost around 50% higher than earlier. It was almost around, maybe around more than 100%, maybe more than 100% increase. Some cost has come down, but it's still 50% higher than the earlier level. The energy cost is still kind of elevated now. So 21%-22% is a fair margin versus 25% in the past? I would give the guidance for the next financial year after the Q4, yeah. Very clear guidance would be given. Okay, sir. Thank you, and all the best. Thank you. We have a question from the line of Kunal Dhamesha from Emkay Global. Kindly proceed. Yeah, thank you for taking my question. First question, on the quarter four. Will we see the similar kind of profitability seasonality in Q4 as well, which we usually see historically, like Q4 on profitability is quite lower than the other three quarters? Let's say overall turnover in Q4 is normally down because let's say around if you see that our first quarter was almost around INR 1,500 crore, close to that. Second quarter was close to INR 1,400 crore. This quarter is around INR 1,300 crore. I think Q4 numbers are normally lower because domestic business around that time is little lower. Domestic business growth in this year is very good, and that's continuing in the. Overall numbers would be on a lower side. Let's say overall business in last financial year if you see the Q4 numbers was on a lower side. Our business was almost around INR 1,100 crore. On that, we will have almost around growth of around 20% in the fourth quarter, yeah. Sure. This will be remain lower than the Q1, Q2, Q3. Yeah. Sure. On the India business, when you suggested that in September, October timing, we'll take a lot of price increases. From a portfolio perspective, what proportion of India business we would have taken the price increases for this financial year? Practically, if you look at the overall, I think, what we have achieved, business growth in first nine months is almost around 31%. Out of this, 25% is your volume growth, and balance is price growth. Sure. Yeah, that's it from my side. Thank you. Thank you. The next question is from the line of Surya Patra from PhillipCapital. Please go ahead. Yeah, thanks for this opportunity, sir. Just on the one more clarification on the Dewas plant side. That you mentioned you have released a press notification saying that, okay, you have commercialized partially. Could you please give some clarity about partially means what extent and what benefit that it can add to? Will that lead to a kind of expanded gross margin scenario because it could provide some record integration to the existing operation? When the plant will be fully operationalized? Some sense on those sides. Let's say at Dewas, I would say that there are two plants we are putting up. One is a bigger plant and another one was smaller plant. The bigger plant, still work is going on, and I think probably even by March, it will practically get commercialized only in the month of April or so. There is a smaller plant. The smaller plant also, one section we have started commercializing on urgency basis because one of the intermediate we are falling short of, and we wanted immediately the capacity. Even though this plant is not designed for intermediate production, we have started some intermediate production there in one particular section. We have expedited that so that the shortage which we are facing is taken care of. The overall commercialization of the entire plant would take in the next financial year only. Means it is on track, sir, to get commercialized? Yeah. Yeah. It's on track. It was to be over in the Q4. The plant would be ready completely and we will start commercial production from the next financial year, yeah. Okay. Okay. It's only the small section, we have started some intermediate production there. Okay. Sir, second question is on this U.K. distribution issues. We have in the recent past, you know, in some time that on and off that we have been seeing this issue of distribution. What is the real issue? I think [a long way] only that we had shifted to our own distribution channel and all that. Still we are facing similar kind of issue again. Is it because of the COVID related this thing, or it is another, the old issue? Some clarity there would be appreciated. Basically, we have one distributor in U.K. and in past also, I think, we have faced some problem relating to delays in payments and therefore we stop the further shipment. Then they regularized the account and they started paying money in on regular basis. Recently we are seeing the same trend again and therefore we have stopped the further shipment to them, and therefore that has also impacted in this. As far as our own distribution is concerned, the large amount of files are lying with your MHRA, the regulatory agency in U.K. We have almost launched around six, seven products there. There is a tremendous amount of delays happening in getting the approval because in U.K., even artwork needs to be approved, everything needs to. Even though those products are in market now, since it's being launched in our own name. Earlier it was in the name of distributor. Taking those approvals are taking time, and therefore, let's say out of a basket of almost around 40-50 products, we have just launched six-seven products. It will take maybe around a year and to get all the approvals in place and then launch everything. Our own distribution will take some more time. I see that U.K. business will remain impacted in the maybe around three to four quarters. At least three to four quarters this will remain impacted. If for the distributors to whom we were supplying their payment positions and all doesn't improve and they start paying us in time, we will not make supplies to them. On the subsidiary side, if you can give clarity, sir, about your subsidiaries, what is the performance and also during the quarter? Sorry. Subsidiaries-wise, if you look at we have, overall numbers, let's say Bayshore Pharmaceuticals has overall done in first nine months a turnover of around INR 110 crore. It's the distribution they are taking of the generics of other manufacturers and all, and they have contributed a loss of around INR 18 crore in this year. Onyx Scientific has a good growth, almost around INR 98 crore-INR 99 crore turnover they have contributed, and they have contributed a PBT of almost around INR 26 crore in this year. So very good profitability overall. Trophic Wellness has done business of around INR 61 crore, and they have contributed almost around INR 14 crore to the PBT. The other companies are, let's say, Pisgah, we have started now. The business has started reviving now there. Overall in this year, they have contributed a loss of around INR 13 crore. Okay. Sure. Thank you, sir. Okay. Thank you. Thank you. The next question is from the line of Swechha Jain from ANS Wealth. Kindly proceed. Hi, sir. Thanks for giving this opportunity. Am I audible, sir? Yeah, you are audible. Okay. I have actually two questions about the recent acquisition that we, you know, made in Lyka Labs. My first question was the company has lyoph facilities and we don't have it, right? How do we plan to scale our lyoph business post this acquisition? And also, you know, they have recently expanded their lyoph capacity. What kind of turnover and margin, you know, you think this company can do at a full capacity? That Lyka is a listed company and I would not like to comment on our call on Lyka because I think—y es, we have already started an expansion, some kind of capacity in the bottling debottlenecking and all that exercise is currently on. That will take some more time. As far as our plan was there to integrate those all products in our market where we are doing the branded promotions and all that in our hospital coverage in various country. All those registration mapping and filing registrations and that process is going on. That will definitely give us advantage in terms of addressing various country tenders and also give the advantage in terms of promoting those kind of injectables in our ROW markets and all. Their business itself will grow. Overall that's the business plan. Yeah. I still have one more question regarding this acquisition. It has high, you know, like the question was the old promoters still have a significant stake. What kind of management control, you know, do we have or will we have over this company? Do we intend to, you know, help them reduce their finance cost and, you know, raising working capital? Because what I understand is we enjoyed that advantage in the market, whereas they have a high interest rates, you know. Like the debts are at high cost. Just wanted to understand our reasoning, you know. Madam, this information was already given in our offer document. Okay, whatever their ARC borrowings are, were there, it was at a very high rate of interest. Most of those borrowings are now repaid out of the funds that we made available to them. That was given in our open offer document. Their cost of b orrowing has substantially come down. Right. Okay. Okay. As far as the holding is concerned, the promoter family is holding just 20%. That was their holding even earlier also, and our holding is slightly above the promoter family holding. Okay. Will we have a management control over that? That is, madam, already disclosed na. Once this open offer formalities, which just got completed now, payment is pending. Post that, we will be adding our directors on their board, and we will be the promoter of that company. Those things are already made very clear in our open offer document under the SEBI takeover regulation. Okay. Thank you, sir. That helps a lot. Thank you. Thank you. The next question is from the line of Surabhi Saraogi from SMIFS Capital. Kindly proceed. Hello. Hello. Hello. Yes, ma'am. Hello. Hello. Yes, sir. My question has been answered. Thank you. Thank you. The next question is from the line of Sanjaya Satapathy from Ampersand Capital. Kindly proceed. I just want to clarify, did you give a guidance of 20% growth in revenue in quarter four? Yeah, on a standalone basis. That is right. Okay. Sir, the second thing I wanted to ask you is that your domestic growth has been pretty strong and well ahead of industry and most other companies. Is it because of some particular COVID-related factors or something, or it is something which is much more structural and can sustain for a fairly long time to come? We don't have any COVID-related product in our portfolio. Except that the hydroxychloroquine last year, what was sold, it was not a COVID drug. It was repurposed for COVID and so that was the business mostly happened in the first three quarters in the last financial year. In current year, there is no COVID business as far as we are concerned. Overall, I would say that the whole for industry and for us also, your acute portfolio has done really very well in the current year because of high level infections and cough and cold and so many other issues and post-COVID complications to the many peoples and all that. That has also helped overall for the better growth of your domestic market. As far as if you look at past eight to 10 years, we have been continuously growing around 1.5x the overall market growth. That trend is perfectly continuing. In current year, because of the overall very good seasonalities and our promotions, that has definitely helped us in achieving much better growth. In first nine months of the current year, we have achieved almost around 31% kind of growth. In this quarter also, we had a significant growth of almost 23%. Overall, even the trend in the month of January was also significantly higher than what we have achieved overall up to now. Overall, let's say business in domestic is very good. The market growth was also good, I would say that. We expect that we will continue to beat the overall pharma market growth by around 1.5x. That's our future guidance. What kind of overall pharma market growth would remain and all that, we will give the overall guidance only after the fourth quarter. Sir, your guidance, your ability to grow at 1.5x the industry growth will be driven by expansion of your product therapy targets, or it will be more of mining the same pain and all those categories in which you are already doing so well? Let's say by and large, the business growth will come from the categories which we are already in. Like, say, 15 years back, 12 years back, we were nowhere in the scene as far as the ortho for pain management business is concerned. Today almost around 48% of our business is coming from pain. We have built a lot of other therapies like derma, we have built urology, we have built ophthalmology we are building up. All those newer therapies, urology we have built up. Those kind of therapies are now under built up and we are further increasing in next financial year, the some more divisions on cardiac side and on ortho side, to further accelerate the overall growth. Our overall alignment to the growth market is also very good. We have a very small part, maybe around INR 60 crore-INR 70 crore of portfolio which is on decline phase. The rest all are in the growth phase. Overall portfolio alignment to the growth market is also very good in our case. Thanks a lot, sir. We don't add too many products in the market. Our whole business philosophy is that to see that the product become big. We don't keep on adding too many product. In a division, we hardly add a product in a year or some line extensions if only as a service product. We don't add too many products in the market because it's basically the market, India market is highly crowded. In each segment you see every company in cardio-diabetes will have three, four, five marketing divisions. The doctors who can really prescribe and give you more prescriptions, they are chased not by the 25- 30 companies, but maybe around 100 divisions of those companies. Every therapy, this is the kind of scenario. Unless you have a focus around the product and the very category conversion plans and retention plan, it's very difficult to get the mind share of doctor and then prescription from that. Market is fiercely competitive and we have to remain focused, so we don't add too many products. Thanks, sir. Thank you. Participants, if you wish to ask a question, kindly press star one. The next question is from the line of Naresh Goswami from Sameeksha Capital. Kindly proceed. I want to ask about the cash outflow tax this year and next year, not in terms of accounting tax which you have provided in the P&L, but the cash outflow percentage. Yeah. Overall, if let's say we are a MAT company, and whatever MAT rate of tax is there, that is what is the cash outflow is there. But we are not up for the new rate of tax because still we have a lot of MAT credit still lying in the books of accounts, and some MAT credit is not in books of accounts because earlier we were not recognizing the MAT credit as such. So overall we have currently after filing the last financial year's return, I have almost around INR 365 crore of MAT credit still remaining in the books overall; credit is there. Probably even the next financial year also, and a year thereafter, we would continue to remain in the MAT, and thereafter we will have to opt for tax rate of 25% and plus surcharge. That's the broad guidelines I can give you at this level. Currently, let's say provisions are made at the rate of I think 32%-33% tax rates are there, out of which some credit are utilized out of MAT and tax payment is around 17%-18% also. Okay. Thank you. Yes, probably we will definitely be under the 25% kind of tax rate. Sure. Current outflow is maybe 18%, so that will go to around 25% after two years. Thank you. The next question is from the line of Nikhil from SIMPL. Kindly proceed. Yeah. Hi, am I audible? Yeah, Nikhil, you are audible. Yeah. Yeah. Hi, sir. Just one question. On the promotional market, sir, if we look at it like for last three to four years, our sales has been in a band of INR 350 crore-INR 400 crore. How do you see the market evolving? Is it like for last two years, has COVID been a big issue? COVID has been a big issue, but do you see the original growth rate of the market sustaining to what it was or any new markets which we are looking to enter? Nikhil, in this kind of business, promotional market business gets impacted by a lot of factors, the country stability, the currency stability, that all impact. Last few years, even though we had a significant volume growth, overall, our revenue numbers has not grown to that extent, mainly because of CIS market. The ruble used to be around 33-35 level. It went up to 70-75 level. The prices in that market has not gone up 100% or maybe more, because you can increase prices only to the extent of inflation there. Basically, that advantage got diluted. Had the ruble remained at around that level, probably the business would have been double and everything could have added to the margin. That has not happened. In the meantime, we were building the businesses in other geographies. Now, let's say, French-speaking African markets are now becoming almost at par with the CIS market. CIS business has not, in terms of overall, your number, even though the quantity is just maybe more than double there, but, in terms of your overall, the revenue numbers has remained more or less at the similar kind of level. We have been growing around 15% year-on-year on this therapy. In current year also, we expect that kind of growth, excluding the exceptional business in last financial year, but on hydroxychloroquine, chloroquine shipments to the various all these commercial markets. Current year also, the business growth in these markets are around 15%. For whole of the year we expect that kind of growth to be there. Excluding that kind of exceptional business what we had on, chloroquine and hydroxychloroquine in last financial year. Okay. Secondly, on the subsidiary, sir, the number which you gave, I just want to understand because if I separate the consolidated and the standalone, a large part of the impact has been because of the subsidiary. Anyway, where we are thinking of, like, controlling the cost because sales growth for last like even for like nine months, if we see the sales growth has been pretty good, but the cost has been significantly impacted. Anything which you are thinking or will this kind of performance sustain? The current financial year, the cost has definitely moved up. It cannot be compared with last year because last year, there was hardly any kind of promotional costs were there. Manufacturing cost, because of overall inflation and, energy cost and overall lot of external factors, shipping costs and all that, has gone up. Margins could have improved significantly, but material costs this year has significantly gone up. Rates has significantly gone up. In spite of that, we could maintain the overall gross margin levels is only because of, on continuous basis, the reviewing the prices in the market and, wherever the cost has gone up, we have tried to see that how do we take the price increases and those kind of things. Overall, the cost levels has definitely moved up. As far as subsidiaries are concerned, few subsidiaries are making very good profits and few are making losses. I would say that as far as your this guy is concerned, that the much better improvements will come in the next financial year. Ramdev also things have started improving. Onyx is doing very well. We have further expanded there, and I think business growth will continue to remain very well. As far as Bayshore is concerned, it's by and large a trading, so it's maybe some kind of one- time losses there on Bayshore on account of one particular product, but that's not a normal thing. Last year they made profit and in next financial year also they are likely to make profit. Between the stand-alone and consolidated, the level difference is just I think this is getting offset and there's a minor difference of INR 2 crores-INR 3 crores. The stand-alone profits are higher by INR a few crores compared to the consolidated. Sir, what is this one-time loss in Bayshore, if you can just like? Basically some product- related loss, yeah. It's a trading, some loss is there. Okay, fine. Thanks. Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal. Kindly proceed. Mr. Manudhane? Hello. Am I audible? Yes, now you are. Okay. Thanks. Thanks for the opportunity. Sir, just on the other expenses which has been higher both quarter-over-quarter and year-over-year, and considering the logistics cost remaining at the elevated level. INR 340 crore is kind of a run rate to go by for next few quarters or you see this number coming down Q1, FY 2023 onwards? Tushar, more or less, whatever that other expenses are shown in the current quarter, that run rate will continue. Next year, given that it will be more of a full-fledged marketing promotion expenses assuming COVID don't come back, then this whatever annual increment like an increase can be expected. That is correct. Right. This year, whatever expenses are shown, all field staff expenses are back to normal in the current nine-month period. Those expenses will also continue in the next financial year, plus whatever inflation- related additional cost. Understood, sir. Just on institutional— Moreover, I would say that if the things get normalized at China level and all that geopolitical risk is not there, logistic costs cannot continue to remain at this high level for a very long period of time. An energy cost, which has gone up probably it's an exceptional thing which has happened in this year. It will remain some kind of elevated level but some reduction would happen. Already coal costs has started coming down, so for the. But petroleum is still at high level, so your FO and all those cost is high. It all depends on a lot of the geopolitical issues and how China factor gets there. Overall, I feel that on material cost- wise, from there, the price reductions will start coming and from the first quarter of the next year, the prices may go down little bit. Fair point, sir. Fair point. Just on losartan, while you know we've been validating the process and subsequently more or less we are done with in terms of the removal of azido impurities. The existing products in the market that don't carry any risk of recall and all, right? No, there has been no recall. Today also many countries allow the old processed losartan. In many countries, pharmacopoeia whatever the azido impurities are not even included today. It's only in Europe. Following Europe a lot of customers has started taking the newer material. Even though their country requirement is as such not there, but they are asking for the lot which is not having this impurity. Understood, sir. Understood. Just lastly, if I may ask on institutional anti-malarials. Considering the nine-month sales of almost about INR 240 crore and then we're guiding for INR 350 crore, the quantum in the fourth quarter is expected to be reasonably higher. That's basis of new contracts which you have got or it's more of a pending contracts which are to be executed more in fourth quarter? Mostly pending only, Tushar. You can't get a new contract and execute everything within three months, it's n ot possible. Is there some kind of shipment? Shipment deferment, delays because of container, those things are also factored in. Understood. Thanks. Thanks for the— Thank you. Injectables business in this quarter was lower because there was a media fill and almost around one month. It is a planned shutdown. There was a production loss also of one month because of that planned shutdown. Thank you. The next question is from the line of Parth Dalia from DAM Capital. Kindly proceed. Hi. Thank you for the opportunity. My first question pertains to the India business. Could you shed some light on the growth of our domestic business, for the next financial year given the high base, for the company? Now, Mr. Jain has already informed during our next quarter con call, we will give guidance for the next financial year. As far as this financial year and the last quarter of this financial year is concerned, the guidance is already given. Okay, thank you. The second question would be on the NLEM share and the price hike. What is the current share of our India sales that falls under the price control? About 25%. Whatever price increase will come because of this price index growth, every company for that matter will take that kind of a price increase, and we will also take from first April. Okay. Our calculation suggests that we may get around over INR 50 crore kind of price rise on NLEM products from first of April. Okay. That's all from my side. Thank you. Thank you. The next question is from the line of Saion Mukherjee from Nomura. Kindly go ahead. Yeah. Thank you. On the domestic market, you know, what is the MR strength that you have and expansion plans, if you can talk about? We are currently around 5,000 MRs and probably the three more divisions we are adding. Next year the overall expansion may be around 700-800 more people, yeah. Okay. This expansion is primarily, sort of aimed at reaching more doctors and more geographies. That seems to be the focus, right, sir? Let's say ortho, the rheumatoid arthritis and osteoarthritis and all the pain segment is our focus area. We have a significant share and leadership there. We want to further fortify that and therefore we are adding one more division on ortho side. That's the one particular step we are taking. On cardiovascular front also, our CTD range is doing very well, and I think CTD brand, with that brand almost reaching around INR 130 crore in current year, with our reach is increasing with the cardiologist and overall in that market. Therefore, to encash that, we are further adding people and also at the high-end cardiology we are adding another division which will have a lesser number of people. There are two divisions being added on cardio-diabetes side and one in ortho side, that will be the expansion in next year. The overall range from 5,000 currently may go up to around 5,700 or 5,800. Right. The growth that you are witnessing, I mean, I'm just wondering if it is possible to sort of split out, like how much of it is coming from, let's say, new prescriptions that you're generating from a new doctor, sorry, versus higher prescriptions from existing doctors. I think practically everywhere 80/20 principles works. That, you know, at the end 20% of doctors will give 80% of prescription. What is our focus remain is, we try to convert one- product prescriber into two- product prescriber, two into three into four. The major business what you get is from the core doctors. If I get Zerodol prescription from ortho, that has much more value compared to Zerodol prescription from a GP, because ortho can write, if he's writing my product, he can write 25 prescription compared to GP writing one prescription. Whole focus is on core. Whether it's a cardiology or all. It's not the—i t doesn't matter that if more number of doctors prescribing compared to that if a core doctor prescribes, that your business multiplier effect is much more. Our focus is around core. All right. Would you say, sir, 80% of your, let's say Zerodol prescription would be coming from ortho specialist? Let's say Zerodol is covered by various specialties. Ortho is one of them, and ortho is the major prescribers. Dental is there. Dental is— ENT is there. Practically and e ven in— AP, yeah. Zerodol even, consulting physicians because the people with low back pain kind of issues or maybe the soft tissue pain problems and all will not reach to ortho. Each product wise in that also there is a sub-segmentations are there. Maybe on those kind of product, we make consulting physicians becomes a major prescriber. It's all depend on each product offering and who are the core for that particular product offering. Right. Just one more question. Strategically, you know, you seem to be sort of developing, you know, strong relationships with, you know, some of these specialists. Why not sort of you know launch more products? I mean, you mentioned that you're very selective in the product you launch. How do you leverage these relationships, you know, either through acquisition or your own launches? Any thoughts there to sort of, you know, go beyond like two or three big brands, which are anyway doing very well for you? We leverage relationship. Like say, ortho we have built a very strong relationship. There is a limitation to add the products in the existing divisions. Therefore we are starting new divisions. New divisions will have a faster success rate because of existing relationships. Similarly, we are building a very strong franchise now in cardiac. We are now leveraging that through adding more divisions so that we will continue to remain focused on the products because the market is fiercely competitive. You can't relax, otherwise you will also start losing the existing businesses. Because if you go and talk of 10 products to doctors, he may not even remember one. It's very difficult because it's, he's also hard- pressed and there are n number of reps chasing to a prescriber. If you are focused, then you get a good amount of prescriptions, yeah. Then you keep on converting one- product prescriber to two- product to three- product, five- product, six- product prescriber. That's how you start getting the significant amount of businesses. Those kind of doctors becomes core doctors to you. We monitor each core doctors who are writing for us, that no visit should be missed, and we continuously guide them that which are the product to be prescribed to them. All those kind of things are continuously monitored. Each doctor-wise, they are monitored by the company. Okay. Sir, just one question, if I can ask— I'm sorry to interrupt, sir. Okay, I'll join back. Continue with the queue. Yeah. Sure, sure, sir. Yeah. Thank you. The next question is from the line of Vinod K, an individual investor. Kindly proceed. Hi, sir. Thanks for the opportunity. My question is regarding your recent investment in company called Lyka Labs. There you mentioned that you want to enter into a lucrative lyophilized injectable business. I just want to understand, like, how big is this opportunity for Ipca and how you want to grow further in this space. It is too early to say how big is the opportunity, and there is a lot of gestation period also in building this business. What we will be now initially doing is to register the products which are manufactured by Lyka in the ROW market, where we are operating through our own field force. We are doing that business, branded business in about 40 countries in CIS, Latin America, Africa, Southeast Asia, and all. That is our initial work, what we'll be doing. It takes time actually. You develop a product, you file a dossier registration. There could be an inspection triggered. Registration takes time. It is a business having a lot of gestation period. We have already started that work, and that was our interest in acquiring this company. In Lyka, the bottlenecking we are doing by way of further expanding their lyophilization capacities and all. That work is going on. It will take some more time. Yeah. Yeah, sir. That's fine, sir. From opportunity side point of view, how you see, in the short, medium, or long term? I think. Those questions, Lyka will have to reply. It's a listed company, we will not reply for Lyka. Okay. Thank you. It seems like— Sir, do you have any further questions? No, thank you very much. Yeah. Thank you. The next question is from the line of Surya Patra from PhillipCapital. Kindly proceed. Hello, Surya Patra. As there's no response, we are moving on to the next question. The next question is from the line of Kunal Dhamesha from Emkay Global. Kindly proceed. Thank you for the opportunity again. Just one clarity on the MAT credit. Sir, you mentioned that we have INR 360 crore MAT credit till the last you know income tax filing. I believe that for FY 2022, we'll be using roughly INR 180 crore out of that. For FY 2023 would be INR 180 crore utilization, right? Roughly 15% of our PBT in each of the year. Wouldn't you say that in FY 2024, we'll be back to the new regime of 25%? Broadly, Mr. Jain said the next two financial years, that is FY 2023 and FY 2024, more or less we should be in the MAT only. Post that, we may go for the new regime. That is what was told, actually. No, does that assume that some of the off-book MAT credit you will be able to utilize? Because the MAT is not, you know, basically adding up, right? If we had INR 360 crore MAT credit and we'll be utilizing INR 180 crore for FY 2022 and INR 180 crore for FY 2023, then for FY 2023 we'll need to utilize off-book MAT credit, something like that? Overall credit is around INR 360 crore, out of which some credit will be utilized in current financial year, and major part of that will be utilized in next financial year thereafter. There are some kind of incentives that are still there, particularly on certain one plant, t hat deduction is going away. So 10 years are completed. Second plant is still there. It's not as simply numerical that half will be utilized this year and half will be utilized next year. It will depend on whole amount of tax calculations, which are the incentives that are still available. I would say that your March 2022 and March 2023 probably in the two years the whole credit may be utilized or whatever remaining credits are there, that may because once you opt for the newer regime, those credits will lapse. Whatever therefore, we are not a lot of credits which are not there in books because earlier we were not accounting. We have not taken those credits in books because we really don't know today that how much of those credits will get lapsed. It all depends on tax calculations and overall profitability and what kind of overall incentives are available and all that. Definitely, I think your current year as well as next year we are on MAT. Thereafter, even if there are credits left and which is small credits, probably that will lapse because once you are opting for new tax regime, neither you can have incentive nor you can have utilize the past credits; t hat will all lapse. We have made a provision on deferred tax also in the books at a higher rate, because current rate of tax, since we are at 33% now because we are not opted, so some kind of those deferred tax credit will also get reversed in books. That figure may be around INR 80 crore-INR 90 crore or so, that deferred tax liability will get reversed. I don't have right now the exact calculation, but broadly I'm telling you right now, these are the numbers. Oh, okay. Sure. Yeah. Thank you. Thank you for that clarification. Thank you. Ladies and gentlemen, that was the last question. I would now like to hand the floor over to the management for closing comments. W e have already—w hatever questions were asked, we have already answered. I don't think there is anything further to add to what we said. Thank you so much. Thank you very much, sir. Thank you. Yeah. Ladies and gentlemen, on behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.