Ladies and gentlemen, good day and welcome to Ipca Laboratories Limited Q4 and 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 and zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal from DAM Capital Advisors. Thank you, and over to you, sir. Thanks, Nitin. Hi, good afternoon, everyone, and a very warm welcome to Ipca Labs Q4 FY22 earnings call hosted by DAM Capital Advisors Limited. On the call today, we have representing Ipca Labs management, Mr. Ajit Kumar Jain, Joint Managing Director, and Mr. Harish Kamath, Corporate Counsel and Company Secretary. I'll hand over the call to Mr. Jain to make some opening comments, and then we will open the floor for questions. 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 Q4 FY 2022 earnings call. Today's earnings call and discussions and answers given may include some forward-looking statements based on our current business expectations that must be viewed in conjunction with risks that pharmaceutical business face. Our actual future financial performance may differ from what is projected and perceived. You may use your own judgment on information given during the call. Domestic formulation business delivered 27% growth for the quarter from INR 433 crore to around INR 551 crore for Q4 FY 2022. Export formulation business recorded a growth of around 3% from INR 338 crore- INR 346 crore for Q4 FY 2022. Branded promotional market in CIS market recorded a significant decline due to geopolitical issue in the region and we could not make shipments in the month of end February and March. Both months, shipment did not go. Overall, promotional market achievement achieved a turnover of around INR 103 crore from INR 101 crore in Q4 FY 2022. Generic business in U.K. mainly impacted with much lower shipments to our distributors in U.K. as we have started our own distribution arm in that country. Business building sustainable business on that will take some more time as we get the product approvals in that market. We were marketing almost around 43 products-44 products of our own. Right now in our labels, we have just got around seven registrations and which are commercialized. We have got around six-seven more registration recently, which will be commercialized now. As we get more and more registration, those products will get commercialized there and business will build. The U.K. business in this quarter has declined from INR 60 crore- INR 20 crore in the Q4 FY 2022. In spite of above, the generic business, excluding institutional business, recorded a growth of around 2% for Q4 FY 2022 to INR 164 crore from INR 160 crore in last financial year. Institutional business is also impacted due to lower shipment in the quarter to around INR 80 crore from INR 76 crore in Q4 FY 2022. API export API business recorded a decline in business of around 14% to around INR 181 crore from INR 209 crore. Domestic API business delivered 52% growth from INR 50 crore- INR 77 crore in Q4 FY22. Overall API business for the quarter has declined by 1% from INR 260 crore- INR 258 crore for FY22. API business for Q4 FY22 is impacted due to issue of azido impurity in the certain API which is since resolved, and there were certain sales returns received during this quarter. Domestic formulation business has been very strong in this quarter. Our pain management segment has recorded 32% growth. For whole of the year, it has recorded around 20% growth. Cardiovascular in this quarter has recorded 13% growth. For whole of FY22, it has recorded 14% growth. Antibacterial in Q4 recorded 43% growth. FY 22 almost around 55% growth. Similarly, cough and cold has recorded almost around 71% growth for the quarter as against 72% for whole of the year. Derma business recorded 20% growth, and for whole of the year, it has recorded almost around 41% growth. Similarly, urology has recorded 36% growth as against 40% for whole of the year. Domestic business in the quarter has been very, very strong. In March 2022, as per IQVIA, our ranking has improved to 18, and overall, our market share has gone up to around 1.79% of overall India market. The relevant market share has also gone up to almost around 4.98%. The COVID-19 spread and broad-based treatment thereafter positively impacted for the year FY 22. For antibacterials, antimalarials, cough and cold preparation. These therapies has delivered during the year very exceptional overall domestic business growth. Excluding the exceptional business in FY 21 relating to hydroxychloroquine and chloroquine for COVID treatment, we have achieved a business growth of almost around 13% for FY 22. Overall therapeutic contributions in some of the key therapy area for domestic market has been around pain is now almost around 49% of the business, cardio and antidiabetics around 17%, antibacterials is around 7%, antimalarial, dermatology and cough and cold each contributing around 5%. Urology, CNS are contributing almost around 3% each now. Impact of higher cost, overall the value addition for the quarter stood at almost around 70%, for Q4 FY 22, as against 72% in Q4 last financial year. For the full financial year, FY 22, our value additions has been almost around 68%, as against 70% for the last financial year. The Q4 EBITDA got impacted due to impairment in the value of investment of almost around INR 22.46 crore provided during the quarter. For whole of the year, we have provided almost around INR 39.14 crore as a provision for impairment in value of the investment. We almost recruited around 500 additional people in marketing in Q4, and that has also resulted in a higher cost. These additional marketing divisions are launched from first of April in the current financial year. During the year, we are recruiting almost around 1,200 additional medical reps and launching four more divisions in the domestic market in the current financial year. Higher incentive to field staff for significant higher achievement of 27% business growth as against the budgeted growth of around 16% has also resulted in overall little lower higher provision for the incentives to the field staff. Significant higher fuel cost for the quarter. Almost the cost has gone up for the quarter by almost around 60% as compared to last year. For whole of the year, the fuel cost is it has increased by almost around 49% for the year. Similarly, shipping cost has also significantly gone up during the quarter, even though our export business has not done a significant addition. The freight cost has gone up from INR 13.7 crore to almost around INR 23 crore-INR `24 crore. Overall, higher wholesale price inflation in economy has also increased overall overhead costs. Having given the broad presentations, now I request participants to ask the question. So shall we open the floor for questions. Yes. Thank you very much. We now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask a question. Anyone who wishes to ask a question may press star and one. The first question is from the line of Ranveer Singh from Sunidhi Securities and Finance. Please go ahead. Yeah, thanks for taking my question. My question is related to that Sartan business. In last quarter, we mentioned that due to impurities the shipment was lower and that normalization happened in last quarter itself. Yet in this quarter also, in your commentary, it seems that it is not normal something. Please throw some light on it. Let's say issue got resolved. We have filed the newer process, whatever with modifications and all. A lot of shipments which were made earlier to certain geographies, they have returned back. Sales return was higher. These goods will be reprocessed and then reshipped. Reshipment will also, and therefore in this quarter because of sales return, some sales return may even come in the first quarter of the current financial year. For some more time this will get impacted. Yes, newer shipments has already started. The business got disturbed for almost around six months- eight months because of this issue. We are also likely to lose some kind of market, which will take some more time to regain back. What are the quantum of sales return in this quarter? Maybe I think overall maybe around more than INR 20 crores. Okay. Sales return is over now or some part remains to- No, I said some more may come in Q1 of the- Okay. Current financial year, yeah. Secondly, on institutional business, that also in last quarter you indicated some full year revenue of INR 350 crore. This is the full year revenue is considerably lower. You mentioned the shipment was lower, but reason why shipment was lower, that I wanted to understand. Let's say as against INR 350 crores, what we have achieved is around INR 318 crores. It's lower because order flow, what we were expecting, based on our discussions with various agencies, that did not materialize. Order flow itself is very, very low from institutions around that time because artemisinin prices has gone up significantly higher, and therefore there was a price increase. The getting those kind of higher prices and so overall flow was slow. The artemisinin price, which used to be existing around $150 has gone up to almost around $250-$260, and therefore consequently prices were also revised. What kind of flow were expected, that did not happen. This is not a case of any part of sales being deferred to. No. There's no deferment of shipments, yeah. Okay. What would be outlook on institutional business for FY 23? I think FY23 will, we'll see a flat kind of business. We don't expect much of growth in institutional business for the whole of the year. Okay, fine. I have more question. I'll be in queue. Yeah. Thanks. Thanks a lot. Thank you. Participants, you may press star and one to ask a question. Next question is from the line of Damayanti Kerai from HSBC. Please go ahead. Hi, sir. Good afternoon. Thank you for the opportunity. Sir, my first question on India business. Obviously we have seen exceptional gain, as you mentioned during your opening remarks, in some of the therapies due to COVID. On a high base of FY 22, how should we look at FY 23 growth? If you can split growth into volume growth and new launches contribution, that will be helpful. Okay. Overall, I would say that all business has not grown because of COVID because our pain segment is significantly outperforming and it is continuously doing very well. There are no impact of COVID in that kind of segment except a small brand of paracetamol of ours has shown a good growth of almost around 109%. Zerodol continued to record almost around 30% kind of growth even in the last financial year. Overall pain segment for Q4 has also grown by 32%. Overall, in spite of hydroxychloroquine, which was exceptional business last year, and that declined, in spite of that, pain has given 20% kind of growth. That has and other therapies like, say, let's say Derma for the year has grown almost around 41%, CNS 25%, urology 40%. These are the therapies which has outgrown significantly from the market. As far as some of the therapies like antibacterials, we had almost around 55% growth for the year. Antimalarials had 64% growth, and cough and cold we had almost 72% kind of growth. These are the segments which has impacted because of the higher businesses because of COVID also. The normal business has also grown, but because of COVID, there was exceptional demand in the market for antibacterials and antimalarials and also your cough and cold preparations. As far as the next financial year is concerned, I think, overall, domestic business for us may grow almost around 12%-13% for the whole of the year. Okay. 12%-13% on a base of FY 22 look achievable. Yeah. for FY 2023. Okay. Yeah. Q1 growth may be little lower because the Q1 in April and May because of the Delta variant spread and all and broad-based treatments and all those significantly higher offtake of antibacterials and cough and cold. On that base there, the growth may be little slower, but for whole of the year we should be able to do a business growth of around 13%, yeah. Okay. Sir, quickly on the price hike which was allowed for NLEM portfolio that's been taken and, if you can confirm that. What about price increase for non-NLEM portfolio? What kind of price hike you are anticipating or you have already taken? Overall, in NLEM product, almost around 10.7% price increase was allowed, and I think price increase was announced practically at last date. Normally we carry around two months inventory, because the Q1 business is higher, so we normally carry higher inventory around that time. Therefore, practically this price increase, in the current year will be only available in June because we will be selling the older inventory which is at a lower price. This price increase will be available for at least maybe around 10 months of the whole of the year, not for 12 months. As far as Indian products are concerned. As far as other products are concerned, normally our price increases has been around 6%. Overall for the whole of the years, we used to have around 6% kind of. Looking at overall, the wholesale price and inflation which is currently in economy, probably we may be on an average around 8% kind of price increases during the current financial year. Okay, sir. My last question before I get back to the queue. Given we continue to see high pressure on the input cost part, whether it's a raw material part or shipping and freight cost which you also touched upon. In terms of margin for FY 22-FY23, what kind of assumptions you are building in right now? Let's say in spite of higher prices in the current FY 22, we have been able to have a gross margins of almost around 68% for the year, which has come down from 70% in last financial year. 70% was very exceptional, because of certain additional business on account of COVID, what we did on chloroquine, hydroxychloroquine. That was at a much higher prices. In spite of your overall significant increase in raw material, I would say that we have been able to maintain the overall gross margins value addition at almost around 68%. In the Q4 of the current year also we had 70% kind of value addition. That's what I have said in the initial presentation. We don't foresee that there will be any kind of reduction in that part. What I am seeing from market now is there is a significant resistance from the buyers in passing on the higher cost. Normally buyers gives one-year orders and all those kind of things for the APIs and all. Currently, what we are looking that the buyers has apprehensions that prices will come down and therefore they are also giving quarterly orders and not committing for the full year deliveries and all those kind of things. Similarly it is happening for intermediates also that the intermediate producers are also facing the heat because their volumes are going down. Therefore, there are indications of lowering the prices in spite of the China lockdowns and so many issues and logistics issues and all that. We are seeing the softening of the prices of certain key intermediates in the recent times, and probably that trend would continue. If that trend continues, then overall our gross margin will further improve. Okay, sir. Thank you. Thank you. Operator, please star one to ask a question. The next question is from the line of Surya Patra from PhillipCapital. Please go ahead. Yeah. Thanks for taking my question, sir. Sir, first of all, can you give us an update on the ongoing projects, whether it is at Dewas or the de-bottlenecking activities in Ratlam, Aurangabad, as well as the conversion of Ratlam API to intermediate. On these projects, what is the kind of status and in terms of utilization for Dewas, how soon that we should be building for the current year in terms of the utilization and all for both the units? At Dewas we have started the commercial production for one intermediate. Second intermediate production would start in the next quarter. The major plant is the one which is under installation. The overall I think installations and validations would get completed. It's further delayed by two months. Maybe I think around July end or August that will get completed. Thereafter say all the validations, all the establishment and validations and the stability batches and all will be taken. It will take almost around six thereafter to generate the six months stability data then file with the regulatory authorities for the approvals. Regulatory authorities will take some time for approvals and visit the plants and all. We don't foresee any kind of significant impact of Dewas coming in the current financial year. The Dewas will start impacting our overall performance, maybe from the Q2 of the next financial year. Nothing great would come. In fact, it will contribute the initial losses because that's the pain in drug industry that you need to do all those kind of work and then meantime it will start producing some kind of the penultimate stages and just keep on supplying to Ratlam plant and from there we will increase the overall API output and all. But Dewas would not significantly impact in the current financial year. As far as your overall I think Aurangabad you have talked about. Aurangabad, there are no issues. It's a normal business. We have installed one pilot plant there and the few stages are practically stabilized and their yields has gone up by almost around 20%. Few more products are under trials, and we expect significant improvements in that also. Some of the stages where there are high amounts of practically phosphorus oxychloride are used, those we are facing problems relating to MoC issues, and we are still not able to resolve in spite of taking up with all kinds of companies in domestic and international. That issue is still there. On the other reactions and all, we are seeing a good amount of progress happening there. As far as the Ratlam de-bottlenecking is concerned, yes, that has been completed and the commercial production has already started, yeah. About Ratlam. Ratlam, the journey is going on almost around, five products-six products are validated there now. We have started filing those with the EDQM and other authorities that the filings has already started. I think in current year, we may do almost around eight filings-nine filings. Once those kind of approvals start, then European and other business will start from that plant. Meantime, right now, it's serving to the domestic industry, yeah. Overall, in terms of annually, what you generally mention about the integration levels for your activities with your captive operations. Can you share that, what is the level of integration now currently? It's almost around 56%. Okay. 56% of your formulation- Our turnover is coming from captive API. Okay, fine. Sir, my second question is on the overall export performance. You mentioned that you had shipment problems during the last two months of the quarter, and hence there was a kind of impact. That is clearly visible. Apart from the stronger growth in the domestic formulation, which was the savior, otherwise, all other segment, whether it is API or export formulation or export API, everywhere that we have seen some slippage to the normal expected levels. Do you think, given the kind of concerns that is there on the shipment side or trade challenges front, so do you see any kind of softness or a softer trend for the export that is continuing at least in the initial period of FY 23, and hence a kind of moderated growth on the overall export business? Let's say firstly, promotional market, we were targeting almost around 20% growth, excluding the exceptional business what we did in last financial year relating to COVID. If you do exclude that part, then I think on promotional markets, we have achieved a growth of around 12%. In spite of two months shipment has not happened. If those would have happened, which are for the CIS market, if the things would have been normalized, we could have achieved almost around 20% growth in promotional market. As far as current year is concerned, I think April got impacted because we didn't make much of the shipments in that month. From May onwards, I think overall things have normalized. In fact, we may gain more, particularly in Russia, because one is your ruble rate has now stabilized around 57 and all. Our pricing in that market was based on 70. Our overall dollar pricing in that market will improve. Based on overall initial impact in February and March, looking at the depreciation, we have revised our pricing based on 70-90 in that market. Therefore, we increased the local prices in that market. We have not reduced the prices right now. Hopefully there will be a significant gain as far as Russia is concerned in dollar terms for us, because our dollar prices will get revised there. not only that business in Russia, even the API business, we have very good business in Russia. That business also got impacted. we have put all the customers on advance list now, that you send the advance and then it took us some time. now shipments have started going to that market. both on formulation front and as far as API front, we have suffered in that market. As far as Ukraine is concerned, we don't have a significant business, but we were doing almost around INR 15 crore business in that geography in a whole of year. some shipment was sent in earlier part of February. Even that has not reached to Ukraine. Therefore, I think Ukraine business will definitely suffer because we are still finding difficult to have the logistics put in place for shipment to that market. As far as generics are concerned, let's say all other geographies we are having good progress, except U.K., because there we are now completely stopped shipping to our distributors in that market. As I said earlier that we have almost around 43 products with more number of number of SKUs put together was a very large list. We only got around seven approvals and seven products for commercialize. Recently, we got almost around six, seven more approvals, which will be commercialized in maybe in the Q2 of that all preparations are going on. Overall, that business will show a decline in the current year, but European business, Australia, Netherlands, Canada, South Africa, they all will grow. I don't foresee a significant growth in generics. Overall business growth in generics will be muted because of U.K., and the overall growth in generics may remain around 5% or so, overall. API business I foresee almost around 10%-12% kind of overall growth, once these issues are completely behind us. Okay. Sir, just last question. Sorry to interrupt you. Can I request to come back in the question queue? Sure. Thank you. The next question is from the line of Kunal from Edelweiss Financial Services. Please go ahead. Kunal, may I request you unmute your line from your side and go with the question, please. Due to no response, we move to the next participant. The next question is from the line of Ranveer Singh from Sunidhi Securities and Finance. Please go ahead. Thanks for follow-up. Just on U.K. side, though we have mentioned that change in distribution, you know, model has impacted. Wanted to understand what's your status currently. We have already set up our own distribution channel there, and we expect sales to, you know, pick up in subsequent quarters, or that process is still going on. Secondly, how would that impact our profitability in that region? Overall, if you look at U.K., in FY 21 we had almost around INR 152 crore business. Prior to that years, you know, U.K. business was almost around few years back it was almost around INR 350 crore. Because of distribution issues, this business has significantly got impacted, and therefore we decided that, yes, we want to be there in that market on, and have our own distribution. We have got during the year those kind of registrations what we have talked about, almost around seven registrations. During the year, our in our own label we have done almost around INR 23 crore business. On distributors, the business was almost around INR 61 crores. Overall, almost around INR 84 crore business we have done in U.K. Looking at the current basket of 13 products, the seven which we are currently marketing and six approvals that we have received now, we would be almost around INR 60 crore-INR 65 crore kind of business. We are expecting more kind of approvals, which if it comes during the year, then business could still be better and we could be at a breakeven, maybe around INR 84 crore-INR 85 crore in the current year. We have not factored in our budget so far the fresh approval. We'll certainly get more number of approvals during the year. U.K. business we see that there would be some kind of decline during the year. Breakeven would be achieved? Let's say we have not right now created our own warehousings and other things, we are completely outsourcing, but we have marketing teams in place, and we have all other people in place. The QP testings are completely outsourced there, and we are also setting up our own QP testing facilities there. In fact, business margins could improve there. Okay. Just to double-check, you said INR 152 crore was from U.K. in FY 22? Yeah. FY 21. Okay. FY 21. FY 22 was INR 84 crore. Okay. Huh? INR 84 crore was in FY 22 for a full year. Right. Okay. Okay, Okay, fine. Business has significantly come down from INR 350 crore- INR 84 crore. INR 350 crore was in FY 19? Uh, uh- Before that. Before that. 2018-2019, yeah. Okay. Similarly in Russia, what is the contribution of Russia in FY 21 and FY 22? Hello. I think overall CNS we did almost around INR 134 crore. For FY 22? FY 22, yeah. The majority would be from Russia only, you said. Majority would be Russia, almost around INR 15 crore was from Ukraine and some from Belarus. What was that number last year? Just, I wanted to understand the normalized number. It was almost around INR 164 crore. Okay. Sometime, you know, in a war-like situation, when the situation normalizes, that demand also, you know, some sort of pent-up demand also comes up. Or there may be some opportunity there because some MNC, we saw some MNC has withdrawn from there. Do you see any, that the opportunity would be larger, in case when that situation normalizes in, Russia? In fact, we are sensing that business would definitely go up there. There are good opportunities. Our team is working. The team is right now sitting from India there to assess all those kind of things, which are the dossiers of other markets from which we can get Russian approvals and all that. Those all preparations are going on. We see a good improvement in business, and also, you see earlier dollar-ruble rate was almost around 35. From 35 it went to 70. 70 it has come down to 57. It is basically our dollar billings were getting impacted because of currency depreciation there. Since ruble is again appreciating, our dollar billings will increase. Overall business in Russia will definitely go up. Apart from that, additional opportunities which are there relating to newer products, approvals and all, that also will be positively impacting Russian business. whether we have that forward contract there to hedge that currency fluctuation? No, we don't have that. Okay. Our beliefs, we decide the prices there in those markets. Net prices and the distributor margins in those geographies are capped. Okay. Thank you. Okay. I'll just come back in the question queue. Yes. The next question is from the line of Dino from InCred Capital. Please go ahead. Hi. Just a follow-up from my side on the domestic market. We have done exceptionally well in the domestic market last year. Obviously part of it came from the COVID upside, but you also said that, you know, part of it is not COVID related, like the pain, derma, et cetera, et cetera. I was wondering, you know, all these are businesses which used to grow, say 10% or 11% annually. What has suddenly changed that these are growing 30%, 40%? What are your thoughts around that? I'd say base was low. See, last year base was low. Okay. Area growth purpose. If you look at 2 years CAGR, the business growth was almost around 14%. 14%-15%. As against that, because of all these uncertainties and the base last year of the exceptional business what we had, more particularly in antimalarials last year, and also in our antibacterials, we are lagging a little, as against, let's say 15% kind of growth, we are projecting around 13% kind of growth. Okay. Got it. Thank you. Thank you. Next question is from the line of Saion Mukherjee from Nomura. Please go ahead. Yeah, thanks. Sir, any update on U.S. FDA inspection? Any conversation you had with U.S. FDA with regard to your plants? Let's say all remedial actions are done. We are in regular touch with FDA. Hopefully inspection should happen, but FDA doesn't announce when they will come. Hopefully inspections would happen in current year. Because there is nothing pending, no pending requisitions from FDA again, on any kind of, remedial actions or submissions we have made to the FDA. Sir, on the branded business, you sounded positive with Russia coming back and some of the other markets. What's the kind of growth expectation you have in fiscal 2023 for branded formulation exports? It could be around 20%. Okay. Sir, your API business has done very well, you know, particularly last two years. It has come off a little from FY21 levels. You mentioned about Sartan. How should we think about what are the kind of opportunities you have? You have guided for around 10% growth next year. But slightly on a longer term basis, what's the kind of expectation? This 10% growth you see or there is additional opportunities that you expect on the API side? The business from 10%, I think overall, API business may grow to around once this capacity becomes available and regulatory inspections of Dewas site and all, it happens and those filings happen from that site. I think overall business may grow to around 15% for next three years thereafter. Okay. Sir, one final question on raw material prices. You mentioned prices have started to come down. I just wanted to understand is the worst behind, and is it like the price inflation that you have seen or are seeing is limited to specific products? Any color if you can give and or is there a possibility of a material margin improvement in gross margin? Is that something which you see is possible because some of the costs may be exceptionally high at this point or in fiscal 2022, which can come down? We have seen the trend that overall, let's say, intermediate prices and they all started coming down now. Even the buyers are facing hit because the sellers are facing hit because they are also not getting volumes because at higher prices the buyers are not taking the shipments and those issues are there. Companies, the manufacturers of APIs are also facing problems in passing on the prices because Europeans and other manufacturer, the buyers are also are hesitant to give these higher prices because somewhere they also have a lot of insurances and other issues and there are pricing pressure there, and they are not able to buy at those prices. Definitely the these prices which was significantly gone up, it's not 10%-20%. Somewhere it is 100%, 200%, those kind of price increases happen on intermediates and all. Those prices definitely are coming down and the trend will be seen in the current financial year. At the same time, because of higher petroleum prices, your solvent prices continue to remain high. We are seeing that excipient prices, which are mainly used in the drugs for formulations purpose, those prices are moving up, but they don't contribute much to the overall cost. Overall, we see that, yes, the prices will definitely come down and that will positively impact. How much that would happen, we are seeing maybe around 5%-10% retracement in the prices, but it has to come down much more. That could positively impact the margin. Right now it's very difficult to project that how much it will come down. Understood, sir. Thank you, sir. Thank you. The next question is from the line of Aditya Khemka from InCred Asset Management. Please go ahead. Yeah, hi. Thanks for the opportunity. Thank you. -sir, just one ques- Yeah. Sir, just one question on the U.S. business. You know, our acquisition of a stake in Lyka, can you sort of expand on the rationale and what is the progress? Your Lyka current plant is having WHO-GMP and certain the authorities the approvals there. They don't have any kind of approvals which are from the stringent authorities of the world. No approval exists for the stringent authorities of world. We have made an assessment there, and probably there some kind of modifications are required that will be carried out during the year. Our internal teams are assessing their overall, let's say, quality systems and other issues. After those kind of things are done, we will review their data and then after modifications and all, then filing process will start, first in ROW market and then in the stringent market, all that kind of thing. That's maybe around a two-year journey. Injectables are. We have most of our businesses coming from oral therapies, and we definitely wanted to go for injectables. We wanted to have that kind of presence. There, Lyka has a very good product range, so it's only some kind of corrections and then the regulatory approvals, and we can go for those kind of businesses. ROW itself presents very big opportunities as far as those injectables are concerned. Yeah. That's a two-year journey. Understood. Sir, any outlook on the Sartan portfolio of APIs that we sell. I know we have been seeing some pricing pressure in Sartan over the past nine months-12 months. Do you think prices where they are now, given the raw material inflation, Sartans will not see further price erosion? In fact, will we be able to take some price increases in that portfolio to pass on the cost? In fact, this azido impurity issue which has come that has opened us an opportunity that we could revise the processes for much higher yields, and that would in fact reduce the cost. Therefore margins would be better. All right. You don't see any further pressure on the end price of Sartan portfolio in the markets? No. In fact, the intermediate prices were elevated. They have started coming down. Yeah. Okay. That's good to know. Thank you, sir. Thank you. The next question is from the line of Surya Patra from PhillipCapital. Please go ahead. Yeah. Thank you, sir. Sir, a couple of questions on the finance side. Compared to last year, there is a debt addition of almost INR 550 crore. What was the reason for that? Although it is short-term plus long-term and a couple of small acquisitions that we would have done. If you can break that up in terms of our requirement and rationale for that. That debt is not utilized. It's lying in the bank account. We may at appropriate time repay those kind of debt. It's only a commitment for 13 months. For a specific purpose this debt was made, and that purpose has not materialized, so we have not utilized that debt. There is no major changes that we should build in our. Yeah, yeah. Models. Yeah. Okay. Models. Yeah. Okay. Models. Yeah. Okay. No, no. The debt, it's lying in cash. I have in the balance sheet almost around INR 1,300 crore cash right now. Okay. Fine, sir. Second question is on the cost, sir. Although the elevated raw material cost and all that, despite that we definitely have delivered a strong gross margin scenario. The cost pressure, what we are currently seeing, it is not on the gross margin front. The cost pressure, what we have seen in the for the fourth quarter at the employee cost front as well as more on the other expenses front. Possibly, it is a fuel cost, it is the distribution cost or shipping cost or freight cost and all that. Could you give some sense on that, sir? Do you think that the other expenses are likely to be normalizing in the near term? Given the challenge, the trade challenges that is there, your other expenses is likely to remain elevated for entire of this year. While we take comfort from the gross margin front, but the other two line items are looking relatively larger. Some sense on that front for FY23. As far as personnel cost is concerned, I think overall rise during the year is around 14%. Out of 14% there are 8% is on account of your general increments to the people. The balance is because incentive provisions has significantly gone up because in our system when somebody outperforms, the incentives are significantly higher. And therefore, incentive provisions has gone up by almost around more than double. It's almost around INR 60 crore additional provision for the whole of the year and per month. That has pushed the overall personnel cost during the year. In the Q3, Q4 of the current year, we have decided to add four more marketing divisions in the overall domestic marketing, and we are increasing our field force size from 4,800 medical reps to almost around 6,000 medical reps. In current year, that will significantly impact and therefore personnel cost will definitely be, will remain on higher side during the year. We have seen that by and large, we are able to do almost around breakeven in the two years' time. That whatever the reps are added during the year, in two years they start recovering their entire cost and from third year onwards, they start contributing towards the margin of the company. We will see some pressure during the year because almost around 1,200 more people are being added. In the last quarter, almost around 600 out of that people were already added in the last quarter, and they were under training and all that. That has added to the additional cost. We are continuously doing better in the domestic market and we see a good scope to further increase our overall market shares and all. Therefore, we are adding four more divisions in the high growth therapies overall. Okay. As far as other costs is concerned, shipping costs will still take more time to normalize because petroleum prices are at a higher level and because of the China COVID situations and the overall logistics issues and that will continue to remain elevated. I think it's difficult to say when that's likely to be normalized. Once I think China this overall situation starts and becoming under control as far as COVID is concerned, then the logistics costs will also come down. Sure. As far as the fuel costs are concerned, coal is a real big issue now. Last April, the coal rate was INR 100, it's almost around INR 220-INR 225 is the rate now. It's almost gone up by 120% the coal cost has gone up. In spite of whatever efforts we have done to save the fuel costs and others, overall in spite of all that, the overall fuel cost to the company has gone up by almost around 49%. It's very difficult for me to say that when the fuel cost will get normalized. It has a lot to do with again China because they stopped buying coal from Australia and the coal which was coming from Australia, Indonesia and all that became very, very high and India also because of high heat suddenly the power requirement went up and then the coal was not available to the industry to that extent and the prices. They have started moderating in between but again because of this high heat and all the coal cost has gone up. I think we will have to watch because if the winter the rainy season is a little extended then the coal price may continue to remain elevated. If season ends in time and all that, probably the coal cost may start moderating around that time. As far as the electricity is concerned, I think overall there was a very big strain on the electricity this year. Electricity cost has not moved up very big way. It's only the fuel surcharge they have increased because all electricity boards were holding the tariff hike and all. We don't know when the tariff hike goes up. That could further increase the cost. Thank you. Surya, I may request you to come back in the question queue for a follow-up question. Thank you. The next question is from the line of Kunal Dhamesha from Emkay Global Financial Services. Please go ahead. Hi. Thanks for taking my question. The first question on the Dewas plant, as you mentioned that there would be some, you know, the cost which would be baked into FY 23 and the real commercialization would come in FY 24. Can you quantify what kind of expense that we are looking at from Dewas in FY 23? I think overall I think the plants will be ready for say capitalizations. The major part of the plant will be ready to capitalize in the month of August. Thereafter maybe around INR 1.5 crore per month up to March that will be the cost. Some cost will definitely get recovered, but major will remain unrecovered. Because it's basically all the dossier developments and filings and stability and all those will be done. Data will be submitted to regulatory authority. Till the time we can do is only business with the countries where those kind of approvals are not required and they are normally at a much lower price. Sure. Second question on the Sartan. As far as I was aware, the newer process was having a lower yield, right? I think earlier you alluded that the newer process is having higher- No lower yield. That was having lower output. Higher time cycle. Higher time cycle, but that we have again revised that and with that revisions it's a normal output and higher yield. Okay, normal output and higher yield. On EBITDA margin, have you provided any broad guidance for FY 23? I think overall, our top line may remain around 10%-12% for the whole of year, and EBITDA margins will be around 22%-22.5%. Because we'll have pressure of additional people recruitment in the year, and overall elevated cost on account of overheads, more particularly fuel, shipping and overall inflation in the economy. Our gross margin levels will remain around 68%, and if the prices comes down down little bit, gross margin may improve and that may impact the positively the overall EBITDA. Sure. The tax rate still remains at 18%, right? No. Tax rate will go to around 25% because we are exhausting most of our tax credits and all, and some credit will get lost. Okay, I think last quarter we said we had some INR 360 crore or something pending. Current year because of all the SEZs, all those tax incentives are expiring, and thereafter you can't take those kind of tax incentive once you're opting for 25. Some of the credits will get lost. We'll have to see that, which is a better method. We will have some kind of credits will get lost. Okay. From this year onward you said. Since that credit is not recognized in books, so it will not impact the balance sheet, but yes, the tax rate will go up. From this year only? Yeah, this year only. Yeah. Okay. Thank you. Thank you so much. All the best. Thank you. Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal. Please go ahead. Sir, just on the clarity on the API growth outlook. You guided for 10% growth for FY 23. Yeah, that is correct, Tushar. Yeah. Just that going by the quarter run rate of INR 250 crores and Losartan issue may be taking a quarter or so, still attaining 10% on almost about INR 1,340 crores in FY 2022, so incremental sales is going to be much higher in the remaining three quarters. Is that assessment right? Yeah, that is correct. Yeah. Because progress is slowly happening in capturing additional customers and business for Losartan volume. See, we were not servicing customers for four months-five months because of this impurity problem. Getting all that business again is slowly progressing. at the same time, I presume there are, I mean, there would have been some competition would have already, you know, taken away that market share. Regaining the market share- That is right. Yeah, that is correct. Whatever benefit we have, costing and other things, we are sure we will get back all our customers and all our volume. It will be a slow progress. This quarter, Mr. Jain has already explained there could be some return of older shipment also. Right. You have to give them the fresh material, so there is no loss of anything, but only that, return will get replaced with fresh material. To that extent, there will be lower growth. Got it, sir. Done then. That's it from us. Thank you. Yeah. Thank you. The next question is from the line of Kunal Randeria from Edelweiss Financial Services. Please go ahead. Good afternoon, and I hope I'm audible now. Yeah, Kunal. Yeah. Yeah. Thank you. Sir, just want to understand, sir, because of, you know when all the API price increases, you know, API input cost increases, you know, API contracts when they come up for renewal, how much of it are you able to pass it on? Mr. Jain has already said there is a hesitancy in the buyer side to give increased pricing. Earlier, routinely lot of long-term contract used to get signed, but now buyers are preferring one quarter contract and all. There is a lot of hesitancy in the marketplace also. People are not sure whether the price will remain at elevated level or it will go down. Corresponding formulation demand, formulation pricing, those are also having some concern and issues. Because of all that, there is a disturbance in the API business. But it will stabilize and improve as we progress quarter-on-quarter. Sure. Okay. Thank you. Just one more. While you did briefly touch upon this, you know, I think your sales force increase is almost like 40%, if I, you know, understand correctly, from around 5,100 to almost 7,000 by the end of this year. Where are you going to deploy this? Any particular division or any branch that you are looking to sort of invest in a bit more, you know, color with the input? Almost around 350 people will be added to the existing divisions because what we are finding that our survey suggests that in cities we need more representations and therefore we are adding more number of people in our multi-specialty divisions, more for cities. Around 350 people will go in existing division. We are adding almost around 1,200 people, out of which maybe around 350 people are again getting added to the pain segment, the newer divisions in pain. Existing rheumatology divisions where we have market leadership and around 60% market share, that is getting bifurcated in two parts because it is becoming increasingly difficult to add products there. If you add products then with the larger basket, it becomes difficult to have a kind of focus around the products and all that. That we are splitting to get the higher market share from that kind of segment. We are creating another segment for neuropsychiatry and that's some other additions are there. In cardiology, we are adding almost around two more marketing divisions there, and almost around close to 400 kind of people will be added there. Broadly, these are the areas where the deployments would happen. This is helpful. Thank you very much and all the best. Thank you. The next question is from the line of Prashant Poddar from ADIA. Please go ahead. Yeah, hi. Can you hear me? Yeah, Prashant. Go ahead. Yeah, Mr. Jain and Mr. Kamath, thank you very much for the details. Just a quick question on the hesitancy that you talked about in price increases. Are you doing some risk mitigation at your end, in terms of lower inventory cycles, et cetera? It's very difficult to keep a lower inventory because this is the time where there are a lot of uncertainties as far as supplies are concerned because of. Mm-hmm. The China issues and all. In fact, our inventory in the current year has gone up by almost around INR 200 crore. We could have, in fact, reduced the inventory, but Yes, absolutely. Yeah, yeah. How would this because of all the uncertainties. affect you? Yeah. In fact, the inventories has gone up because in order to maintain the business continuities and all, to avoid supply disturbances, we have. In fact, the inventories have gone up by around INR 200 crore. Could there be an intermittent risk if the raw material prices were to correct? On that there will be a lower realization, but we can't have business disturbances because. Yeah. No, no, we agree. Yeah, yeah. That's it. Yeah. This risk is only in the API business? Yeah, this risk is there in API business. Yes. Okay. All right. That's all from myself, sir. All the best. Thanks. Thank you very much. Ladies and gentlemen, that was our last question. I now hand the conference over to the management for closing comments. Yeah. We have nothing more to add. Thanks to all the participants for taking your time out to attend this phone call. Thank you. Thank you very much. Thank you very much. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you. Thank you. Thank you. Bye.