Good evening, ladies and gentlemen. I'm Kritika, moderator for the conference call. Welcome to Ipca Laboratories Q1 FY23 earnings call hosted by DAM Capital Advisors. As a reminder, all participants lines will be in 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 telephone. Please note this conference is recorded. I would now like to hand over the floor to Mr. Nitin Agarwal of DAM Capital. Thank you and over to you, sir. Thanks, Kritika. Hi. Good evening, everyone, and a very warm welcome to Ipca Labs Q1 FY 23 post-earnings conference call hosted by DAM Capital Advisors. On the call today, representing Ipca Labs, Mr. A.K. Jain, Joint Managing Director, and Mr. Harish Kamath, Corporate Counsel and Company Secretary. I'll hand over the call to Mr. Jain to make the opening comments, and then we'll open the floor for questions. Mr. Jain, please go ahead, sir. Thanks, Nitin, and DAM Capital for organizing this call. Good afternoon to all participants, and thanks for taking the time and joining us for Q1 FY 2023 earnings call. Today's earnings call and discussions and answer given may include some forward-looking statements based on our current business expectations. This 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 information given during the call. Domestic formulation business for Q1 FY 2023 has delivered a growth of around 12%, from around INR 613 crore to around INR 685 crore. Domestic anti-malarial business has shown a significant decline in first quarter by almost around 68%, and business from INR 39.5 crore last year first quarter is reduced to just around INR 12.6 crore. Excluding anti-malarial domestic formulation business, other therapies has delivered almost around 17% growth during the quarter. This is in spite of the WPI-based pricing increase on domestic scheduled formulation benefit was not fully available during the quarter because we were maintaining around two months inventories around that time. Prices have become effective only from somewhere in June. We expect that domestic formulations to business to grow around 12%-13% in current financial year, FY 2023. The lower projections for growth in this business is on two accounts. We also have higher base of anti-malarial business in second quarter and higher base of antibacterial business that we had last financial year due to COVID-19. Our export formulation business by around 14% for this quarter. The business in Sri Lanka, Russia, Ukraine declined for the quarter because of geopolitical issues and disturbed market. For FY 2023, this business is expected to deliver around 13%-15% growth. Export generic business for the quarter has declined by around 2% to around INR 213 crore from around INR 217 crore. It's mainly because of decline in U.K. business because of issues with. We have stopped dealing with one of our distributor. We are confident that in spite of some decline in U.K. business for the business overall for FY 2023, the generic business is expected to deliver around 5% growth. Institutional export business of anti-malarials has declined by around 17% in this quarter to around INR 97 crore from INR 116 crore. We have pressure on this business in FY 2023, and there may be some decline, maybe around 8%-10% in this business in FY 2023. API business has shown decline of around 10% for this quarter. It's mainly because of sales return of losartan. Now E.U. has come out that there is no risk of azido impurity level that we had earlier in our earlier produced batches. We have further improved our manufacturing processes to reduce the impurity level to a drastic low level, and this business is expected, the API business is expected to deliver around 5% growth in the current financial year. Overall material cost to overall total income has gone up to around 34.71% for FY 2023 as against 33.39% on same period last year. There is an increase of almost around 1.33% on this. Inventories of higher cost procurement are consumed for this quarter. The cost has started coming down. There is a softening trend in the prices of both raw materials and packing materials, but inventories which were procured earlier was at higher prices, so mostly that got consumed in this particular quarter. Expenditure on fuel, travel, export freight are high to a very significant level and the increase in the costs compared to FY 2022. At the same time, increase in number of field staff, as well as lower base of expenditure last year due to COVID, Delta wave resulted in the higher sales promotion and marketing costs. Practically, field staff has worked in last financial year for only two months, so their travel and everything was low. At the same time, we have also increased our field staff in current financial year, so that is also increasing the promotional cost as well as our field cost. The EBITDA margins for the quarter has declined to around 19.5% in our standalone accounts as against 27.1% in the same quarter in last financial year. We have revised our EBITDA guidelines for FY23 as against 23% last year for the whole of the year, 23.25%. Earlier revision was around 22%. Looking at the inflationary pressure now, we are revising the EBITDA guidelines to around 21% for financial year. There is a pressure on additional cost due to field staff, the overall increase in the field strength. On taxation front, our post-tax profit will decline due to opting for 25% tax as against 18% tax earlier paid in cash and balance tax was paid through past MAT credit available to the company. Since we are now opting for 25% tax, the MAT credit would not be available. Our overall current tax is expected to be around 27% because a lot of those kind of costs which are there on marketing and sales promotions and CSR and all those will get deferred out. As against 25% tax, our overall current tax is likely to be around 27.5% in the current financial year. The deferred tax provision for the quarter is higher by around INR 8.76 crores. This is mainly because whatever earlier MAT credit was there as per books and there was higher deferred tax liability was there. The deferred tax liability is coming because we have at lower level because of 25% tax and the MAT credit that got set off and there is a difference of around INR 8.76 crores that has been charged to the P&L account as a part of deferred tax liability. Therefore, deferred tax liability in the current quarter is higher by around INR 8.76 crores. Given the overall business scenario and some details, I now request participants to ask questions. Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you have a question, please press star and one on your telephone keypad and wait for your turn to ask a question. If you would like to withdraw your request, you may do so by pressing star and one again. I repeat. Ladies and gentlemen, if you have a question, please press star and one on your telephone keypad. We will wait for a moment while the questions are coming in. First question comes from Surya Patra from PhillipCapital. Please go ahead. Thanks for this opportunity. Just a couple of questions. First of all, let's say the European business which is seeing a kind of pressure in terms of growth, largely led by U.K. Could you give some more color, sir? Like, we had registered around 43 odd product in our own name, or rather, converting those registrations to our own name. What is the stage of conversion there? When do we really see the revival of the business in the U.K.? Something on that side. Listen, by the current year end, probably we will be more or less there'll be some decline. Overall, we'll be able to recover in the current year itself, as against 43 dossiers, because all these dossiers were registered in distributor's name. Now we have to get our own registration. Mm-hmm. We have practically up to now we have launched 6 products only in U.K. and almost around similar number of approvals has recently received. Next, I think in few months' time, almost around 5-6 more products will be launched. With that, almost around 85% of the business, whatever of distributors and our own we were doing, that we'll be able to recover. In the course of the year, we expect around 8-10 approvals more. Depending on that approval, hopefully the business would be recovered. It's only, I think, whatever decline is, a small decline may remain, that will remain in current year. From next year also onwards, this business will start doing very well. Is it fair to say, sir, this 20-20% kind of a decline in the overall European business in FY 22 because largely to do with the U.K. disruption rather? From last year it has started because the distributor we had business relations for almost around more than 20 years, and we had a significant business with them. Since their financial position deteriorated and their payments started coming late. As a result of that, we never wanted that business cycle should disturb that way because of payment. We stopped dealing with them because the situation was not improving from their side. Okay. It's only because of payment. There are no as such dispute with the parties or anything of any kind of litigations or those kind of things. It was only because of payments not coming in time. We have said that we will not be able to do business, and then we'll start our own distribution in U.K. That's what we have done. Okay. The second question is on the domestic formulation business, sir. We had indicated about 1,200 people addition for the current year. What extent that we have done. We are also indicating about the price hike, possibly in the opening remark you commented something that, okay, the full benefit of the price hike was not visible, but whether you were able to take the price hike of around 6%-7% on the entire non-scheduled basket, sir. Yeah, that's what is going to happen in current year. In fact, downstream market we are doing very well. More particularly, we are increasing the people in metro cities because almost all bigger cities has expanded, largely, and their populations are increasing in these cities. Our more focus is now towards the city side, and we are increasing our coverage in cities in most divisions. Even in the first quarter itself we are by and large, say, Delhi, Calcutta, Mumbai, Hyderabad and Bangalore and Chennai. These cities has registered almost around 23% growth because of overall increase in the field force. We have improved our ratings. We also improved our market share in domestic market. As you have seen that, excluding antimalarials, our growth is almost around 17%. Antimalarial API in this quarter has, I think, from 6% it has come down to 2% for the quarter. Our second quarter base of antimalarial is normally very high because it's around that time all antimalarial sales, but we are not seeing that kind of sales in current year. We see that there will be a significant decline in antimalarial base even in the second quarter of the current year. Therefore, even though our other businesses will move up, overall growth will come down because both our anti-malaria and antibacterials, these are the two therapies antibacterials because of COVID-19 and Delta wave and subsequent infections and all were very, very high. Therefore, antibacterial sales last year for whole industry were good. This year, more particularly for your Azithromycin, the business was. We also had Azithromycin brand, and that brand is declining current year because it was significantly used for COVID-19 treatment. Those issues will continue. Because of that, we have taken overall, let's say, growth guidelines to 12%-13% for this year as against higher guidance of 13%-15% kind of guidance. Because of these two declines. Yes. Overall in domestic market we are doing very well. As against 1,200 people, overall increase, almost around 800 people are already recruited. I think balance will get recruited in next 2 quarters and depending on the overall progress and all. Almost around 1,200 people will increase in the current year. That will also put little more pressure on our field operating cost as well as on sales promotion cost. These costs will be higher. Normally it takes around 2 years' time for people to work on productive. Yes, sir. Hopefully, because domestic, we are doing very well. Our market shares are increasing. Most therapies are doing well. It's the right time for us to increase our overall penetration in India. That's why this step is taken. Sure, sir. Just last one question. Obviously, the elevated cost, input cost, logistics and all that has been a kind of a concern area for some time. You are also kind of indicating a lower margin for the current year from the earlier guidance, about 100 basis point kind of lower. Here the commissioning of the Dewas plant and whether that likely would offer benefits flowing from the integrated operation and due to that new plant. Whether that will not be seen this year and this elevated cost structure is likely to continue entire of this year, that is why you are guiding this way or anything else that you're thinking about it for cutting your margin guidance. Let's say the cost heads. The major cost heads are like one is fuel which has moved up significantly. Another is field cost has moved up. Sales promotion cost is moving up. Travel cost last year was hardly any. Now let's say international and domestic travels of our corporate office corporate staff and your sales promotion teams and sales team and international marketing team all those travels are happening so that cost is moving up. Another is freight. These are the costs which has mainly contributed. Otherwise all costs are left more or less at the same level. These are the costs which is in the first quarter has almost added around INR 60-70 crore to the overall cost, which includes fuel itself is around INR 12 crore. Freight itself is also around INR 11 crore. Field staff cost has gone up by almost around INR 14 crore. Balance, I think travel itself has gone up by around INR 6 crore and balance from sales promotion cost. I would say that, as far as fuel is concerned, in first quarter last year, the base was lower. We were procuring coal at around INR 7-8, which has gone to INR 15-17 in the in between period. Now coal cost is coming down. It is around INR 12-13 kind of. From that base it has come down. From a base last year of 7-8 INR, it is still at elevated level, and it's not likely to come down so drastically. Cost is coming down every month, but it's not likely to come down to any level near the level which was prevailing in the first quarter last year. So the fuel cost definitely will remain high. Freight, I would say that container cost, which has gone to $8,000-$9,000, has come down by almost around $3,000 now. Mm-hmm. The cost is coming down, but it's also not likely to be what was practically before one year those kind of cost which was prevailing. Cost will remain elevated. As far as my field staff is concerned, that cost will remain high because we are adding almost around 1,200 people. Also because of all these, fuel costs are moving up, their traveling allowances and all those kind of, say, daily allowances have moved up. That cost definitely will remain elevated, will not come down. First quarter impact is higher because for 30-40 days the field staff was sitting at home. There was no travel or nothing, work or no sales promotion because of Delta wave around first quarter time. Therefore this year cost is not of, we are comparing two months cost with practically three months cost. The cost increase in the first quarter is higher as compared to in the. In future quarters the increase may not appears to be that high. But yes, this cost will remain high because of overall increase in people and also increase in that, the not only your traveling cost, your ticket cost and all that, their allowances has also moved up because of higher petroleum cost. That will remain elevated. Yeah. Freight is coming down, but still it is nowhere nearer to what it used to be there earlier. Cost pressure will continue to remain. Looking at the cost pressure and looking into overall business and everything, as of 23% kind of EBITDA, 23.25%, what we had in FY 2022. Our earlier guidance of 22%. Looking at overall overhead and overall field staff increase and other costs, we have further revised our whole working and it's coming out that I think probably we will be able to achieve around 21% EBITDA for the whole of the year. EBITDA from our overall last financial year, it's going down by almost around 2.25%. It's not 1%. 1% is from earlier guidance. Okay. Sure, sir. I have a couple of questions. I'll be in the queue, sir. Thank you. Thank you, sir. Next question comes from Prakash Agarwal from Axis Capital. Please go ahead. Yeah. Thank you, sir. Good afternoon. Just clarification. Your EBITDA margin includes other income, right? I mean, then only we get 19%. Adjusted for forex et cetera, you are at 17.9%. Yeah, that's how we calculate, yeah. The other clarification, you mentioned that all, most of the high-cost inventory is largely consumed in this quarter, and the resultant would be that gross margins would likely to come back to 66%-67% or it will have a step function? Yeah, gross margin definitely. Costs are coming down. It's definitely there, but they are not near to the level which was there earlier year. Let's take on domestic market, like, say, your, this scheduled formulations, now it will be available for the whole of the year, that price increase. Other price increase will also be in the region of around, almost around 7% in current year. Overall it will have an offsetting effect of that. That also will come in the overall in margin calculation. Any expectations around gross margin? Overall, I'm not looking at much of gross margin pressure. The more pressure is on the account of the overheads. That is clear. I think we have done almost around significant improvements in three of our major API in cost reduction. The cost reductions are almost accounting for around 20%-25% of the cost. They are major selling APIs where we have the new processes and those validations and submissions to the regulatory authorities are happening now. Our overall, there'll be overall I think in maybe somewhere in third quarter and fourth quarter, some of the effects of that also will start coming in. There were around two big intermediates we were importing from China that we have completely internalized now. There'll be no more imports of those which except for if there is a higher consumption than some quantity we may import from. That is coming at an overall lower cost. Our own internal manufacturing will be at a lower cost. That will also have some kind of positive impact overall on margins. As far as gross margins are concerned, I am not looking for a bigger pressure. Bigger pressure is on account of cost increase because of overall increase in number of field staff and still the cost of fuel, travel and freight, they are at elevated levels. That is clear, sir. Gross margin actually will improve from here, is what I understand. You have given 21% margin versus 19% in Q1. The remaining 9 months margins should be healthier because of the reasons you said about cost reduction. Yeah. Price increase in India. Are there any big pieces which you are missing? No, that's what, I had talked about. Yeah. Okay. Second question is on, you know, the new initiatives you are taking for the India business. Currently, we see you are having a very strong growth in pain management, cardiovascular. Have we looked at, you know, new initiatives, new therapies, new product launches in India and export markets? Anything, new segments we are looking at India, API and export markets, sir? I would like to correct you a little. Let's say, pain we are continuously doing well. Even in the first quarter current year we had 20% growth on pain. Cardiovascular, our growth was lower. In fact, cardiovascular antidiabetic in first quarter we just had around 5% growth. The reason for that is that we are starting two more divisions. With that there was, whenever you do the restructuring, there are disturbances because your doctor-product relationships and all those get disturbed. For some period some coverage get missed and all those issues happen. We are... We were knowing that since the first quarter because of the overall reshuffling in the overall cardio basket and that two more divisions we have started mainly because the huge amount of good number of products which are blockbusters are getting off-patent and their launches. We are doing very well. Our overall cardiovascular reach is improving at the consultant level and all. Therefore, we wanted to have further more penetrations in these markets more particularly to increase our overall our chronic basket coverage. Therefore, this initiative is taken. For short-term period, there is this kind of disturbance in first quarter that we had lower growth. Hopefully, we'll do better in the second quarter and now onwards. In fact, our other therapies growths are very, very good. Antibacterials also has declined in this quarter because of, only because of azithromycin, that last year first quarter, we had around almost around INR 48 crore business of antibacterial. As against this year we did almost only INR 40 crore. These two therapies, one is antibacterial and antimalarial, both has declined, and cardiovascular has had lower growth because of restructuring. In spite of that, we have 12% growth. Excluding antimalarial itself, we have 17% growth. We have overall improved our market share in India. Market share has become almost around 1.85% now. Okay. Exports and APIs, are any new initiative, new product launches or anything in the pipeline? That's a continuous process on new product launches and all. We are looking for much higher significant business increase in API in time to come with Dewas commissioning and with lot of products which were commercialized now, on which lot of sampling and other things are done. Hopefully, in 3-4 years' time our API business itself should tell almost around 3 years' time or 4 years' time, maybe around INR 2,000 crore basket. Okay. Sir, lastly, on fiscal 2024, since so much development is happening, how do we see the margin playing out for fiscal 2024? Just little color will help. Let's say by and large, this one year is a transition period because of all these 1,200 people additions and that cost. That is what is putting larger pressure. Hopefully, by year-end, a lot of good traction with the market with these people additions will start. Next year should be much better because now cost pressures are also reducing, particularly on your chemical side and on intermediate side, and our own production of certain intermediates and cost reductions on certain API which are larger in volume terms. That will. Can we come back to 23%-24%? Hopefully we should be able to again see the earlier levels. 23%-24%? Around 23% is reasonably possible. We have not done the working right now, but it's possible to achieve that. Okay. Perfect, sir. Thank you so much, and all the best. Thank you, sir. Next question comes from Chirag Dagli from DSP Mutual Fund. Please go ahead. Yes, sir. Thank you for the opportunity. Sir, can you comment on your margins in India, currently versus pre-COVID levels? As far as India is concerned, gross margin there is not much of a difference. Issue is only increase in the overhead because of additional people what we have added since Q4 of the last financial year. This is what I am talking about, India formulation business. Correct. Just too broadly. Sorry to interrupt, sir. Yes. Sir, your voice is too low. Could you please be louder? Hello, is it better now? Sir, there's some electric noise from your line, sir. There is lot of disturbance, sir. Better now, sir. I'm actually on my handset. No, still there is a lot of disturbance. I will come back again, sir. I will come back. Yeah. Thank you. Thank you. Thank you. Thank you, sir. Next question comes from Priya Harwani from Perpetual. Please go ahead. Hi, sir. First question is on, like, just a clarification on institutional sales. You mentioned there will be some pressure in FY 23. What's your guidance exactly you said for FY 23? Actually, we had not given a very big growth numbers. Unfortunately, looking into the current scenario and sourcing and fund allocation and other things by institutions, we feel there could be some reduction in this business compared to the previous year. Sir, second question is on branded formulation business. On export side, you said there was a decline in business in Russia, Ukraine and Sri Lanka. How is the situation now, like, in July or maybe in the month of August? Overall, I think we have guided for current year that this business will grow almost around 15%, 13%-15%. 13%-15%. The business, which is happening good. As I have told earlier, I think, when we had our Q4 results, that initial period in Russia, the currency fluctuation was very high. Right. Currency went up to very, very high level. The ruble was almost around RUB 120-125 level. At that time, we were little slow in shipping. Practically, we have lost a lot of time in April. Practically in April, there was hardly any shipments were there. Okay. Because that would have added if from the past levels of currency, if this kind of levels were there. For some time, we have stopped the even billing there because in Russia our distributor we have said, because otherwise reimbursement of cost difference would have been too high to them. If we have sold at 120 level, then practically they would have asked the reimbursement of that cost difference to us. When currency started stabilizing around at a lower level, then we started billing, and then thereafter the traction has been very good. In fact, Russian markets are doing very well, so business definitely are improving. In fact, that inventory level in that market has significantly come down and therefore business will again move up. It's only in case of Sri Lanka, we have no overdues in Sri Lanka for the matter because we are getting all the payments in time. Mostly the businesses are happening in LCs and we are distributor. They have a very large network and a lot of exports also. Therefore they are able to overall get the foreign currency and do the business. Businesses are not happening because it's also people's affordability levels. Businesses are not happening to the level which was happening earlier. There'll be definitely some reduction in Sri Lanka market. In first quarter itself, I lost a business of almost around INR 5 crore in Sri Lanka. Overall, all markets are doing well and hopefully we should be able to do almost around 13%-15% kind of growth in overall in branded promotional market. Okay. That's helpful. Thank you so much. Thank you, ma'am. Next question comes from Kunal Dhamesha from Macquarie Capital. Please go ahead. Thank you for taking my question. First one, clarity on the EBITDA margin guidance. You said 21%, but is it, including the other income, et cetera, that guidance? That I have clarified that normally we include other income. I think probably your method is you take, exclude the other income. Yeah. Sure. There are both other income and. Yeah. Okay. On the manufacturing, on the other expenses side, is the Dewas commercialization already included in the quarter one P&L or there is some more, overhead that can come from there, in, you know, future quarters? Dewas, initially we started production of 2 intermediates. We have just received the drug license now. In I think last week, 10 days back, we have received drug license. Now the process of establishment batches of API as well as their validation batches. That process will happen of around 5 to 6 API. From now to March, the Dewas plant will be doing only the establishment and validation, establishing the entire chemistry. They will take the transfer of technologies on your entire analytical method when manufacturing and all those kind of practice, training. By and large, there'll be only the validation batches would happen, because our first priority to do the validations and thereafter do the stability. Because without stability from that plant, you can't ship anything to anybody. Next six months is practically whole plant will be busy only on the establishment and validations. Once you have, let's say around six months your stability data, then on the API produced, then you can give a higher kind of your stability and the shelf life on the product. Actual business would start happening only from next financial year. Dewas will not contribute to any kind of turnover in current financial year because unless we generate the data, we will not be able to do business. This data will then be supplied to the filed with regulatory authorities, then we will invite the regulatory authority for the approvals and all. Meantime, let's say India-related business and lot of other market-related business where those approvals are not required to be taken, merely on submission of data we can start. Those kind of business will start first, and thereafter once regulatory inspections happens, then other market like U.S. and lot of those market like Brazil, Mexico, all those kind of markets and will be added to that. That process, that's the process. Dewas will have to go through that process. For some time these kind of, let's say, operating losses would be there, and that is all factored in our calculations, yeah. The last one on the India business. NLEM business, you have suggested that price increases will kick in from quarter two. On non-NLEM fees, have you taken the price increase or, you know, are they still going to kick in, let's say in quarter two or quarter three? Or is it currently factored in quarter? In India business, let's say on first of April, as government announced the prices on scheduled formulations, we have taken the pricing, but that production started in April. By the time, let's say for two months, we have sold our older stocks off with lower pricing. Practically, somewhere pricing has come effective from June and somewhere from July, but now everywhere the prices are effective. As far as the non-scheduled formulations are concerned, the price increase can be taken in a cycle of twelve months. Most of our cycles are falling in the second and third quarter. First quarter have been that significant, but overall maybe around, we have guided around 6%-7% price increase would happen and that some price increase has happened in first quarter also. Major increases are happening in the second and third quarter. Thank you, and all the best. Thank you, sir. Next question comes from Dino Pathiparamtil from InCred Capital. Please go ahead. Hi. Thanks for taking my questions. Just two quick questions, sir. Any further update on our US business restarting? Anything further? As far as the US business is concerned, whatever regulatory wanted, we have already submitted to them. For all the plants we have made a request for inspection. They have started now visiting India, and probably the inspections have started of the companies now. I think a lot of inspections are currently happening. Hopefully our plants will also get inspected, but it's very difficult to say that when the inspections would happen. We understand that there is nothing pending from our side to be given to FDA. Hopefully from that end, yes, inspections would happen. When FDA any day they can come, today, tomorrow, anytime they can come. Understood, sir. Suppose, We are ready. We are ready We are ready for that. Suppose that inspection happens and you are cleared, you know, can you immediately start selling some of your old approved products immediately in the U.S. market? Or is it going to be a cycle of fresh approvals product-wise? Let's say we are on import alert. After inspection there could be. Suppose there are some kind of minor observations. They need to be replied within certain number of days. No, I'm assuming. I'm talking about once everything is cleared. Once the plant is cleared, immediately your old approved product, say. My disclaimer is that nobody is waiting for me. I have to go and disturb the market and create the market again. It's a cycle, that some people get tied up for six months, some get tied up for three months. Whenever they come back for the buying, and then we start pitching. It will take some time to get back to the market. It's not that from there, day one there the business will start and business will start in a big way. It will take its own time. Understood. We are concerned that we are still able to get higher businesses on those products because we have cost efficiencies on our major products and we still have cost leadership. On those very products, we are further reducing the cost. We have ability to disturb market big way. Got it, sir. Still making. Got it. One final question on tax rates. You were mentioning in the initial comments about the tax, something about the deferred tax liability regarding MAT. What is the full year reported tax rate that you're looking at for this year and also say for next couple of years? That's what I have clarified. Earlier our guidelines was there that probably we will fall in 25% tax rate, not from this financial year, from next financial year. Supreme Court has come out with the decisions on all the sales promotion cost of past and other things. Because of that judgment, even past cases which are there in your appeals and all, they will where assessments are open. Let's say three years assessment are open, and there are certain assessment which are there in the appeals and all. Where the for small issues there are the litigations are there. Now these cases will be looked at fresh and practically a lot of those costs will get disallowed. Therefore, we thought that whatever MAT credit available with us, let us utilize that credit for the past disallowance. Therefore, instead of opting for 25% next year, we have opted for this year. There are no past liabilities. Past liabilities will get adjusted against past MAT credit available. From this year we will be on 25% current rate of tax. The finance bill has changed the finance act has changed practically some kind of that there'll be absolutely when you are opting for 25% there'll be no incentive. The or no kind of deductions will be there. The Finance Act has also come out that, whatever say brand recalls and all that are given, to the doctors on small values and practically to remember the brands and all that kind of thing, that will also likely to get disallowed. Therefore, that will also put an additional burden on pharma companies. We said that as against 25% tax, our tax rate is likely to be around because of disallowances. There could also be mismatch between book depreciation and IT depreciation. Overall tax rate could be around 27.5% in current year, and that tax rate will continue. There is some kind of, because of timing difference, there could be deferred tax, but that deferred tax amount is not very large. Overall, let's say around 27.5%-28% would be the current tax and deferred tax in the current financial year and future financial years. Perfect. Thank you very much. Thank you, sir. Next question comes from Kapil Agrawal from IIFL Securities. Please go ahead. Hi, sir. Am I audible? Yeah. Yeah, Kapil. Yes, you are audible. Sir, I wanted to understand a little better on what happened around the U.K. To my understanding, you were partnering with only one distributor in the U.K. and when you had issues with distributor you decided to facilitate your own distribution. I wanted to understand what were the dynamics that would lead you to not partner with multiple distributors in the U.K.? Why did you decide to, instead of partnering with some other distributor, decide to distribute your own? Kapil, we were doing business with this partner when we were nobody in U.K. Our relationship with this distributor is 25 years. From zero, he took us till INR 300 crore. There was absolutely no issue. Since last 2 years, the distributor is having its own problem because he also has its own manufacturing facilities in U.K. because of this COVID and Brexit and all. His own operations is also into some kind of trouble. Because of all that, the remittances from him were not coming in time. That is the reason we decided better we start our own distribution network in U.K. That is how we started. Now we are having already 6 products in market, and another 6 products will get added during maybe in a quarter or two. F ew more products registration will come before end of this year. Another few products are under registration. Going forward, we will have a good number of our own products registered and under market in the U.K. We are very confident and whatever business now we are doing is our own business, and it is a more predictable business, and it will grow year after year instead of depending on a distributor, and we see a good scope in U.K. market. Understood, sir. Also doing business in many European countries where we have multiple distributors. We have learned from U.K., so you should not depend on one distributor. Actually, what happened in U.K., we were new and this distributor came to us and all our dossier, even though we developed, it was registered in his name. Because of that, we could not start our own distribution immediately. Neither we could give those dossier to somebody else. Whereas our model in other European market, we are present in many countries, we give product to multiple distributors. They have to exclusively buy from me because it is my dossier, but I am not exclusive to him. I can give same product to any other party. That kind of a business arrangement we have in multiple countries, Australia, New Zealand, many of European countries, Canada, which is our business model. Got it. That helps, sir. Thank you. Thank you, sir. Next question comes from Abdulkader Puranwala from Elara Capital. Please go ahead. Yeah, hi. Thank you for the opportunity. My first question is on your India business. What is the total number of MRs do we have right now? Secondly, dare we call out that the productivity of these MRs would be at par in the next two years? By end of this current year, more or less we should be having around 6,000 sanctioned field staff in the market. Okay. On the productivity front, you know, by what time could these be as productive as the current ones? Let's say our current productivity is around INR 4 lakh rupees per rep on an average basis. There are newer divisions where productivities are low, and our older divisions where productivities reside at INR 10-12 lakh rupees or INR 7-8 lakh rupees. It all depends on establishment of brand by their divisions and over a longer period of time as the business get established, the productivity keep on rising. Since we wanted to increase our penetrations, by and large these field force additions are happening in that. Number one is in existing divisions to increase the penetrations because our surveys suggested that our own internal surveys that overall, we have a lower number of people in the metro cities where we need to have more penetration in metros. All bigger cities are growing faster and there the doctor coverage was a little on the lower side because of lower MR people. One, we have increased more penetrations to the bigger cities. Number two, we have started two more cardiac divisions. We also split our rheumatoid arthritis division, which is in pain management, and created one more division because we wanted to add more number of products in the rheumatoid arthritis segment and all. With more number of brands coming in, it becomes difficult for a rep to concentrate on that. In a division you can have only important three to four power brands. Brands can grow only if you have the more number of power brands and a rep can't concentrate more than three, four kind of power brands. We needed to create more divisions in rheumatoid—one more division in rheumatoid arthritis. Basically it's more micro coverage, more penetrations in rheumatoid arthritis and cardiovascular divisions where the addition of people is happening. Almost around 1,200 people are getting added in current year. Out of which almost around 800 are already recruited. Balance people are in the process of recruitments and all, in the current financial year. By the year end, we should have almost around two medical reps in the field. Sure, sir. Appreciate that clarification. Next question is on this API guidance for the year of 5%. Are we factoring an entire normalization of Losartan in the year in this guidance of 5%? Normally what happens then when disturbance happens, the other suppliers penetrate in between. Somewhere some Chinese suppliers has also entered into the supply chain, and it takes some time to get back those market back. Even those, let's say the regulators has come back and said that whatever our impurity levels were there in part per billion. Earlier they have expressed that that could be risk, but now they have come out that, yes, absolutely at that level of impurity there are no risk. Meantime market got disturbed because of that guidelines, and it took us some time to come out with process. First we came out with a process where overall, let's say impurities has come down, but our productivity has drastically gone down because of additional step of purifications were added. Costs were also increasing. That process was not efficient. We were simultaneously working to come out with a newer process where we have added a process where efficiencies are gained back, your capacities are gained back. We also improved our overall yield factors, thereby reducing the cost. Those process registrations are on. We will be able to aggressively compete and gain the market share, but it will take some time. Therefore we have overall lowered the guidelines for current year. First quarter anyway, we have recalled and those kind of losses are there on account of lower business and all. Looking at that kind of things, we have overall reduced our guidelines to a lower level in current year. Hopefully next year and next three years as I already guided, we are looking for almost around from API side, around INR 2,000 crore kind of business. We have those kind of product pipeline and now capacity getting built up for our Dewas plant and all. Hopefully that journey will perform. We expect to do very well on API in a longer period of time. Got it, sir. Thank you. Wish you all the best. Thank you. Thank you, sir. Next question comes from Mitesh Shah from Nirmal Bang Securities. Please go ahead. Thanks. Yeah, thanks for taking my question. Sir, I just want to repeat the same thing about the tax rate. You said that that increased from 25%-27.5%, mainly because some of the assets not considered in the depreciation. Is it right? No, no. Some of the expenses will get disallowed. For example, CSR expenses. Correct? In your profit before tax, you are reducing that. For income tax you have to add it back because it is a disallowable expenditure. Similarly, Mr. Jain said because of the Supreme Court judgment, certain small recall items, what we use for brand recall and all, those expenses may also get disallowed. Because of all this, the taxation actual rate will be 25% plus another 2-2.5%. The recalls are from the. That's our profit before tax. Okay. Those recalls are from the export market, right? No, no. Domestic market. Domestic market. Okay. Got it. Thanks. Whatever sales promotion, whatever expenses you are incurring, like brand recall, you give pen, paperweight, such expenses. Got it. That. There the name of the brand will be put. That is applicable across the industry, right? Yes, yes. There across industry every player will have to pay higher taxes because all those expenditure will get disallowed under Income Tax Act. Got it, sir. Thanks. Thanks a lot. Law is also amended and Supreme Court decision has also come. Both are there, yeah. Supreme Court judgment is impacting the past open assessment and your current taxation rates are changing because of budget. Just one more question. That 1,200 MRs you are adding, you said that could be productive in next two years. That will be a optimal productivity they will reach in that two years? Normally, it takes two years' time to become productive. That's what our past experience is there. Productive means, I would say that he start recovering his cost, his supervision cost, all the promotional costs which incur on them, and then he start contributing towards the margin. Till such time, let's say his travel cost, his salary cost, by the time he start giving us, say, the business at a break-even level and above break-even level, it take around two years' time. Got it. Got it. Thanks. That is from my end. Thanks a lot. Thank you, sir. Next question comes from Anubhav Sahu from Nirmal Bang. Please go ahead. Hello. Yeah, thanks for the opportunity. A couple of questions. One, I probably missed out. What is your sales, overall sales guidance for fiscal 2023? Last year it was 20%- 9-10%. Yeah. Growth. 9%-10%. I mean, here also, have you revised down? I mean, It's around what earlier we were talking around 10-11%, so it's 9%-10% now. It's a 1.1% down. Okay. For the domestic business? Domestic business we have guided around 12%. Yeah. Okay. Okay. 12%. If we exclude antimalarial, any numbers you have or if we exclude. It will be higher, anywhere between 17%-20%. Okay. Got it. Second, sir, could you tell what would be utilization levels for the facilities which are impacted by import alerts, like Pithampur, Silvassa and all? What will be- There are two formulation facilities. There are two formulation facilities which were having a USFDA approval. That is at Silvassa and Pithampur. Mm-hmm. Pithampur we are using to some extent for other generic market, whereas Silvassa capacity utilization is bare minimum, hardly anything. Pithampur maybe around 30-35%. Whereas Ratlam capacity whatever was there, which we are using for U.S. market, most of them, we have now started using for other markets globally. Okay. For Ratlam we also did the debottlenecking also. That is correct. Yeah. Okay. We have also come up with a new facility at Dewas, which will help in scaling up my API production as and when required for U.S. market including. Okay. Dewas is primarily for APIs, right? It is for API. Okay. I wanted views on Krebs Biochemicals. How do you foresee the business right now, and when can we achieve break-even EBITDA level? I think Krebs is a listed company, so it's not good on my part to talk to you on Krebs. I think probably you can raise the question to the Krebs. Yeah. I will. Okay. Fine. Thank you. Thanks a lot. Thank you, sir. We're having a follow-up question from Kunal Dhamesha, from Macquarie Capital. Please go ahead. Thanks for the opportunity again. Just one on the daily allowance. You said that daily allowances for medical reps has increased. Can you just, you know, give some clarity on what was the number before and what is it now? There are various kind of allowances. I'll not be able to give number, but let's say petroleum cost has moved up. Their travel costs have moved up. Somewhere, those allowances are gone up. Plus all food co prices have moved up. Daily allowance also. Daily allowances on food and travel and all that. 6,000 people in field, so that will definitely put some pressure on cost. That's true. So, uh, if it- Food prices. That's the 2 things. Can you quantify the allowances, the percentage increment? Allowances increase are 10%-12%. Yeah. Okay. There are two kinds of effects. One is increase in allowances and, secondly, increase in field people. Numbers. Yeah. Yeah. Both are, yeah. Both are happening simultaneously. Okay. Yeah. Thank you. Thank you. That's very helpful. Thank you, sir. This will be the last question for the day. I would now like to hand over the floor to the management for the closing comments. No, madam, we have answered most of the questions. No further comment from our side. Thank you. Thank you all the participants. Thank you, sir. Ladies and gentlemen, this concludes your conference for today. Thank you for your participation and for using Chorus Call service. You may disconnect your lines now. Thank you, and have a pleasant evening. Thank you all. Bye.