Welcome to Ipca Laboratories Q2 FY 2024 earnings conference call, hosted by DAM Capital Advisors. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask a question after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your telephone 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. Thank you. Good afternoon, everyone, and a very warm welcome to Ipca Labs Q2 FY 2024 post-results earnings call hosted by DAM Capital Advisors. I, on the call today, we're welcoming Ipca management, Mr. A.K. Jain, Joint Managing Director, and Mr. Harish Kamath, Company Secretary. I'll hand over the call to the management team to make the opening comments, and then we'll open the floor for questions. Please go ahead, sir. Thanks, Nitin, and DAM Capital Advisors for organizing this call. Good afternoon, and Happy Dhanteras to all participants, and thanks for taking out time and joining us for Q2 FY24 earnings call. Today's call and discussions and answer given may include some forward-looking statement based on our current business expectations, that must be viewed in conjunction with the risk the pharmaceutical business face. Our actual future financial performance may differ from what is being projected or perceived. You may take your own judgment on information given during the call. Our domestic formulation business for the quarter has delivered a business growth of around 10%, with a two-rank jump over corresponding period, and IPCA is 13th in acute segment. On chronic market, also we had a one-rank jump, and IPCA is now ranked as a 16th in the segment. IPCA has outpaced the industry in both acute and chronic segment. Our market share has improved to around 1.92% from 1.89% on MAT basis. It's MAT September 2023, as per IQVIA. For FY... Q2 FY 2024, our branded promotional business has delivered a growth of around 15% from INR 127 crore, almost around INR 146 crore. Our export generic business has delivered around 32% growth from INR 200 crore to almost around INR 264 crore. This mainly, the business growth has come from UK and European markets. Institutional, tender, anti-malarial business has declined, by almost around 21% to around seventy-seven, from seventy-seven crore to around, to INR 61 crore. Overall export formulation business in Q2 is at around INR 470 crore, as against INR 404 crore in Q2 FY 2023, with overall growth of almost around 16%. API business in Q2 FY 2024 delivered a growth of around 6% from INR 307 crore to around INR 355 crore. We continue to face the price decline and volume decline on certain API, as well as on anti-malarial API business. With both formulations plant and Ratlam API plant, now in VAI category for Pithampur plant. For Pipariya plant, as well as Ratlam plant, the import alerts are already lifted, and we are awaiting that import alert will be shortly lifted for the Pithampur plant also. We are initiating now the process of augmenting the supply chain and validation, revalidations of all the formulations and updating them. The whole process may take around four to five months, and thereafter the shipments to U.S. may begin in Q1 FY 2024. Overall, we had given earlier the business guidance for domestic business of almost around 12%-14%. We maintain our guidelines, despite that, business growth was around 8%. Overall, in H1, the business growth in domestic formulation is at almost around 12%. Our international branded business has delivered in first half a growth of almost around 18%. We have projected a lower growth of around 12% for this business is mainly because of depreciations in Russian ruble and certain contingent challenges that are being faced in West Africa. On export generic business, our at the beginning of the year, our projections, the growth was around 7%-8% for the year. As against that, in H1 FY 2024, we had delivered a business growth of almost around 21%. Our revised guidelines for this business for the year, the growth is expected to be around 20%. The overall lower business guidelines, which was given earlier in the year, was mainly because we have lost certain tenders in South Africa, and we were expecting a loss of business of almost around INR 60 crore. But the business there has been good in private market and other businesses, and therefore, overall, that decline may not be there. Institutional anti-malarial business. The business is likely to decline by almost around 25%. The lower business is mainly because of lower demand as well as lower business of antimalarial injectable is largely because of the plant upgradations which are currently happening. The API business, we have earlier given a guidelines of decline of around 10%-12%. As against this, the decline may remain at around 7%-8%. Having given the broad numbers, I'll now request the participants to ask questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, you press star and one. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we'll wait for a moment while the question queue assembles. First question is from the line of Surya Patra, from PhillipCapital. Please go ahead. Yeah. Thank you for this opportunity, sir. I'm audible? Yeah, you are audible. Yeah. Okay. So this quarter it seems that you have integrated Unichem, and that is why, to some extent, the impact on the core margins and earnings that we have seen. So is it possible to share what is the Unichem number that you have added in the revenues, EBITDA, and PAT? Overall, I think, so, so around two months from first of August side, we have consolidated Unichem in the overall numbers. And overall, I think top line, which is consolidated, is almost around INR 285 crore. And I think on bottom line side, there is a loss of almost around INR 16 crore, yeah. Okay. The EBITDA level, sir? EBITDA is positive, around 5%, yeah. Okay. Okay. So, after having, sir, it is whether it is a full phase kind of integration from the 1st August or it is after 21st September? It's a line-by-line integration from 1st August, yeah. Okay. Okay. My second question is about the way forward that we would have decided or thought about after the integration, sir. Like, what cost energy, what revenue energy that we are witnessing or anticipating for the integrated operation? So if you give some sense about it, that would be helpful. Overall, we have worked out, let's say, short-term goals and medium-term goals that what we need. Because the agency is highly regulated, and lot of approvals are needed before any kind of changes are implemented. On short-term side, let's say there are certain changes. More particularly in API processes that can be done with minor annual notifications. So that process is already initiated on various raw materials, which can give almost around 15%-20% reduction on RMC on those products. So that's the one area which is initiated. Second area which we have initiated is we have also started looking into the API processes, where improvements are required in the processes, where almost around 30%-40% API cost reductions can be done again. And also, the Unichem's overall API business is very low. So where these kind of reductions, the business volumes on API can certainly go up. So that journey we have started looking into. Third process we have initiated is also we are looking into their entire utility cost and all. And we expect that almost around INR 12 crore-INR 14 crore kind of utility costs can be reduced in the current financial year itself. So that process has already initiated. Another process that we initiated is we have looked into, tapped into all your, material rates. They are buying, and what kind of material rates, what we are getting. And, we find that, the procurement volumes are very large, and therefore, our rates are also lower compared to what they are projecting. So, they are purchasing. So, maybe it's a solvent, an acid, an alkali, and intermediates and all that. So that's the process we have initiated now to align the entire process of procurement, even on the services and things, because we worked on annual contracts with suppliers for all the plants. And therefore, those kind of costs are also on engineering items and also lower. So that process we have initiated, and that will also start giving results in time to come. Another issue which we have short-term wise, which we are looking into, is the logistics costs are very high. By and large, they are because of two reasons. One is their air shipments are very high, which is almost around maybe over 50% is air shipment. So we are looking into the various issues whereby productions can be increased and whereby the reduction can happen in the air shipment. And secondly, mostly their shipments, they are not loading the containers as planned. Most of the container loadings are happening at the port site, and therefore, their cost on logistics are also higher. That process of integrations and reduction of the cost is already started. So that may start giving results from the maybe a quarter later. So that process is which we are initiating. So these are the kind of short-term things which we are looking into. Another issue which we are looking into is the market extension of products. Let's say that there are U.S. approvals are there, like, say, market like Chile, accept the U.S. ANDAs and all that. So that filing process we are initiating so that we can open Chile as a market and with, without doing any work on the, export side, because it doesn't require, because entire doses, dosages are accepted as it is. So with those kind of approvals, market extension can happen to Chile. We are also looking into reduction of losses which are currently happening in the, I think, Ireland and UK markets, and we expect much better prospects are also coming from their range. And probably there may not be any kind of losses in the current year. It may result into profitability in the current year. So these are the short-term things which we are looking into. As far as medium terms are concerned, we have identified, mapped their entire API processes. All the products may be around 50-55 APIs, which they have. So entire process is identified. We have appointed a team leader for every API. We have mapped the transfer from where the current RMC and where the RMC could go and what kind of changes are required, and entire standardization is already done. So a lot of work is happening now at the lab level, and thereafter the piloting and all. And once those kind of reductions happens, we all the regulatory filing and then thereafter, the approval from the regulator. So that process is long, but we see a significant reductions in their API costing and time to come. Then another issue, what we are looking for is market extension of products. Like, say, we identified that out of the, your overall Unichem's ANDA, there are certain ANDAs, almost around 17 products, we identified where, on the 5 products, there could be a bio waiver, and those dossiers can be directly filed in, let's say, Europe, Australia, New Zealand, South Africa, where the fee may not be required. So that they are, their fees are not required. So the 5 products, market extension can happen quickly. There are another 12 products where the, the, the only bio stability need to be repeated. The all parameters of other markets are meeting, internally. So those extension could also happen very quickly. Another 24 ANDAs, the products which are developed, that minor tweaking in the dossiers in a period of almost around 18 months from now, those products also, the market extension can be given. As Ipca, we do a lot of businesses in Europe, Canada, South Africa, Russia, various ROW markets and or developed markets. So these products of Unichem can also be extended to these markets. Let's say, all these work can happen in a period of around 18 months, and there may be some kind of some time may be required thereafter for regulatory approvals and all. But those integration process and market access, that process has already initiated. Now that another aspect we have also looked into is, let's say, what kind of, because Ratlam plant is now clear, and there are certain common API which they are using, where our cost of productions are lower, and those kind of advantage can come to Unichem in their procurement pricing. So those API also maybe around 10-12 APIs are there, which can definitely be integrated into the Unichem's basket. But of course, those integrations will take time. There are regulatory approvals and all those processes are there. So it's a goal of around 12-15 months time. So a lot of those issues are looking, and in fact, almost 55 APIs out of 15 APIs out of their 55 basically gives 77% of their business. And the balance 40, i.e., 14 APIs are, if taken up, then it is almost around 93, 93% of their business or formulation get covered. So all those APIs we are looking into. Then on ROW market also, the both the teams are integrating and looking into that, how can we increase the ROW market business and all. We are also looking into a lot of their ANDA, which are their under approvals and all, which the approvals are expected and all. From that aspect, I think almost around 11 new products can be launched in the year 2023-2024. And nine ANDAs, the nine last from April 2024 to March 2025, they can be launched. And there are seven ANDAs, which also include three Para IV also included in that, can be launched in 2024-2025. So a lot of those works is currently going on. Of course, that will take time. But from looking at all these data, we are very confident that what we had talked initially when we announced the deal that we will be able to achieve almost around INR 300 crore kind of EBITDA margins on EBITDA on the Unichem side. That is very much possible, looking into all these details, what we have done. And once the market extension happens and we start marketing those products in various markets, definitely we can make Unichem as a beautiful company. Sure, sir. This INR 300 for EBITDA for FY 2025 you mentioned, sir? I said two years it will take, because a lot of work and regulatory approvals are required. Yeah, sure. Nothing happens in this business without, because you need to take products, you need to validate them, then develop the dossier changes and file with the regulators and take their approvals. There are only smaller things like, say, where no solvent is changing, no process is changing, no equipment is changing. But in spite of that, also with minor tweaking in the process, you can reduce the cost of production and time cycle production can happen. So those are the things which are initially targeted. But, that may not give us significant kind of savings. Some savings will start coming from that, but the significant savings will happen with those kind of changes what we have planned and already worked out each API wide. All details and team leaders are appointed, responsibilities are given to the people, and the teams are working. By and large, their focus in next two years is likely to be the low-hanging fruits. All these are low-hanging fruits, that process changing and all. The product development will be on a slower pace in these two years. The team will work on the market extension. The API team will work largely on cost reduction. So let's say 80% of the time will be utilized on those kind of processes by the team, so that the results can be obtained faster. So that's the process so that we can turn this company into profitable. So thank you so much, sir, for a detailed explanation. Now, having some development on the US business front from our facilities, so could you give some sense about activating our DMS and potential filing of dossiers or reactivating the dossiers, what we would have filed long back? Or what is the, what is the purpose here for Ipca's own US business? Let's say there are certain products where there are no updates in the filings, let's say, which are required. So those are around 18 products can start quickly after the supply chain after the validation, again, the process, because we have not been there in the market for almost around 9 years. So we will have to do the revalidation of the processes and all the entire process for product. So that process can start. On other dossiers and other approvals, let's say API processes change, where we have a cheaper processes. Those processes need to integrate into our dossiers, because those work are not done. So that the work will be, is required to be done. So that process also we are initiating at our end. That will take some time. Let's say the earliest we can be there in the market is only in the first quarter of next financial year. Thank you, sir. Thanks a lot. Just one focusing number update. Here, the tax number with the integration, what is the EPS that we are anticipating for, let's say, current year and next year after the integration, sir? You want to know about the tax? The tax rate, integrated tax rate after the integration. Basically, I would say that, as far as Unichem is concerned, the disallowances are there because they are not there in domestic market, and so their tax rate will remain around 25%, also. There's not much of a change. As far as we are concerned, is mainly, largely the tax rate is going up because of disallowances. Like, say, CSR costs get disallowed, any donations given that, that get disallowed. And marketing costs, large part of marketing costs also get disallowed. So, that figures, the overall because of that, I feel that, we have made a provision for the tax at almost around, which include deferred tax at around 34%, as against- Yes. The normal tax rate of around 25% plus some deferred tax of 1-2%. So as against that, tax may be on higher side because of disallowances by almost around 6%-7%, yeah. Okay. Thank you. Thank you. Ladies and gentlemen, before we move to the next question, a reminder to participants, anyone who wishes to ask a question, may press star then one. Next question is from the line of Chirag Dagli from DSP BlackRock. Please go ahead. Yeah, sir, thank you for the opportunity. Sir, of the products, of the eight-10 products that you talked about for the US market, that can immediately come in the market, what is the market opportunity of these approved products here? Because the last time you, you, we were in the market, you were doing about $35 million-$40 million. Since then, there could be price actions, and plus, this time around, we have our own front end as well, and not so easily supplying to a partner. If you can just give us a sense of what is the market opportunity and what should we expect in the first 12 months, you know, in terms of revenue from the US, post us coming into the market? Yeah, Chirag, the initial product will be same product in which we were there earlier in the U.S. market. And as far as the pricing is concerned, in our product range, there is hardly any reduction in the prices in that market. When we were there, we were sharing almost 40%-50% profit with the marketing partner. Now, that issue is not there. All our products and port will be distributed to Unichem franchise. Bayshore as well, right? Business also, operations we are integrating along with the Unichem now. Okay. So. We then will remain, but the operations will be handled by Unichem. Understood. So, but, the way to think about this is that 100% of the economic interest will be with Ipca, or how will you share with, the- No, no, economic interest is always with Ipca, because we are holding, all ANDAs. See, it is like earlier we were doing business through marketing partner, right? So Sun Pharma, initially it was Ranbaxy. At that time, there was a formula, transfer price, in which we have certain margin. And sales in the U.S., minus our transfer price, minus certain percentage of sales as handling and distribution cost, which we will also give to, Unichem, because it is a higher percentage. And remaining, profit, we used to share, in the ratio of 40/60, or in some product, 50/50. So only that profit sharing ratio may change, otherwise economics will not change. Understood, sir. And, would you say that pricing action has gone up or has gone down, over the last decade or so? However, we are confident whatever margin we were doing that time. So that will improve because there won't be profit sharing. Mm-hmm. Understood. And, like you said, 50% you are sharing with your, partners as well. That is right, yes. Correct. Sir, can you indicate the number of pending ANDAs we have? There is no change in that scenario. We have not filed any new ANDAs. Incidentally, recently, we got approval for one more ANDA, Ondansetron. Those all with VAI for all the facilities and all, one ANDA approval also we got. We expect a good number of approvals immediately after the Pithampur import alert is lifted, because Pithampur is already VAI. So import alert lifting might take a few. Days, few weeks. Few weeks, maybe. Thereafter, a good number of ANDA approvals will come because. These are all later ANDA filings were from Pithampur. I think we have almost around 18 approvals and around 26, which are. Filed and pending approval. Pending approval, yeah. Of these, the ones that you are reporting approval of Pithampur, how many will those be, sir? Most are, most of them are from Pithampur. See, initial all filings are from Pithampur. Most of them are already approved. Most of the subsequent filings which are now pending approval, they are all filed from Pithampur. Understood. So, sir, you know, if I were to take a slightly longer term view, and I understand you, you will take time, FY 2025 will likely spend, you know, scaling up our existing products. But if I were to take a, you know, slightly longer term view, do you think, you know, this can be a, a $100 million business or $200 million business with the, business. It is very difficult to comment on the numbers now, but actually, when we were there in the U.S. market, our API plus formulation business put together, including it, indirect API sales, people are buying in India, but end formulation was going to U.S., all that put together was about INR 500 crore. INR 450 crore-INR 500 crore. Understood. And just a last question, sir. That was with the limited number of products. That time we were marketing about nine-10 formulations. Understood, sir. Understood. And now with Ratlam getting open for the US market, are there any products where your realizations are substantially better in the US market and hence, you know, you can immediately move? We were not there for 10 years. Now, we have to now start seeking business. It will take little bit time, because all my customers are already with, currently with some other supplier. So we will start that process also. Understood. Okay, sir. Thank you so much. Whereas our efficiency, our cost efficiency and all, it is intact. Leadership position, there is no change in that. Understood. Thank you. We are confident we will regain all those lost business in due course of time. Nobody is waiting for us, so we will have to create the market. So it will take time. Right now, we are not in a position to give the numbers. Thank you. Ladies and gentlemen, to ask a question, you may press star and one. Anyone who wishes to ask a question, may press star and one on their touchtone telephone. Next question is from the line of Saion Mukherjee from Nomura. Please go ahead. Yes, sir. Thanks, thanks for taking my question. Sir, how are we thinking about the US business in terms of, you know, filing? You know, we have been filing and what implications on R&D platform or R&D expenses, that you see, should, should happen over the next three years? Sure. In the meantime, we have also developed several formulations. We did not do any filing because it was entailing filing cost and all. So now we will increase our filing case also. So as we grow, we will have a lot of ANDAs now in the U.S. Unichem itself is having 60-70 filings. Plus we have our filings, and we will increase the filing speed going forward. That will have any meaningful implication on R&D expense? Definitely, no. So when we were there in the U.S., we were developing our filing products. Our R&D costs were around 5%-6%. Slowly, we will, we are now currently around 2.5%. Little bit increase will happen. Okay. Maybe up to 4% also. Okay. And how many ANDAs have you already decided, like, how many ANDAs you see filing going forward? See, basically, our filings are going to be based on our own APIs. So we are currently producing around 70-75 APIs, out of which around 46 are filed. So it's going to be the balance APIs we will look into the filing. And yes, more APIs are commercialized, more filing will happen. So we are not filing the more number of products based on somebody else's API. By and large, it's like, it's like US market is going to be more integrated kind of business for us. Mm-hmm. So on that, we have to file significant number of the formulation. That's the practice, which is the Unichem also have, they are also integrated operations, and Ipca's also integrated operations. So by and large, wherever we have API, good API processes, that will only be taken up for filing. Okay. R&D cost is not going to have a significant impact. It did not go from 2.5% - 6%. It's going to remain around 4%. Okay. And sir, I also see that, you know, you are making some efforts on biosimilar front. Anything that you would like to share, how are you planning? What are the products? How are the spends? Are they already sort of coming in or will some increase because of clinical trials, et cetera? Currently, I think, the plant is under construction. It may take, I think, by, let's say, the end of the first quarter next year to for the plant to complete and thereafter, the validations and all. We are currently working on almost around five products, and for two, we have already taken the EMA, U.S. FDA and European authorities guidelines, and clinical strategies on that has been finalized. Third is in pipeline. So the three products are all for here at those kind of scale. But the commercialization of this will happen from the plant. So any commercialization efforts will only start after the plant is ready, and then. So it's still a far away, but the current R&D cost also includes the biosimilar kind of cost, yes. On all products, the development of clone is in-house. We are not taking clone from anywhere from outside. Right. And this is pipeline that is selected, so when you enter the market, so you would target Europe and U.S. at some point in time? Yeah. Yeah. It's. So. Yeah. So these products, we are looking at what, 57, 58 kind of time frame, and are these products which are. Yeah. After the plant is ready, it may take around two and a half years to, that's the kind of period for, initial batches, and thereafter, the all these establishment batches, and then bioequivalent, development, taking the batches and clinical studies and all that. So, that kind of time will, after the plant is ready and everything is done, around two and a half years. So still it's a, it's a long journey. Okay. So the pipeline that you've selected, is it you are targeting to the first wave launch, or you are... Those are the ones that you see you have a cost advantage and you're going for it, despite some of them they have already gone generic sometime? Looking at our R&D presentations and all, we are getting the data values are much higher than currently, what market is getting. That's what I can say, but I cannot give the name of the product then right now. Okay. Okay. Okay, thank you. Thank you. Next question is from the line of Abdul Puranwala from ICICI Securities. Please go ahead. Yeah. Thank you for the opportunity. So, can you provide a rough split of the India business between the various therapies and how it has grown this quarter? The pain segment has grown by almost around 12%. Like, say, your has grown by 13%, CNS, 22%, Derma, 17%, Urology, 23%, Ophthalmology, 38%. Other products by around 10%. The product which has declined in the quarter is materials has declined by 4%, Antibacterials has declined by 2%, and cough and cold has declined by 5%. That's the overall number. The second quarter was the toughest quarter. I think overall market growth was also around 7% or so. We have grown by around 10%. First quarter, our growth was 13%... compared to market. We are seeing now markets, domestic market reviving the overall, let's say. October was good, and November is also appearing to be good. Overall, therefore, we are not changing the overall guidance for the year. We will continue to have around 12%-14% growth on domestic market. Half year at 12% overall domestic growth. Sure, sure. So, I mean, a couple of quarters back, we had added some MRs. So I mean, in terms of the MR breakeven or productivity for those considering that the market has slowed down a bit. So where are we? I mean, are we still on track of breaking even in two years, or given the current market circumstances, do you think this will take some time? I think if you look at last year, my overall MR productivity was INR 418,000. Okay. And after the addition of people also, I'm currently at around INR 453,000 kind of productivity in the first half of the year. Yeah. That's, that's the overall productivity. Productivity has definitely improved, and this is overall. This includes. But let's say the people which we have added in kind of the cardiac businesses and all, that take a longer time compared to the other businesses. Like, say, we have started cardiology division, which initially are currently around, after one year, we are at around INR 100,000 productivity. But the growth is better. The other division we have around, because there, in that division, certain products were transferred and also that's around INR 2.5 lakh productivity. The workforce people we have added in your rheumatoid arthritis segment, that has given very good productivity and almost they are around INR 4 lakh kind of productivity now. Certain products were transferred and certain products were added in that market. But that has not reduced the productivity of the FQR division, which was earlier marketing, and that is also going up. The productivity level is at almost around INR 9.2 lakh. So that's a good production. Understood. Overall, the urology has also done well, so productivity are good as well. Sir, a final one, if I may. So I want to know with the US plant getting cleared, sir, is there any plan ahead of sourcing some CDMO molecules from the subsidiary which can be scaled up to this plant and cater to the US market? No, now, presently, those things are not considered. So initial, our work is to launch the products which were already there in the market when we went out. So gradually we will look everything. All right, sir. Thank you, and wish you all the best. Yeah. Thank you. Thank you. Next question is from the line of Tushar Manudhane from Motilal Oswal. Please go ahead. Yeah, thanks for the opportunity. Just on the US, please, again, so what would be the current capacity utilization for Ratlam plant, Pipariya, and Titapur? Pithampur, it should be around 15%-20%. Titapur may be around 30%. Ratlam, we are having certain specific plan for specific products where there is a capacity available. In any case, now we are gradually scaling up production at Dewas also. That plant also ultimately will be offered to all regulatory agencies inspection. So availability and manufacturing of API should not be any issue. Understood. But at the same time, even from our external API source, where the volume decline for some items. So you know, how are you- There is not so much decline in volume. The price decline is very severe, from under $1 to about $50. Thank you. In case of Lopinavir. In fact, that is where my, the other part of the question is that, what new API molecules are you looking for, growth in API business? No, no, across all other products, we are seeding across the globe. So we have seen good business progress. Many projects are now getting commercialized, so there is no issue in growing the API business. Only issue is about pricing. Other than that, there are no concerns. And just lastly, we had metoprolol filing as well for the U.S. market. It is filed, but it is pending approval. There is no change in that status. Thank you. All right. Thank you. Yeah. Thank you. Thank you. Next question is from the line of Damayanti Kerai from HSBC. Please proceed. Hi, thank you for the opportunity. So my question is on your margin trajectory. So a lot of cost initiative happening at Unichem portfolio as well as your own. So, like, the second quarter number includes two months of Unichem business. Ahead, how do you see costs, like, dynamics changing, and how do you see margins, say, in near term and then in slightly longer term, in terms of, like, trajectory movement? Damayanti, Mr. Jain has already explained what initiative we will be taking as far as Unichem is concerned. As far as Ipca is concerned, more or less in the second quarter, if you see our financials, whatever guidance we have given, actually, we have done better than that. So there is an improvement in the standalone EBITDA margin from 18.85% to 20.86%, nearly 2% in Q2. Similarly, in consolidation, there is two-month Unichem sales that have come in. In spite of that, there is an improvement in the EBITDA margin from 17% -1 7.64%. Okay. So. We are confident of telling the assuring investors that our EBITDA margin going forward should improve at least by 100 basis points, year after year. Okay. So at least 100 basis point improvement per year. That's good to hear, sir. And then I wanted to check update on the Dewas plant. You said it is yet to be offered to agency. So what is the timeline like when you are planning to invite some major regulators and then. Initially, we have started developing API. Some products are already developed. Then there is a process, stability, and all. So it will take time. Okay. Not in this fiscal, for sure, right? It maybe. Not near future. It will take time. So we have filed the products to various regulatory authorities, and users are fine. So. When they come for inspection, so again, all that involves some time. Yeah. So filing has already started from there. At least, we have almost around six, seven APIs which are standard there, and filings are in process now. Few filings are already done. Europe doesn't take very long time to come for inspection. Maybe it's a time lag of almost around five months. Five to six months, they, they come through. Hopefully, by this year end or early part of next year, the inspection should happen from Europe. US, we are yet to file. So once Europe, the, the, I think, five, six, all these, happen, then we will trigger based on our own, processes itself, the, the, the inspection of, from US also. So, you know, we will utilize the Dewas APIs also for, our, uh. Formulation. Formulations with your API. So we will trigger that kind of inspection from there. When inspection will happen, that's not in our hands. Yeah. Okay. So my last question is. Those inspections and other inspections can start, I think. Got it. So my last question is, if you were working on this continuous process plant for some specific KSM, et cetera. So any update there, like how that has moved and what kind of margin expectation you are seeing approaching for such continuous process-based products? We have installed one plant in last few months at Aurangabad. So earlier we have put up a pilot plant, and now we have set up a proper plant for one intermediate. So that I think that can start commercial production somewhere in end December or so. So from next quarter onwards, then after we get all the results from that, we will talk to you what kind of reductions are there. So and the other products nine months thereafter will take an effect, Nagpur. So we are still awaiting some kind of, we have got the environmental clearance, but yeah, the consent to start is still pending from the if. State Pollution Control Board. State Pollution Control Board. So we are in, following with that, and thereafter, the, all the continuous process plant of that type will set up, be set up at, Nagpur. So that's the kind of planning. And each plant doesn't have very high investment. The continuous process plant, every plant may be set up maybe around INR 20-INR 25 crore. It doesn't take very long, very, very deep, investment. So that's, that's going to be an advantage, in the Nagpur. Your overall capital cost, will come down. Got it, sir. Thank you very much, and wish you a very happy, festive season. Thank you. Thank you. Thank Thank you, madam. Thank you. Next question is from the line of Pulkit Singhal from Dalmus Capital. Please go ahead. Thank you for the opportunity. Just question on Unichem. I mean, broadly, when you look at the U.S. opportunity, from three to five years out, you obviously alluded to, you know, the cost synergies and the market extensions. But when you think about addressing that opportunity, are you looking to invest in the Unichem business to do more new product developments? How do you decide what should be done here versus, or these two be very independent growth engines? Just a broad thought process, five years out. Both are the separate growth engines, but the marketing will happen through, the, in U.S., through your. Unichem. Unichem, because that's the much better established, your business. The other was small outfit, and therefore, we are, we will need, let's say, good business we are- we will be combining there, and we will keep only one marketing outfit instead of two marketing outfit, to reduce all the operating costs of the, that level. So, but otherwise, both will be separate, engines. The Unichem R&D team will, will separately, they will report to their managing director, and, but the overall, the selection of products and all, we will guide them in terms of like which are products. Unichem team is taking up which products will... They already have their pipeline and all, so they will continue to work. But first focus will be given on the low-hanging fruits, like, say, process corrections, which the Mr. Pabitra K. Bhattacharyya is, he's the managing director, and he's doing this technocrat, and he's guiding the team in terms of, R&D is now getting dedicated to correct those kind of processes and all that. So which all action plans has been, right? And then market extension, which can give a faster generation of revenue and also profitability. So those kind of things are planned so that we turn Unichem into profitability. That's the main, the first goal. So I said that next two years, almost around 80% of time, R&D will devote only on the improvements area, and 20% on the new developments. Once these major API corrections are happen, then only the new developments will be focused. So their R&D costs will not be that high because of course bio costs will be there, but material costs and other things will be on lower side. But thereafter work again they will take up the development of products. Yes. Understood. Thank you. Second question is, broadly, you had given a guidance of, like, you know, INR 1,800 crore of revenues and similar crore of EBITDA. Obviously, you have a much better understanding now, having, you know, probably evaluated further. I mean, the company is already doing almost INR 1,700 crore of revenue, I mean, even now, if you just analyze the first half. So how do you see that trajectory changing over the next three years? What is the peak potential in terms of revenue growth itself? No, actually, when we gave this projection, their annual turnover was around INR 1,300 crore. Suddenly, this year and the last two quarters, we have seen a lot of opportunity in the US because of shortages and all. So that is why there is a sudden jump in their US generic business. Having said this, they also have a product pipeline. They will be commercializing two ANDAs, which are already approved in this financial year as well as the next financial year. Their Brazil business has started doing good, which was earlier their business. They have started doing well. I think this year in first half, they have already grown by almost around 65%. They have good pipeline of products where some of the, this certain journey we will integrate with their approvals and all. So we see a good future even from Brazil in that market. We see good revenue generations and all, even from their European business point of view. So. Understood. Just very lastly, you, what is, what do you think is the peak revenue potential for this entity, and how many years will it take for you to, you know, reach there? Let's say we are, let's say their, your, Ghaziabad plant, I think, their production capacity is almost around 300 million tablets. That plant, we have, some kind of working is done, and it, it, production capacity by certain changes in it, it can go up to 70 million kind of tablets. As far as the Goa plant is concerned, the first plant capacity is around 500 million tablets. That can go up to 625. Doesn't need any kind of investment. It's only the internal some changes are there. As far as their third plant is there, Goa 2, which is beautiful plant, and, it's for the scale up. So, we are planning a lot of much bigger size batches there and all that. But that will all go through the whole regulatory process of approvals and all. A lot of things may not happen through CDMO process. It's a cross-approval process. So right now, focus is to say volume products will be shifted to Goa 2. Goa 2 also has almost around 500 million tablet capacity. So capacity-wise, there are no constraints as far as Unichem are concerned, because Goa 2 capacity is practically utilized for a very, very small top. Today, production volume may be around 50 million tablets now. So it's more scale-up batches to be taken, products, larger products to be shifted to that, and after regulatory approval. So it will take around one year time to do that journey, and that will also result in a lot of cost saving. So. Yeah. that also free up a lot of capacity there. And therefore, we are talking that, the, last, the next three years, what kind of, new products, they can launch and all that. And on those products also, on the API side, we are looking for cost reduction. So their NDA will have to be updated again once I have the... API has to be qualified in those NDA. So that process is all vetted and workings are going on, but it take time. That's the only thing that in pharma business, everything has to go through the whole process and thereafter approvals and all, so. So that's why we have divided the things in two parts. One is ongoing and can be done, you know, immediately, and one maybe 12-18 months, and thereafter the results start coming in. That's, that's the journey. Listen, that's great. Thank you so much for the detailed explanation. Thank you. Next question is from the line of Rashmi Shetty from Dolat Capital. Please go ahead. Yeah, thanks for the opportunity. Just one clarification, what are the guidance you have given for the branded business and the generic business that includes the Unichem integration, sales also? Unichem, Unichem doesn't have any branded business, no? Uh, so. Even for Ipca, it is Standalone Niskar. We have not considered anything of Unichem in that. Okay, now even in your general portfolio, so there you have upgraded by 20%. The guidance given was for current financial year. Next six months, we can't do anything much as far as, Unichem portfolio is concerned. The guidance what we have given is our own portfolio, our own business. Understood. Okay. And, you know, what is the status on borrowing for this acquisition, and what is the cost of that? Our current net borrowing is around INR 800 crore. Cost may be around 7%. You know, there is also increase in the borrowing cost. Earlier, most of our borrowing were in foreign currency. We were paying about 1%-1.5%, which has now increased to about 7%. Okay. Overall, gross borrowing is around INR 1,600 crore, but we have almost the balance as in the balance sheet. Around INR 800 crore, yeah. INR 800 crore. Net borrowing is around INR 800 crore. Net of cash is INR 800 crore. Understood. So just wanted to understand more, so when you said that, you know, currently in your balance you have not included Unichem integration, so you're saying that for the integration process will take time, and therefore, the sales from Unichem will not immediately come in next six to eight months. Am I correct to understand this? Whatever Unichem is doing business, their businesses have also grown in the current financial year by almost 35%. This guidance, what Mr. Jain said, is of standalone Ipca business, which was growing business. We have not included immediately anything out of Unichem product in our books so far. That will take time. Okay. All right. Thank you for that explanation. Unichem, per se, their businesses have grown from INR 1,300 crore last year. They are growing around 35% in the first half of the current financial year. Okay, sir. Thank you. Thank you. Next question is from the line of Rahul Jeewani from IIFL Securities Limited. Please go ahead. Yeah. Hi, sir. Thanks for taking my question. So you indicated that you will re-commercialize your US portfolio through Unichem's front end. So when that happens, would you be booking the sales or the sales would be booked at the Unichem level? Standalone, we will book in our books. It is an export business to me. Similarly, Unichem US will also book. In consolidation, it will get adjusted. It will reflect. Hello? Hello, hello. Your voice is breaking. Yeah, sir, I'm saying it, and it will reflect in it's called standalone books as well. Of course, now, because I am manufacturing and I am selling it to Unichem US, so it would reflect in my books as sales standalone. Whatever Unichem is selling in US, it will reflect in Unichem US's book. When you do consolidation, it will get adjusted. Okay. Sure, sir. And sir, any plans of merging Unichem into Ipca through a share swap? No, no. Currently, nothing on board. So both the entities, we have to bring their businesses. They are focusing only on Unichem business now, if you want that. Okay. So both the entities would continue to remain separately? That is right, yes. Okay, thank you. That's just something. Thank you. Ladies and gentlemen, as there are no further questions from the participant, I would now like to hand the conference over to the management for the closing comments. No, since there are no further questions, I think we should end this call. Happy Diwali to everyone. Happy, happy Diwali to all the participants. Thank you. Thank you. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines.