Ladies and gentlemen, good day and welcome to Ipca Laboratories Q3 FY25 Earnings Conference Call hosted by DAM Capital Advisors Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal from DAM Capital Advisors. Thank you, and over to you, sir. Thank you, Ms. Khan. Good afternoon, everyone, and a very warm welcome to Ipca Labs' Q3 FY25 Post-result Earnings Call hosted by DAM Capital Advisors Limited. On the call today, we have representing Ipca Labs Management, Mr. Ajit Jain, Managing Director, and Mr. Harish Kamath, Corporate Counsel and Company Secretary. I will hand over the call to Mr. Jain to make the opening comments, and then we'll open the floor for questions. Please go ahead, sir. Thanks, Nitin and DAM Capital for organizing this call. Today's call and discussions and answers given may include some forward-looking statements based on our current business expectations. This must be viewed in conjunction with the risks that pharmaceutical business faces. Our actual future financial performance may differ from what is projected and perceived. You may use your own judgment on information given during the call. The domestic formulation business has delivered a growth of around 13% for the quarter. On December 2024, Ipca is ranked as the 16th company as per IQVIA and is fastest growing among the top 20 players. Ipca continued to improve its market share. There is an 11 basis point improvement in market share in this particular quarter from 1.95% net market share at December 2023 to 2.05% on end- December current financial year. Six brands of the company are among the top 300 brands in the country, and both on acute and chronic market segments, we are delivering better growth compared to the market. Overall, the pharma market in this quarter has grown by around 7.4%. IQVIA is tracking our growth at 11.4%. On acute segment, the market has grown by around 6%. Our growth is tracked by IQVIA at 8.7%, and on chronic segment, IPM growth is around 9.7%, and in this period, we have grown by around 17.1%. Overall, our formulation business has delivered a growth of around 6% for the quarter, and API business has also delivered a growth of around 12% for the quarter. If you look at our standalone Q3 FY25 EBITDA margin, it is at around 24.25%, as against 18.52% in Q3 FY24. There is an improvement of almost around 5.73%. If you look at the nine-month basis, we have delivered an EBITDA of around 23.14%, as against the previous year's nine months of around 19.55%. There is an improvement of almost around 3.59%, and overall, the guidance for the year was around 21%. But for the whole of our financial year, our EBITDA is likely to remain in the range of around 23%-24%. Overall, on consolidated EBITDA margin basis for Q3 FY24, it is at around 19.87%, as against 16.1% in Q3 FY24. There is an improvement of around 3.77%, and if you look at the nine-month basis, it's around 19.18%, as against 17.34% in the previous financial year. There is an improvement of almost around 1.84%, as against overall our guidelines was around 18% for the year, as against we are delivering around 19.18%. Hopefully, 19.18% to 19.5%, this is the range in which the overall consolidated margins would remain for the current financial year. Both on standalone and consolidated EBITDA margins are better than our guidelines for FY25. Having given the broad numbers, now I'll request participants to ask questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the touch-tone telephone. If you wish to remove yourself from the queue, you may press star and two. Participants, I request that you use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while the queue assembles. The first question is from the line of Surya Narayan Patra from PhillipCapital India Private Limited. Please go ahead. Hello. Yeah. Congratulations for the good set of numbers, sir. My first question is, hello, can you hear me? Yeah, you can hear. Yes. Okay. First question is on the gross margin, sir, so I think the positive surprise in the quarter of what we are witnessing is in the gross margin, and if I see this is one of the highest-ever gross margin numbers that we have seen for the quarter. What is driving this, and how sustainable is this one, sir? The gross margin this particular quarter was exceptionally high. Mainly because overall, let's say, the turnover in this quarter has grown by around 10%. But material cost, there is a significant reduction. Against 10% growth, material cost has come down by around 5%. So that is the impact. And that impact is mainly we don't see any kind of reduction in the material pricing. More or less, pricings are more or less here and there. There is hardly any change. So it's a certain kind of product mix improvement that is there that has helped us with the better gross margin. And one other factor which has happened that last year in the same quarter, our ROW market business was very low. It was around INR 104 crores or so. And this year, it has grown by almost around 50%. It's only because some shipments here and there have happened in the last quarter, and that has resulted in the lower. But in this particular quarter, that number has come high. So that has also added to the overall margin because there our margins are better, and it's the highest as a company as a whole in any business line. So that has also helped in the overall better margins in the current quarter. But there is a significant improvement there. If you look at each quarter by quarter, our material cost ratios are continuously improving. If you look at the number on standalone basis, the quarter one material cost ratio was around 28.9%. In quarter two, it was around 29.59%. This quarter, it has come to around 27.62%. And overall, for the nine months, it is at 28.73%. So more or less, for the fourth quarter also, it will remain around 28.73%. That's the kind of broadly around that 28%-29% is what is the overall. And last year, for the first nine months, this ratio was around 32%. So if you look at nine months versus this, so there is almost around improvement of 3.37%. So that improvement is there overall in the current financial year. So it's largely because of better product mix. And overall, if you see that our chronic portfolio has done well, we are delivering much better growth now, and we are beating the market continuously on chronic also. So that is also helping overall in the margin improvement. Okay, and is it fair to believe, sir, even the turnaround of Unichem, that is also kind of playing a role in the gross margin improvement here on the consolidated level? If I was talking of standalone side, as far as Unichem is concerned, last year, around same time, they were having around 5% EBITDA margin. And now their EBITDA margin has also improved to almost around close to 12%. So that is also helping in consolidation to deliver the better margins. Okay. The second question is on the U.S. business front, sir. So could you give some color about the kind of progress on the product launches from our portfolio, although now it has been included in the Unichem's portfolio? And now, considering the integration of this U.S. business in Unichem, so how should one monitor the progress of our U.S. business in Unichem? Because in the light of that, are you going to give an upgraded guidance for Unichem, sir? As far as Ipca portfolio in Unichem is concerned, I would say that we have shipped around four products till now, and almost around seven to eight products are in pipeline, and mostly, the stocks have gone in the current quarter and end of last quarter, so nothing meaningful has happened as far as the overall consolidated numbers are concerned. We have made shipments from here, but it will take some time for the market bidding and all that, so that process has just started. We have started winning some kind of the bids and all, so in the coming quarters, that will start reflecting. But right now, U.S. business doesn't have much of an impact as far as our overall business is concerned currently because hardly any meaningful number has come so far. Yeah. Okay. Just last one question from my side about the institutional business. In the light of all these funding issues by the agencies, so how should one think about the injectable business that we are having, which was a kind of a promising business and a futuristic business opportunity what we are targeting through hormonals? So how should one think of those potential business and the existing business in the institutional side? As far as institutions are concerned, it's by and large antimalarial business only, and I think in the current scenario where the U.S. has abruptly stopped the USAID to the various programs, so we are still assessing the impact of that, so currently, we have not heard from any institution, any kind of cancellation of orders, but we have calculated our internal number, what kind of business on a year basis we were doing with where the aid was given by the USAID to the concerned donor, so that business is around INR 40 crores, yeah, so how much of that will impact? Right now, it's difficult to say, but yes, that is the number which we have, which is relating to the USAID business, and we actually know how much USAID is giving funds to the Global Fund. So if the Global Fund is also receiving the USAID, then how Global Fund will thereafter take up, that number is not known to us. So I will not like to comment on that. Sure, sure. Yeah. There could be some USAID to the Global Fund. So that is not known to me right now. Sure, sir. Yeah. Thank you. Yeah. Thank you. The next question is from the line of Shiva from Purnartha Investment Advisers. Please go ahead. Hello. Am I audible? Yeah, you are audible. Yeah. Okay. Thank you. Firstly, congratulations on a great set of numbers, especially with respect to the margins. My first question is with respect to generics. This quarter, there was a slight bit of weakness. Could you just say any particular reason, or what was the reason behind that kind of slightly low numbers in generics? By and large, there's this lower generic numbers mainly because of South Africa. We were doing a business of around INR 120 crores in South Africa in a year. I think this year, the number may be around INR 40 crores or so. So there'll be almost around 80 crores kind of 75-80 crores kind of decline in South Africa business because of some tender orders are lost and all those kind of things are there. But we are working on next year's plan, and there'll be significant improvements that are likely to be there in South Africa business in the next financial year. But in the current financial year, that's the one reason that has overall impacted our overall generic numbers here. Okay. And with respect to Unichem, obviously, there was a steady progress, and the margins have done way better than expectations. So just wanted to understand for the next one year, how are you looking at because the margins have improved better than what we have expected during the acquisition's time. So how are you looking at Unichem's growth and margin for the next one year, or what are the kind of deliverables that you've planned and what are left? If you could give more color to that. So right now, all the improvements which are coming is basically improvement in operations all. It's synergistic benefits and you're extending the product range to other markets and other developed markets and all. That's a little long-term game. So right now, it is basically all improvements what we could brought about in the overall in Unichem's operations and buying efficiencies we have created. That is what is reflecting in their overall margin. And we are also asking our U.S. team to be a little more aggressive and all. And we have monitoring that part. And we see a much better business which is coming now in U.S. also. And overall, it's basically improvement in operations that has got the results right now. And long way to go, I would say that. The margins will keep on improving as far as Unichem is concerned. Oh, that's good to hear. A lot of improvement is happening on API side. It's a work in progress because API efficiencies are one where it will also reduce the capital consumption cost. And also, right now, Unichem is not able to sell the APIs to the, let's say, the Indian market or other markets where it's more of a price-sensitive market and all that. It's because their overall production cost is higher. So they are mostly consuming the API for their own production for U.S. and all. So once we start improving efficiencies on that and all, so that will also bring a lot of continuous improvement. And these improvement numbers will start reflecting in the next one or two quarters because one of their bigger plants, which is likely to be operational maybe in the next quarter somewhere. That will start reflecting after a quarter or so once the regulatory approvals and all start coming in, filing happens from there. And some kind of once they start captive consumptions of those materials, the cost of API production will go down. So there'll be continuous improvements will happen in Unichem's operations for that. The participant left the queue. We'll move to the next. The next question is from the line of Tushar from Motilal Oswal Financial Services, please go ahead. Yeah. Thanks for the opportunity. Sir, just extending your comment now with backward integration of Unichem's formulations and subsequently chronic share increasing in India formulation business. Qualitatively, at least, if you could say compared to FY25 consolidated EBITDA margin, what kind of margin one can think for FY26? So right now, the budget exercise is going on. So once the budget numbers are finalized and overall we work, so normally, we give those kind of guidelines along with the last quarter result. So around that time, we will give the guidelines. But I would say that the margins are improving and will continue to improve. But the guidelines we will be able to give along with our annual results. Got it. So secondly, just on the API products portfolio level, is the inventory now more or less getting normalized at industry level, or we are still seeing pricing pressure? Right now, we have not noticed any kind of pricing pressure. Somewhere, some solvent prices have moved. Other solvent prices have come down. I think on the chemical side, there are hardly any kind of movement. And intermediate side, we have seen slight improvement in few, but we have seen a reduction in many more. So overall basis, I would say this is a neutral, and I don't foresee that in the next two quarters also there could be any kind of further improvements in the overall, let's say, increase in the prices. So more or less, the similar trend will continue. Got it. And just lastly, the effective tax rate, how much do you think about for FY25? Overall tax rate for us is 25%, but some kind of disallowances on CSR and also on the marketing cost and all right. I think overall tax will remain around 27%-28% kind of thing. All right. Thank you. Thank you. A reminder to all participants, you may press star and one to ask question. The next question is from the line of Nitin Agarwal from DAM Capital Advisors. Please go ahead. Thanks for taking my question. Sir, on the generic business, can you provide an update on the EU and the U.K. market, how have they sort of done so far in nine months, and how are you looking at it going forward? Overall, U.K. was also very fiercely competitive market. So overall, I think U.K. numbers are muted, more or less in the line with what we had previous year nine months. So it has not grown. EU numbers is we had good growth in EU. So around 14%-15% is the overall growth there. But overall, South Africa is a little down, and also Australia and New Zealand numbers are down. Australia numbers are down mainly because of some supply chain issues on API, which we were using for formulations. But now that issues are resolved, so in this quarter, Australia numbers have improved, and I think overall in next quarter also those numbers will improve. So that's the broad reason for overall lower growth on generic side. And then looking forward, is the U.K. business how are you looking because we were expecting a turnaround in the business that I think is coming slower than expected. So how are we looking at the business now, sir, when we look at or take a two-year view on the business? Let's say I think second quarter was very bad, but third quarter onwards, the prices have again started improving there, and business has started improving overall. And I think we have a lot of launches also in pipeline. So I think in U.K. numbers, we will see around 15%-17% kind of overall growth in the next financial year. And so Europe will continue to grow at these double-digit growth rates? Yes. And then lastly, on generic formulations, what drove such high growth this quarter? It's only, let's say, last year on the same quarter, the number was very low because the shipment in that quarter was low. And now it has come to the normalized level. So this quarter's number is more or less similar to plus minus 5-7% compared to the other quarter. So more or less, that impact is of one-time impact because the number of last quarter sorry, Q3 number last year was low. So it's appearing to be a high growth. But overall, on these promotional market business, we are looking for around 8-9% growth for the whole of the financial year. Okay. And then lastly, the. The API side will be muted, is also because of the appreciation of Ruble. Right. And then lastly, on the API business, sir, how should we now think about the API business going forward? 8%-10% growth. Okay. And sir, the newer capacities in both Dewas and all, have Dewas come through now? You start using the Dewas capacities? Yeah. Dewas capacity we have started already. Yeah. But capacity utilization is around 35%-40%. It is still low because a lot of regulatory approvals have yet to come, and inspections are pending. Once that happens, then capacity utilizations will pick up. Okay. Thank you, sir. Thank you. A reminder to all participants, you may press star and one to ask question. The next question is from the line of Surya Narayan Patra from PhillipCapital India Private Limited. Please go ahead. Yes, sir, so this is an extended question about our APIs. In fact, sir, API export particularly, that was one of the key earnings drivers also for us for a longer period of time because of our cost effectiveness there. But if I see that, okay, during the COVID period, the kind of run rate what we have been seeing, even after four, five years, we have not touched that number. So obviously, there was the issue post the impurities in the couple of key APIs, what we've seen from the U.K. side, post that, we have seen there is a kind of moderated performance only. So if you can give some sense of what is currently or which are the key products which are currently the drivers and going ahead to what should drive growth for us, whether it is a new product or it is a new capacity that will drive the APIs, could you give some sense about the API portfolio as a whole and the export market particularly? Let's say on COVID period, the major API business buildup was around chloroquine and hydroxychloroquine because they were required for COVID, and that has also came with good pricings and all. So that has given overall high numbers around that time. And subsequently, we have faced the problems on certain business. So that has resulted in overall lower growth. And also, we were carrying higher inventories and which were at higher intermediate pricings and all. And pricing has sliced down to around from $100 level to almost around $40, $50 level now, so around $50 now. So that has also resulted in overall turnover number coming lower on that account. And prices of intermediates also of those APIs have significantly declined. So that has resulted in overall lower numbers. And overall portfolio-wise, we are also adding the APIs. And also, on portfolio approach, now all these things are things of past. We also lost a significant business in Iran. We were doing almost around INR 75-80 crore kind of business in Iran, and today that business is zero. So that has also resulted in overall lower because they don't have dollar or currencies to pay, and therefore, that market we are not able to sell anything right now. So that business has also come down. So that consistent business what we have on Iran is no longer there with us. So that has also impacted overall business. And now, since portfolio is also increasing and we have idle capacity, by and large, incremental capacities will be used for our U.S. captive consumptions and all. Dewas capacity is available, and all that will result in around 8%-10% kind of overall API business increase. More specific numbers I'll be able to give after, along with the fourth quarter number, whereafter our annual budget exercise is complete, and we will be able to give the proper guidelines on that. Is the statins still kind of the largest product segment for our API business? Yes. Individual number-wise, yes. This is giving the highest growth, highest overall number, but yeah, and we are also seeing that with even volume number going up, overall your sales number is not moving up. Some market prices have started moving up, but overall, on mixed basis, I would say that number is still muted. Yeah. Okay. Just on the U.S. business side, from the perspective of Unichem, now since they are having the integrated operation at their end, so we know that pre-acquisition, it was a loss-making business. Because of the watered-down kind of not so significant integrated portfolio, as well as not so complex generic products there in the portfolio. So here onwards, that Unichem as a whole, it's a kind of significant chunk of the consolidated business. So going ahead, what is the strategy there for the U.S. business on a consolidated basis, and how should one think about that, particularly regards US? Also considering the concern of tariff and all that, so how should one really position about Unichem's larger portion of the business, which is US? If you look at Unichem business, the product portfolio is of the older products only, and they are continuously launching three to four kind of new products every year. And probably in the next few years, at least five to six kind of launches can happen year on year on Unichem's portfolio. And on Ipca portfolio also, the launches would happen. With consolidation with Unichem, the business overall, what kind of expenditures, duplicate expenditure was there, that we have already eliminated. And that benefit has started coming because standalone Bayshore was having this ongoing marketing operations and cost, and they were not able to recover those costs because business operation around that time, and then we were not having FDA approval. So that cost was a burden. So that cost has gone out now because Unichem already has those kind of people, and they don't need to hire additional people to do the Bayshore and also Ipca business. So that is resulting in overall in the operational cost decrease for us. Okay. And this last one piece about the subsidiaries, how do you see their performance? I'll just request you to return the queue, please. Sure. Yeah. Thank you. The next question is from the line of Gagan Thareja from ASK Investment Managers, please go ahead. Yeah. Good afternoon, sir. So the first question is on the gross debt levels. If you could give out the gross debt levels, and how should we think of it going ahead? Overall, I think gross debt is around INR 900 crore in the balance sheet for Ipca standalone. And we have almost around INR 600 crore of cash. So net of cash, we have around INR 300 crore kind of debt overall of cash what is available with us. And I think next financial year, practically that number will become nil because with repayment and all, overall cash holding and etc., net debt would be practically zero. This is on the standalone level, on the consolidated level? Standalone level, yes. On the consolidated level, what would be the gross debt? Consolidated level, there are hardly any borrowings in Unichem. So it's not maybe less than about $12 million-$13 million, $30 million overall. All right, sir. And can you also give the salience of Zerodol and its line extensions in your domestic portfolio, and how has that franchise grown for you year to date, and what do you think of that particular brand going forward? Overall, if you look at the same portfolio, overall for the first nine months of current year, on pain portfolio, we have grown by around 14%, which includes osteoarthritis and rheumatoid arthritis both. So in both the market segment, we have leadership, and that portfolio has grown by around 14%. So that portfolio continued to do very well for us. But certain markets like antimalarial this year has not grown, so practically zero growth on that. Antibacterials have just grown by 1%. Cough and cold has grown by 4%. So these are the portfolios where we have lagging. Our cardiovascular portfolios are now doing better. Our urology, then dermatology, and nutraceuticals, and gastrointestinal portfolios, they are doing better. So overall, we have around, if you look at first nine months of current year, on overall portfolio, we have around 12% internal growth. Okay. And on the subsidiaries, if you could give some flavor of the subsidiary performance both at a P&L level and also at a balance sheet level, if some details can be given out. Except Ipca and our associate company Krebs, other all companies are profitable as on date. Bayshore, as Mr. Jain has said, we were incurring losses because of administrative cost. That has gone from our books now. So only Ipca and Krebs are little cause of concern. Other than that, all subsidiary and associates, there are profit in the consolidated level. Okay. All right. But potentially, there would be room for further improvement in margins in all of those? Yes, definitely. Definitely. Everywhere there is potential room to improve margin. Right. Especially Ipca, we are working on long-term plan and all. It should turn around in a couple of quarters. Okay. Thank you, sir. I'll get back in a bit. Thanks for taking my questions. Thank you. Thank you. Yeah. Thank you. A reminder to all participants, you may press star and one to ask question. The next question is from the line of Pulkit Singal from Dalmus Capital Management. Please go ahead. Thank you for the opportunity and congrats on a good set of numbers. My first question is on the U.S. portfolio for Ipca that's going to be marketed by Unichem. What is the potential revenue opportunity for you over the next three to five years as per your own estimation, a rough range? See, before our U.S. FDA issue started, maybe in the year 2012, 2013, when exchange rupee dollar was about 60, we did about 250 crore formulation business with about 10 products. So out of those 10 products, we have just manufactured and shipped four products. Few other products are on the verge of getting manufactured. So gradually, we will build our business through Unichem on those initial products which were earlier selling in the market, in the U.S. market. And we have very good cost benefit because of backward integration, our own API and all. In most of those APIs, I am also maybe one of the largest manufacturers in the world. Understood. So whenever you cross, let's say, 100 crores or 200 crores of size, what kind of percentage margins are then recorded at Unichem level for the marketing? No, no. Unichem, what I was saying earlier, also we were doing business through marketing partners. Those marketing partners are now replaced with the Unichem. There is a formula for sharing profit, for sharing cost of distribution. Everything is on paper. It will be beneficial to both Unichem as well as Ipca. Yeah. I'm just trying to understand what is the value to your effective time because, I mean, Unichem is at around 60. We have not spent any money for doing business. Whatever plants earlier, we were manufacturing U.S. products. They were as good as not manufacturing anything. Then we started gradually using them for other markets like Europe and all. In spite of that, their capacity utilization was very less. Once we do progression in our U.S. business through Unichem, whatever overhead recovery will also improve. That will also indirectly benefit me as well as my API additional production. So all those benefits will come over a period of time as we go on improving our U.S. business. Understood. And when it comes to Unichem's own facilities, I think they are at 50%-60% utilization. Is my understanding correct? That is also gradually improving. Goa 2, which was newly commissioned, there also they have started gradually ramping up the production. So all-round improvement is there in the Unichem productivity also. That is also one of the reasons why operating cost is coming down because of higher production. So all verticals, wherever operational efficiency can be encashed, everything is being worked on. Understood. And in how many years do you see that you would be almost fully utilizing the Unichem facilities? So next four to five years, I don't think they will need any further capacity other than routine capacity improvement plans and all. And whatever API they want to produce going forward, that CapEx is already happening at Pithampur API site. Formulation, they have adequate capacity available. So API, there were a little bit bottlenecks which are being now addressed. Great. Thank you for answering my questions. All the best. Thank you. Thank you. The next question is from the line of Tushar from Motilal Oswal Financial Services. Please go ahead. Yeah. Thanks for the opportunity again. Sir, just again on Unichem, given that they are also now primarily into U.S. business and Ipca also has, so any thoughts on sort of merging Unichem along with Ipca? No, no. There is currently no such plans. But the product portfolio of Unichem and Ipca, except few products which are common, the rest are all different products. And as Mr. Jain has said, we are already having a plan to take their products to other markets. They were hitherto not present: Australia, New Zealand, most of Europe, and also ROW markets. That action plan is already on. Product registration, document generation, all work is happening. All right. I mean, of course, the business-wise integration is very much happening, but then why to have two separate listed in there? No, no. We have not thought on that so far. Just we are trying to now consolidate and improve Unichem performance. That is our focus. Just secondly, on domestic formulation, if you could share price volume new launches data for the quarters and for nine months? I think one particular reason for not taking up consolidation is also because we are looking for a strategy of hedging. If anything happens to Ipca or anything happens to Unichem, like we have burned our fingers in the past. So we don't want that situation to happen. And therefore, we are keeping quality and manufacturing everything separate. And so in the event of anything happening, you can produce product utilizing others' capacities and all. So business disturbance doesn't happen. And therefore, currently, there is no such idea of merging both of them. Because at the top of the mind of management is always there that it should operate as a hedging for each other. Sure. Sure. So if you could address the domestic formulation question, price volume new launches? Pardon, Tushar, what was your question? So, price, volume, and new launches for the quarter? Most of the growth was because of volume. New launches are hardly anything. Price may be overall 5%-6%, not more than that. As you recollect, last year, there was hardly any price increase in NLEM products. Understood. That's it, ma'am. Thank you. Thank you. The next question is from the line of Shiva from Purnartha Investment Advisers. Please go ahead. Yeah. Hello, and with respect to margins at standalone level, I just wanted to understand, going ahead, how do we, I mean, are there any other, as you said, raw materials we did not get much of a value? You're saying it's only by the mix. So how do you look at going ahead? Is there any other operational levers at standalone level that we can show any improvement, or you feel these kinds of more improvement will be slower? Other than material cost, there was some increase in manpower cost because of addition of people. So as you recollect, last one and a half years, we have added a lot of people in the domestic market. Now they are slowly becoming productive for the company. So going forward, there will be some benefit out of growth or they will bring. So overall, our guidance states going forward, also maybe next three, four years, 100 to 150 basis points margin improvement should come. So normally, our material cost used to be around 20% of overall sales. Currently, it is around 21.5% or near about. It's largely because of addition of people. And a lot of those additions which we have made in the past are yet to become productive. Because it takes time somewhere in normal therapies, it takes around three years' time. Chronic is sometimes it takes a little more. So some of the people have a few divisions that have become productive in very second year. But on the chronic side, whatever numbers we added, that yet to become productive. And as their productivity moves up, we'll have overall a good set of numbers. Currently, in current financial, we are seeing that per man productivity has gone up by almost around 20,000. On an average, on total, around 6,700 people. So that's overall productivity improvement in the field. This productivity improvement will keep on happening because we have added a significant number of people in the last few years. Okay. To be understood correctly, if there is not much change in the raw materials, most of the production or the margin benefit will flow through from the employee cost, is what we say. Yeah. Employment cost also will happen. Then overall, once U.S. business picks up, then capacity utilization will also help in overall better improvement. Operating leverage. Yeah. Yeah. Okay. And you're saying about the MR. So if you could just give some details about the present MR and what is the productivity at an overall level and the four divisions. Like two years ago, we made additional four divisions. How are their productivity? Overall, I think we have around 6,700 people currently, and overall productivity per month is around 435,000. 435,000 for this quarter? 445. 445. 445. Yeah. Oh, this is for this quarter? Yeah. Up to nine months current year. Okay. Nine months. Okay. And how does that compare to the last year? Nine. It was around 425,000 with 6,300 people. Okay. 6,300. Okay. It's currently INR 6,700 and INR 445,000 per month. Okay. And once they settle down, what kind of number do they hit? I mean, the new divisions, how will that look like once they settle down in one and a half years, one or two years? Productivity each year, even if there are 300-400 people addition, will continue to have around 25,000-30,000. Average productivity improvements will be there on a continuous basis. Okay. Okay. This kind of current improvement, what we are seeing in current year, that improvement will continue even after addition of people. Understood. And how was your initial experience? I mean, you said that you've sent it to U.S. market last quarter. How was the initial feedback, and how are you finding it right now in this quarter? See, Unichem team has already started bidding for the products in which we have cost competency. So slowly and steadily, they are gaining orders. But it will take time because there are already other players in the market, and the sellers are already tied up with other people. So it works on contracts, three months, six months. So as and when people come for bidding, that time we participate. So there will be some gestation period from the day the goods are received and your sales commence. And then there will be a gradual progress quarter after quarter. Okay, and the growth guidance, you're sticking with the guidance that you've given? Thank you. Yeah, yeah. So it is in line with whatever we are expecting. Okay. Thank you. Okay. Good. Thank you. The next question is from the line of Saion Mukherjee from Nomura. Please go ahead. Yeah. Thanks for taking my question, sir. On the EBITDA margin front, I think on a standalone basis, you are already 23%-24%. Would it be fair to assume the domestic business margins are materially higher? If you can give some colors, given the fact that the employee productivities are rising, raw material prices have come down, qualitatively, if you can talk about the profitability or EBITDA margin for the domestic business, then what are your expectations on that going forward? See, Mr. Jain has already explained the major reason for this number is because of product mix change. So if you see business-wise, there is hardly any change in whatever we have been telling from the beginning, gross margin-wise. So only business-wise, there are different margins. And when the margins are better, business improves, the overall EBITDA and gross margin improves. It is that way. And wherever there is better margin, those businesses are growing year after year. For example, domestic and branded formulation business, ROW market, typically they have the highest margin in the company's overall top line. If you look at, let's say, current year, anti-malarials have not grown. We have lowest margin in anti-malarials. Antibacterials is also a low-margin business. That has not grown. It's just 1% growth. Cough and cold is also generally a low-margin business because it's all bottle packings, and that cost of packaging is high on the product. So that business has just grown by 4%. All other businesses have grown faster and better where margins are better. So that is also reflecting in the overall EBITDA margin. Yeah. So basically, what I was trying to get at is the fact that, I mean, if I look at 23%-24% margin, your business has API institutional on the lower side, and ROW India business are probably higher than the company average. So I'm just wondering if it is significantly higher or marginally higher than where standalone margins are, particularly for the domestic business. Domestic margin will further improve. As the productivity improves, margins will keep on improving, and margins are definitely higher. Okay. And sir, the other question I wanted to ask is, now since the businesses have stabilized or are on a growth path, what are the new areas the management is thinking about investing, whether it is India, US? If you can share any plans that you can share at this point on new initiatives that you are taking. New areas are. Number one is, let's say, we are leaders in pain management. And as far as the orthopedics and dentals are concerned, we have significant leadership there on those kinds of products. And now we are trying to leverage those relationships and now started a new division called Flexicare for adding the products which are used by orthopedics for other indications. So pain is one area, but they prescribe a lot of other products. So gradually, we are ramping up. Right now, the division is just added around 150 people. The recruitment of people is going on. So maybe another 200 people will be added. And I think next year, that division will be ended. We expect that turnout and faster higher rise. It should reach to the break-even point because we have a strong relationship in these therapy areas. So we should be able to. So we are leveraging those relationships. So that's one area we are looking at. Another area we're looking at is cardiovasculars. Now we have started beating the market growth and significantly compared to the market and all. And this is the further time for us to further consolidate our offering in the market. So next financial year, we will again add one more division with around 300 people in cardiology. Then another area is dermatology that we have done well and built the business on dermatology in the last few years. And we are missing on cosmeto-dermatology. So we have lined up the products for a lot of products under development and all. And I think one more division we will add in next financial year somewhere in the mid of the next financial year on cosmeto-dermatology. So wherever areas, like say, urology, we are doing well, it's giving us almost around 20% kind of 22% kind of growth. So some people additions will happen in urology areas. So all these therapy areas where we are continuously consolidating, which are the high-growth areas for us. So we are further investing on those areas. So that's a continuous journey. Anything on the U.S., sir, in terms of ANDA filing across Unichem and Ipca, any product category segment? How should we think about the research and development expenditure? What is it now, and how much can increase? Let's say our business philosophy is that we by and large use our captive product for ANDA developments and all, so now, last, I think, 10, 12 years, Ipca has not filed anything, but right now, there are a good number of product pipelines which are there under development and all, so I think every year, we should be able to now file five, six kinds of Ipca ANDAs, and Unichem will also continue to do that kind of numbers, and more or less, it's going to remain from, let's say, captive API. Some of the products we may outsource also, but broadly, so it's not that we have to file N number of products because our strategy is to always keep backward integrated products for forward integrations and all, so more or less, we are not changing that strategy, so it will remain in that line here. R&D spend, sir? Currently, both Ipca and Unichem put together, it's around 3.25% kind of R&D cost. That cost is likely to move to around 4%. Okay. Thank you. Thank you. The next question is from the line of Harsh Bhatia from Bandhan Mutual Fund. Please go ahead. Yes. Thank you. I'm audible? Yes. Yes, Harsh. Yes. Thank you. So in the second quarter, you had mentioned that there was some U.S. sales at a level that was shipped out but not booked. Have you booked those sales this quarter? Sorry. It's not audible now, Harsh. What was your question? Is it better? No. Yeah. Hi. Is it better? Yeah. Tell me. Yeah, so we were saying that there were some U.S. sales in the second quarter that were not booked. They were shipped out but not booked in the second quarter. Those sales have been booked in the third quarter? You are not audible. Sir, I just request you to rejoin, please. The next question is from the line of [Varit from Equirus. Please go ahead. Hi. Thanks for the opportunity. So we have done phenomenally well in the past years in domestic business. So how do you see this business behaving as compared to the IPM in the at least next two, three years? If you would talk a bit about it. So, more or less, whatever our growth, 1.5x IPM growth, hopefully, we should continue with that. How big? How big our pain management therapy would be in the overall compared to? About 52%. 52%. So somewhere, the largest product would be Zerodol. If I'm not wrong, that product is almost like around 5,800 per year. In spite of that, the pain therapy has grown by 14% in the nine months of the current financial year. Are we calling out how big is Zerodol for us at this moment? Two $0 SKUs are among the top 300 selling brands in the country. Right. So are you expecting pain management to stay at almost like 13%-14% growth going forward as well? Is it possible to? Basically, unless pain management grows 13%-14%, I can't grow 1.5x the market growth. Right. Because that is almost 52% of my overall business. But what is driving this growth in the overall pain management, if you could talk? And how this growth will be maintained? Because we'll be covering the latter part of the market. Earlier, the business will be also one of the foremost when it comes to the pain management. So how are we looking to maintain this growth going forward as well? Let's say not only osteoarthritis products, but rheumatoid arthritis products are also growing faster. And if the more penetration of disease prevalence in the country is very high, it's all we have to create enabling of the more number of rheumatologists practicing in the market and taking those rheumatologists to the other areas and educating doctors and all. So the rheumatology portfolio is last 10, 15 years also, we have seen continuously it's growing one and a half times the market growth. And we don't foresee in the next five years also that growth rate can come down. It is significant work is still to be done to make all these therapies available in any nook and corner of the country. And as far as the pain is concerned, the role is continuously growing. Even in this market also, it is growing faster than the overall IPM. It's almost around one and a half times the market is growing. And we don't see any kind of problem in growing this therapy also in the next three, four years at current pace. So we are not seeing any kind of challenge. And as far as the new product offerings are concerned, there are not much on particularly on osteoarthritis side. On rheumatoid arthritis side, yes, there are a lot of opportunities and of the new patented products. And we are working on everything of that. So we are keeping our complete hold on that kind of things. And we will continue to add the new product portfolios as and when the patent expiry happens and all. And also, we are further augmenting our Ortho offering by the addition of new divisions, which we are currently in the process of doing that so that we can leverage those relations in particular in the Ortho segment. So that segment will continue to remain focused for us. And we don't foresee any kind of difficulty in growing this business. In fact, it will grow faster than the overall company growth. And every major product I am selling in pain category, I am the market leader. And my growth is higher than the market growth. Okay. Sure. Thanks a lot, sir. Thank you. A reminder to all participants to press star one to ask questions. If there are no further questions from the participants, I now hand the conference over to the management for closing comments. Over to you, sir. No, more or less, most of the areas we have covered on the call. I don't think there is anything further to be added. Thank you. Thank you, all the participants. Thank you very much. Thank you, sir. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us and you may now disconnect your lines. Thank you. Thank you.