Good evening, everyone, and a warm welcome to Marksans Pharma's Q3 and 9 months FY23 earnings call. Please note that all participants line will be in the listen-only mode, and there will be an opportunity for you to ask questions after the opening remarks. Please note that this conference is being recorded. The results, press release, and investor presentation are available on the stock exchanges and company website. I would like to now introduce the management to you today on the call with us, Mr. Mark Saldanha, Founder, Chairman and Managing Director, and Mr. Jitendra Sharma, Chief Financial Officer. A cautionary note that some of the statements made on today's call could be forward-looking in nature, and actual results could vary from these statements. A detailed intimation in this regard is available in the investor presentation, which is available on the stock exchanges and the company's website. I will now hand over the call to Mr. Mark Saldanha for the highlights. Over to you, sir. Thank you, Siddharth. Welcome, everyone, and thank you for joining us on our Q3 FY23 and 9-month FY23 earnings conference call. I'm pleased to announce another quarter of strong performance across all our regions, led by volume growth and market share gain in existing products. Strong revenue growth of 32% year-on-year was also reflected in the similar EBITDA growth. Our EBITDA margin year-on-year was stable at 16% despite high inflation, input cost pressure, pricing erosion of high single digits in the U.S. The supply pressure and freight costs have softened in the current quarter compared to the last year, which is a silver lining for us. Before we discuss our performance in the quarter, I'm pleased to highlight that on January 20, 2023, we completed the raising of INR 372.40 crores through the conversion of warrants into equity shares by OrbiMed Asia and the promoters at INR 74 per share. With this transaction, OrbiMed Asia now owns 10.8% stake in the company. We are confident that our strategic partnership will bolster OrbiMed with OrbiMed's deep global healthcare presence. Marksans strives to strengthen the best governance practice. We continue to value the expertise of OrbiMed's representative, Dr. Sunny Sharma, on Marksans' board. We have MSKA & Associates, affiliate of BDO International, as our auditors. BDO is the fifth-largest global auditing firm. In January 2023, we also completed a buyback of 64.74 lakh equity shares for a total value of INR 32 crores. Looking ahead, we see growth potential in OTC and RX markets, especially the switch from RX to OTC. We remain confident of our growth journey driven by volume growth, market share gains, and new product launches. With this, I'd like to turn it over to Jitendra, who will update you on the financial before we can start our Q&A. Thank you, sir. Our operating revenue was at INR 479.8 crores, an increase of 32.3% compared with INR 362.6 crores last year. US and North America was at INR 217 crores, representing a 37.8% increase year-on-year basis. EU and UK formulations market grew by 25.4% to INR 186.8 crores. Australia and New Zealand formulation market recorded 27.6% growth to INR 49.6 crores. The rest of the world saw 52% increase in the sales to INR 26.5 crores in Q3 of FY23. Gross profit was at INR 240.3 crores, up 23.2% year-on-year. Gross margin declined by 371 basis points from 53.8% to 50.1% in Q3 of FY23 due to the pricing pressure and input cost inflation. The EBITDA was at INR 76.6 crores, an increase of 32.6% year-on-year. EBITDA margin was stable at 16%, with operating leverage offsetting the impact of high level of inflation. Profit after tax was INR 62.3 crores compared to INR 48.3 crores in Q3 of FY22, a growth of 29.1%. EPS for the quarter was at INR 1.56, 30% growth on year-on-year basis. I'm taking you through the nine-month performance. The operating revenue was at INR 1,366 crores in nine months of FY23, up 27.3% year-on-year. The gross profit for the first nine months of FY23 increased by 21.3% year-on-year to INR 688.6 crores. The gross margin was at 50.4%. The EBITDA for the nine months of FY23 increased by 17.7% year-on-year to INR 229.8 crores. However, EBITDA margin declined by 138 basis points from 18.2% to 16.8% in the first nine months of FY23. The cash generated from operation was at INR 208.6 crores. For the first nine months of FY23, PAT grew by 16.2% year-on-year basis to INR 182.6 crores. The earning per share grew by 18.7% to INR 4.54 per share. We spent INR 24.5 crore in the first nine months of FY23 in R&D, which amounts to 1.8% of the sales. We continue to remain debt-free. We had a total of INR 417 crores of net cash was open as of 31st December 2022, which we plan to utilize for CapEx funding and for our inorganic growth strategies. This cash excludes the 75% warrant subscription amount of INR 279 crores, which we have received in January 2023. With this, I would like to open the floor to questions and answers. Thank you very much. Thank you, sir. You can now open the floor for questions. Participants may use the Raise Hand function or come in by introducing yourself and your company. We would request you to kindly introduce yourself and your company since we need it for record purposes. We'll wait for a few minutes till the question queue assembles. I have the first question from Hridesh Gandhi. Hridesh, could you please introduce yourself? Sure. Hi, sir. This is Hridesh from, you know, Discovery Capital. Congratulations on your numbers. Just wanted to understand, you know, we are showing revenue growth despite you indicating high single digit in price, you know, decreases. Just wanted your view on if you see the price actually erosion to kinda be kinda continuing into the future or, you know, when you see it actually abating. Also, just to get an understanding of the reason we've been able to gain share. Is it because we have kinda reduced our, actually, you know, our pricing, or is there something else which has led to an increase in our, you know, share leading to increase in revenue? Hi, good evening. Basically, obviously, the pricing pressure, price erosion, still continues in all the first world countries, especially U.S. We do see it stabilizing at some time. The scenario is highly volatile where raw material prices are also on the decline, so that again arise, raises all the questions of pricing pressure. Our market gain has been obviously, because of service, because of new product launches, because of, you know, positioning, and a product basket that we offer now in those markets in, especially in the U.S. We have, we are the preferred choice and we are catering to segments in total. That's where we have achieved the market penetration, reliability and sustainability. That's where we basically have succeeded in actually gaining some market share overall. That's helpful. Sir, if you could also throw some light on to, the backward integration you guys were looking to into API and any kind of timelines on to that? Yeah. With regards to the backward integration, what we have done is, besides doing our R&D work, we are going with a CDMO strategy presently because we have our hands full where obviously we are working on the Teva integration and the acquisition and the integration of Teva will be our immediate focus. We are actually working on the CDMO strategy, but we do plan to file our DMFs in the calendar year of 2023. That's this year. Got it. Effectively we would be looking at a commercialization, then would still be, let's say three years away, two to three years away. Co-commercialization will be relatively fast. There is a process because once we file our DMF, we still need to get that DMF onto our licenses. Actually, that process is longer than actually developing and filing a DMF. Because, you know, getting active raw material onto a license could take anywhere between 6 to 9 months after we file it, after we file the DMF. We are working on parallel grounds, but you're looking at a year and a half in total. Got it. The last question with regards to effectively, going ahead, do we kinda continue to be able to see this kind of growth trajectory? Is there any sort of abatement in terms of the inflationary pressure and therefore potentially coming back to that 18%-20% at the EBITDA level? I think we will maintain our growth trajectory. Like I've always said in my previous calls, we are poised to cross INR 2,000 crores in the next financial year. I think so we are moving in that direction. I don't see any hurdles coming out there. I think with regards to pricing pressure, it's just the nature of the beast that, and we are into that. We, we know the nature of the game very well by now and I don't foresee any challenges appearing from that angle. We should be pretty much as per what I've pretty much mentioned in the last couple of quarters. Right. Thank you, sir, and all the best. Thank you. We move on to the next question. Cao Capital, could you please introduce yourself and ask your question? Yeah. Am I audible? Yes, you are. Yeah. Hi, this is Agastya from CAO Capital. Congratulations for great numbers. I think in the sector you guys have probably delivered the best numbers. I could be wrong, but, great performance. I'll take that compliment, sir. That's fine. Yeah, because the numbers were really bad in the sector. Thank you for hosting this call over Zoom. Last time, we had requested you to do the same and you guys took the suggestion. Thank you very much for that as well. My questions are kind of an extension of what the previous participant was asking, but I'll concentrate more on the cost side. There are so many moving pieces as of now. As you mentioned, that raw material prices are coming off and freight costs are also coming off. Yet there is an element of inflation. Right. How long do you see inflationary pressures continue to reflect in our PNL? I'm pretty sure on the margin, costs are coming off, but you must be sitting on some inventory, and there will be some lag effects. On the cost side, when can we expect some sort of stability? Do you have any visibility on that? Yeah, that actually, that's a very Agastya, that's a very good question because yes, you are right. We are sitting on some material and especially because if one noticed in the month of November, December, October, November, December, China had all these issues of lockdowns, and there was absolutely a standstill by China there. At that time, obviously, we decided to increase our inventory holdings so that we can, you know, service our contracts and everything of that stuff. The position is very fluid, but one positive silver lining, like I mentioned earlier, is the freight costs have come down, and that's that is some relief. Okay. The raw material situation is that we are sitting on very close to 6 months of inventory on raw material of finished product, which are at a high cost. Okay. We do see, if now that China's opened up and now that things are cooling down or calming down, we do see the raw material situation to further improve. This impact or this advantage could be, you know, maybe post-six months you could see that. Would we see a couple of quarter of some inventory losses? Are the finished good prices falling fairly steeply? No, no. because we all have contracts. Okay. Basically this, finished good prices will not, change, overnight. Okay. However, the margins will also not improve overnight. Okay. We'll see some better days, like I mentioned, once our inventory, once the new raw material pricing come down. I must caution you that while raw material prices do come down. Mm-hmm. You know, as and when you go for new contracts, there will always be a correction in pricing or pricing pressure happening. Right. The market is in, especially in the U.S., is, you know, just coming off a pandemic. It's coming off, you know, the flu season. Right. It's coming off the virus that was there. The virus that was prominent. What happens is there's always a correction in the distribution channel. During that correction. Right. In the distribution channel, you do see a slight slowdown happening. Yes. Yes. obviously companies do get a bit, you know, desperate in terms of pricing. Right. That said and done, we are confident of, you know, achieving our objectives and hitting our forecasted numbers. Right. I was coming to that point also. Can you give some idea as to what kind of channel inventory is out there as of now? Because you were not the only rational person. I would say it was very rational of the company to stock up on inventory given the situation in China in October, November. But I'm pretty sure the channel would be filled with inventory as well. And also, along with the freight, the transit times were also compressing. That also has this result of just liberating a lot of material in the supply chain, right, which was earlier getting caught up in transit. Given all of this, do you think there is any risk of significant channel de-stocking, or do you think the situation is under control, overall, and we should not see any significant slowdown in primary sales, so to speak? In primary sales, the only slowdown can happen more seasonal or more because of COVID or the lift up or the distribution channel basically being overstocked due to, like I mentioned, the flu season. Right. the COVID or the viral outbreaks that happened in the last quarter. Mm-hmm. With regards to destocking and with regards to excess stocking, I don't see that having a materialistic impact, in movement, in terms of units being sold or distribution or value being eroded presently. Great, sir. 1 question to your CFO, sir. I just wanted to reconfirm the cash that you guys have received post conversion of warrants is INR 279 crores. Yes. Over and above INR 417 crores of cash, as on December. Yes, that is correct. 279. Sir, can you also share the final, fully diluted share count now after the warrant conversion and after the end of the buyback? See, the final, the share, you know, issue share capital is around 45 crore shares now. Okay. You know, we have intimated the exact numbers to the stock exchange. I'll check it again, sir. Thank you very much, sir. Thank you. I'll go back in the queue, sir. I may have a few follow-up questions. I'll go back in the queue now. Thank you. Thank you. Yeah. Utsav Jaipuria, DAM Capital. Hi. Thanks for the opportunity. My first question was on the U.S. business. QOQ also you've seen about a 12% growth. Is this largely because of the flu season? Um, I, I think it's, uh, there is some flu season, uh, involvement, uh, out there, but, uh, it's again, um, it's, it's how, uh, you know, the products, uh, move in certain mar... uh, in certain seasons and it, uh, how it moves in certain markets and certain timings. Um, we do plan to show this type of growth, uh, basically year on year, so we don't foresee any, um, hiccups on actually showing growth in the US in, even in the next financial year. Uh, we should be able to, um, uh, maintain that growth, uh, per se. And that will be because of new product launches also that, uh, that takes place and, uh, uh, you know, and, uh, then, uh, and certain contracts that are being commercialized which were awarded maybe six months back. So it's a... I think it's coupled with a lot of factors. Thanks, thanks for that. On the contract, this would really be largely in the store brand segment, right? Yes. what's the typical length of a contract in that segment? It's normally two years. Okay, two years. Is there any sort of a switching cost for our customers in that? I didn't get you. Is there anything that prevents, let's say, a customer from switching to a competitor after 2 years? After 2 years, nothing stops them. You'll probably have another bid that comes around, and then you have to pitch for the business and. You know, over time, you develop a relation, you know, you have a reliability factor, you have a consistent consistency factor. You have, you know, the support factor that comes into play. It's basically the confidence that they have on you which puts you in a stronger position to win the contract next year. That's fair. I had a question on the Teva plant as well. Okay. What sort of a break-even timeline, ramp-up timeline are you expecting from this plant? What sort of a payback period are you expecting? About nine months, give or take, maybe slightly here and there. We do see the first nine months, obviously the consolidation phase happening, integration happening. We are gonna pump in a lot of money into CapEx and increasing capacity. I would say it'll probably take us nine months to break even. Okay. Thanks for answering my question. Thanks. Now we have Viraj. Viraj, could you please introduce yourself, your company? Yeah. Hi. Hi, I'm an individual investor. Hi, Mark, Jitendra. Congratulations on stable results. A couple of questions for you. Mark, you mentioned about this Rx-to-OTC switch. Can you educate us a little bit about what's happening in the end markets, particularly in markets like the U.K., which is leading to an increase in OTC due to the switch? Yeah. I mean, these are opportunistic moments that one looks for where products coming out of RX going into OTC. It's all about timing and how fast you can actually foresee that and develop your product to file it and get an approval on pretty much the same date. These are opportunist opportunities that give you pretty much better value than a normal generic. As a company, we don't go into Para IV patent challenges, we do look at these situations where, you know, a product which was initially an RX item but still has high usage goes into OTC, which becomes basically reachable for the consumer who goes to a grocery to just pick it up. Obviously, in such scenarios, the volumes grow much higher than. Understood. than waiting for a prescription. It is a area where, I mean, we are not inventing this. It has always been there, we are. it's driven by the local regulator, healthcare regulator? It is driven by local regulator and companies, basically. Companies who basically propose, show evidence, and obviously there is something called the regulator obviously does a risk assessment evaluation. They look at the grandfather status, how long the molecule has been in the market, time tested. Mm-hmm. the clinical, the risk factors to consumers of overdosing, everything. There's a lot of factors that go into it, but ultimately it's a regulator who decides that this product qualifies to go into, a consumer mode of, OTC. Understood. Understood. Second question is regarding freight costs. Freight costs have come off meaningfully. Have you had a benefit of the freight cost reduction in this last quarter, or is it likely to kick in Q4 onwards? Uh, there- There's probably a lag effect. There is a lag effect, it will kick in in Q4 onwards. Right. It's a relief, you know, because. Yeah. Absolutely. that was a big burden, which was difficult, because, you know, freight is a very variable factor, so it's difficult to pass it on to a client or something of that stuff because it may go up, it may come down, so you can't keep going to the client saying, "Well, it's gone up one day, it's come down the other day. No. No. It was a huge drag in terms of the margins. Right. that's- You reckon margins will go up by 1% on account of these freight costs reductions going forward or? Yeah, slightly, 1%+. 1%+. Yeah. Okay. 1%+. Okay, good. And lastly, on this API question that, you know, the first participant, Hridesh, asked, your strategy of going with the CDMOs, now you're not going to acquire an API plant or, you know, you're gonna have this partnership with existing API players. What does that mean for your margin expansion? You're obviously now gonna pay it out as opposed to doing a 100% in-house. Yeah. Do you see a margin expansion as you file these DMFs and, you know? We do- go the CM-CDMO route? Yeah. By how much? We do see a margin expansion, you know, because we would be sourcing the intermediates. We'd be sourcing the chemicals. We'd be probably paying them the conversion cost. That's the only thing. Right. That conversion cost, if you run a plant, you'd probably have the same conversion cost yourself. Right. Gestation time to break even a plant from a greenfield project or from an acquisition would be much longer. Mm-hmm. I'm assuming. Mm-hmm. We do to a great extent, you know, prevent in taking any immediate losses or burden in terms of the learning curve that we go through in trying to integrate a manufacturing plant of especially into API. Right. Obviously our reason is because we all, we have the Teva acquisition there, which we have done, and we'll be integrating as this acquisition on 1st of April. There were too many things to juggle, so we decided to go down this route. Number one, I do believe it'll be more economical. Yeah. Number 3, we do see margins improving because we would be in control of the cost factor. Right. Many a times when there is a surge in demand, mostly you see the raw materials prices not going up that much, but a lot of time API companies exploit the situation and increase the price. More stability in your RM and hence the margin expansion over time. Yes. Yes. Okay. Great. All the very best. Thank you. Oh, sorry, one last question, but let me come back in the queue. Okay. All right. Thanks. Yeah. Thank you, Viraj. Next question is from Prerit. Prerit, could you please introduce yourself and your company? Yeah. Hi, I'm Prerit Choudhary from Green Portfolio. I have some questions related to the numbers. We are saying that we would be supplying some of the products from the Teva plant to their existing customers till the end of financial year 2023. In the current quarter, did we record any revenue from the Teva plant? No. In this quarter, obviously there won't be because We are getting into the Teva plant on first of April. The revenue from the Teva plant will start from the next year. Okay. All right. Second question is, how much was the revenue from the Access Healthcare business? For the first 6 months. The revenue. Revenue from Access Healthcare for this quarter. Yeah, it was INR 19 crore only. INR 19 crore. All right. Now OrbiMed is our become a key shareholder in the company. I mean, how would OrbiMed be helping our company in growth? If you can talk about it a bit. Obviously OrbiMed gets a lot of intangible values onto onto the board, besides intellectual and discussions that we have, strategic discussions that we have. Their exposure and experience in the global market, and especially in the healthcare, is absolutely valuable to us. Our business module revolves on both organic and inorganic strategies, so they are exposed to a lot of companies, clients where, you know, they do get to us opportunities for exploring our inorganic strategies. It is, it is, very helpful to use their strengths, and basically help us in our growth strategy, which partly depends on inorganic, that's why we raised the resources or the funds. Over and above that, obviously, having an investor with so much of knowledge in the healthcare does add a lot of valuable discussions that we have in the board on a regular basis, on a monthly basis, on a quarterly basis. Definitely they are adding good value onto the board and to the company. All right. Okay. My next question is, company has a cash balance of INR 470 crores, and through warrants it raised INR 279 crores. Now we have around INR 700 crores in cash with us. What would be the breakup? How would we using these funds in the future? Yeah, obviously we have a CapEx plan. Yeah. which we have discussed, over the last quarters, in the same line that we, number 1, we still have to consummate the Teva-- I mean we have to pay for the Teva deal. Okay. We'll be paying for the Teva deal maybe in the next couple of weeks. Okay. Over and above that, we would have to spend onto the CapEx plan of Teva, which we've already highlighted. Then we have the inorganic growth strategy that we are pursuing, and we are in dialogue with a few firms. Nothing concrete. We still need capital to consummate these deals. Right. That's where we do look at a decent amount of capital going. Okay, understood. The last question is, what would be the guidance of our revenue and margins for the next financial year? Obviously we do, like I've always said and I repeated the same thing in the beginning of the call. We are looking at crossing INR 2,000 odd crores next year. That is pretty much what we said even in the last quarters. Mm-hmm. Our trajectory is, if one extrapolates the numbers, we'll you can easily know where we will rank for this year. Yeah. Based on that, we are confident we will cross INR 2,000 crores in the next year. Okay. On the margins front? Margins front, I think we will maintain our margin, if not slightly improve. All right. Okay. That's it for me. Thank you. Yeah. Thank you very much, Prerit. Next question is from Vishal Manchanda. Vishal? Hi. Thanks for the opportunity. This is Vishal from Systematix Institutional Equities. On Teva, when it gets integrated next year, imminently will we see an impact on your operating margins, because the new, it will take time for you to get the approvals from the clients. Is it fair to assume an impact on margins imminently? We do have a CDMO contract with them, a CMO contract, sorry, CMO contract with them on the existing products that we need to ship out for the next 12 months. That said and done, I don't see it being, I don't see the margins having too much of a impact overall. Like I said, the break-even scenario, we are looking at 9 months once we enter the plant. It will take us about 9 months to basically break even our operations out there in the plant. Mm-hmm. Will you need to incrementally invest in the facility? In, definitely we'll have to invest in the facility in terms of CapEx, which we've always said. We are planning to expand, I mean, increase their capacity, their capabilities, in different dosage forms. We are planning to put in a lot of resources out there to scale up the operation. I mean, yeah, from that angle, investment will go into CapEx. That will also give us additional revenue right now. You know, we are looking at Teva giving us decent sizable revenue maybe 12 months down the line. Can you share a number as to how much you need to invest in the Teva plant for whatever period of time? We have budgeted about INR 200 crore in overall CapEx for the Teva plant. That includes the upfront payment you would make to acquire the facility? Yes. In rupees. Yes. That includes? Yes, that includes. Okay. just one just need to understand price erosion a bit better. What I can see is in your portfolio you have, you also have aging products like Ibuprofen. Do you still see price erosion in such product categories? Because price erosion in such categories, obviously it'll be very limited because it's already eroded substantially. That said and done, with raw material, if raw material prices keep falling down, then obviously competition do try to exploit that situation and throw in different pricing. From that angle you can look at price erosion happening. Relatively it's a much more stable molecule in terms of volumes, in terms of value, in terms of everything that we have seen so far. Like, is there a thumb rule that's like when you have, say seven or eight players in a product category, it may be so that price erosion may not infinitely happen, you know? The lower competition will remain prone to pricing erosion. Price erosion happens, when, like I said, when the pricing of, materials, change. I mean, if the material prices are very stable, then price erosion does not take place to that level. If material prices start, going down rapidly, then pricing pressure comes into the finished product also. Okay. Just with respect to the Rx-to-OTC switch, are you targeting any product categories in the U.S.? We are working on few categories. It's too early to discuss that right now on this forum, but we are working on few items and products both in Europe as well as in U.S. Is the Rx-to-OTC switch kind of, driven by the company or it is driven by the regulator? It is driven by the regulatory prima facie, it also it's a push from bigger companies that go on. You know, instead of waiting and watching, you need to be more alert as to what's happening in the market. Obviously regulatory bodies evaluate, like I mentioned earlier, a lot of other parameters before they actually approve it. Based on the probability factors, we need to start working well in advance so that we don't miss the bus on the, you know, early to market strategies. Thanks. That's all from my side. Yeah. Thank you, Vishal. Any more questions? That's all. Yeah. I believe Lalit was there in the queue, his hand is not raised. We have Yogansh Jeswani. Yogansh, could you please introduce yourself? Yogansh Jeswani, are you there on the call? Okay, we'll move on to Jessel. Jessel, are you there? Okay, we'll move on to HN. I guess HN is also not there. Hello. Yeah, this is Hiral speaking. Sor-sorry? Hiral. This is Hiral. I'm an individual investor. Hiral? Okay, fine. Yeah, Hiral, please start. My question got answered. I also wanted to understand your broad plan to utilize that 700 crores and more about the Teva facility and the timelines. I think both the question got answered in, by the previous participant, so I'm done with that. Thank you. Thank you. Yeah, thank you. I guess we have Deepesh on the call. Deepesh Sancheti. Hello. Yeah. Deepesh, could you please introduce yourself, your company name? Hi, I am Deepesh Sancheti. I'm an individual investor. Okay. Yeah, please ask. I just wanted to understand, are we carrying any accumulated losses, which will be useful for a tax advantage from Teva firm? No. There won't be. Okay. Also wanted to understand, I mean, what is the risk of additional competition coming in from other Indian companies into the OTC market, which we are in U.S. as well as in U.K.? sorry, could you repeat that? I'm saying, what is the risk of additional competition coming in from the other Indian companies into the OTC market of U.S. as well as U.K.? This is not a new market. I mean, we live with that and we live with competition. Like I said, it's the nature of the beast. We just gotta, we just gotta work with that. No, because you mentioned that the cost advantage which we have is the marketing cost. In the presentation. Yeah. I mean, because we do not have to increase the marketing team. We don't need to over-leverage ourselves or reinvent the cycle all over again. That's where our advantage arises. Beyond that, I would say that it is competition will always be there. New players may always come in. While new players come in, some old players exit. It's a balancing act. Okay. Where do we see our growth coming from, in the coming years? Will we see it maximum from Teva firm? We are... Yeah. Growth will come from all geographies. Teva, the plant in which we acquired at Teva, from Teva, that will help us to service and basically fuel re-revenue from whatever we produce in the plant. Definitely, it's gonna service our global demand that is going on and newer markets that we venture out into. You know, it is a very important strategic acquisition that we have done at a decent price. The INR 8 billion capacity expansion which we are planning to do, will maximum happen in Teva? I mean, how much of it will happen in Teva? I mean, all of it will happen in Teva firm. All of it will happen. Approximately INR 200 crores is the CapEx which we have budgeted, right? Yes. Okay. Yeah. Thank you so much. Okay. Yeah. Thank you, Deepesh. We have Manthan on the call. Manthan, would you be having a question? Anupam Agrawal? Yes, good afternoon. This is Anupam from Lucky Investments. Congratulations on good numbers. My question firstly is on the number of filings that you have mentioned, basically the pipeline for U.S. and Europe. If you can give some color as to the overall market size, the potential number of co-competition in those products. Well, you know, in UK we've planned over 34 new filings in the next, what we are planning in the next 2 years. Mm-hmm. Obviously we do plan to out of which nearly 7 are planned only in this calendar year 2023. You know, 16 products have already been filed previously, are waiting for approvals. It is a huge product portfolio. It's a huge basket. The same thing in the US. You know, we are looking at nearly 32 products which are in the pipeline. 20 of them are in solid oral. There are some in ointments, some in, you know, creams, some in soft gels. It's difficult to narrate the segment and the value of each of them, but these are our future growth drivers that we do believe will add value. It is quite expensive to go and file a ANDA now in the U.S. We only undertake that when we feel there are, there's enough of returns and value to be generated from the product. We are looking at the futuristic growth. That said and done, this is not gonna happen in 1 year. When I talk of 32 products, it's over the next couple of years. My question was not on product specific answers. I'm asking basically that 75 products which are in pipeline, which will fructify in the next 3-4 years, what will be the overall potential of those products? See, market size will be huge, couple of $billion. That has no relevance because obviously then you have a lot of players in it. You know, if it's a digestive item, then, you know, a single molecule could be $1 billion. You may have four or five players. You may have players that are very prominent into those segments. Definitely they can give us a good revenue jump, help us to at least, you know, get us to a double revenue over time, let's say in the U.S. You know, help us to achieve that objective of doubling our revenue over time, if all those molecules do see light. Understood. In terms of capacity utilization, how much would that be for the Goa plant currently? You're talking now Goa, obviously we have to consider 2 plants that we have. Yes. With our plan to expand the Teva plant to get us 8 billion units, that plant will basically be generating more volume than our current existing plant. Mm-hmm. Slightly more volume in terms of our current existing plant, which is very close to INR 8 billion anyway. You can just add the numbers of what we are doing presently today, and you can double that from what will come from that plant. We do see larger revenue pie coming from the other plant. Fair enough. Fair enough. lastly, just wanted to understand on this Rx-to-OTC switch. Is it going to be marginally accretive for us, and is it gonna take time for that to happen, or is it going to be with a Q1, Q2 lag? No. Rx-to-OTC is a long-term plan. These are items which, like I've said in my to the previous people on the call, that these are determined by regulatory authorities. Once a visibility comes, you should be ready to file it, and then after filing it, wait for approvals to happen. You don't want to file it when it's an Rx item. You have to file it when you see a visibility happening in the OTC. When it's being switched to an OTC part of it. These are long-term game plans. Like I said, we are not into Para IV or patent challenges, but these are opportunities that we look out for. Got it. Lastly, sir, again, on the CapEx. INR 200 crores CapEx for the plant, and balance would be inorganic acquisition. Is it right? Yes. At what stage of discussions or negotiations are we on that front? What location are we looking at the acquisition to happen? It is in different geographies. Like, I've always stressed that we are looking at expanding our footprints into Europe. At what stage is too early. There's nothing concrete to put to discuss on this forum right now. These acquisitions will take a decent amount of resources or funds to consummate it. Like I said, there's nothing I can't basically discuss on what stage it is presently because it's too early. The size of the acquisition will be INR 400 crore-INR 500 crore kind of acquisition or? Can't comment right now because it all depends on at what valuation expectation and agreements that we would eventually conclude on. It's very vague to speculate on that right now. Fair enough. Fair enough. Thank you so much. I'll wish you all the best. Thank you. Yeah. Thank you, Anupam. Next question we have from Manoj Mathew. Manoj, could you please introduce yourself? Hello. Can you hear me? Yeah. Loud and clear. Manoj, could you please introduce yourself? Okay, I'm an investor. My question is, has the warehousing charges in the U.S. gone up? Warehousing charges. Warehousing charges. Warehousing charges, I mean, we normally have our own warehousing in the U.S. Okay, not public warehouse. No, we don't, we don't do 3PL warehousing out there. Okay. You're asking if real estate prices have gone up? Yes. The answer is yes. Okay. The next question, you're talking of some acquisition. Probably, let's guess it's Europe, but definitely it should be consummated within the next financial year, because of course, OrbiMed will also be getting restless with their funds with you? Well, M&A is a very tricky thing. If past history has taught us anything, I mean, if you look at our track records, we have done over 4 M&As, you know, over the span of a decade and a half. We are exploring, we are in talk. OrbiMed is involved in everything that we do. Mm-hmm. We have marathon discussions. Mm-hmm. Their input is valuable because, you know, they do give us insights of the company, the financial backgrounds and analytic, you know, evaluations that they run through. They are pretty much involved in tune, in hand with us, on M&As. They are also getting quite a few potential clients to us, and we evaluate it as a team. Then obviously then that's only the starting point, right? From there it goes through the entire nine yards. Mm-hmm. Presently today, there's nothing concrete. We are in dialogue with a couple of companies, but there is nothing concrete to discuss as to whether they'll be consummated or whether they will go through and the timelines of that. If not, we will keep continue our search and we will continue exploring that possibility. Okay. again, back to the warehouse. You ship to the East Coast, West Coast, Gulf Coast of the U.S. Okay, in all these three places, you have your own warehouses? No, we ship to the East Coast, and from East Coast, we distribute it to the rest of U.S. You have some arrangements with some truckers? No, we have our own, I mean, we don't have our own logistics, but we have companies that basically either collect programs or, if you are dealing with a large client, they have collect programs where they pick it up from a warehouse. Okay. Sometimes we ship it directly to the customer, you know. Okay. You will be shipping to New York most probably? Yes. We have all state licenses, so we don't need to, you know, work on a 3PL for anyone else. Okay. You own a warehouse in New York. That's what you're telling me? Yeah, we have own, we have one own warehouse, and we have a long-term lease warehouse. Okay. Fixed lease for long term. Yeah, long term. Okay. Okay, thank you. Thank you very much. Mm-hmm. Yeah. Yeah. Thank you, Manoj. Our next question is from Bilal. Bilal Khan, could you please introduce yourself? Yeah, Bilal. Are you there, Bilal? Okay, Yogansh. Yogansh Jeswani. Yogansh, you have a question? Okay, next question, Vishal Manchanda. Thanks for the presentation, Anupam. On your presentation, you indicated you also have your own label brands. Can you share what percentage of your OTC business will be your own label? What percentage? Yes. Our own label is around 15%-20% right now. Are the prices in your own label brands stable, and do they fetch better realizations versus the rest of the business? Yes, they do to some extent, yes. like, as I understand, private labels are gaining market share over own label brands. Are these brands stable in terms of market share? They are stable. They are niche products and, they have potential of growth. Okay. Which categories are these, you know, these are the therapeutic categories, that the private label or own label brands target at, or those are wellness categories? No, they are in the same categories that we are into pain, in digestive, in cough and cold. Our product portfolio revolves around those type of products we have presently. We focus on to these three segments presently on that. One thing that you are thinking about fortifying your existing business is backward integrating into API. One of them is Ibuprofen, where you are thinking to backward integrate. Which are the other molecules, which may be large part of your business and you will want to backward integrate into? Well, we have couple of molecules where which have become very large. Cetirizine is one of the items that we are backward integrating. Some of the digestives, we are backward integrating. We are working right now on 10 DMFs presently. We do believe at least two or three of them will be filed in 2023. These DMFs will be filed from third-party facilities? No, the DMF will be on our name, will be filed by us, but we'll be only using their facilities. Right. A 200 basis point expansion, is that fair to expect on account of this backward integration process? Yeah, sure. It is. It's reasonable to expect that. like, currently if 50% is your raw material cost, would it be fair to assume about 80% of that would be API costs? Substantial. Yeah, substantial amount will be the active. Yes. Thank you. That is it. Yeah. Thank you, Vishal. Thank you. We have our few investors left. I'll just take them one by one. We have Yogansh. Yogansh, your question is done or you would like to ask? Hi. Am I audible now? Yeah, Yogansh. Yeah. I'm so sorry about the. Yogansh, could you please unmute yourself. ...which I had some problem. I am from Mittal Analytics PMS. Mark, my question to you is on the inventory side. Could you share the December ending inventory number for us? Yeah. See, hi, Yogansh. See, as of 31st December, we had inventory of around INR 449 crores. Say INR 450 crores. Okay. If we just look at your inventory, in terms of inventory days, 2 years back, it used to be, I think somewhere in the range of 100, 150 days, 120-150 days. In last 2 years it has gone up to 250, 200 kind of days. Going forward, what is the trajectory like? Do we think that once these things normalize, we'll be back to our 150, 120 days or, that is, challenged now? are talking of couple of years back, you know, our revenues have also grown. We are expecting to do almost INR 1,800 crore plus in this financial year. you know, if you see our overall working capital cycle, as on December, like, you know, we had a working capital cycle of around 110 days. We think that, you know, this kind of, like, you know, numbers will remain in the business. With the absolute sales going up, the, you know, the working capital will also go up. These levels I think will continue in our business, from now onwards because, you know, we need to. The inventory consists of raw material and the finished products. Since we are directly distributing the finished products, it keeps bit high availability will be out there. Okay, understood. Just one clarification on that part. Earlier, the finished products used to not be on our books. Is the warehousing thing that you were mentioning to one of the participant, is that something recent that we started, say, last one, two, three years? We have a forward integrated business model. We are directly marketing these products to end consumers. Our revenues, 100% revenues are coming from B2C segment. Before acquiring Time-Cap in U.S., we used to distribute it through third parties or through repackagers. At that time of course, the finished goods inventory, like, you know, used to come in their books, not in our books. Now since we are distributing directly, once we export the products to U.S., it stays with us till we, like, you know, deliver it to the customers, end customers. Okay, understood. That was helpful. Just one question. Not even a question, I just wanted to know your management's thought on it. Our company has been performing very stably for last many quarters now, and we are doing a lot of right things like we did a buyback at a good time. We have also put in money in terms of promoters and bringing in a strategic partner. While if we still look at the kind of valuation that the company is getting in the market is really low. What are your thoughts as a management on this and what are you thinking of in terms of, you know, unlocking more value for all the shareholders? Well, there's no magic wand, except working hard and performing. Over and above that, obviously, sentiments of the market play a very vital role in what you say. You know, COVID, with COVID, that took place, I think sentiments, you know, was not very favorable when COVID, when we accepted the pandemic scenario and got into normalcy. A lot of other industries started coming back into the play. That said and done, we are looking at a long-term, long-term outlook, and our performance will speak of the numbers that will come. I think our numbers will be a reflection of our performance and, you know, that's what I believe, from a long-term, one has to evaluate it from that angle. Right. That should be helpful, Mark, and I wish you and your team all the very best. That's it from my side. Thank you. Yeah. Thank you, Yogansh. We have a question from Forum Makim. Forum, could you please introduce yourself? Forum, are you there? Okay, Bilal, you have a question? Bilal Khan? Okay, Tanuj Khiyani, you have a question? Yeah. This is Tanuj Khiyani from Ventura Securities. I actually had a question on the Ibuprofen shortage that was going on recently. How is the situation like and do you have any material impact on you? Well, the shortage was very short-lived because obviously of the impact of what happened in China in the last quarter. With China opening up, I don't foresee that having any material impact. Of course, we do have a good amount of inventory, like, you know, raw material API lying with us. We don't see, foresee any challenges, at least so far as we are concerned. Oh, okay. I think Caplin Point has also done with its CapEx in the soft gel segment, soft gel segment. How do you see them and, like, how would they compare to, in regards to our company? I can't comment on somebody else's company. I don't. We don't look, we don't evaluate it from that angle. We are more focused onto what we do and how we grow. I don't see that being a concern right now. Yeah. That answers my question. Thank you. Yeah. participants, in the interest of time, this was the last question. For follow-up questions, we request participants to write to ir@marksanspharma.com. M-A-R-K-S-A-N-S Pharma, P-H-A-R-M-A dot com. Sincere apologies for this. Yeah. As we have, you know, restricted the questions, so we may now conclude the call. I will now hand over the call to the management for the closing comments. Over to you, sir. Thank you, Siddharth, and thank you everyone for, you know, giving us this time, opportunity. I know it's a busy day of the week. Thanks a lot for coming on the call. I hope we answered all your questions. Have a great day and be safe. Yeah. Thank you. On behalf of Marksans Pharma and Systematix, that concludes this conference. Thank you for joining us, and you may now disconnect your lines and exit the webinar. Thank you. Thank you.