Ladies and gentlemen, good day and welcome to NATCO Pharma Limited Q3 FY 23 earnings conference call hosted by Nuvama Wealth. 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 your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Kunal Randeria from Nuvama Wealth. Thank you, and over to you, sir. Thank you again, and good morning, everyone. On behalf of Nuvama Institutional Equities, I welcome you all for NATCO Pharma's Q3 FY 2023 Earnings Call. With us today we have NATCO Pharma senior management team represented by Mr. Rajeev Nannapaneni, Director and Chief Executive Officer, and Mr. Rajesh Chebiyam, Executive Vice President, Crop Health Sciences. Over to you, Rajesh, for opening remarks. Thank you, Kunal. Good morning and welcome everyone to NATCO's conference call discussing our earning results for the third quarter of FY 2023. During this call, we may be making certain forward-looking statements or statements about future events, anything said on this call which reflects our outlook for the future must be reviewed in conjunction with the risks that the company faces. I would like to state that the material of the call, except for the participant questions, property of NATCO cannot be recorded or broadcast before NATCO's express written permission. We'll begin with the results, highlights and followed by a interactive Q&A session. Again, we hope you have received our financials and the press release that was sent earlier. It's also available on our website. NATCO recorded consolidated total revenue of INR 513.3 crores for the third quarter ended 31st December 2022, as against INR 590.7 crores for the same period last year that had a one-time licensing fee revenue. Net profit for the period on a consolidated basis was INR 62.3 crores as against INR 80.4 crores same period last year. For the nine months ending December 31st 2022, the company actually recorded a total revenue of INR 1,884.8 crores as against INR 1,433.2 crores same period last year, reflecting almost 31.5% growth. On the net profit side, the company recorded INR 439.5 crores as against INR 220.5 crores, reflecting almost 100% increment in PAT. On the segmental revenue split, this has already been shared with you. We'll pause here and, we'll take questions. Thank you. Thank you. Ladies and gentlemen, we will now begin the question and answer session. Participants who wish to ask a question may kindly press star 1 on your touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and 2. Participants are requested to use hands up while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Tarang Agrawal from Old Bridge Capital. Kindly proceed. Hi. Good morning. Couple of questions from me. One on the employee cost, I believe there's a INR 29 crores for one-time VRS. Is this one-time? If so, ex the VRS, the employee cost ends up being INR 77 crores for the quarter, which is materially lower than the previous quarters. The VRS, I have to check that number, Tarang. Give me a moment here. Let me just check and come back. Okay. I'll just take my second question then. How should we look at accretion in the Agrochemical business from here on? I think, let me answer the VRS question. I think that is for the year that this happened. In this particular quarter, it doesn't reflect that INR 27 crores touch from what I understand. The consistent salary is what's been shown in this quarter. Okay. Okay. The second question is how is the Agro division. Agro division is doing very well. Even this off season, we couldn't launch because the court clearance took us till October. I think we had a good reasonable start. I think we had about little less than INR 10 crore of revenue in that division. I think we feel that it should do very well. I think this quarter in the January to March quarter and of course the coming Kharif will do extremely well. Our thinking is that we should do over INR 150-200 crore in division, which is as profile has not contributed any revenue. This will happen this year in the next 12 months, and I think we're very confident. I think everything looks good. Rajeev, I mean, in terms of your conversations with your B2B customers and your, the way you must have formed up your channels, I mean all of that is in place, correct? I think B2B customers are all lined up, and I believe, I think B2B customers will not, will make a profit 25%-30% of sales. I think 65%-70% of sales will be our direct label, our own label. The real value is in your own labels that are not selling to B2B customers. I think we're seeing good traction. We have launched all the combinations, and some of the combinations we are the only product other than the innovator. I think we're in very good space and I'm very excited. I think this quarter we'll see some uptake because of the UP sugar season, I think, and then of course the Kharif in the next quarter. As you know, in Agro, I think a lot of the sale happens in the Kharif season, so a lot of the sale will get reflected in this quarter and the next quarter, I think. It'll be lumpy in Q4 and Q1 of next year. I think that's where things are going. Thank you. Thanks. All the best. Thanks. Thanks a lot. Thanks a lot. Thank you. Participants, if you wish to ask a question, please press star 1. The next question is from the line of Chetan Doshi from Tulsi Capital. Kindly proceed. See, actually, if you see last five years of revenue from Pharma, there is no big growth coming except for one-time sale in the current year first quarter. Secondly, our margins are getting suppressed year-on-year if you see. This development of pesticide is definitely a good idea. That is how the company is looking for making up the losses or they are planning to have some new development going on in Pharma also where high margin business they are expecting. Okay. To answer your question, see, if you look at our earnings five years ago, a lot of it used to come from one or two products. It used to come from Tamiflu and little bit from Glatiramer, and it used to come from Pure and doctor business. Practically, all the earnings of those three products have declined dramatically, I think. Tamiflu has completely vanished. Doctor business come down by 85%-90%. If you look at, let's say our balance sheet for 4, 5 years ago, almost 40%-50% used to come from these, you know, big one-time products. We actually had to redo the models completely. Essentially what we did is we have built subs in Brazil. We have, you know, have a sub in Canada. We have built our ROW business. We started the Agro business. Essentially, if you look at that business, we have actually built back the same business that we had about five years ago with a more steady state revenue. On top of that we have Revlimid. I think it's a very dramatic transformation, I think, in terms of what we have done in terms of building a more sustainable, wider business. When you build a sustainable wider business with multiple geographies which don't have the extra super normal profits, obviously the margins are gonna be low and there's no way around it. If you look at this particular quarter, for example, Revlimid is very little revenue, but still it's a very steady state revenue that we have. The revenues are equal to what we have, let's say, made about three, four years ago when we had all the one times. You need to understand something, okay? I mean, I say this all the time, but I'll repeat it one more time. The growth in this business doesn't happen from base. The growth in this business happens from your super extraordinary pharma. I challenge you on this, on any pharma company that you pick, look at any company's balance sheet. Your base business gives you that minimum margin which pays the bills and you get normal profits. If you want to get growth, you wanna get something special, you need to have something interesting. That interesting product is what delivers that bump in the earnings. Without that, you'll never have steady growth in earnings or extra profits. That's the nature of the business because of the competition that is there in this business. What has happened is, if you look at a product where there are multiple competitors, there's not too much margin to be made in a lot of our key markets, especially U.S. or even our export business. That's the structure of the business, and in a way, I think we have to get used to it. It is more so pronounced in our balance sheet compared to other people, but more or less that's the structure of the business. This is, it's across the sector in my personal opinion. Okay? In Pharma sector, you are not looking for any big growth coming in next two to three years? I'm not saying there's no growth. I think you didn't understand what I'm trying to say. I think what I'm trying to say, you will get growth from your base business and you'll get growth from the filings for which you have, where you have a niche complex filing where you have an option, and these will drive the earnings to what I'm saying. If you want earnings growth, it'll come from that, not necessarily. Base business cannot contribute for all the growth. It will come from the niche limited competition filing. We are planning to get into some specific areas where we can look for good volumes and margins both. Some development is going on on that subject? No. What I'm trying to tell you is, I'm telling you the exact opposite. What I'm saying is that you will get business through diversification in multiple countries. That will contribute to some percentage of your growth. The real growth will come from when you do the niche and the small, high value, small volume products. That's where the real value will come from. For example, you know, we have a lot of ANDA filings, and I think we probably should. We're trying to do, you know, some couple of FCF over and above what we already have. If we deliver like another three, four FCFs, you know, this whole decade is set. I think our whole concentration is doing more niche hard to do generics where we see a lot of value while we build our base business by expanding our geographies. One last question. Sorry to interrupt you. Go ahead. One last question, please. Okay. Okay. Go ahead. Thank you. Thank you for giving the opportunity. In this pesticides business, you have written in the presentation is biopesticides. You mean to say that is biodegradable product? No. I think that is specifically referring to a particular product. We have a product called Pink Bollworm, which is a pheromone. Pheromone is, it interferes with the mating of... It's a, it's a naturally occurring product which interferes with the mating of the insects. It interferes with the mating of the insect, it reduces the eggs that are laid on the plant. Therefore there will be less infestation on the plant. Specifically referring to that particular product. The core product which is driving the earnings, which is chlorantraniliprole, is not a biopesticide, it is a regular pesticide. I think the flavor of the presentation was trying to tell you that in addition to this, we're also working on products which are bio in nature. The Central Insecticides Board actually categorizes the pheromone under the biopesticide. That's why, okay. Thank you. Thank you. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Kindly proceed. Hi. Thanks. Rajeev, now on Revlimid, how should we expect the next couple of quarters? We should start seeing a profit share booking from Q4 into Q1 like it happened last time? Yes, absolutely correct, Nitin. I think Q4 and Q1 will is our expectation most of the profit share will be booked. We already shipped the quantity for Q1, so I think we'll have a very good Q1 and Q4 and we'll have a very good year. Our expectations are this year I think we should overall as a company, I think we should do about INR 2,700 crore-INR 2,800 crore in top line. This year's PAT also should be, I think, closer to INR 700 crore this year. I think that's our expectation. It'll probably be our highest revenue and highest PAT in the history of the company. I think, and I think a lot of it will be helped by Revlimid, that we're going to get in this particular quarter. You said, INR 1,000 crores-INR 700 crores of profit at about, this is for 2024 you meant, right? Or 2023? '23 March. Yeah. Okay. Lastly on the Agrochem business, beyond CTPR, how should we think about this business, you know, in terms of launches and all ultimately going forward? I think, Nitin, CTPR is gonna be the base of the business. I think CTPR will set up the business, and it'll be the anchor that will allow us to build a larger portfolio. CTPR, its combinations itself I think has a lot of scope in the next two years to build out the business. We have other products in pipeline and we will launch them over the next period of next few years. Some of them involve patent litigation as well. I think to give you a timeline on what products and all, I think we'll disclose that over a period of time, but I think we are very excited about this possibility and I think it has a lot of value. Do you have a sense of where the size of the business could be in the next 3-5 years overall Agrochem piece for you? I think next 12 months, I think I stated what our expectation is that this business should grow by INR 150-200 crores. Over a period of time, I believe that this business can grow to about INR 400-500 crores with mostly branded India business driving it and eventually the export also picking up. I think that's our expectation of this business in the next few years. I think to start with, I think this is a number that we're working with. Thank you. Thank you. Participants are requested to restrict your questions to two per participant. The next question is from the line of Venkat from 3 Sigma Financials. Kindly proceed. Thanks for the opportunity. Rajeev, you know, we have been seeing that, you know, competitors are able to perform better in the domestic market from the growth point of view. While we are seeing challenges in growth, is the problem with pricing or the sales, you know? What is actually limiting our growth compared to our competitors and more so in oncology and other divisions where we historically had a great leadership position actually. Domestic I think, it's always been a challenge for us because we have always done a limited segment. I think we've always done a niche segment. I think that's been a challenge. Because we did a niche segment I think our growth has been limited. I think now we've expanded the portfolio. Now we are covering GPs, we're doing cardio, we're doing diabeto, which we've not done in the past. I think we launched this division and we have expanded our field force. The benefit of that we will see in the next few years. Onco has seen a lot of competition. I think once you are more spread out in multiple divisions then the impact of a particular segment and pricing of a particular segment will not, you know, impact balance sheet as much. We're also looking for an acquisition vector. I think it'll take some time. I think we're working on different acquisitions which allows us better reach and a more deeper portfolio. We have cash on the books. I mean, you know, we have almost INR 1,030 crores of cash on the books. And we have very little debt. Except for working capital debt, we don't have any debt at all. I mean, we're getting more cash coming forward the next year. I think we'll find something to plug the gap, and I think it is going to be a combination of expanding field force and acquisition, which will drive growth in that space. Okay? Okay. You know, the other question I wanted to have is, I'm sure you must be doing a competitive analysis on the sales effectiveness. I'm hoping that, you know, periodic reviews and the right tooling is being provided for the sales representatives, you know, in the absence of that, the effectiveness may not be really so much actually, because, you know, for comparable size company also, we are seeing better returns or better sales, you know, from other companies. I just wanted to make a comment, you know, not expecting any response from you, but this is an observation that I have made actually. Well, I think, Venkat, I see what you're saying. I think we could have done much better. I think I generally don't run away from the question, so I'll answer it directly. You know, it is what it is. I think we could have done much better. Venkat, you need to structurally also understand we do domestic. It's not that we don't do domestic, but our strength is the regulated market. If you look at our facilities and all, you know, we specialize in doing patent litigation abroad. We specialize in doing hard-to-do generics. When you do a hard-to-do generic, typically these are all niche, you know, peptide products where the value proposition is not so big in India. It is big outside India. If you look at our balance sheet, you know, you know, most of our revenue comes out of U.S., you know, and regulated markets. It's a challenge, you know, when you do well in that, sometimes, you know, you miss this. I think in hindsight, I wish we could have done more things in India. I think we're fixing it. See, Venkat, the way I look at this business is I think we need to build a more diversified business. I think part of that challenge is we want to build this organically. It takes time. It doesn't happen over a period of time. I mean, for example, the Agro initiative, we've taken it about three years. Now we are seeing light at the end of the tunnel. We believe that that business is gonna increase by INR 150 crore-INR 200 crore. I think we're trying, you know, organically to build these businesses. Again, I like to build businesses with high, you know, value and, you know, and high margin and bring something special to the table compared to, you know. As a company, culturally, Venkat, I think we've never done well selling a commodity. We always do well selling something niche or something first in the country type of portfolio. It's a different DNA. I mean, I don't want you to compare us. We are not Apple's competitor. We are our competitor. I think, for example, we have done extremely well in the regulated market and, you know, and we are able to deliver these niche filings all the time. I think we have to look at the success at a larger context. Yeah. Thank you. One question is, you know, most of the rather newer players have become very competitive marketing when I look at my landscape, the people are focusing on domestic market and that's why things were centered around. Venkat, sir, we are not able to hear you clearly. I understood the question, Venkat, but I'll tell you I'm exactly doing the opposite of what the industry is doing. If we are making money in U.S. And nobody is making money in the U.S., and the people who are making money in India, we're not making as much money as in India. I think even in the U.S., Venkat, I think it's a the thought has been flawed too many times. I think there is ways of making money in the U.S., but you need to have a very clear strategy on how to make money. You cannot make money by doing a commodity. I'll tell you for example. I'll just first take for explanation for all the benefit of the college students. You could never make money on atorvastatin in the U.S. because there'll be so many competitors on that generic, and you'll never make money as a supplier of atorvastatin in the U.S. If you have a brand of atorvastatin in the U.S., in India, you'll actually make a lot of money because you have a reasonably well-priced product. What works in India, what works in the U.S. are completely different. To succeed in the U.S., you cannot be trying to sell atorvastatin, what model you have in India, you can't replicate that model in the U.S. You want to do something niche, something which has a difficult patent challenge, first-mover advantage or difficult chemistry. That's where you make money, which is what we are good at. To say that U.S. is a bad market and all, U.S. is bad on income. As a matter, even India market is also bad in a lot of the segments. It's. You have to find that sweet spot, and I think that's where the value is. I think that's what we need to judge a company on rather than trying to. I mean, any business is bad if you look at it at a very macro level. There are always sweet spots that you need to find. That's That's where the smartness is, isn't it? Okay. Thank you, sir. Okay. Thank you. The next question is from the line of Prakash Agrawal from Axis Capital. Kind you to proceed. Yeah, thanks for the opportunity. Good morning to all. Sir, there are three questions. First one, in U.S. you mentioned business is profitable, no doubt. You are into niches, no doubt. I mean, you know, post Copaxone and Revlimid, we haven't heard, you know, the next level of products that your R&D team has been delivering in the past. How is the next five years looking in terms of, you know, product approval, development work going on, filing expected? If you could just give some color there? I mean, we have other Para IV filings. I think we publicly disclosed them, I think some of them like Carfilzomib we have got to file. I'm sorry. I was just saying as exciting as the two you have delivered in the past. Yeah. Fair enough. Okay. It's all a jackpot. Yeah. I think we have done other filings, Prakash. Again, I'm not at liberty to disclose at this time what other filings we have. I think we have done few other filings in this financial year. Hopefully, we're FDA upon this. I think once we get a confirmation on that, we'll speak about it. I think we have as exciting products as Revlimid coming up in the next by end of this decade. In due course, we'll reveal this pipeline and I think I'm very bullish about this business, and there are enough niches that you can exploit, and you need to get, like, two or three of these ideas right for this to take care of your earnings till end of the decade. I'm very confident, and Prakash, in my personal view, I think we will disclose, in due course. And I think very confident we'll be able to deliver. Okay, fair enough. Thank you. Secondly, on India business, you know, you mentioned that you're also looking at M&A. I mean, 2022, if you look at calendar year, that was the most busiest year in terms of M&A, be it Derma acquisitions, you know, licensing of cardiovascularly, you know, products like sacubitril. Did you see these assets? Were you considering them or you are looking at separately different, kind of, acquisition? Some color will help. We looked at different assets, Prakash. I think a general comment is that the valuation of domestic assets have gone up dramatically because of the nature of the, you know, the atmosphere at this time, right? I mean, in terms of the general, you know, excitement in that assets. There are a lot of assets coming, Prakash. I'm hopeful that we'll be able to consummate some deal in 2023. I know we missed an asset in 2022. We could only do one acquisition, which was a front-end in the U.S. That was the only acquisition we could close. Otherwise we couldn't. We tried very hard. I think we looked at different assets. Unfortunately, we couldn't close. There is enough traction in the business. I think we believe that, you know, we'll be able to close something. There's a lot of assets that are there, and people are redoing their portfolios, so there are a lot of opportunities. I think we'll be able to hopefully try something in 2023. Okay. With a similar focus of higher margin and low field force, will the focus continue? I think that's the idea, Prakash. I think that's what we are trying to do. Again, also fair return on capital, Prakash, which is the most important thing, right? Again, you don't wanna bid something so high that you don't make any money at all. I think you need to have... Just because everybody is doing it, I don't wanna do a bad deal, right? I mean, nobody wants to do a bad deal. Doing no deal is better than doing a bad deal, right? I think we'll find something. I'm confident. You just have to be patient. You have to wait. Yeah. Sometimes... See, I am not under pressure in that sense, right? Because we have steady earnings going forward because of the steady cash flow on the, on the portfolio that we have. We have enough cash on the books. It's not for lack of money, right? It's just the right opportunity. Just wait and you'll get the right one. Yeah. We'll do that, Prakash. No, totally understand that. It's just that the India business, both on onco and, you know, the FC is declining quarter date, now stabilized. I mean, growth is clearly missing in domestic portfolio. I think it can be fixed. I'm not worried about it. We'll fix it. I think we have the resources to fix it. We have the cash to fix it. We have the strategy to fix it. You just have to be patient, my friend. That's all I can say. You know, that's the only answer I can give. You know, we will do the right deal at the right price and bring the right value for our shareholders. Sometimes you should not just get caught up in the frenzy, right? When you do a bad deal then, you know, it affects everyone, right? I think we just have to do it at the right time. I think we're fine. Just be patient. be patient. That's all I can say. I'm working on it, clearly. I think it's a very strategic asset. I think as the gentleman said, I think we are trying to redo the business in a way that our dependence on the U.S. also reduces. Right now, our business is pivoted very heavily towards U.S. I think as we become a bigger company, I think it's important that we diversify away from U.S. I mean, the Agro initiative is part of that. Also the acquisition of domestic assets is also part of that. As of now, if you look at the balance sheet, you know, you know, we'll probably do INR 400 crores of domestic out of INR 2,700 crores of the top line. Domestic is like 15% or, you know, whatever the number is. Yeah. 15%-16% of the top line. Coming forward next year, hopefully we'll be able to bring that up to because of the Agro revenue, we can bring that up to 20%-25%. In the long run, I think we're objectively thinking that we should make this business about 30%-35%, which is more or less consistent with our larger peers. That transformation, Prakash, will take time. It can't happen overnight because we are - Yeah. - relatively pivoted towards the U.S. and doing niches. To transform yourself to something else, it takes time. It takes a five to seven year cycle. You can't change your earnings tomorrow because you know, because you want to, right? It It takes a process. You just have to be patient with us. Yeah. Okay. Just last quick one on Revlimid. It would be fair to understand with, you know, market share increasing, the delta of your revenues will increase or it would get offset by the incremental competition, little bit price declines, et cetera, for next year? I don't wanna speak about it, Prakash, because I don't really know. We will know in the Q4 and Q1. I'll probably give you more ideas in the coming quarters when we do the Q4 earnings. As of now I don't wanna guess anything. I think it should do well. I think our expectation is that it should do well. We will. I think we'll speak more about it during the next quarter. Yeah. This Agro INR 150 odd crores is for 2024 or 2025? I mean, revenue expectation. I would say in the next 12 months. A lot of the sales of Agro, again, this is another very lumpy business. It happens in Q4 and Q1. Okay. A little bit in Q2. Most of the sales will happen between Q4 and Q1. I think Q1 will be the biggest quarter for that business. Okay. This calendar year basically? Yeah. When I'm saying 12 months, I assume the problem is 12 months will include one quarter for the previous year and one quarter for the next year, right? Then you have two kinda easy quarters, right? Because of the way the business- Okay. Yeah. We don't have any export business to bring consistency in revenue, so it's primarily driven by India right now. The lumpiness will continue, Prakash. Our Q4 and Q1 will always be strong for two reasons. One is because of Revlimid, and because of Agro. The other two quarters will be a little slower because those two are missing. That's how the balance sheet is gonna be and the way I see it's gonna be like this for the next few years. Okay, lovely. Thank you and all the best. All the best. Thanks. Thank you. The next question is from the line of Nikhil from SiMPL. Kindly proceed. Yeah. Hi, good morning. Am I audible? Yes, Nikhil. Please go ahead. Yeah, hi, Rajeev, I have three questions. One is, in continuation to the previous participant question, when you said that our FY23 guidance is INR 2,700-3,000 crores on top line and INR 700 crores on PAT, and if I just adjust for last year, that inventory write-off and all, what are you building in terms of pricing for March 23 when you say INR 700 crores? Is it like a significant price erosion or is it like a smaller volume offtake in March quarter and a larger offtake in Q1? I think that's my expectation, Nikhil. That's our expectation. I don't know. Let the quarter end, I think. You know, this is what... I mean, I'm just making an estimate based on, how the earnings are gonna be, but that's our expectation. Yes, that's correct. Secondly, one of the competitors in, on the Agrochemical side, had mentioned that the patents for the products are valid till 2027. This should remain a limited competition market. We had also mentioned in previous calls that we are open to do B2B business. What we see is that there are lot of people who have submitted their files for to the government for approval. Yes. Okay. Yeah. How should we understand? Should it remain a two, three-player market, or would we be open to more licensing and allow competition? In a way, if we allow competition by B2B, we are killing our own margins in this product. It's not like that. Structurally, business is not like that. Domestic market doesn't work like that, Nikhil. I think. Okay, let me answer your question. There are patents which are there till 2025, okay. I think we litigated and we won. Okay, that's the first thing. There are very few people who have litigated and won. You're right said there are only about two, three suppliers in the market right now, right. Therefore, in that sense, it's a limited supplier market. That is where the value is coming from. Typically what happens is, these two, three competitors, including us, will have our own brand, which we sell, and we get a fair amount of market share. Certain percentage of the market which cannot be serviced by you, give it on B2B basis. B2B value also remains with you because you are selling the technical or the formulation to that person. It is, doesn't destroy value because some people are strong in certain markets, some people are not strong in certain markets. It is a fairly, you know, well set model. I think everybody does that. I think you do little bit yourself and you give some to third party. That's the structure of business. It happens in domestic also, where, you know, even, you know, even domestic formulation in pharma also, the same thing happens. Two, three. There'll be some companies are very strong regionally. There's some companies which are strong in certain geographies or certain segments of doctors. It doesn't destroy value as long as there are limited number of suppliers. The number of suppliers are limited because of the patent thing. I don't agree with the characterization that it'll hurt you completely. It does hurt you a little bit, but on a net-net basis, you always gain because of the superior access you got. Net-net on a ROC basis, if we look at the whole, product as a profile of B2B and, our own product basis, would you say that the ROC profile of this business will remain in a 25%-30% range, or would it be similar to a domestic market kind of ROC profile? Because it's a full year approach we have taken, right? In a way we are deciding the price. It will be fairly profitable. How much money we'll make, I'm expecting about 20%-25% margin. I think that's what I'm expecting. Net margin after expenses, after everything. On gross, INR 100, we're expecting about INR 25-INR 30. See, let's see how it looks. So far looks good. We have some high cost inventory that we litigated, but I think when it settles down, yes, I think that sort of margin is very reasonable. Yeah, I think so. That's how it works. Okay. Last question on the subsidiaries. Now, for last four quarters, the subsidiaries are at a run rate of INR 80 crores sequentially. This is to some extent supported by Revlimid tenders in Canada. Do you see that this run rate can be impacted when the new tenders will come in? When does the new tender in Canada come in? Any idea if you can - Some early and some tenders are for two years and all. It depends on. I don't know exactly which tender is when, but it will hold up. See, if you look at our earnings also, see, there's a netting off effect that is there. Actual subsidiary revenue is INR 169 crores this quarter. If you look at our PAT as well, maybe 40% of PAT is coming from the subsidiaries. It, and it kinda shows what we are trying to do, is to diversify our revenue and diversify our geographies. To answer your question, it's a fairly significant revenue and I think, and I think it will hold up for a little bit, but not for long. Again, you need to come up with some other product which can offset the loss that you have. [Sulphur] is itself as contributing a significant part of our sales. Yeah. Sure. I'll come back in the queue. Thank you. Okay. Sure. Thank you. Thank you. The next question is from the line of Arun Malhotra from CapGrow Capital. Can you proceed? Yeah. Thanks for taking my question. Wanted to ask couple of things. We have mentioned that Para IV 11 products have been approved. What is the size of this opportunity for these 11 and for the 19 products which are still in litigation? 19 products are there in litigation. 11 products are approved. I don't know. What we said in the presentation, like for 19 Para IVs are in the pipeline. Like this is as of March 31, 2022, right. We usually consolidate and update once in a year, not necessarily quarterly. And the market size varies depending on the product. There are some which is $1 billion opportunity, some are in the- See, just because you do a Para IV doesn't mean it has value, my friend. Sometimes there are joint filers. Let's say there are eight filers and everybody's doing a Para IV, then really it doesn't really have much value. I think Para IV is just an indication that you're challenging your patent, but doesn't necessarily mean that you'll make. Just because you're doing a Para IV doesn't mean that you'll make money on that particular product because if there are a lot of competitors, it doesn't really matter, right? What you need to do is judge the filing by the product. I mean, if the product has limited competition, then it has value. I think that's how we have to look at it. 11 approved, what does that indicate? Any opportunity size where we could have some color? I think we have. The presentation has the products where we are sole FDF and one shared FDF. Sure. I think we can, I mean, they're in the presentation I think. For example, just to give a flavor, I'll give you. I can't recollect all of them on top of my head, but for example, Carfilzomib on one strength we have shared FDF, but on one strength we have the sole FDF. On Bortezomib, suspension, we have the sole FDF. It's, you know, it's, every product has its own sort of, you know, dynamic. We, I mean, this is not the right time to go over, you know, by product by product, but broadly I think that's how it works. Just wanna add one point here just to clarify your question. See, we have, roughly around like 26 commercial products in the U.S., right? Of that, what we are suggesting in the presentation is about 11 of them are approved. That means some of them are launched and Para IVs are generally a higher value because limited competition and possibly first to file. That's what we're trying to indicate. You know, I think we'll give more clarity in the presentation next time where we leave this limited competition, which are shared. I think that will give better color to the pipe. Yeah, we'll. Yeah. That will be helpful for us in estimating the future revenue. Yeah, yeah. Sure thing. Yeah. I think we'll make clarify that in the presentation. I think Rajesh will address that in the presentation. Yeah. Thanks. Next question please. Sure. Second is can you throw some light on current Revlimid pricing scenario in the U.S.? I don't wanna talk about it at this time. I think we'll speak about it I think in the coming quarter. I think we'll have a better idea of what things are. Generally, we don't give up your commercial strategy and we don't speak about our strategy, I'm saying how the prices in the industry are, or the prices are? I can't answer that question, my friend. I'm sorry. I can't answer that question. All right. Thank you. Thank you. Thank you. Thank you. The next question is from the line of Rahul from Investor. Can we proceed? Excuse me, Rahul. Yeah, I'm on line. Are you able to hear me? Yes, we are. Can you proceed? My question is, what about the management of the overall profitability because we are losing something in this quarter? Are we going to make up it completely with Q4 or still there will be some pretty downfall in the profit? I think I've answered this question earlier. I think I'll repeat that question. I think the way our nature of our business is, like Q4 and Q1 will be lumpy and Q2 and Q3 will be, you know, on the lower side. You can look at the earnings on an annual basis, and that's how we have looked at it. It's gonna be like this going forward as well because Agro is also gonna significantly contribute to the base business. A lot of the sale comes from Kharif and little bit in Revlimid. That's the nature of the business. I think, if you look at the nine months earnings, I'll, I think the press release can address this that. Our nine months earnings, we did about INR 1,884 crores of revenue, and we have a profit of INR 442 crores. I think, we've, you know, given a guidance that, you know, going forward, we'll do over INR 2,700, based on our Revlimid growth and, you know, a PAT which is probably closer to INR 700, a little less than INR 700 in that case. My question I have only one, I have only one doubt here. See for like I understand your business because I have been investing from last 24 months in your company. My thing is, are we going to pull the losses of other quarters into this so that this is going to be subsidized? I didn't understand the question, my friend. I'm not able to understand. I didn't understand. I didn't hear it at all. Can you repeat that question, please? Yeah. see, the quarter of, Q4, I understand it will be cycle 2. At the same time, the value of that particular quarter should not get built up because of the previous two quarters, right? I don't understand your question. For example, my Q2 didn't do well, my Q3 didn't do well, means there will be a lot of pressure on Q4, right? It should not depreciate my Q4. Are there any concerns for that? That's what I'm asking. I think Q4, I think the guidance addresses that question, no? I think our expectations are that it will do well, and I think that's our expectation. Okay. Okay. Thank you. Okay. All right. Thank you. Thanks. The next question is from the line of Yogansh Jeswani from Mittal Analytics. Can we proceed? Hi, sir. Thanks for the opportunity. Am I audible? Yeah. Go ahead. A lot of participants have asked you on CTPR. Just a few more follow-ups on it. In CTPR, if you see, the other companies have also come in, they have also come in with 20%-25% discount to the pricing. I think Best Agrolife is one which is very upbeat about their CTPR launch. Given the market already has two, three players and the innovator, how are we looking at this market in terms of, you know, the INR 150 crore guidance that you gave? How competitive it is gonna get in next 12, 16 months? How are we differentiating ourselves or how are we presenting? Out of the other competitors, we are the only company who is not an Agrochem company. Again, I'll tell you, if you were to start a business and somebody comes and tells you that you have an opportunity to launch a product where the market size is almost INR 3,000 crores and there'll be only two or three suppliers. Would you like to start a business in that manner, would you like to start a business where you have 30 competitors and you're competing with for the same size? I think this is probably the best possible position that you could start from. I know we are not an established player, we have a reasonable network we have built over the last two years. We did a lot of hard work building infrastructure, building, you know, the sales force and the manufacturing capability. We have a very good quality product. We're getting good traction, and I think I'm giving the guidance after, you know, going into the market, and I think we should do well. This is probably the best possible scenario that you could enter the market. Then you're asking a chicken and egg question also, right? You know, if you say that then you are not a player in this business, then you can never enter that business then, right? I think this is probably the best scenario that you could enter. I think that's the way I can put it. This sort of limited competition doesn't happen all the time. I think we're setting ourselves up for that, and I think that's what we specialize on. When we enter a market, we don't try to be the. We're always, like, the only show in town or you're the only one or two shows in town, so that your chance of your success are much higher compared to a situation where you are dealing with 40 or 50 competitors. This is probably the best chance for us to do well because of the limited amount of competition. I think the market is big enough also, no? See, INR 3,000 crores, I'm actually saying not even 10% market share. We're not asking for beyond that, isn't it? We're not going and saying that we want more than that. It's a very conservative estimate, and I don't think it'll be hard to make. Got it. No, I think I came across little wrong in that sense. No, I'm not saying that this is a bad way to enter the market. In fact, this is a very good way to enter the market, and CTPR has been a very good launch. What I meant to ask was, see, we, out of the players which are there in CTPR, we are the only players who is not an Agrochem company. If you could just, you know, share your thoughts, your way of how you have entered the market. You know, what kind of regions you have tapped in. The INR 150 crore guidance that you gave, out of that, how much will be the B2B part and how much will be the B2C part that you will do? Let's say next year how much of that will still change between B2B to B2C? That's what I wanted to understand. Yeah, yeah. For sure. I've already answered that question, but I'll mention. I think 65%-70% we're expecting from B2C and about 25%-30% we're expecting from B2B to B2C. Yeah. That's my prediction. Yeah. Got it. In terms of differentiating, is it solely based on price or is it also based on the combinations that we can offer in CTPR? It's a combination. See, again, you mentioned other competitors. I think the other competitors have not launched all the combinations. I've launched all the combinations. They have launched only one or two of the combinations. They have not launched all the combinations. That way there's a differentiation between us and them, right? It is doesn't mean just because another competitor has come, doesn't mean that he'll offer the whole portfolio, that he'll be able to supply that particular market on time. Doesn't mean that, you know, he has a full basket. He could be focusing on someone else. Always traders play one against the other, right? I think there's enough market for everyone. I think the market is good enough for everyone. I think it's large enough for everyone, and I think you can, you can make your mark. Understood, sir. That's helpful. Thank you. Thank you. Next question. Thank you. The next question is from the line of Nitin Agarwal from DAM Capital. Can we proceed? Thanks, Rajeev. Rajeev on, I think you asked this question partially before, but how should we look at the subsidiaries, you know, incrementally now going forward? Are the subsidiary businesses again largely dependent on, how revenues scale for the new businesses or there are more products which can meaningfully scale these businesses? I think a lot of launches in both the subs. I think Brazil has about five, six launches, in the next 12 months. Canada also has some very good launches coming up in the next few months. We are trying to diversify the portfolio and we have a lot of filings and we're doing litigation in these markets. I think the idea is to build a more diversified model. I'm not concerned about a drop in price on one of the products, affecting the profitability because we have a fairly diversified portfolio. Yep. Secondly, on the newer filings on the U.S. that you've done, by when do you think you will get clarity from the FDA in terms of your first of all sales and community products? In the next few months. Hopefully in the next few months. Next two, three months. How many numbers of products that you are banking on could be meaningful to you or that you've done? I think I have two products, 2-3 products. We will know whether we have FDA shortly. All three are filed. One thing I will file all three, we just don't know what the FDA said. We will know shortly. Okay. Thank you. Thank you. Participants, if you wish to ask a question, kindly press star 1. The next question is from the line of Mr. Chaudhary of Pharma. Kindly proceed. Hello, Rajeev. Yeah, hello. Yes, please go ahead. I'm a Pharma and NATCO investor. First question is about CTPR. I understood from the markets that you are only offering small packs, up to 150 ML. Whereas, I am from Ballari area, where the farmers do buy a lot of large packs, 600 ML of chlorantraniliprole. Okay. That's one thing. Second, I also understand... Hello? Which territory are you from? I'm sorry. Which state? Hello? Which state are you from? I'm saying. Which state? Ballari, Karnataka. Ballari. Okay. I was inquiring with your people in Anantapur. They told me that they're essentially giving out, I mean, the largest packs are about 150 ML. Okay. Whereas the demand is quite strong for 600 ML packets in packs in cotton balance, which I think would be your primary consumer. Okay. Just one moment. I think Rajesh answered that question. Raj, you can answer. Mr. Chaudhary, so, till today we have launched the 10 ML, 30 ML, 60 and 150. We are also offering the 300 and 600. It's just on its way. Okay. I also heard that you people don't have a network in Karnataka as of now. Is your network limited to only Andhra and Telangana as of now? I think the last quarter has been focused on building the team. We do have some people who have started very recently. We are expanding. The goal is in the next one, two months, we'll have the full team in place in Karnataka. Okay. You plan to cover the entire cotton belt, Maharashtra and Madhya Pradesh and South? We are covering everything. We are covering all the states. Karnataka especially, our team is just getting on board. Okay. With regards to the other part, B2B, I noticed that, you know, the other, one big player like UPL has grown mainly in B2B business, because of their technical competency. Okay. NATCO is a new entrant in, you know, AG business and acquires a tremendous amount of technical competencies. Would you think in terms of, you know, expanding your the business by building a large B2B portfolio and also utilize that to service your area, chosen area within India? Yes. I think the idea is that only. I think, idea is that about 60%-65% we wanna do on our own B2C direct customer. About 35%, 30%-35% we're targeting on B2B as well. We have lined up quite a few customers. I think about five, six customers we already lined up. We will get sales from both. I think the guidance that we gave of INR 150 crores in this business is based on the assumption that these customers are already onboarded. I think we're fairly confident because we already have onboarded these customers. Yeah. That is limited to only CTPR. I was talking about introducing other products which are complex, where the APIs are probably imported or, you know. Yeah. We have a pipeline, Mr. Chaudhary. We are working. This is just a start. This is the first product we have launched. This is the first real product we have launched and it has made a lot of sense. We have a pipeline going forward to the next five, six years. We have a steady pipeline every year. This is the most important product in the pipeline. I think that's why this is, this is getting more attention. Yes, we have a steady pipeline, and we're hoping to build a large business, not only directly to customer, but also to third party. We are very, you know, confidently working on that. Absolutely correct. Could you give some color on your Brazil subsidiary's performance? Brazil subsidiary's performance. Okay, just one moment. Give me one more second. Brazil subsidiary last quarter did INR 38 crores of revenue. Okay, that's great. Okay. Right. Thank you. Bye. Thank you. Thank you. The next question is from the line of N.K. Arora, an individual investor. Can we proceed? Good morning, Rajeev. Yeah, Mr. Arora. Tell me. Please go on. All the people, all the companies which have launched CTPR in USA, they have volume restrictions. Does that mean there is no incentive for price erosion by anybody to anyone? I think, you know, Teva markets the product, Mr. Arora. There is erosion in the price. There's no question of erosion. I think the product should do well. I think there's enough money to be made, on the product. Okay. Second reason, as we have discussed in the previous call, our volume share is in mid-single digits. Uh-huh. From seventh month onwards, it will be in double digits. We'll have a significant increase in profit every year as our volume rises. I think so, sir. That's our expectation. That's correct. Yes. Absolutely. Thank you. Thank Thank you so much. Thank you. Thank you. Next caller, please. Thank you. This will be my last question, yeah? Okay. Participants, if you have a question can you press star 1. Is that all? Okay. The next question is from the line of Nikhil from SiMPL. Yeah, Nikhil, go ahead. Thanks for the opportunity. Just one question. On the Revlimid case, if you can just educate us, what is the thing and how do you think, can it blow out in a large way or what's your understanding? I think Teva is handling the case, my friend. Teva is the NDA holder. They're handling the case. At this time it would be very premature to say anything. It's nothing I can comment at this time. Yeah. Okay. You won't be able to comment that even if. I'm just trying to understand that if it goes adverse, because the profit share is between three players, whatever the penal actions or whatever the payments have to be done, all the three will have to do or how will it evolve. At this time I can't comment. I think we are confident about our position. I, and, at this time I can't say anything beyond that. Thank you. Sure. Thanks. Okay. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments. Thank you all. Any questions related to what was discussed during today's call, please feel free to reach out to us. We'll be more than happy to address those. Thank you all and have a good day. Bye. Thank you. On behalf of Nuvama Wealth, that concludes this conference. Thank you for joining us. You may now disconnect your lines.