NATCO Pharma Limited, for its opening remarks. Thank you and over to you, sir. Yeah, thank you. Yeah, once again, I welcome all of you for our evening call today to update on the acquisition. Thank you for joining on a very fairly short notice. During the call, we may be making certain forward-looking statements about the acquisition or future events about it. Anything said on the call which reflects our outlook for the future must be reviewed in conjunction with the risks that the company faces. We are very excited that we are offering to acquire a stake in Adcock Ingram Limited, one of the largest pharmaceutical and healthcare companies in the African continent. The press release and the presentation related to the same have been uploaded with the stock exchanges and also on our website. With that said, we'll delve into the key highlights of the transaction and then open the floor for the Q&A. I'd like Mr. Rajeev Nannapaneni, our Vice Chairman and CEO, to take you guys through the presentation and share his thoughts. Thank you. Good evening, everyone. First of all, I'd like to thank everyone for participating and showing interest in our call today and turning up. Let me start off with the first slide. We'll just run through the presentation. For us, it's a very large transaction for our firm. It's probably the biggest investment that we ever made in our life. It gives us a good global presence, and it's a 35.75% stake in this company. At this time, this is the share that was available, but still, it's a very substantial minority position. We get to consolidate the profits of the company into our books. We also get an avenue to send our products there and work in a market that we are not present in. I'll just walk through the company and the major highlights of the transaction. The name of the company, as you have seen, is Adcock Ingram. We're proposing a 35.75% shareholding, and Bidvest is going to own 64.25%. We're paying ZAR 75 for buying the shares, which are in public. We will delist the company and make it a private holding company. It'll cost us about INR 2,000 crores. Financial highlights: it does around $500 million. Last year, it reached about $5.6 million, and our share reached about $262 million. Next slide, please. A little bit of background. It's a very long history. It was established in 1890 in South Africa. It's the second largest company in the private market. It's there in the private and public sector. It is having a nice portfolio of prescription, OTC, hospital, and consumer. It owns three manufacturing plants near Johannesburg in South Africa. It also owns two plants in India as well, a 0.9% Indian JV company they have. These are the areas they're present in: prescription, OTC, hospital, and consumer. These are the top brands. These are all household names in South Africa. It's a business that we have no exposure to. Now, our shareholders will have an earnings exposure to this business, which helps us in our drive for diversification and strengthening our base business. These are all big household name brands in South Africa. All these brands do excess of $10 million. These are top brands. It's a solid brand portfolio. Next slide, please. This is the income statement. It's consistently doing more than $500 million revenue annualized. Even this year, it exceeded more than $500 million in revenue. Next slide, please. There are multiple value creation opportunities for us. Our pipeline is not going to Southern Africa. This acquisition will allow us to take our portfolio to Southern Africa. As you know, it has a nice breadth of portfolio that they're covering. We are here to strengthen that portfolio and grow with the company. Next slide, please. The broad contours of the acquisition will enable us to get a lot of revenue synergies over a period of time. We'll be doing some portion of the manufacturing where they have a requirement. Of course, our R&D pipeline not only can be extended. As you know, we are present in the U.S., India, Brazil, and Canada, which are the four big markets. Now, we added South Africa to it. I think that's among the African countries, this is probably the most stable and strong economy to be present in. Bidvest, I think some of you know about this firm. It's a very big conglomerate in South Africa. Their background is not necessarily from pharma, but they have a diverse set of businesses. We want to work with them to strengthen their R&D and prescription business, which is where our value is, and bring value to them as well. Thank you. It's a very monumental acquisition. As a group, we'll be touching almost $1 billion in revenue. It's a big milestone for us. I think we're very excited about this acquisition. It has come at a very reasonable valuation, as you can see. I think I'm open for questions. Thank you. Thank you, sir. We've now opened the call for Q&A session. We'll wait for a few minutes until the queue assembles. We request participants to restrict to two questions and then return to the queue for more questions. Please raise your hand from the participant tab on the screen to ask questions. The first question is from Arun. Hello? Yeah, hi, Tadhir. Sorry for my name. First, just two questions from my end. We are right now acquiring 35%. Is there an option with us to acquire the rest of the stake or take it to a majority stake in a certain timeframe? That's one. Is there any significant potential for us to expand on the margins, or is it the, you know, sustainable level of margin at around 40%, 50%? I think, first, I'll answer the first shareholding question. I think at this time, I think Bidvest doesn't want to sell their shares. I mean, we looked at it. This is just such a, such an A-class asset. I don't think we'll get an asset like this. I thought it was worth buying 35%. Regarding increase of shareholding, we have a first right of refusal. If Bidvest decides to sell any sometime in the future, we have the first right of refusal. At this time, the transaction is envisaging only a 35.75% stake. Increasing margin, Tarun, I think we believe, I think you'll see the benefit of the transaction over the next few years as we start selling our products through the entity. If you have a smart disruptive product, then obviously the EBITDA will improve dramatically. We will mix it up with our pipeline and also help them source other products from India, which are interesting and strengthen the pipeline. We're looking for a very strong long-term relationship with them. Okay. Perfect. Thank you. Thank you, Sara. Thank you. The next question is from Rashmi. Requesting participants to identify yourself and your company when asking the question. Thank you. Yeah, Rashmi, please go ahead. Yeah, I'm audible, right? Yes, of course. Please go ahead. This is Rashmi from Dolat Capital. Just a follow-up question from an earlier participant. What we have seen is that you mentioned that there are very good brands, you know, which are more than a $10 million market. Yet the margins from the last two, three years are pretty stagnant at around 14% - 15%. What is the reason for that? If you can also give the split, like, you know, whether the business has got, you know, more of a branded part or, you know, in the hospital because you mentioned that in the hospital and critical care also, it has got some segment. If you can give the split between that also. Just one moment, Rashmi. One thing is the challenges with the margin. There are multiple factors in it. Before getting to that, I think what value we want to bring is the pipeline, Rashmi. I believe the pipeline that we're bringing is so strong that the margins will improve. You know that we have a very exciting pipeline in NATCO. If you're able to plug that pipeline into Adcock, you'll see a lot of value in it. Even if you get a breakthrough with one or two smart products, you'll be home. The value that we bring to the table is going to be in the prescription business, which is where the growth has been sluggish. If you look at the split, Rashmi, it's about 35% in prescription and 21% hospital. OTC and consumer is about 20%. OTC is 26% and consumer is 17%. Okay. One more question. You know, you will be leveraging your portfolio to the South Africa country. Would you also look to leverage their portfolio into the India business or the other geographies of NATCO? I think, see, the good thing about South Africa is all those plants are fixed-up growth, which allows you to export to other countries. We're looking at proper possible synergies, you know, where they could supply to one of our sister concerns like Brazil or something like that. I think it's early days, Rashmi. I think we're just going to close the transaction. It'll take us about three months, three and a half, three to four months to close the transaction. Once it settles down, I think we will look at the details. Yet at a high level, yes, I think we see some synergies, yes. Okay. One last question. The consolidation would be not a line-by-line item, right? It would be only one-line item, just before the net profit in your P&L, whatever share of profits directly to NATCO's P&L, and then that will get consolidated, right? Absolutely correct. I think that's what my understanding is. As for the accounting standard, that's what will happen. For example, if the profit is $45 million a year, argument said, 35.75% of that will get consolidated on a quarterly basis. Understood. Thank you so much. That's it for the slide. Thank you. Thank you, Rashmi. you, Rashmi. Next follow-up. Next question is from Viraj. Hi, Rajeev. Congratulations for buying into this marquee asset. I know it well from my healthcare banking days. Just a quick question regarding the synergies on revenue and cost side, as you've articulated. There's a huge opportunity there. When it comes to the critical care hospital business and the consumer and OTC, can you share some light on what you can do around those businesses? Are you planning to potentially bring the hospital care business or products into India and build that out? Are you potentially considering spinning off or selling off the OTC business? No, no, no. We're not fencing any of those, Viraj. I think we want to grow this business. I think there are a lot of synergies that we see in the prescription business. I think one of the rationales is, like for an Indian company, for example, Viraj, we spend R&D money. We export to seven to eight countries, right? Or 10 countries or 20 countries. When you're a local company like South Africa, then you're not getting that geographical expanse. The first leverage we see is in the R&D. You're doing a smart product in India. You can extend it to multiple markets. That's probably the biggest advantage we see, especially in the prescription business. OTC and consumer business, I think we can probably help with some new ideas on new product developments. That is the strength of that company, which is not, I mean, the value that we bring is less there. I think it's more in the prescription business. One of the challenges, I think one of the ladies asked me why it's not growing so strongly. Part of the reason is that there's a lot of competition in the prescription business, and all our prescription business competition is coming from India. One of the rationales that I, and when we spoke to Adcock, is that you know, you need a strong partner who can help you out in the prescription business because this is where good. You got the whole manufacturing at the back end. Yeah. Yeah, absolutely. I need backward integration. I think that's a value that we bring, at least with our niche portfolio. Indians have gone global and become very competitive, which is why you need a partnership with somebody like us who can help you out. I think that's the synergy. Second question, Rajeev, is are there any markets that Adcock exports to, which are white spaces for us NATCO? So new market entries that you're getting access to over and above just South Africa or parts of Africa? They're active, Viraj, but they used to have presence in other countries. I think they went back a bit now. They're active in the neighboring countries. I think if you know South Africa, Swaziland, the nearby countries, they're active. They're not gone to most of Africa. I think that's one possible synergy as well. We could expand this business to other countries in Africa. There are, in addition to South Africa, they're present in the neighboring countries of South Africa as well in a small way. We're looking to strengthen that presence. No exports outside of Africa at all, the continent? I think very minimal, Rajeev, from what I understand. Okay. Thank you. All the best. Thank you. Thank you. Next follow-up. The next question is from Kunal. Hi, Rajeev. Good evening. Rajeev, firstly, you know, interesting comments that your contribution would be to get your very impressive complex synergy pipeline to Adcock. Did you not explore the option of having a profit share agreement for a lot of products like you have for Revlimid or Copaxone that you have done rather than taking equity in the company? Kunal, that's not the deal on the table now because I think, you know, there's also a very large firm. I think the deal right now is buying the shares. I think that's what we accomplished after many months of negotiation. Oh, absolutely. I get you, Rajeev. The point is, was this not an option that you had explored because it's, I mean, you have a very enviable portfolio, right, of products which a lot of large companies have struggled to get to the market. I was just wondering if that was not an option. I think it's a cross-border transaction, Kunal, and it's a public company. They also wanted, you know, they felt that the value will come when it goes private. I think this we thought is best for everyone. I think that's the best way forward. Okay, thank you. We need to have an economic stake in it. It gives us an incentive to give the pipeline and take it forward. We need to try to create synergies and incentives so that the asset does well. For us, some economic stake has to be there so that we are also strongly incentivized to support the asset. I think that's rational for the transaction. Fair enough. Rajeev, second question. South Africa, you know, you made an entry here. You still have cash on the books. Future aspirations, again, would be in countries where you do not have a footprint at the moment? think so, Kunal. I think this is not the only transaction we want to do. I think we've been saying that finally, I think we accomplished one. I think that's good. I'm also looking for another transaction. Hopefully, we can do something as large as this or even bigger than this so that we can solidify our position in our key markets that we operate in and bring more diversification and stability in our core earnings. I think that's what my thinking is. I think that's where we're going. This is part of that accomplishment. Sure, just to kind of, you know, take this forward, would it not, is it fair to assume it would not be in Canada and Brazil where you already have some presence? I think, Kunal, you're looking at either. I think I said there are only three things in this business that work, right? One is you need to have great products and great R&D. Two, you need to have global scale. Three, you need to have multiple markets that you're there. We get at least, you got three of them, three right, then you're building a wonderful business. If you don't get these three things right, it's tough to compete in this business. I think our strength has always been R&D. Our problem has been market access. A lot of times, we don't have access or we're sharing. I think that's what we're trying to sort of address so that we have access and we have scale so that we can bring value to the pipeline of. Okay. Thanks [crosstalk]. Thanks, Kunal. Next follow-up, please. The next question is from Nirali Shah. Hi, Nirali. Yeah, am I audible? Yes, Nirali. Yeah, please go ahead. Yeah, congratulations. I have one question. I just wanted to know what are the two, three immediate synergies or any near-term wins that you are targeting from this deal, and whether it's a dossier monetization or R&D collaboration or any supply chain leverage. If you could mention by when should we expect them to reflect in numbers? It will take some time. We have about a few filings in South Africa. We'll try to see whether we can monetize those assets through our associate firm. Those, I think, will start kicking in immediately. It will be immediately earning the accretion because we'll be able to consolidate the numbers. The real value for the asset, Nirali, we'll be able to see in the next two to three years, I would believe. Once the new registrations start coming in, we start filing, start getting approvals, and we launch products, I think that's where the real value is. I think you got to look at medium term, not in the near term. The near term, you'll see some value, but the real value will come in the next three years. Understood. Nirali? Yeah. Nirali, can you ask the question and mute? I think there's some background noise. Anything else, Nirali? No, thanks. Okay, thank you. Thank you. Next follow-up. The next question is from Neeraj. Requesting everyone to please identify themselves and their company name, please. Thank you. Hello. Thank you. Yeah, Neeraj, go ahead. Thank you for the opportunity. I'm a retail investor, individual investor. I wanted to ask, does this company have assets like first-to-file or new molecules? The second question is, we are paying a significant premium. Is it because we are taking the company private? Is that why we are paying the premium? Okay. Let me answer that question, Neeraj. First of all, their geographical expanse is Southern Africa. They sell primarily in South Africa specifically and countries nearby. The majority of the sale is coming from South Africa per se. It is a very highly concentrated single geography business. The second question you had was what? Why the significant premium? Premium. Okay. We're taking the company private, Neeraj, and I think we need to give a good premium to entice the shareholders to tender their shares. I think we believe we gave a very fair premium. I believe we have enough support, and we strongly believe that we're able to delist the company in the next three to four months. Okay, thank you. Thank you. Thank you. The next question is from Radhakrishnan. Am I audible? Yeah, Radha. Go ahead. Please go ahead. Yeah. Congratulations, Rajeev. It is a good complementary addition to NATCO. What does NATCO plan to do with the remaining cash in hand? I hope to also do something large, something large like this, which is something very large and interesting. We'll be using some of the cash. Obviously, we don't need any, you know, we might borrow for a short term, but I think most of the transaction will be funded with the cash on the books that we have. We're looking to do another large transaction if everything goes well. I think what we're trying to do is to sort of bring a diversification in our business, bring move our revenue focus away from the U.S. and bring other markets in so that we have more stability and strengthen our bases. Okay. Does NATCO have any operational or board-level influence for the Adcock Ingram machines? We'll have 1/3 of the board seats. That's really great. One last question. What is the plan for integrating or collaborating with Adcock' s team's R&D, production, and supply chain? I think there are all the three areas we see a lot of synergies. We can help in sourcing. We could find, you know, assets which could be interesting for them. We could use our own pipeline we could send. The real work will start once the transaction is completed in the next three months. I think, yes, I think we see a lot of value. Is there any possibility to market semaglutide in South Africa with this partnership? Some of our products, you're saying? Semaglutide. Yes, of course. I think that's one among many things. It is not the only one, there are other things as well. I think that's where you cited a very good example. I think products of that will be very happy to sell through the asset. Yeah. Yeah. Thanks, Rajeev, for the opportunity. Thank you. Next follow-up. Please bring everyone. If anybody wants to ask the question, please raise your hand from the participant tab. We will wait for a few seconds to assemble the queue. The next question is from Abdul. Yeah, hi. Thank you for the opportunity and congratulations on this acquisition. Rajeev, just two questions from my end. First is, you know, what would be the cash balance you would have post consummate of this acquisition? Can you say that again? Can you say that question again? I didn't catch it properly. Can you just say what I'm? Sure. I was asking that, you know, post-completion of this transaction, what would be the cash balance available in the queue? We will be able to fund the transaction using the cash that we have. How much cash balance we're left with, you're saying? Yes. Top of my head, I can't remember, but I think we have about INR 3,500 crore of cash top of my head right now. We'll be using INR 2,000 crore. We'll be left with about INR 1,500 crore plus whatever money that we'll go to accrue from June quarter and September quarter profits that I have not included in the calculation. Okay. At a broad level, I'm telling you, don't hold me to it, but I think at a broad level, I think that's what it is. No, fair enough. Fair enough. Thanks a lot. Yeah, just one more. In terms of, you know, you had echoed that there might be a few more transactions into the pipeline. Would that be on similar lines or would you like to acquire something into the U.S. like what you have done previously, or the strategy now changes towards our market completely? I'm not, I mean, we'd want to acquire businesses that are not actively, you know, not part of our core pipeline, which can strengthen our core business. I think we're looking for more assets which will help us give us geographical spread or give us a portfolio which we don't have. We'll judge it by the situation. Understood. Thank you. Thank you. Thank you. Next caller. The next question is from Vishwanath. Yeah. Hi, Rajeev. Congratulations on the deal. You mentioned that when you're planning another similar deal, this would be in which geography, whether this be in India or whether this be in the rest of the world? As I said, I can't answer that question directly. I think we're looking to do a transaction which can strengthen our portfolio. I think that's all I can say at this time. The second question is on, like, you are, I mean, you rely largely on the U.S. I mean, the large bulk of your revenues come from the U.S. Is there anything changed in that market with this discussion on tariffs? Is that weighing on your mind to diversify or do the geographic diversification? I mean, tariffs is one among the many challenges in the U.S. Obviously, there are other things as well. We have to deal with whatever happens. Anyway, we're going to deal with it. I think, yes, I think as a business, we want to diversify clearly. I think we want to have a good geographical spread and diversify our revenue and strengthen our core business. We always have the cash. I think we have the opportunity and then we're able to click and get this transaction. I think generally, Vishwanath, as a firm, we're all looking to diversify and build a more robust portfolio so that you're not dependent on one particular market. Got it, sir. Thank you, sir. Congrats. Thank you. Thank you. Thank you. One last follow-up, please. Yeah. Thanks. Thank you. The next question is from Critical iPhone. Please identify yourself and your company. Hello. Yes, sir. Karthik Jain from HSBC. Hello? Yeah, Karthik, sir. Go ahead, Karthik. Congratulations on this one, Rajeev. Congratulations on this. I have two questions for you. In this case, is there a plan to take majority stake in this? Are we going to sell products in other parts of Africa where there is, in a way, going to be demand? This company has access to these markets also. For the second question, when you say you want to acquire another larger, sir, will that be for a geographical overall footprint or will it be for any technology, product, etc., which you don't have? Let me answer one at a time. I'll answer your second question first. I think whatever we want to acquire further will be to either strengthen the pipeline that we have in the existing market that we're present in or add a new geography. Whatever comes through and we're able to find the right valuation and we're able to consummate a deal, I'll be very happy to do. Your first question about market access, I think this company has very good access in South Africa, obviously, which is one of the most dynamic economies in the African continent. The neighboring countries also have very good access. I think we've been discussing with them how we can expand this reach to more countries in Africa. I think that discussions are ongoing. Once we settle down as a shareholder and take it forward, I think a lot of these plans will come through. To acquire a controlling stake in this company? At this time, it's not available, Karthik. I think we had this discussion. I was very keen on a higher stake. I'm always very keen. I think the only consensus we could build at this time is not for offer. In the future, if they are interested in selling, we have a first right of refusal. If that opportunity comes, we're very happy to take. For now, I think this is what is for the offer. What I felt, even though it is, you know, a strong, it's nearly 36%, but an asset like this, you won't get every day. I thought, you know, it's worth doing it because to build this type of business in South Africa is not, you know, for us, it's not possible, simply not possible. It will take us decades to do that. I think it's probably the best. The valuations are far more reasonable than our country, you know that as well. I feel this is in a far superior transaction than anything that we have seen. Okay. Congratulations, Rajeev. Thank you. This is my last question for today. I appreciate the time you guys have spent attending this call. It's a monumental achievement for us to be able to do this transaction, which allows us to gain size and stability. I look forward to all your support. Thank you so much, guys. Thank you so much for it. Thank you. Thank you so much. Thank you for joining us. 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