Ladies and gentlemen, good day and welcome to Piramal Enterprises Limited Q4 and Full Year 2021 Earnings Conference Call. 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 and zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Hitesh Dhaddha from Piramal Enterprises Limited. Thank you, and over to you, sir. Thanks, Aman. Good evening, everyone. Hope you're safe and in best of your health. I am pleased to welcome you all to this conference call to discuss our Q4 and full year FY 2021 results. Our results presentations have been uploaded on our website and you may like to download and refer them during our discussion. The discussion today may include some forward-looking statements. These must be viewed in conjunction with the risks that our businesses face. On the call today, we have with us our Group Chairman, Mr. Ajay Piramal, Nandini Piramal, Executive Director of Piramal Enterprises and Chairperson, Piramal Pharma Limited. Mr. Rajesh Laddha, Executive Director and Group CFO, Piramal Enterprises. Mr. Khushru Jijina, Executive Director of Financial Services, Piramal Enterprises. Mr. Jairam Sridharan, CEO of Retail Financing Business, and Mr. Vivek Valsaraj, CFO of our company. With that, I would like to hand it over to our chairman, and would request him to share his initial thoughts. Over to you, sir. Good day. Hope you and your family members are safe in the midst of COVID-19 second wave. Some of us have felt the pandemic even more acutely with the loss of our family members, relatives or loved ones. I wish us all the strength and fortitude to deal with our loss in these challenging times. The second COVID wave has impacted the recovery cycle India was witnessing in the H2 of FY 2021. The economic impact is expected to be nowhere closer to what we saw during the peak of the first wave. Actually, the business metrics in the Q1 of FY 2022 are likely to resemble those of quarter two in FY 2021. To our economy front, our country is better prepared this time than a year back. Businesses have learned to adapt to physical restrictions. Government is judiciously imposing measured lockdowns to minimize disruptions. RBI and financial markets are better prepared to manage liquidity challenges. The recent RBI relief measures for small borrowers and MSMEs were proactive. It is also equally important to remain well prepared for a scenario of continued economic slowdown in case the COVID-19 extends longer than anticipated. Despite such a volatile environment, the company has delivered a resilient performance in an unprecedented year. For FY 2021, the revenues at INR 12,809 croresss and normalized profit of INR 2,627 croresss were broadly stable year-over-year. For the Q4 of FY 2021, revenues marginally grew up to INR 3,400 croresss and delivered a normalized profit of INR 748 croresss. After significantly transforming ourselves over the last two years, we have now built in a much stronger balance sheet, strengthening our equity as well as our liabilities profile. We continue to work towards building a resilient business model that can tide over multi-year business cycles. On the balance sheet side, over the last two years, we have raised INR 18,000 croress of equity. As a result of these two years, our equity base has increased by 29% and our net debt has reduced by 45%. Our net debt to equity has reduced from 2x in March 2019 to 0.9 currently. The capital adequacy in our financial services business has gone up from 22% in March 2019 to 37% now. This is amongst the highest capital adequacy levels across financial services companies in India, ensuring safety in the most volatile of environments. We've also raised INR 33,000 croress of long-term borrowings in the last two years. We have utilized this borrowing to replace most of our short-term CP borrowings. As a result, we now have a much stronger ALM profile with significant positive gaps across all the buckets. We had INR 7,000 croresss of cash and cash equivalents in the entity level as of March 2021. That is over 15% of our non-book size. At these levels, we are one of the most liquid large NBFCs in the country. At the beginning of the first wave of COVID, we had made an incremental provision of INR 1,900 croresss, taking our total provisions to nearly INR 3,000 croresss as a prudent measure towards potential contingencies. In the last year, we have utilized nearly INR 166 croresss out of that provision. We now have provisions of INR 2,800 croresss, equivalent to 6.3% of our overall loan book. The provisioning as a percentage of wholesale loans is even higher at 6.8% as of March 2021. We believe that these provisions are sufficient to meet any future contingencies that may arise due to the impact of the second wave of COVID. Apart from significantly transforming our liability side and strengthening our balance sheet, we are continuing to move towards executing major transformation of our asset side. We are progressing on transforming ourselves from a largely wholesale-led NBFC to a well-diversified NBFC with a share of retail to increase to 50% of the lending book in the near term from 12% as of March 2021. This transformation is being undertaken through executing on three major strategies. The first, organic buildup of the retail lending business. Second, completion of the DHFL acquisition. Thirdly, rationalizing our wholesale book and making it more granular. We made good progress in pivoting the retail lending business to a multi-product strategy during FY 2021. We increased our product portfolio from two to seven products in the last year and plan to add more products in the current year. We expanded our presence from 14 to 40 locations. We formed partnerships with select fintech and consumer tech firms and have onboarded top quality talent. In the last quarter of FY 2021, we saw a healthy traction across product categories as disbursements and logins continued to pick up month-on-month. The DHFL acquisition remains on track and is progressing as expected. In FY 2021, we received the RBI approval, and recently in April of this year, the deal also received the CCI approval. The DHFL acquisition fits well into our overall retail strategy, as it will enable us to achieve scale and leverage the platform to cross-sell, significantly change our loan mix, and lower our cost of borrowings due to low acquisition borrowing costs, as well as the benefit from loan book diversification, resulting in a possible ratings upgrade post completion of the acquisition. To increase diversification of our loan book, we are also consciously bringing down our wholesale portfolio size, which has reduced by 23% since March 2019 to INR 39,000 croresss. Our top 10 exposures have reduced 28% since March 2019 from INR 18,400 croresss to INR 13,300 croresss. None of the accounts are now greater than 15% of net worth, and only four accounts are greater than 6% of net worth. The environment for the H2 of last year played out better than what we had envisaged. The real estate sector has witnessed a revival in demand since October 2020, driven by pent-up demand, changing customer preferences, and government initiatives, especially in Maharashtra, the stamp duty cuts. In fact, developer sales and collections across major cities had surpassed pre-COVID levels in the last two quarters. No new account has been restructured in the last quarter of FY 2021 under the RBI-approved one-time restructuring scheme. However, the second wave of COVID-19 has now hit the country. Although our clients are more prepared this time to handle the situation, it is too early to assess the impact. We continue to remain vigilant across our portfolio to mitigate any potential risks. I come to the GNPA. The GNPA ratio has increased from 3.7% in December 2020 to 4.5% as of March 2021. The increase in our GNPA during the year was majorly due to movements from stage two to stage three and lower base effect as our loan book size reduced in line with our stated diversification strategy. Our pharma business has continued to grow and registered a growth of 19% during the quarter, delivering revenues of INR 1,923 croresss, thereby indicating the quality of its business model, which can deliver strong performances even in the toughest business environment. The business teams have been quite proactive in taking several measures to navigate the current challenges posed by the unprecedented environment. Our top priority is the safety and well-being of our employees. Our plants have worked through the pandemic. The second wave of COVID-19 in India has impacted more people than the first. On the other hand, the developed markets are opening up and businesses are returning to normal. We secure our supply through alternative vendor development and backward integration activities. The strong fundamentals of our business, as well as sufficient measures taken during the COVID period, has enabled us to continue to deliver robust performance even during the midst of the second wave. I'll now come to our CDMO business, where we are uniquely positioned. We have capabilities across the drug life cycle as well as in niche areas such as injectables, HPAPI, antibody drug conjugation, et cetera. This grew by 23% during the quarter due to a strong growing order book despite COVID. We added 50 new customers in the year. Our ability to provide integrated offerings got significant traction from our customers. There has been an eight times increase in order book of integrated projects from FY 2017 to FY 2021. 40% of the order book is from integrated projects in the last year. Patent development programs saw a three times increase in number of phase III molecules from 10 in FY 2017 to 30 in FY 2021. We also saw significant growth in commercial products under patent, which increased from 11 to 19 in the past two years. The complex hospital generics business remained flat during the year. There is volatility and uncertainty around market demand, we have grown or maintained market share in most markets and products. Despite these challenges, we do see a positive trend emerging from our largest product, furosemide, in our largest market, the U.S. We are now the largest furosemide supplier in the U.S. for the third and Q4 of FY 2021. Reflecting a change in the COVID-19 scenario, government responses, and patient sentiments in the U.S., we have seen positive trends in the recovery in surgeries in the U.S., resulting in sequentially increasing furosemide volumes in February, March, and April. Operations and manufacture continued uninterrupted, and we achieved cost savings. In addition, we won significant contracts for products across major markets. Now coming to the Indian consumer healthcare business. Our business delivered a 55% strong growth in the quarter. We launched 15 new products and 35 plus SKUs during the year. These also include multiple COVID-19 care products such as Tri-Activ sanitizer spray, liquid disinfectant, oximeters, et cetera, demonstrating the agility of the business to find opportunity even in the toughest of the crisis. At 22 e-commerce platforms. Hello? Yes, sir. Can you hear me? audible now, sir. Yes. We had just lost you for about a second, but now you're audible again. Please go ahead. As you're aware, during the year, Piramal Pharma raised up to $560 million of equity capital from Carlyle Group for a 20% stake, one of the largest PE deals in the Indian pharma sector, valuing our pharma business at an EV of US $2.775 billion. Since the capital raise, we have been investing organically and inorganically across all our pharma businesses. In the CDMO, we announced an investment of $32 million in our Riverview facility for additional capacity in potent and non-potent API development and manufacturing. In June 2020, we acquired a solid oral dosage facility in Sellersville, Pennsylvania. Recently, we've agreed to acquire Hemmo Pharmaceuticals for peptide API development and manufacturing capabilities to our CDMO business. Despite the pandemic, Hemmo has generated 20% higher revenue during the first 11 months of the current year versus the full year fiscal year, with gross contribution and EBITDA margin higher than our overall pharma businesses. Leveraging our customer base and end-to-end capabilities to provide integrated offerings, we expect its revenue to grow three times or more in the next few years, meaningfully changing the profitability margin for the business, thereby improving our overall pharma profitability. In the hospital genetics space, we completed the acquisition of the 49% remaining stake in Convergence Chemicals. The consumer Indian healthcare business has also been investing in brand promotion activities to further improve the brand equity of our products. Our pharma business has consistently delivered strong performance over a long period, with our 10 years revenue CAGR of 14% and 10 years EBITDA CAGR of 28%. Going forward, we expect to maintain an organic growth of 15%, and acquisitions will add to this. Each of the businesses has a compelling plan for organic growth and sees multiple acquisitions opportunities. We've announced three acquisitions, as I said, during the year, and we'll do more in the next two to three years. Our focus on the next year is to invest in the businesses to further boost its growth, and ROC will gradually improve as we deliver on that objective. In conclusion, our Q4 and the results for the full year of FY 2021 reflect the transformation that we have undertaken to bring us a long environment on our transformation agenda, which will significantly improve earnings predictability and create long-term value for shareholders. In the last one year, we have also taken several steps towards creating two separate listed entities. We have sold our less strategic businesses or investments, such as the DRG and our stake in Shriram Transport, thus simplifying our corporate structure. We have brought all our similar businesses together in pharma under Piramal Pharma Limited. We have strengthened the balance sheets of both the businesses to enable them to stand independently in the future, and created separate board and management teams for both the businesses. We are now getting ready for demerging our company into two large listed entities in the financial services and pharma sectors by making our businesses even more stable and resilient. I'm confident that these businesses will emerge as two strong companies, which should have a good runway for growth in the long term. As I end, the board has recommended a dividend of INR 33 per share for the approval of shareholders in the AGM. The total dividend payout on this account would be INR 788 croresss. Thank you. Thank you very much. Yeah, operator, we can take questions. Yes, sir. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets 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 Alpesh from Motilal Oswal. Please go ahead. Yeah, hi. Can you hear me? Yes, sir, we can hear you. Please go ahead. Okay. Hi. Thanks. Sir, two, three questions from my side. First is on the financial services business. I see there is a sharp drop in the margins on a quarter-on-quarter basis, and correspondingly, obviously, decline in NII also. Any specific reason? Because the loan book has not declined to that extent. Shall I put all the questions together or one by one? No, put all the questions together. Yeah. Sure. That's the first one. The second one, post the complete acquisition of DHFL transaction, are you planning to add more capital to the financial services business since we are sitting with some unallocated net worth at the consolidated level? The third question is related to the goodwill. The ministry guidelines are taken into consideration for the subsidiaries as well, especially the financial service subsidiary. The last one, when I look at the standalone and the consolidated balance sheet, there is investment property line head of around INR 1,300 croress that has come up in this quarter. Has there been any takeover of the assets related to our loan book during the quarter? These are the questions f rom my side. Thank you. Rajesh, can you please answer? Rajesh, would request you to please unmute your line. Sorry, I was on mute. Sorry, sir. I think your first question was around net interest margins. Yes. There, as the wholesale book is reducing, on an overall basis, the net interest margin will come down because the yields on the wholesale book is higher than the retail one. That's where there is some pressure on NIMs on an overall basis. Rajesh, I understand that. The drop seems to be very strong on a quarter-on-quarter basis. Even though you factor in the decline into the wholesale book, the drop seems to be extremely strong on a quarter-on-quarter basis because you report the cumulative margins, right? Not the quarter-specific margins. The quarter-specific margins are down almost, if I'm not wrong, around 140, 150 basis points, QOQ. If you see the wholesale book reduction during the quarter, you're referring to quarter four, right? I'm talking about quarter four. The margins that you report, that 5.6 is for the full year. I'm coming to that and when I explain to you the fourth point, that time I'll cover this up again. Sure. Yeah. Your question four, I'll cover this up. As the wholesale book is coming down, because the overall margin of wholesale were higher. I'll cover that up when I answer the question number four. Okay. Thanks. Your second question was around DHFL completion, right? The process is on. The matter is with NCLT. As Mr. Chairman also mentioned that we already got the RBI approval, we got the CCI approval. The matter is pending with NCLT. Hearings are on. We expect this to get concluded in next couple of months' time, as far as NCLT is concerned. Unless there is some other party takes it to higher authorities. The overall NCLT proceedings should get over in next two months' time, couple of months' time, and then post that, we have to just conclude the transaction in terms of making the payment, et cetera. That's the broad timeline for overall DHFL completion. Okay. A question on to this, are you planning to add more capital for the transaction? On financial services, I don't think this March year-end, financial services overall capital or the net worth is close to about INR 18,000 croresss. If you see the net debt to equity, as far as financial services is concerned, we are very comfortable position. For next four, five years, even if we have to grow whatever number you want to take, 20%, 25%, we will not need any more capital for financial services business. Unallocated capital, which is lying at, say, PEL level or Piramal Enterprises level, will remain unallocated unless there is some major new idea which can develop. Otherwise, both our businesses will be independent in terms of capital adequacy, so to say. Pharma also is already adequately capitalized with Carlyle infusion. Pharma also may not need a significant amount of capital. With regards to this property or the rights which we have got, FSI development rights. This was a transaction which was lying at PCHFL level or Piramal Capital level vis-a-vis the Omkar loan. Because of the IBC risk, which was looming as far as Omkar was concerned, what we have done is that we have bought these FSI rights for one of the projects of Omkar, where we have lent money from PCHFL. We have moved that to PEL to secure ourselves from the IBC risk because there was indication that the entire Omkar or this portfolio can go into IBC, and we wanted to secure ourselves completely. That's why this particular loan transaction we moved to PEL and now we own or we have bought the FSI from Omkar for further sale or whatever we want to do in future. In a way, we have secured ourselves from the IBC risk from Omkar through this transaction. Because PCHFL or Piramal Capital could not do it, we had to do this transaction at PEL level. Now we'll not be accruing any more interest on this entire inr 1,200 croress-inr 1,300 croress because now this has got converted from loan to an asset. Okay. Whatever the accrued interest that you had, you would have reversed it by the time of numbers. That's right. Quarter four, we have reversed that. Quarter four, we have not booked anything on this. Actually, not quarter four, quarter three we did the transaction. That's the impact which has come as reversal. That is one. Secondly, also we had, Devesh can confirm the number, one of my colleagues, because of the Supreme Court decision also, we had to reverse interest on interest in quarter four. I think the total number is about inr 75 croress, inr 78 croress. Where Supreme Court has given a judgment that you can't charge interest on interest on borrower. Because of these two, three reasons, quarter four is looking weak on the interest income, therefore on the NIM side. Okay, got it. If I may ask you, that Omkar transaction, were we the sole lender that the project, even if the project may go into litigation, this is completely secured for us now? Yes. Now it's completely secure. Rajesh, can I answer that? Yeah, please do. Yeah. Khushru here. It is not a Worli transaction. This is Andheri East transaction, where we have taken over the development rights of 67 lakh sq ft, much ahead of all the problems which Omkar is facing. That was a proactive measure we took, and now we are the master developers and PL, and now we will be actually doing either the joint development or selling off the development rights, and that's what will happen now from 2022 onwards. Got it. When we talk about the master development in the sense, there would be certain other finances also involved into this project. Sorry? There would be more finances involved into this project. No, not at all. More? No, the entire this thing belongs to us now. Yeah. This is our property. Okay. Rajesh, just a last question related to this goodwill notification. Have we implemented this at the financial services level as well? When we take the merger of the subsidiaries, there was a goodwill which got created at the subsidiary level. At the parent level, obviously, it got knocked off, but at the. Yeah. this tax notification, which has come in this budget. It's applicable for the future amortization for goodwill. Last four, five years, whatever has been amortized, we have taken that benefit. The balance unamortized part, we have actually reversed the DTA in the consolidated accounts to the extent of about INR 1,250 croresss this quarter. That's the one-time charge you'll see in the accounts. We cleaned that up. We have followed exactly what Budget is prescribed in terms of treatment of goodwill and therefore the amortization and the tax benefits. Yeah, we did not take the depreciation benefit at the subsidiary level, right? There won't be any tax impact at the subsidiary level. We were taking depreciation benefit at the consol level, correct? No, depreciation benefit was always at subsidiary level, at PCHFL level. Amortization was happening at PCHFL level. We had to create deferred tax asset at consolidated level. Yes. I got it. Whatever DTA has already been amortized, is amortized. Whatever unamortized portion of DTA has been reversed during this quarter. Perfect. Got it. Thank you. I have two more questions. I'll come back into it. Thank you so much. All the best. Okay. Thank you. The next question is from the line of Aditya Jain from Citigroup. Please go ahead. Thank you. In the slide which you've shown on the products being added, now there are quite a few which have been done in partnership with FinTech. For these, could you talk about the typical process flow and how you control for underwriting policy? That's my first question. My second question is, if you could give us some sense of how the developer portfolio is doing in April. How has the construction activity changed with respect to the pre-lockdown or March levels? Last question, we saw some increase in GNPA. As you mentioned, there is also a lower base, lower denominator, which is causing it. Just your outlook for this going forward, and in that context, what is the drop at least till now? Thank you. Those are my three questions. Hi, this is Jairam here. Let me take the first one, then I'll hand over to KJ for the second one. Your question of how are we thinking about underwriting when we get into partnerships with FinTech, there are three parts to the credit underwriting aspect. There's one separate thing which is on fraud. I'll come to it later. The first level, the way the filtration works is, we agree with the FinTech partner upfront what some of the gating criteria are going to be. The gating criteria are decided months in advance of the partnership going live. That is done by evaluation and assessment and analysis of the partner's past track record and history. We work with them and their database to actually see what credit performance of their customers has been, et cetera, and based on all of that, we agree on a pre-defined gating criteria. That gating criteria, once we agree and we sign off on, then that starts getting implemented and executed at the partner's end. Everybody who passes through the gating criteria is actually then shown to us, at which point we take the information that is available at the partner. We do the bureau pull, we actually take all the information available on the bureau, and see we have partner profiling criteria of our own, which we use. We overlay those three things and come up with a credit decision. All of this happens in an automated fashion in real time, and we are able to get back to the partner with our decision. The other element of this is the fraud check, which is a completely different machine learning model that we have, which uses customer profile, partner profile, persist profile, and the bureau records to actually come up with a fraud probability score. We have an automated engine which cross-tabulates the credit risk and fraud risk and comes up with auto-decline decision from that basis. That's the broad architecture of how we look at underwriting in a partnership context. KJ, you want to talk about the developer. Yes. Question that I have? Your question was on how are the developers performing in April, right? That was the question? Right. Yeah. In the second wave, first of all, I must say that there is a difference between the second wave and the first wave. What is it? In the first wave, way back last year in March, April, May, there were zero sales because it just hit you, and real estate developers didn't know what to do and how to sell. Over this journey, you would have seen that the sales have also become now digital. While in April the sales have actually happened, it's not like the last wave. What is very important for you to understand here is that the last two quarters, which is October to December and especially January to March, all India, not only Maharashtra, our developer sales. In fact, generally also, I can talk about our developer sales, have been actually very good. In fact, in the last quarter, January to March, the sales and the collection figures were almost two times that of the pre-COVID levels. Why am I telling you that? Because at the end of the day, the collections is what is very important for us, more than the sales. Collections is broken up into two parts. One is sales already done, where the slabs have to come, so construction has to go on and you keep on collecting, and second is new sales. Let's look at the numbers for April, which is very early we have got. Our collection for April was INR 750 croresss, which is in line with our normal pre-COVID. Out of that, only INR 25 croresss was from new sales, and others were all basically sales which were locked in receivables and the construction going on. Sales will fall in the month of May. The collections will be largely dependent on the construction. Already we are seeing a dip of construction activity by 20%. In the month of May, you could see somewhere around 20%-25%. If you go granular, there are some sites which are actually becoming better because the migrant labor after Bengal election is coming back, but we'll have to wait and watch. In summary, I would like to say that we have to watch the construction more than the sales. Sales can drop further in the month of May, but our focus should be on collection. In other words, if the construction continues at least at 70%-75% levels, your collections will be there. If I have answered your question. It's far, far better than what it was in the Q1 of last year. Got it. Thank you. That was really helpful. The third part on the outlook for GNPA. The TS level now. Rajesh, you want me to take it? Yeah, go ahead, please. Yeah. Yeah, please. There has been a slight increase in the GNPA, mainly because a couple of accounts moved from Stage two to Stage three, and also because of the base effect, because at the end of the day, even the book is shrinking. Also having said that, I must also share with you that, in fact, two out of those accounts we will be resolving in the Q1 itself. In fact, one of them, Sadbhav, which went into Stage three. In fact, we have fully recovered the amount in the month of April. Having said that, your question on the outlook. I think it is too early to say on the outlook. As of now, I think the current provision is good enough because we are well provided. You must not forget that at the end of the day, when the book is coming down month-on-month, we are not reversing the provision. The provision is actually there, so it's actually adding to the buffers. Having said that, we'll have to wait and watch. Too early to comment on that. We'll have to see how this COVID two plays out. I just want to add one point here, Aditya, that we created this provision of INR 3,000 croress by adding INR 2,000 in the beginning of the year. So far in last one year, despite the COVID activities, COVID has been there for almost full year. We ended up utilizing less than 10% of the total provision, and 90% of the provision is still intact. That basically also kind of reflects the real estate activity that happened well during the H2 of the year. As Mr. Khushru Jijina mentioned, we will continue to push for the collections, and let's see how things play out in May and coming months. Got it. I don't know if it's possible, just mention the GS2 number, if you can share that would be really helpful. You're talking about Stage II? About Stage II, yeah. Mr. Laddha, would you like to respond to the question? Generally, we don't give the breakup, right? I would follow the same policy, Hitesh. Okay. Thank you very much. Thank you. The next question is from the line of Tushar Manudhane from Motilal Oswal Financial Services. Please go ahead. Yeah, thanks for the opportunity. Just from the pharma side, given that we have a strong order book on the CDMO, and we'll have a revival on the elective surgery side, given that the intensity of COVID is relatively less in the developed market. Is the 15% revenue guidance too conservative? The 15% revenue guidance was given for the long term. I think in the current year, we should do better than that. Yeah, right. Because again, supported with the low base of FY 2021 because of the impact on the complex hospital-centric business as such. Yes. The order book is also strong, so we should do better than that. Secondly, we have hit the EBITDA margin rate of 28% for Q4, while it's lower for full year. How do we look at the EBITDA margin trajectory going forward? Well, 28% is not. The last quarter was a very good quarter as far as the sales was concerned. I don't want you to think that that's going to be the margin for the whole year. Where we had indicated earlier, that will be the margin. Let's look at that. Okay. Because I was wondering, like the operating leverage would play out in the complex hospital generics with the revival in sales and CDMO anyway. Yeah. Trading at a higher margin. The traction on the India consumer products also continue to do well. There also, it's more of a operating leverage play. From that perspective. Yeah. That doesn't happen. Also, during the year, I want to say that we are going to invest more in the Indian consumer business because there are opportunities. We'll build brands also there. Okay. Actually, that was my other question. On the CapEx side, on the organic front, how much the CapEx to consider for the upcoming year in the pharma side? Vivek? Yeah. As we had guided during our Pharma Day as well, during FY 2022 and FY 2023, we'll see a slightly higher quantum of CapEx, given that we are doing capacity expansions at our North American facility and our facility at Grangemouth. You would see on an average about $90 million-$100 million CapEx over two years. Got it. Okay. Thank you. $ 90 million-$ 100 million over two years. All right. Thanks a lot and congrats for good number from the pharma side. Thank you. Thank you. The next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead. Yeah. Hi. Good evening, and thanks for the opportunity. My question is similar to the earlier participant. If you could give some more color on the quarter four margins, because what I understood was the nine months margin was around 19%, and you're saying full year is about 22%. There is a bump up in the Q4. We have also seen some recovery in the complex generics. Should we correlate the two? Going forward, we are saying that complex hospital generic business is expected to see growth revival. The margin should go way up, and taking care of the consumer business investment also. What are we missing here when Mr. Piramal is saying that we should not take margin expansion here? Overall, you would have also noticed that the sequential growth in the pharma business has been almost 40% in terms of revenue. A large quantum of expenses are fixed in nature, and therefore, whenever revenues are significantly higher during a quarter, you will see margin expansion. If you compare this with even last year, you would have seen that margins even increased 9%. I don't think one quarter's margin is any way our guidance. As Chairman rightly indicated that, the margins will be more uniform if you look at your full-year operating margins. Yes, while the complex hospital generics revenues increase, overall global pharma margins will see some improvement. As we have made a conscious call to probably invest in some of the OTC brands, that will also have a midterm impact on the margins. That's where the overall margin will be, the blended margins will be. I mean, this quarter is clearly one-off you are saying, and you're not giving us color on why the margins are high. Correct. The current quarter is not an indication of the future because the sales are extremely high this year. Prakash, what we should understand is that the margins on the existing operations will be good, but we are also in investing mode. We raised capital. We are investing in the processing. I understood on the outflow. I just wanted. Yeah. Color on why the quarter margin was higher. I mean, we have not clearly explained that, right? In the quarter, when the revenues are higher, your fixed costs are leveraged better, and that leads to a higher margin. Okay. Because a large quantum of manufacturing sites have got fixed expenses. When contract manufacturing revenues grow by 25, expenses remain at the same level as they were each quarter to a great extent. Therefore, because of expense leverage, the operating margin goes up. Question. Vivek, what is the quarter four sales salience amongst the four quarter? Correct. almost about 35% of the revenues actually come from quarter four. Correct. That's the reason why EBITDA margins are higher because of fixed cost leverage gain. If you do 35% of the yearly sale in one quarter, obviously you'll see this kind of performance. Okay. Practically the pharma. Maybe some recovery in the complex hospital business would have helped. Would that also be correct understanding? It will help. Next year, because the margins on complex generic on EBITDA level is much higher, if that business revives, margins will improve. The point which is being made is that we will also invest into our OTC and our CDMO businesses. Okay. Thank you for that. Yeah. Second one is on, there was earlier a covenant of this Carlyle giving an upside of $360 million subject to some conditions. Yeah. Yeah. It doesn't ask for some information. Yes, that is correct. I wanted. Sir, I think you're speaking and Chairman, sir, would you like to respond to the question? Prakash, can you repeat that? What is the question? Sir, I wanted to understand, is there any upside which was agreed earlier, a year back with the Carlyle deal of about $360 million? Are we still subject to getting that, or is it done and dusted now? No, that's now with the performance and what we are seeing in the hospital generics, it's unlikely to happen. That won't happen. Okay. Given the COVID year or whatever. That's Okay. Yeah. Okay. Got it. Lastly, sir, you mentioned about coming nearer to the demerger of pharma and financial businesses. Any timeline you would like to attribute to? No. I think we have said so before, let's just wait for it to happen. Just see all the steps taking place. There are still moving parts of the DHFL acquisition and so on. Once that happens, I think we'll be in a better position to tell you. Fair enough. Okay. Thank you so much, and all the best. Thank you. The next question is from the line of Kunal Shah from ICICI Securities. Please go ahead. Yeah. Hi. Few questions from my side. Firstly, in terms of the unallocated equity, I think you said currently it would neither get maybe allocated either towards the financial services or pharma, as both of them are sufficiently capitalized. On demerger, if we have to actually look at it, where should it sit finally? Maybe financial services will be a growth business, capital consuming. Now would ideally a significant part of it would get into the financial services? How should we look at this entire unallocated equity as such? The way to look at it is that frankly, both the businesses, the pharma business does not require any additional equity today. Neither does the financial services business, even after taking into account both the fact that we are doing the acquisition of DHFL, as well as if we take the growth for next five years at a 20% growth year on year, we do not require any additional equity. It will remain unallocated. We will decide how to do it, and we will be transparent when we decide what to do. What are the options? If we have a very big need of equity through a big acquisition in pharma, we can do that. If we need something more, some new inorganic growth in financial services, we can do that. We have other options as a parent. We can do either a new business, we can return it to shareholders. There are many options. Today we only know that it's not needed today. That's what's important to understand. We will make the best use of the equity. Sure. Secondly, in terms of this NCLT hearing, which is on, can you say it is more in terms of procedural, or it is maybe in terms of other bidders having some representation out there, and that's what is happening? Maybe this is the normal course which is going on in NCLT. As far as my understanding is, this is normal course. None of the bidders who were there in the process have actually gone to court. I think we also have to recognize that we got 94% of the creditors voting for us. The 6% were the ones who did not vote for anybody. It's not that other bidders got more than us. The difference between us and the next bidder was significant, and therefore they have not gone into the process. The fact that this is an RBI directed this whole IBC process, and RBI gave us the fit and proper in the short ratification. You know how it is. Anybody can raise in the country has a right to go to court. We have to go through the process. Sure. The other thing was on interest on interest reversal, if I heard you correctly, what was the amount? inr 75 croress, inr 78 croress? INR 73 croresss. Yes. INR 73 croresss. Does that seem to be very low, considering the entire book would be wholesale more than INR 2 croress? If we just look at the yield over there and calculate the six months interest reversal. I'm quite surprised, maybe in terms of the calculation we thought of was quite a higher number. I don't know maybe how it is getting to this inr 73 croresss, inr 75 croresss. No, that's the number. It's been audited, and we have clearly stated that it is in the accounts there. Okay. I don't know how you guys calculated that. Margin impact was only because of this INR 73 croresss, INR 75 croresss. I think that was the only component which was there in margin, which has led to the reduction. Yeah, that was the major one. I also explained the Omkar transaction. Yeah. Got it. Yeah. In terms of the stage II, you don't share the numbers, but directionally, if we have to look at it, there has been some movement which has happened from stage II to stage III as well. How has stage II directionally moved? Last time you mentioned that stage II plus stage III was up 5% in absolute amount. If you can just give directionally as to how it has been this quarter? If I give you the percentage, then we are giving the number, right? You are just asking the question differently. I think we would refrain giving the numbers separately. Okay. Lastly, in terms of the retail, when would we start sharing the portfolio-wise breakup? Currently, I think this quarter also it seems to be more or less flat at INR 5,300 odd croresss. No doubt, affluent segment, we would be running that down, and that is getting replaced with a new product segment. If we can, I don't know maybe when we can start sharing, so at least we come to know when the growth in retail will actually start inching up. I think when it becomes. Exactly. We'll be happy to share once we have a sizable amount, if the inorganic integration happens, all numbers, then a correct baseline would get set, then it would make sense for us to talk about it on a quarter-on-quarter basis. Right now, the baseline itself will be very volatile given the relatively small size and the rundown issues that you are appropriately calling out. That is the most important dynamic in the portfolio right now. All that will settle down a whole lot better once the integration happens. We should talk at that point. Sure. Okay. Yes. Thanks a lot. Thank you. The next question is from the line of Bharat Sheth from Quest Investments. Please go ahead. Hi, thanks for the opportunity. Sir, this unallocated capital, which is around INR 11,000 croresss, that is our current realizable value or it's a book value? It's a book value, sir. Would you like to share? It's a book value. what is the current market value? Hello? The current market value, the only difference which is going to come is from the Shriram current market value. Apart from that, the book value will be equal to current market value. Shriram, we don't know right now as to what will be the realization. It will be higher than the book value, for sure. Okay. Second thing, CDMO business on the full year basis, which roughly contributes around 60% of the pharma business, and which we are saying is expected to grow a faster pace in medium term. Would you like to share how, after say three year, overall when pharma business is growing 15%, so what would be the contribution from the CDMO business? Nandini, would you like to take up the question? I think we won't talk about how each business grows, but I think the CDMO business will grow a bit faster as we invest in more capacity. In the two acquisitions that we did this year for Sellersville and which we will close, Hemmo, in the next quarter, I think they will also add for growth. When we are talking 15% growth, that is for the organic, and this acquisition will add up further to growth in that. Is that correct understanding? Yes. Okay. The last question is for Mr. Piramal. Sir, when you are saying that there will be a two listed entity, so both will be vertically splitted or pharma business will remain as a subsidiary listed entity of the pharma Piramal Enterprises? No, I think they will be independently listed. Okay. Thank you. That's all from my side. Thank you very much. Thank you. The next question is from the line of Piran Engineer from Motilal Oswal. Please go ahead. Yeah, hi. Thanks for taking my question. I have a couple of clarifications. Firstly, could you once again explain the Omkar deal, what happened, what went wrong, and exactly what the steps were? Because there was a bit of disturbance back then. My other questions are, what is our exposure to Lodha now, because we were planning to split it into an SPV sort of exposure with completed apartments. Is that the reason why it has come below 15% of net worth? My last question is that, in slide 19, where you all have given a breakup of the sales data over the last four, five quarters, I noticed that the sharpest recovery is in Mumbai and Pune, and that's obviously because of the stamp duty cut. In most of the other cities, the increase wasn't as much. Now with this stamp duty cut behind, how do you foresee real estate sales across the top eight cities? Thanks. Okay, I'll take all the three questions. Let me start with Lodha first. In March 20, we had an exposure of INR 3,130 croresss at the holdco, as you are aware. Today, as we speak, in March, it is INR 2,637 croresss. The way to look at it is now very different. Out of INR 2,637 croresss, inr 1,593 croresss is now in an SPV with a 1.5 x cover of fully ready inventory, which we had spoken last time, which has actually happened. The balance INR 1,058 croress is in the Macrotech Developers. Just as a matter of information, we have recently got prepaid in the month of April of INR 431 croresss. Again, our holdco exposure has come down to now only INR 620 croresss. The SPV exposure is INR 1,530 croresss. Today our total combined exposure is INR 2,150 croresss. That's how, even if you look at INR 2,150 croress, it is less than 15%, to answer your question. Have I answered your question on Lodha? Yes. We go to your last question, then the last I will come to Omkar. You are absolutely right, the quarter four sales were actually good all across. Let me put it very differently. MMR region, it was 2.5 x of the normal pre-COVID level sales of our developers. Having said that, even the other regions which were outside MMR also clocked anywhere between, if I go granular between Bangalore, Chennai, NCR, et cetera, they clocked anywhere between 1.4 - 1.5x pre-COVID. It was not necessarily right that only MMR did well, because the others also did pretty well. While this was an absolutely a super-duper performance in MMR, having said that, even if you remove that, the fact that people are doing better in other regions than the pre-COVID level itself is a good sign. Yeah, sir. Have I answered your question? MMR was 50,000 last year and 70,000 this year. Sorry, all top eight cities went up from 50,000 to 70,000. Overall it is a 40% increase. Piran, the data that you're seeing is at the industry level, not our clients. Okay. It's an ICRA data. Don't get confused that it is our client data. That's what I wanted to. Yeah. What Mr. Vijayan is talking is our clients' data. Absolutely. I just wanted your sense that, for the industry, how do you expect sales to be? Not just for your clients, in general for the industry. No, I would like to speak about my clients because it goes back to the fundamentals which we have always spoken about, that simultaneously there is a massive consolidation happening, which we have been speaking consistently for the last three to four years. That's why I would like to again state that our developers, whether in MMR or outside MMR, are actually doing. The minimum is 1.4-1.5 x today. Because the stronger are becoming stronger and the other developers are dying. I would like to restrict my answer to our set of developers. Okay. Coming to your last question on Omkar. Let me go slow and explain this to you. We had an exposure to Omkar in their Andheri East property, which was at the land stage, and we had already got the development rights, the LOI as it is called in the SRA. Much earlier than all the problems which Omkar is now facing and it's in the press, we had envisaged that while the land is very valuable, it has already got a clearance of LOI. When you get an LOI means you actually have established the development rights. It's like an FSI. In SRA, it's called development rights, which is 67 lakh square feet. It's not small at all on the highway of Andheri East. Because of the IBC risk, because this loan was in the holdco, the group decided to take over the land. As my colleague Rajesh was explaining to you, that since PCHFL could not do it on its own because of regulatory reasons, the loan was paid off by PEL. In fact, there was a full process which was run properly as per the guidelines, PEL decided, the parent decided, the board decided that we would rather pay PCHFL off and keep the asset and then monetize it. That's the point I made to the earlier person also, that the monetization exercise, all the planning and all the exercise for monetization now begins from 2022 onwards. Over a period of 2022, 2023, you will see actions on our behalf from PEL to monetize the land in some form or the other and get back the money and hopefully with some indirect accrued interest also. We are not talking of only taking the principal out. Hopefully, we'll get more than the principal. Okay. The land belongs to. Did I answer your question? I'm sorry? Yeah. What was the question? It solely belongs to us. The land has not been developed yet. No. Now we will actually give it off to other developers. We'll cut the land and give it because INR 67 lakhs on the highway, it's not small. It's a very valuable piece of land. How much would the land be worth by your rough estimate? The land, we actually did this exercise, but I wouldn't give you the exact number, but it is far more than the value of the loan. Got it. I can only commit to that it's far more. Far more. Yeah. Okay. That's fair. Thank you so much for answering my questions. Yeah. And all the best. Okay. Yeah. Okay. Thank you. The next question is from the line of Praful Kumar from Dymon Asia. Please go ahead. Sir, thanks for the opportunity. One question on this Omkar. This land, is it with PEL, with us now? Yes, it is with us. With us. Completely. 100% with us. Yeah. We have paid stamp duty on it. Okay. What is the total exposure to this account? INR 1,300 croress. INR 1,300. Okay. Thanks a lot, sir. Thank you. Thank you. Next question is from the line of V.P. Rajesh from Banyan Capital. Please go ahead. Yeah, thanks for the opportunity. Most of my questions have been answered. Just on the demerger side, is it fair to assume that DHFL transaction will take probably six to nine months, and only after that we will have some more concrete plans announced on the demerger? Yeah, it will be post the DHFL merger. Whether it takes six or nine months or shorter, we can't say. NCLT procedure may take, I don't know, maybe a couple of months. If somebody goes into appeal, we don't know. I think, Letter, it's very difficult for us to comment on how long the court takes. It's up to the NCLT or whatever the next process is. Let us just wait. Got it. Thank you. Thank you. I wish I could tell you more, but even we don't know. No, that's fair. Understood. Thank you. Thank you. The next question is from the line of Jigar Valia from Ohm Group. Please go ahead. Hi, good evening. Thanks for the opportunity. My questions pertain to the pharma businesses. Congrats for the good numbers, especially sequential. The CapEx $90 million-$100 million you mentioned was for Grangemouth and which other plant? Was it Lexington or something else you mentioned? Sorry. The CapEx is for our facility in Canada, at Riverview and Grangemouth. Riverview and Grangemouth. Yes, a bit of that also for Lexington. Understood. Thanks, Unmesh. Within the CDMO, we had a lot of molecules which were on the late stage, et cetera, and I'm sure in the times to come, we'll see something there. Broadly, as of now, what would be the development to manufacturing mix? A very broad approximate. Is it 50/50? Is it significantly skewed towards manufacturing or the other way? Maybe some broad color. The average size of a manufacturing contract obviously is much higher than a development contract. Overall, Commercial revenues are 65% and development is about 35%. Obviously, this has improved over a period of time. Understood. Thanks so much. Almost probably 70%-75% of the new pipeline could be on that line. Should that kind of change the mix or the skew more in favor of? Is it that we need to do a lot of more small volume works with regards to the new pipeline? Or you see the mix being stable? Or any direction on the mix 35/65 right now? As I mentioned, development a few years ago used to be about 10% of our revenues. Today, it's close to 35% of our revenues. Obviously, as you mentioned, there is a lot of development work which is happening. A lot of molecules in the clinic advancing from phase I to phase III, which is eventually going to become the funnel for which will migrate into commercial revenues. Yes, this mix would increase and eventually will become the source of business for commercial revenues in the future. Understood. Very helpful, sir. My last question on this is, a couple of years back, we had kind of referred to this Billingham, U.K. plant and the Fujifilm tie-up for biocatalysis. I just want to know, did this go through and is it still functional? Yeah. No. This did not go through. In fact, the deal fell through almost about four, five years ago itself. Okay. That's it. Thank you so much, sir. Thank you. The next question is from the line of Ujjwal from Quest Investments. Please go ahead. Thank you for taking my question, sir. Just wanted to understand what kind of investments are we looking in the consumer healthcare space for FY 2022. Are we looking for inorganic opportunities during this time for the next year or is it basically only on our existing portfolio we would be doing branding exercises or brand extension? We are looking at a combination of all. One is organically we are looking at how do we strengthen our existing brands, how do we do brand extension, how do we add new products which we ourselves develop. That is one part. We are also looking at acquisition. If something is in the right value, we keep saying that we are looking at it, we would do it. Okay, sir. Any quantum you can specify in terms of investments that we have planned for FY 2022 in this space? No, there is no specific quantum. It depends on really the opportunities. We have a budget as far as existing organic growth is concerned, but for inorganic, it'll depend on the opportunity. Yes, I was asking for the organic budget, if you can share. That we are not yet, but we are doing I think we will adequately fund this. Okay, fine, sir. Secondly, sir, on Hemmo Pharma acquisition, sir, you just mentioned you are looking at 3x kind of growth, and if you can throw some light about how Hemmo Pharma is going to aid our overall CDMO space, and was it basically a client-driven request in terms of getting into the space, or we were anyway looking at this space very intensely, and we got this opportunity. If you can share some more details about this acquisition and the way forward. Thank you. Nandini, either you or KJ. I can take it. Our whole theory on CDMO is that we look at magnets, which is, for example, capabilities that clients really want and that are specialized. For example, the HPAPI, the Lexington sterile injectables. Those are capabilities that are very specialized that bring clients to us. We have been looking at peptides as additional capability that we wanted to add. That's why we actually looked out for Hemmo and created the opportunity. We've been talking to Hemmo actually almost four or five years ago, and it didn't go anywhere. We were very aware of Hemmo, and it was on our radar of interesting opportunities to look at. When the opportunity came, we actually jumped on it. In terms of, we see a lot of synergies in between Hemmo and our other CDMO plants. For example, a lot of peptides are actually injectables, and we have one client already who was buying API from Hemmo and getting it filled in our Lexington plant. We've seen that synergy actually existed before we even bought the product, and when we did the client references, the clients were actually very happy to have a person and a company like Piramal taking it over. Great. Can you just share your outlook state, 3x kind of revenue growth? What will exactly drive this on Hemmo side? Do we have orders in place or new products have been approved? How is Hemmo going to do a 3x kind of revenue, if you can share that? I think one of the big things is that we will invest in capacity across, because Hemmo didn't have the capability to increase capacity as much. I think that is one big thing. We've seen that already our BD inquiries from our existing customer base have increased because a lot of people didn't want to give it to Hemmo API orders because they were small. We actually see both. It's a mixture of capacity enhancement as well as new orders from our existing customers. Great. Thank you so much. Thank you. Ladies and gentlemen, due to time constraints, we'll take our last question from the line of Ravi from Gera Investments. Please go ahead. Good evening, folks. My question is to Jairam Sridharan. This is about the Bangalore tech center. What is being built there? When can we see some product coming out of it, like app or website or anything? What is future outlook for it? Yeah. Thanks for the question. We are setting going already. We've got the core team that has already been hired there, and every day we have new people joining. The team has already expanded to about 12 people now, and continues to expand on a regular basis. What we are trying to do is tap into the talent ecosystem in Bangalore for two big areas. One is proprietary technology development and the other is big data analytics. For both of those areas, while there is some level of talent that's available in Mumbai and Delhi NCR, Bangalore is a place where we are seeing a lot of talent availability and a core ecosystem in place. That's why we chose Bangalore as the location to set up our center of excellence and we'll continue to make investments there. Of course, right now, given the COVID-19 situation and the work from home construct, it's not going to be as visible, but very soon the physical infrastructure is going to be right out there and very visible. We'll be quite integrated into some of the talent ecosystems in Bangalore. We'll continue to do that in both these spaces of data analytics and proprietary engineering. Thank you, sir. You're also partnering with ZestMoney. What is the point of the loans we are getting from them? Are they sizable? Are they still in evolution phase? Mainly, I think there's unsecured loan. These are unsecured short duration products with an average ticket size of about ₹15,000 for purchase finance in large parts. It is now a four-month-old, five-month-old partnership, and it's scaling really well. Of course, given the second wave of COVID, both ourselves and our partners are being very careful about how to deal with unsecured lending in this environment. In April and May, we are going to be playing it cautiously. Till March, we had very strong growth and we'll likely get back to that trajectory once we see the country emerge on the other side of the second wave. Also, sir, you mentioned, I think you guys around INR 2,000 croress return of book by this year end, I guess. Could you provide a breakup of that, like how much would be unsecured or used car or any new age products that you are planning? We haven't done a whole lot of unsecured right now. I would say that going forward, our intent is to continue to remain secured focused, at least for the next year or so. Predominantly, our customer acquisitions are going to be in secure product categories. Our main products are affordable housing, Mass Market housing, NAS, small business lending, and used cars. Those are going to be the key categories in which we do much of our business in the coming year as well. We are also evaluating products in the space of education financing, unsecured business lending, loans against securities, and two-wheeler financing. Those are the product categories we are looking at for FY 2022. We will evaluate them, and some of them will make the cut in terms of becoming rollout products for us in the coming year. I just have one last question. With digital acquisition, are you getting any tech capabilities, loan underwriting tech platform or anything like that? Or it's only purely loan book? We are building much of this ourselves. We are not acquiring capabilities or products from the outside world. We are building all of this internally. Okay, great. Thanks, sir, for a wonderful question. Thank you. Thank you. Ladies and gentlemen, that will be the last question for today. I now hand the conference over to Mr. Hitesh Dhaddha for closing comments. Thank you, and over to you, sir. Thanks everyone for joining the call. In case you have more questions, feel free to reach out to IR. Thank you. Thank you very much. Ladies and gentlemen, on behalf of Piramal Enterprises Limited, that concludes this conference. Thank you all for joining us. You may now disconnect your lines. Thank you. Thank you.