Ladies and gentlemen, good morning, and welcome to the RPG Life Sciences Conference Call, hosted by Dolat Capital. As a reminder, all participant lines will be in a 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 Ms. Candice Pereira from Dolat Capital. Please go ahead. Yeah. Thank you, Ryan. Good morning, everyone. I, Candice Pereira, on behalf of Dolat Capital, welcome you all to the conference call of RPG Life Sciences Limited for an update on the stock exchange announcement made on September 13th, 2024. I would like to thank the management of RPG Life Sciences for giving us this opportunity to host the call. Please note that the management will only be addressing questions related to the stock exchange announcement at this time. Today, from the management team, we have with us Mr. Yugal Sikri, Managing Director, and Mr. Vishal Shah, CFO. I now hand over the call to the management for the opening remarks. Thank you, and over to you, sir. Okay. Thanks, Ms. Pereira. Good morning. Thank you for being available today. You would have read the outcome of the board meeting held on September 13, 2024, where board had approved two decisions. One was the payment of transfer charges of INR 32.2 crore, as per the order we received from MIDC, under the ULC Act, against the ULC exemption under amnesty scheme. And the second is with respect to execution of a binding agreement with M/s. Krsna Dynasty, for a consideration of INR 144.9 crore, plus the applicable GST. You would also read the mention there, the financial impact emanating from the MIDC order of the payment of transfer charges against ULC exemption is expected to be fully cushioned upon the successful consummation of the binding agreement. Now, behind this outcome, behind these decisions, let me present to you the business context. Let me just start by refreshing that RPG Life Sciences operates in three business segments: domestic formulation, international formulation, and API, contributing to 65%, 20%, and 15% to our revenues. You would also remember that we, in the beginning, decided to focus on domestic formulation, which contributed to two-thirds of our business, where you would have seen that we have grown the business continuously faster than the market. This is our much talked about five-pillar growth strategy. Now, with domestic formulations on stream, we now turn our attention to other two segments, that is international formulations and API. We know well that API is largely export, and thereby we now want to make international formulations and API as our growth engine two and growth engine three. In this connection, we decided to have two prerequisites. One was with respect to, simply with respect to export. The two prerequisites which we have talked about is, one is modernization of our plants, and the second is development of an R&D pipeline. Now, today's discussion, since it is pertaining to the API transactions which happened with respect to API land, I would restrict myself to only API. Now, in the modernization and capacity expansion exercise for the API plant, which is located at Navi Mumbai, we also realized one more opportunity, and the opportunity was consolidation. Consolidation of the plant operations in a way that we can free up a good part of the API land, a total of 34,483 sq m of the land, is where the API plant is currently located. We worked out the whole modernization cum expansion plan of the API plant in a way that we were able to free up 15,015 sq m. This freed up 15,015 sq m plot, part of the plant, we decided to monetize. We all know that this is located at a very strategic location in Navi Mumbai, which is quite high-priced one. So we thought we will, we will dispose of, we will monetize that part, and whatever the proceeds we get out of monetization, that will add to our surplus entity, which is already available to us in the form of the cash surplus coming out of the operations, good operations, which have been happening in the organization for the last four, five years. This proceeds will further add to the kitty, which we will use for our growth opportunity, and particularly in the inorganic growth opportunity, which you all know we have been pursuing. And we have been pursuing, as I mentioned earlier, we've been pursuing these inorganic growth opportunity, both in case of formulation and API. So that is the context. The first part of the announcement was with respect to payment of INR 32.2 crore, as you already received from Maharashtra Industrial Development Corporation, MIDC. To explain this part, I would request Vishal, Vishal Shah, our CFO, and also I will request him to briefly cover the binding agreement which we signed with the assignee, and thereby monetizing the freed up land of 15,015 square meters. So, over to you, Vishal. If you can briefly explain the two areas to all of us. Sure. Thanks, sir. So as you know, as per the announcement, MIDC has levied ULC transfer charges under the 50% amnesty scheme, and the amount is INR 32.2 crores. So the reason for this is that under the ULC Act, MIDC granted an exemption in respect of surplus vacant land, subject to certain terms and conditions. In the past, RPG Life Sciences assigned a part of its land to an assignee, wherein MIDC was supposed to levy ULC transfer charges, but had not levied at that point of time. In fact, it did not levy on any leaseholder across the state. Now, MIDC came out with 50% amnesty scheme, and under this scheme, we are wanting... We have issued the demand order of INR 32.2 crores, and this is what has come to us, which we have to pay for closing this transaction of the past. And what has triggered right now is that since we are going to MIDC for further assignment of our land to an assignee, MIDC is asking us to pay this ULC transfer charges. This is with regards to the ULC transfer charges. With regards to the portion of land, which sir just mentioned, that we are assigning to an assignee is the proceeds of INR 144.9 crores. So these are the two transactions what the board has approved on 13th of September. I hope I have made this clear. This in brief was, we wanted to clarify, and, if you have any questions pertaining to this, to the extent we can, we would like to answer. Thank you. Thank you. Ladies and gentlemen, we will now be conducting a question-and-answer session. If you would like to ask a question, please press star and one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star and two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question comes from the line of Ankur Kumar with Alpha Capital. Please go ahead. Thank you for taking my question. Sir, I wanted to understand, in the announcement to exchanges, we have said that this amount will likely have an impact on Q2. So is it like this INR 32.2 crore, we will be booking as one-time loss in Q2, and then, the INR 144.9 crore will be one time gain in the Q2? I think what you heard is correct. Vishal, would you like to explain? Yes. Yes. So in the quarter two, you correctly mentioned that 32.2 crores will come as a one-time extraordinary expense in our P&L of the company. And as in then, in the, quarter three, because, this new transaction of assignment will be subject to MIDC's approval for subdivision and transfer. So hopefully it will consummate in quarter three of the FY 2025. So at that point of time, the income will come in the books of accounts of the company. Got it. Thank you, sir. Thank you and all those. Thank you. Ladies and gentlemen, a reminder, if you wish to ask a question, please press star and one… Once again, if you wish to ask a question, please press star and one. Our next question is from the line of Amish Kanani with JM Financial. Please go ahead. Yeah. Hi, sir. Sir, if you can just remind us of the proceeds, how are we planning to use? Is it predominantly more future CapEx that we'll be funding with the cash that we have, plus the receipts of these, you know, income land of sale, and that will have? Also, you know, there was a probable, you know, we always say that, you know, we look at some strategic M&A, if and when we get, you know, an interesting opportunity. Is there any, you know, a thought on these lines? Are we using cash more for expansion and/or M&A, or are we, you know, just keeping this cash on the books because it is affecting, we are a very high ROE company, but this cash is affecting our ROE a little bit, so just if you can give some thoughts there, that'll be really helpful. Thanks. Yeah. Thanks, Amish. I think your question covers the answer. Just to add to what you just mentioned, yes, we are building up cash surplus thanks to the operations over the last four, three, four years after we paid up the debt. We are close to over INR 120 crore cash in our books now, and we will be adding another crores coming to us through this transaction. The purpose, as I mentioned in my opening remarks, is to grow the business. As I have explained every time, that we are very, very keenly looking at the inorganic opportunities. Be those opportunities in the formulation space or in the API space, we are very actively looking at. As I mentioned, we have seen close to about 18 proposals. Right now, also there are proposals on our table to be evaluated, which we are evaluating, and therefore, our intent is to make use of these, this cash, which is now augmented cash, which we will have post this transaction, for the purpose of growth or business expansion. As I mentioned earlier, we are restricted only to formulations, inorganic opportunity. Now, we have opened up even for API acquisitions, so this corpus is expected to be used in, for growth and largely in the M&A. Sure, sir. And if you can just quickly remind us of our CapEx programs for this year and also next year, if possible. Yeah. The, as we elaborated earlier, that we have spent over 140 crore on both the plants, modernization cum expansion, and that modernization cum expansion plant is coming to its final leg now. In fact, in case of the API plant, it is almost through, and in case of the formulation plant, it will be through by the end of this financial year. And we have got the regulator already come and visited our API plant and approved it, and we are calling EU regulator to come and approve our plant in quarter three this year. So therefore, the major chunk of our modernization CapEx gets completed now. Going forward, our CapEx would be used on growth, which is developing new products. That's one area. Second, we being in the generic business, we get certain topical opportunities, and those opportunities entail some amount of customized expansion in the plants. Like the way we had a business which we got from a very reputable customer from Australia, and we actually did expansion or customized expansion in our Ankleshwar plant, and actually we are supplying the product today from the expanded facility from Ankleshwar plant. Some such similar opportunity, which we are also pursuing, will entail some amount of CapEx. This, that we will use, plus the maintenance CapEx, which we see every year. I would ask Vishal to give some approximation of the numbers, both for the... or the total CapEx for the plants. Vishal? Yes. So as you briefly mentioned, that, some portion of the INR 140 crore CapEx will also be coming in this financial year, and along with the growth CapEx, so we expect around INR 30-35 crore of our CapEx coming this year. Okay, thanks a lot, sir, and all the best. Thank you. Thank you. The next question is from the line of Aditya Khemka with InCred PMS. Please go ahead. Hi, thanks for the opportunity. Hi, Vishal sir, and hi, Yugal sir. Sir, I joined the call a little late. Did you guys talk about, you know, the nature of the transaction, if I understand the press release correctly, this is the land that we own, and we are sort of leasing it out or selling it to another entity, and before we are able to do the transaction, we have to pay some sort of a tax or levy, to the MIDC. Am I reading the transaction correct, or is there something I'm missing? ... We, Aditya, thanks for joining. If we gave the context in the beginning, but just to remention again, it's a leasehold land. This plant is on leasehold land, and we have 34,483 square meters of the land there. We, as a part of the modernization cum expansion plant, also saw the opportunity of consolidation, and thereby we did the consolidation, and thereby freeing up 15,015 square meters. And this 15,015 square meters is what is being now assigned to an assignee for a consideration of over INR 140 crore. So, that's the context. Got it. Got it. So this INR 140 crore is, So this is a lease payment that he's making you for the next thirty, fifty, hundred years. Is that the arrangement, or is he buying? Yeah, for the ninety years. For the ninety years. That's right. Okay. And the 32-odd crores that you're paying to MIDC, what is the nature of that payment? That's in lieu of the ULC, Urban Land Ceiling Act related charges, which the MIDC charges. This charge was applicable to any transaction which happened before the 23rd June, 2021. After 2021, these charges have been waived off, have been removed. Government has removed those charges for everybody. But before any transaction which happened before this date of June 2021, the charges, the ULC related charges are being levied. We had a transaction in 2013, and this charge is with respect to that transaction. Now, it so happened that this charge was not charged to anybody in the state for any transaction. Now, since we are assigning this land now, this charge has got activated. In order to complete this transaction, we have to pay this charge to the MIDC. Now, MIDC came up in March 2024 with an amnesty scheme. 50% amnesty scheme, which was valid till June 2024, which they extended up to September 2024, 15th September 2024. We have made use of that amnesty scheme, and the INR 32 crore, INR 32.2 crore charge is coming against that. Understood, sir. So basically, we had extra land which we are giving out, and we are getting money in consideration, and obviously the ULC charges apply. So I get that. So, once we receive this cash in third quarter, what would be our expected cash balance, roughly, around that time? Maybe 250 crores plus or thereabouts? It will be difficult at this point of time to comment on that. But with specifically to this transaction, we expect around INR 90 crore net cash in hand, in our hands. And that way, from the operations right now, as sir mentioned, that we have around, like, 100 crore plus, type of cash surplus. But depending on the performance going ahead, the net cash will improve that way. Got it. Got it. One last question. So, you guys have mentioned that, you know, you likely use the cash as a war chest for acquisitions, either on the branded side or on the API side. So, branded business, I can understand. Obviously, that's, you know, something we have done pretty well. On the API side, what kind of an acquisition would you look at? I mean, and I'm not talking about scale, I'm talking about what kind of capability would you really want on the API side? Yeah. So the, our strategy, in terms of, the kind of the portfolio which we are building up, whether in the international formulation business or the API business, is centered around, two or three points. One is we are focusing on immunosuppressants. Okay? That's our one portfolio. And when I'm saying immunosuppressant, we have azathioprine already there, we are talking about mycophenolate, and we are also looking at tacrolimus. The second is actually, on the chemical side, it will be only azathioprine and mycophenolate. The second is we are looking at the molecules which have low competitive intensity. And the DMF filings are lower in number. It might not be a big, big-size molecule, which will attract the attention of the big players in the field, but the ones which are quite good, but not as big that the biggies have the attention, those are the second categories of the products which we are looking at. These are the broad considerations we have at the back of our minds. Further, it depends upon the kind of the opportunity which we get going forward, and we are looking at opportunities, frankly speaking. We're trying to see that our criteria is met, but it all depends upon the kind of the opportunity comes in our way. Sorry, sir, just one follow-up on that. I just want to understand the management's priorities at this point in time.... So if you have a branded acquisition, which will obviously be slightly more expensive when you compare it to an API acquisition, given the nature of the businesses and the, you know, ROEs that this business can potentially generate, what would be your preference, you know, between the two? Yeah, I hope it's a seller's market now. And we also have very clearly defined framework, which we have mentioned earlier. But then we realized that we need to be a little more flexible. And though our intent is very clear, that we will have sustainable, profitable growth in the business, that's what will be the guiding principles for us. But it depends upon what kind of opportunities we get. Yes, formulation business definitely would be important, provided it comes to us at valuations which we feel are okay. We have opened up to API also. Of course, when we are looking at API, we will definitely consider the margins for that API business. We for... This is a limited comment I can make at this stage, Aditya. Thank you, Yugal Sikri. Thank you, Vishal. All the best. Thank you. Thank you. Ladies and gentlemen, a reminder, if you wish to ask a question, please press star and one. As there are no further questions, I now hand the conference over to the management for closing comments. So, thank you so much for being here to listen to the details of the board announcements. And I just want to indicate that this transaction, these board announcements are perfectly in line with the announced growth strategy of the organization. And this will help us to enhance our ability to pursue our growth ambitions more vigorously, largely inorganic. And if it is organic, I'm sure this corpus will come handy, but largely inorganic. So thank you so much for spending your time and being here in the morning. Thank you. Thank you. On behalf of Dolat Capital, that concludes this conference. Thank you for joining us. You may now disconnect your line.