Q1 21/22

Aug 13, 2021

Good day, and welcome to the Aurebendos Pharma Q1 FY22 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. I now hand the conference over to Mr. Arvind Botha, Investor Relations. Thank you, and over to you, sir. Thank you. Good morning, and welcome to our Q1 FY 'twenty two earnings call. I am Arvind Bothraff from the Investor Relations team, Aurobindo Pharma Limited. We hope you have received the Q1 FY 'twenty two financials and the press release that we sent out yesterday. The same is also available on our website. With me, we have our senior management team represented by Mr. P. V. Ramkrishna Zandi, Chairman, Aurobindo Pharma USA Mr. N. Govindrajan, Managing Director, Aurobindo Pharma Limited Mr. Sanjeev Dhani, CEO and Head, Formulations Mr. Santhanam Subramanian, CFO and Mr. Swamy Iyas, CFO, Aurobindo Pharma USA. We will begin the call with summary highlights from the management followed by an interactive Q and A session. Please note that some of the matters we discuss today are forward looking, including and without limitation statements relating to the implementation of strategic actions and other affirmations on our future business, business development and commercial performance. While these forward looking statements exemplify our judgment and future expectations concerning the development of our business, A number of risks, uncertainties and other factors may cause actual development and results to differ from our expectations. Aurvino Pharma undertakes no obligation to publicly revise any forward looking statements to reflect future events or circumstances. And with that, I will hand over the call to Mr. Santhanam Subramanian for the Q1 FY 'twenty two highlights. Over to you, Subramanian. Thank you, Arun. Good morning, everyone. I hope that all of you and your families are safe. So while the fight against COVID-nineteen is ongoing, at Karamintu, we are committed to ensure the safety of our employees and to ensure business continuity is maintained. However, Q1 FY 'twenty two witnessed an increase in overall cases, which resulted in third partial lockdown in various parts of the globe and affected the past normalization. The total performance Ladies and gentlemen, thank you for patiently holding the line. The line of the management is fully connected. Thank you and over to you, sir. Can I start? Sir, we will now discuss the results for the Q1 of fiscal year FY 'twenty two declared by the company, please note that we'll be discussing ex natural numbers throughout the call. For Q1, the company registered a revenue of INR5702 crores, an increase of 2.9% over last year. The EBITDA due to products and other income improved by 5.6 percent year on year to INR1209 crores. EBITDA margin for the quarter was 21.2 percent and improvement of 50 bps over the corresponding previous period. The margins improved on a year on year basis, despite large cost export incentive benefit as well as continued ramp up in R and D spend during this quarter, which is accounting to almost INR180 crores. The net profit increased by 8.9% year on year to INR770 crores. In terms of the business breakdown, Formulation business in Q1 FY 'twenty two witnessed a growth of 2.7 percent year on year to INR4890 crores and contributed around 85.8 percent of the total revenue. Revenue. FCA business contributed around 14.2 percent and structured revenue of INR 812 crores for the year. For the quarter, the revenue from the U. S. Market declined by 1.5% year on year INR 2,681 crores. On a constant currency basis, U. S. Revenue marginally increased by 1% year on year to US354 million dollars We have received the final approval of 400 and launched 5 products in the quarter under revenue. We have filed 8 MGAs, including 2 injectables during the quarter. Revenue from Pharma USA, the company making the oral products in USA, has decreased by 9% year on year for the quarter in year terms. Revenue for automotive to injectables even increased by 22% year on year to RMB62 1,000,000 for the quarter, and we hope to see continued growth in hospital football improve. We have filed a total of 150 injectable ANDAs as on 30 June 'twenty one, out of which, RMB 98 which have received the final approval, and the balance RMB52 are under review. The company on 30 8 June 21 has filed 654 ANDAs on cumulative basis, out of which 4 51 as the final approval and 59 having tentative approvals including 8 ANDAs which are tentatively approved under the Fed 4 under balance 1 charge for ANDAs under review. For the quarter, below formulation revenue dropped at INR1583 crores, an increase of 19.7% year on year growth. For the quarter gross market mix matched a growth of 13.7 percent to INR329 crores. The quarter's performance was led by strong growth in Brazil and South African business. For the quarter year, we did not stood at INR296 crores, degrowth of INR 30,300 year on year on a high basis last year. R and D expenditures were INR358 crores during the quarter, which is 6.3% of the revenue. Net organic capital during the quarter is around $64,000,000 The average profit rate was RUB73.6 million in June 'twenty one and RUB72.867 in March 'twenty one. Net cash to improving investments at the end of March at the end of June 'twenty one was RUB1.5 million. The average amount cost is RMB1.1 million due to having multiple currency load. This is all from our end, and we are happy to take your questions now. Thank you. Thank you very much. We will now begin the question and answer session. The first question is from the line of Anubhav Agarwal from Credit Suisse. Please go ahead. Yes. Hi, good morning to all. First question you mentioned in the presentation you bought certain NDA and OTC brands. How many you bought and which areas they are in? Can you give more details on this? Hello? Am I audible? Yes. Can you repeat the question on the go? Yes. I was asking that you mentioned about acquiring certain ANDAs and the brands. Can you talk about how many ANDAs and brands you've gotten and what's the revenue contribution and some more details of the areas they are presented? Sure. Swamy? Yes, sure. Thank you, Anubhav. So, in June this quarter, we had purchased about 9 currently marketed OTC brands and 6 NDAs. As we had articulated in the past on capital allocation, we look at opportunities that are cost beneficial and then or to market go to market or for product portfolio expansion. Hello? Can you hear me? Yes. Typically, we evaluate medium sized opportunities that can complement our portfolio. And these 9 currently marketed OTC brands are available for revenue. And we expect about $30,000,000 to $35,000,000 in the 1st 12 months and we expect to grow these plants. So that's about the OTC brand. So, were there any contribution from them in this quarter or they came only in the end of this quarter? So, this we got in the middle of the quarter literally and to reduce the transition periods, we did not have much contribution in the quarter. But going forward, we expect some contribution on this. And what about the A and D, fixed A and Ps? Which areas they are in? And can you give some more details about this? So, there are actually 6 ANDAs and these some are ready for marketing and they are currently marketed. And one more NDA will be launching in due course. These NDA we anticipate close around $30,000,000 annually on these Okay. And just second question was on the Cronos acquisition. So, can you talk about how many products can be commercialized in next 1 year and the 2nd year from the holistic approved products in the 42 weeks they are filing? Yes. Anubhav, I'll take this opportunity to talk about the Cronos and give you a total overview for the benefit of the to the investors and analysts. See, the Cronos company has formed in 20 fifteen-sixteen, and it has been going on. And that's another company by name, Cronos LLC, also there in U. S. We have subsidized the U. S. Company as on 1st July 'twenty one to make it 100% subsidiary, right? So the numbers reflected in the press release are reflecting only the statutory numbers. However, if you take the pro form a financials of both the companies, last year, the combined entity on a pro form a basis achieved more than RMB13 1,000,000 turnover. And this year, already in the first half of the year, it has achieved more than RMB6 1,000,000, and they are pretty confident it will exceed the last year number during this year. And if you really go into the if you really get into the overview of that, this is this plant this company is located in Hyderabad on a 10 acre land, which is a seasonal unit, and the plant is constructed on 2.25 lakhs square feet. And they are working on multiple business segments. 1 is the oral and second, injectables. That is the chloroper injectables and CMOs, etcetera. Totally, they're already working total products as of yet is around 67 products. Out of that, if you say, and in pipeline, if you say injectables, it is around 40 and other non injectable, it is around balance 27. And the complete of the exhibit batches pertaining to 32 products, more than 32 products, and filing has been completed for 32 products. And they got approved and that's to the tune of 6 numbers. And this the unit is also having a very good R and D facility, etcetera. And to some extent, Aravindo also supplying some APIs and that, etcetera. We see a lot of good financial I mean, going forward, we see a lot of synergies, etcetera, in this company. And that company has been already invested to that more than $45,000,000 by way of plants and machinery, I mean, intangibles and the development, etcetera. And I mean, I'm sorry, most I mean, around $50,000,000 already, they have infused it. And we are doing only a primary infusion into the company, thereby increasing our space to 51%. And we will be having the management control. And we see a lot of growth coming down the line 3, 4 years. And even though we are not giving maintenance or etcetera, I mean personally, not earning those views, it can be another big I mean another company like Naturo down the line 4, 5 years. Any more questions? Yes. Just one clarity. So after your infusion, what so the $50,000,000 is now what number after the infusion? No, that $50,000,000 the cash is getting into the system. So it becomes more around more than $100,000,000 But can you also talk about how many products, like out of the 6 products, when do we sometimes being launched in the market? Yes. This product, 6 products, which are all mostly 3 months and they're being working with multiple guys. And that inspection should have taken place, U. S. Inspection, as on March 2020. And because of the COVID, it got record and they are expecting the inspection to take place somewhere by end of this year or early next year. And at that time, the product which have been filed, I mean, as long as it is around 22, which will be taken up. And the management is pretty confident going forward, things will look very good. Thank you. The next question is from the line of Damiano Bikaria from HSBC Securities and Capital Markets. Please go ahead. Hi, good morning. I hope I'm audible. Yes. Yes. Okay. So my question is again on Cronos. So like what is a key rationale that we have looked into Animal Health Business? We used to understand we are very well placed in terms of growth drivers on the pharma side where we are working on multiple future drivers. So what has really prompted to look you at the animal health business? Like what kind of business attractiveness or long term, I'll say, positives which you have seen for the business? If you really more than $10,000,000,000 And the product for which will be 67 products will amount that possible market will be more than I mean, around $2,000,000,000 And as growing as we're mentioning in the past, we have different business segments run by different senior people. And they will be growing the company in their own way. I mean, it is not that the entire thing is listed from the stock alone. So this helps to increase the I mean, increase our revenue share in U. S. Market going forward. And there are also mostly in the injectables 40 products in injectables out of the 667, which also will help us to have a firm understanding going forward in the animal health portfolio. Okay. And sir, I just missed like pro form a revenues, you mentioned how much like In pro form a financial, the turnover for last year is more than $1,000,000 And this year, management is very confident they will exceed it. In the 1st half year, they have already achieved $6,300,000 or $6,400,000 This is only with the fixed products, outsourcing products. The real manufacturing, the inspection has to take place and all the 67 minuteus 60 to 61 product have to come into play, which is not that as ramped. Down the line by 'twenty three, I would say, April 'twenty three onwards anytime, the entire manufacturing will start contributing. Okay. My second question is on what is update on the COVID vaccine front? Last call, you mentioned we will be starting some stockpiling manufacturing in July. So just if you can update on the COVID vaccine front, please? Just to recap what we had mentioned in the last call. We have said that the clinical trial was yet to start and the clinical trial is being initiated by Xfinity, which used to be like called as COVAX and they were we mentioned that we see an opportunity in terms of doing contract manufacturing based on their Taiwan approval. And they've already placed orders for 30,000,000 doses. I think that they would pick up based on the approval of Taiwan, which is expected in the next few weeks to a month or so. So based on that, that contract manufacturing will pick up. And sir, what is the progress on clinical trial front? I'm sorry, what is it? On the clinical studies which are ongoing for the vaccine, what is the current status? Clinical trial for PPD is only Phase 3 has been started. And as far as the COVID COVAX or rather vaccine vaccine is concerned, I think they are yet to start their Phase 2, Stroke 3. That I think they've already going ahead have appointed certain CROs as well. They should initiate it in the next few weeks. Okay, sir. I'll get back in the queue. Thank you. Thank you. The next question is from the line of Satish Arthud from Nepal India Mutual Fund. Please go ahead. Yes. Hi, everyone. Can you help us understand the history of Cronos Pharma in terms of how they have grown? Have they done any equation? Who are the owners of this Cronos Pharma? And is it a related party transaction? Yes. This has started in 2015, and they have been putting a plant, and that plant has been constructed near Sancharbaz Airport, which is FEZ zone, and we have personally seen the plant also. And it's a very good plant actually, and it's FEZ zone. And they were about to get the U. S. Inspection last day, March 'twenty. Somehow it has not happened due to COVID, and we said it is happening. And this has been the U. S. Business has been done as we are selling and distribution arm and which has been merged with this company, I mean, made as a subsidiary company. And this is the thing. And we have also gone through the prescribed heavy guidelines, etcetera, etcetera. This is not a belated party, right? However, what we are telling is we have taken the precaution to ensure the entire transaction with our found, and we have taken the consult at the legal fraternity, everybody. And are the 66 filings which they have under development, whether organically developed or there were some occasions they had done in past for then 2 weeks? Out of 67, I guess, 6 have been bought and it has been we have been using the outsourcing to do that. There were 61 products which have been organically developed and they are waiting for the inspection as a I mean, I'm repeating, they're waiting for the inspection. And out of that, 40 is injectables. And for the second, for the $107,000,000 OTC brands and the ANDA which you acquired as well as this one, would you need a shareholder approval? Yes, we are consulted because these are all different transactions and these are all only ANDAs, right? It is within the tolerance I mean, within the limit which has been prescribed under our secretary as well as we have consulted the expert, and it is not required any shareholder approval. And even for the return, this Cronos Pharma, you won't require shareholder approval? It is not required. Okay. Thank you. That's from my side. Thank you. The next question is from the line of Shyam Srinivasan from Goldman Sachs. Please go ahead. Hello, can you hear me? Yes. Hello, can you hear me? Yes. So I was asking about the global injectable sales. If I look at it, what was the number for the quarter? And if you can also share us given the kind of we have moved things we are trying to subsidize and make a UJEA kind of this one. So structure, so can you help us understand where the overall revenues are? I know you have given a guidance in the past, but just to understand on the profitability front as well, can you help us understand that? Yes. The global ingestible number is around $102,000,000 I mean, we'll ensure that next component we are ensuring it is there. And second is, yes, we have been we have taken the approvals and we have informed the stock exchanges and the MIPTA community that we are going to subsidize that and we have already taken necessary action. We have taken the one set of approvals, regulatory approvals and the second set of regulatory approvals will happen. Hopefully, everything goes well. By 30th 31st August, we will try to complete it. Subbu, sir, anything on the profitability? Anything that you can share? Anything? I don't understand. Please, can you What is the profit margins for the global injectables? Is there something that you are sharing at this point of time? How should we look at that business? See, we are not giving the injectable margin number. And however, we are not inferior to any of the competition or anybody, right? We are not giving any specific numbers. So I have to answer you, the long term whatever we have projected last quarter, yes, that is that growth story is still intact. Okay. So, going there was like a $650,000,000 $700,000,000 target for global industry, correct? Yes, sir. That story is still intact and that is what is our goal and that's what we are working towards. This quarter to quarter differences may not matter. Like I think we will we are still confident about achieving that goal, Shyam. Got it. Second question is on the U. S. Oral solids and the U. S. Performance is like Q o Q decline. So we are comparing like for like with 4Q. I'm not really with 1Q. So what how are you seeing the theme there in terms of pricing environment, new launch momentum, if you can help us understand? Pammi? Okay. Yes, I can take this question. Yes, thanks, Shyam. So we had slightly better growth during the Q1 of current year. We saw some price erosion during the quarter and primarily due to buildup of inventory across the packaging, across suppliers due to decreased demand. So price erosion was in, I would say, upper single digit percentage wise, which is higher than normal. We cannot estimate the duration at this point precisely, but we believe the negative impact could be offset with higher volumes and new launches for this year. As you may know, we are today the largest supplier volume and we plan to keep increasing this as we have a large portfolio. Yes, Soumy, just any launches you would like to call out for the remainder of the year? Or are we sticking to the 30 plus launches 30, 40 plus launches for the full year? Yes. We would be 30, 40 launches. 30, as I would say, about 30 plus launches in the year. Year. The next question is from the line of Kunal Jandebia from Middle East. So So just one clarification, what's the management of Cronus or listed the Cronus founder associated with Aurobindo Pharma in the past? So, can you repeat the question that we are clear about what we are answering? Yes. So, was the founder of Cronus Pharma associated Aurobindo Pharma maybe a direct line on the subsidiaries? We have dealt with them in the past because in the past, there are transactions we have done. And even today, we continue to do transactions with them on other entities. Does that answer your query? It does. But as of now, he's not a part of Aurobindo Pharma. Right? He has never been part of Aurobindo Pharma at all. Okay. Fair enough. Yeah. That that answers my question. Sorry? Ladies and gentlemen, we are really sorry for the incident that happened. We have the management to disconnect it. Thank you, and over to you. We sincerely apologize for this call. I mean, I think the quality of the call was really pathetic. We are really sorry about that. Can you connect the gentleman who was asking the question, madam? The person is in the line, sir. Did you get your answer? Yes, yes. I did that. I did that. Thank you. And just one more question. Can you just you're developing 5 biosimilars. So can you share some time line? Because I think you have revealed that you may be filing sometime this year. So what are the time lines, please? Okay. As far as let me answer that. As far as your the first two products are concerned, we have clearly mentioned that those two products with an extended Phase I would get filed during this financial year. And 7 months is a typical time line that you would expect an approval because these are defined time lines as far as the first two products as far as Europe is concerned. There are there is one more product and which will get ready, which will get filed by next year, financial year. And you can expect every year, oneone product getting added to the portfolio. 1 to 2 products depending on the length of the trial, it would get added. So as far as Europe is concerned, whenever the filing happens in 2 10 days, you can expect that rule. As far as U. S. Is concerned, depending on is it the first set of products are already reviewed product, the timeline would be defined. You can take it as an approximately 18 months as a timeline 12 to 18 months as a timeline for approval in the U. S. Depending on the complexity of the product. Does it answer your question? Yes, sir. Just one more clarification on this. So the first U. S. Approval U. S. Filing would be after the European filing, correct? No, before March, we are filing one product. No, 2 products we are filing before March. And in Europe and UK, 1st product we are filing next month. This is what and subsequent year, we can 'twenty two, 'twenty three, we are expecting to file in U. S. 2 products. That is the thing. Sure. And do you expect R and D to go up now? No. Maybe. Nowhere, it was Subbu, can you answer? Yes. See, we are already at 6%. Probably with the turnover going up, I mean, the denominator will go up. So probably we may be 5% to 6%, but depending upon how we see it, right, it depends upon many factors. While we are very clear about we are going to do the clinical trials, etcetera, How to optimize it, we are working on that. The next question is from the line of Vishal Manodhanik from Motiva Losa. Please go ahead. Yes. Thanks for the opportunity. So just would like to understand the progress on the PLI scheme, please. Okay. We have already sought some clarification from the government. Based on the outcome of that, I think we will decide the way forward. So we are all geared up for moving forward, but we wanted certain clarifications, which we already saw from the government and the project agency. So the financial outlay would start from, let's say, in FY 'twenty two or FY 'twenty three onwards? So the financial outlay will start even it will start this financial year ourselves depending on when we receive the clarification. If it is a clarification, let's say, and if it is meeting our requirements, the investments can start in the current financial year itself. Sorry to drag on this, but can you just elaborate on this clarification? Like any major hurdle on starting this project? Clarification is in terms of including certain products as part of that. If you take an example of Penicillin G, we also wanted clarification on whether 6 APA should be part of that or not because when we produce 6 APA, we need not necessarily isolate PEN g. And also 7 ACA along with that, I think we wanted D7 ACA, which is also like a migration which is happening as a starting material in cephalosporins. The next question is from the line of Sarkash from Axis Capital. First question is on the U. S. FDA update. If you could give us we hear that inspection for one of your facilities have started. Is there an update, please? Okay. Unit 1 was audited by U. S. FDA for 9 days and the audit got concluded yesterday. There were there was a 4/83 issued with 7 procedural observations. And we will be responding as per the prescribed timeline and go ahead and work with the agency towards moving forward. And just to clarify, these are the foreign FD inspectors or from the local agency? This is a foreigner based out of the Delhi office. Okay, got it. Thank you for this. And secondly, just picking up thoughts on the U. S. Pricing pressure that we are seeing. So Q on Q, there has been some pressure. So what is this pressure? I mean, what we are seeing on the market on a little what is changing in the market? I mean, we've been growing single digit. We have a very strong portfolio pipeline launches are happening. So what are you reading on the market? What has really changed? Or do you think this is more temporary? Okay. Swamy, I'll take this one. I'll take this one here. So Prakash, basically, as Swamy had explained earlier, our strong belief is that because of the pandemic, people have stocked more material than the need or the consumption. So obviously, we see this as a time period or a phase where everybody has to liquidate the stock, which they have built more than whatever is actually needed. We believe, I think and there are certain things which are happening currently, may not be sustainable. I think so what we are talking about is now the stock is not only with the seller, it is also with the distributor. Once these are offloaded, we expect the normalcy to settle in. And we always have maintained that a 5% erosion is something we also budget for. This time it has been more as already explained by Swamy. So this is a phase in our opinion should pass. We are not giving a specific timeline because we need to know how much stock is being held by everyone, how much time would it take to get liquidated. That's the reason we are not giving a specific timeline. Since we have enough opinions for the future after this phase is over, we are still confident about the growth. So, this year, we still maintain, we'll be able to see growth on the last year's base? It depends on the stock liquidation, as I had explained, Prakash, because we don't want to give a general answer, yes, we are confident because in case the liquidation takes some more time, so that some more time will happen. As you are aware of it that I think we still have a significant portion of our products, I think, which are competitive. As you know, the 60%, 65% of our portfolio is within the top 1%, 2% or maximum 3% in terms of the 1, 2 ranking. So obviously, I think our story is intact. We are confident, as Swamy had explained, like I think the products are awaiting approvals and would be launched. And we are confident about the future. In this space, we are not able to clearly say that like how long this space is sustained, but we are really confident about the growth as we progress beyond this space. Understood. And one more on the rationale or the thought process behind so we already have a very, very strong pipeline of 174 products under different dosage forms. And we have gone and bought this $100,000,000 asset, which has some OTC and ANDA. So on an overall scheme of things, we are doing TIFO, we are doing complex injectables, we are working on biosimilars, vaccines. So these are much larger assets. So I'm just trying to understand the direction of buying such smaller assets A and B also the veterinary piece coming in. So I mean, what are we signaling, I mean, in terms of filling up the gaps? Do we see more such smaller assets going forward? Or we focus on the larger assets, which we are developing organically? I think we are not talking about one against the other, Prakash. We never we are not talking that. Number 1 is as far as the ANDAs are concerned, they are absolutely complementary. See, today in the generic industry, let us be clear about one particular fact. At the time of filing, every product looks like a great product and that's how every company for every product it is filed. But at the time of launch, you cannot predict like I think how many players would be there, how much erosion would happen. And if you're getting an opportunity for a certain portfolio of products, which is going to complement your existing portfolio, you should go for it and that is a strategy which we have adopted in terms of getting those portfolio. Because tomorrow, like I think these products also have enough opportunity for their own growth and that was evaluated based on that. We went ahead with that. As far as the veterinary business is concerned, the one part is like you have to remember most of these APIs I think are also coming from our facility and we clearly see this is a good business to be in. That's how we are going ahead with it. Doesn't mean that when we get into, let's say, your portfolio or existing portfolio will dilute or we are focusing on return, it doesn't mean that we will Hello? Yes, sir. Ladies and gentlemen, it needs to be connected. The line of the management is disconnected. Ladies and gentlemen, thank you for patiently holding the line. We sincerely apologize for the disconnection which has happened. We have the management line reconnect with back. Thank you and over to you. Mr. Prakash, please go ahead with the question. So I had a question regarding the rationale of buying these smaller assets and do we see more of such assets in the future to fill up the gaps, if any? I think I don't think that we are kind of banker to go and chase anything like that as far as these smaller assets are concerned. The smaller opportunities are concerned. As we had articulated in the past about the capital allocation, we are very clear that we are not looking for any large ticket acquisition. But if there is an opportunistic, let's say, asset type India is available and which can actually complement to our portfolio, then definitely we will look at that. Even in the future, if anything comes up, we'll look at that in either in Europe or U. S, I think we'll definitely look at it. But I would also agree with the fact that you will not get such opportunities very many because as we have a larger portfolio, only that makes sense only we'll be looking at it, not that we'll be taking a look at it. Okay. And last one for Subbu sir on the gross margin side. So one is U. S. Pricing pressure. The second I picked up is the ARV sales are down. But why gross margins have dropped? So is it function of raw material and lower sales or there is more to it? And what is the outlook there? No, it is basically the change in the product mix now because in U. S, typically the average margin will be more than the company average margin. And if there is a drop in the space, obviously, the drop margin will get reduced. So is there an outlook for this? I have said that. Having said that, we have worked and then ensured that overall as a company, the gross margin and the EBITDA margin is not affected. Yes, I mean, I could see significant cost controls, but question is on the gross margin outlook, sir. So how do we see this going forward given the U. S. Pricing pressure is here to stay? You're right. But I mean, at this stage, we need to see as explained. We need to see on the price erosion and what are the impacts. Probably, our endeavor will always to ensure that we move towards 60. That is what we always have the standard at 58 and move towards 60. That's all. Because of the temporary nature of this price erosion, because of the COVID related and other things, we had a small setback, but let's see whether it is a one off or we will consume off it maybe down the line in 2 quarters. Okay, perfect. Great. Thank you all the best. I'll join back with you. Thank you. Thank you. Thank you. The next question is from the line of Chirag Davey from BHU Mutual Fund. Please go ahead. Yes, sir. Thank you for the opportunity. Hello. Am I audible? Sure, Chirag, go ahead. Yes. So I was just seeing more players in your base products, the older generic product. And if you can just broadly split pricing erosion between what you see on the base and some of the larger products, which are slightly less competitive. Is there a mass difference in the high single digit erosion between these two categories? Okay. As we have not said, is due to that, the costing of I mean, all the players because when there is an opportunity, everybody thinks that this requirement is sustainable and they always would like to have more materials than what is needed. The offloading of such stock is what we are seeing as a major reason. 2nd is, as you are aware of the fact that for us, any product we don't depend on very high level. I think you know that our top 25 product is approximately 32% in terms of our exposure. So to that extent that any single product, our dependence is not never has been high, Shiraz. You're aware of that. From Kronos, what use so if I heard this correctly, there's a primary infusion that your capital is going to go into the company. Correct? And it's not like you're buying out. So point is, what is the use of that capital for Cronos? What are they going to do with that capital? And also, is there debt on the books of Cronos? Yes, sir. I think this is the most relevant question. The money will be issued as a primary and the checkbook will be repurchased only, right? And this money will be used to reduce the existing debt. This is a high cost debt which will be reduced. And second, as we explained, we have to file another 45 products for which we need to pay the filing fees and we need to generate the cost on account of exhibit data, everything. And this will be closely used for that business purposes in achieving the 67 AMDA approvals. So, veterinary Unless they're not going to stop it here and they will be trying to look at more R and D related work. Veterinary A and D, the filing, there is no ANDA fee. In the end, approval will require each ANDA fee. Yes. Yes. Yes. I'm sorry, sir. What is this point here? I'm not clear. But that is the case. Unlike health care in the general one, we can we pay the money initially with the filing of A and D. In veterinary, we have to at the time of approval, we have to pay 500,000 each A and D. We require some money there for this product. That's what Subbu is telling. So these 6 products, also the filing fees, the approval fees are not fixed? Which one? You said that there are 6 approvals that have already come through for this product, for this company. Those oiling fees 3, this company has developed. The 3 products is the labeling products. Labeling means they have taken somebody's veterinary label, healthcare product. They are selling these products. These 3 products, they already they own they have developed their own, but in other units. And they filed, they got approved, and they have to launch those out of the 2 products, mainly 2 products they have to launch in next month onwards. Understood, sir. Understood, sir. Understood, understood. And so can you give the exact date as on date on this on the Cronos books? I think that'd be around INR 1.50 or INR 1.65 crores? Yes, yes, yes. Because that's what the clients the capital employed as on 30th June, the capital employed is $50,000,000 Right. Of that, R165 crores is the debt, and the balance will be obviously R8.55. Yes. Yes. Yes. Yes. Okay, sir. Thank you so much. Thank you. The next question is from the line of Harit Ahman from Spark Capital Advisors. Please go ahead. Hi. Good morning. Thanks for the opportunity. You mentioned that the valuation that was done by PwC on Cronos Pharma. So will you be able to share that with investors? No, we need to take the consent. See, 1st of all, we need to take the consent of PwC. And second, whether we need to share it, etcetera, we have to go through the process, understand what are all the issues, etcetera. So that is the thing. I'm asking because there are several questions from as you've noted on the call as well regarding the valuation of Cronos. So it will be useful if you can share this with investors. But any investors they want, if they come to office, we can read it, but I don't know, Subbu, sharing willingness to tell me. Even for also people will be concerned, we need to take it. But the simple logic which I'd like to present it is the 6 molecules which have been outsourced is already generating a revenue more than $13,000,000 even though the management is pretty confident and that they are very excited about achieving more than $20,000,000 And they were talking about achieving more than $20,000,000 We want to be Araginda as a company. We want to be very cautious in selling the guidance or anything. But their management team is pretty excited in achieving more than $100,000,000 in 3 years' time. Okay. That's all I can say. Thank you. Thank you. Ladies and gentlemen, this was the last question for today. You sincerely apologize for the bad connection quality. Hello? Yes, sir? Yes. Are the participants there? I'd like to conclude. Sure, sir. Please go ahead. The participants are connected. Good morning, everyone, again. I sincerely apologize for the pathetic quality of call today and wish we could do something about it. But if any of your questions remain unanswered, please feel free to reach out to me, and I'll try my best to address them at the earliest. I thank you for your patience and kindness today. Thanks a lot. Thank you. On behalf of Aurobindo Pharma Limited, that concludes this conference. Thank you for joining us and you can now disconnect your line.