Q1 21/22

Aug 5, 2021

Ladies and gentlemen, good day, and welcome to Cipla Q1 FY 'twenty two Earnings Conference Call hosted by Korex Securities Limited. 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Kumar Gorav from Korex Securities. Thank you and over to you, sir. Good evening, everyone. On behalf of Kotak, I thank the Tesla management team for giving us the opportunity to host their 1Q FY 'twenty two earnings call. From SIPLA, we have with us Mr. Umang Gohra, MD and Global CEO Mr. Kedar Rupadhyay, Global CFO and Mr. Naveen Bansal from the Investor Relations team. I now hand over the call to the management team for their opening remarks. Over to you, Navin. Thank you, Korex. Good evening and a very warm welcome to Cipla's Quarter 1 FY 'twenty two Earnings Call. I'm Nadeem from the Investor Relations team of Cipla. Let me draw your attention to the fact that on this call, Our discussion will include certain forward looking statements, which are predictions, projections or other estimates about future events. These estimates It reflects management's current expectations of the future performance of the company. Please note that these estimates involve several risks and uncertainties, including the impact of COVID-nineteen that could cause our actual results to differ materially from what is expressed or implied. Supply does not undertake any obligation to publicly update any forward looking statement, whether as a light of new confirmation, future events or otherwise. With that, I would like to request Kedar to take over, please. Thank you, Maggie. A very good evening to all of you. I hope that all of you and your families will stay and well. We appreciate you joining us today for the Q1 earnings call for the fiscal year 2022. I hope you have received the initial presentation that we have posted on the website. Before I come to the quarter, I hope you have had the time to review our recently published integrated annual report for fiscal 'twenty one. This is our 4th integrated annual report and reflects our related focus on improving transparency, governance and setting best into our disposal practices. Asia citizen will also give significant updates on our business reimagination, system engineering and digital transformation journey. Over the last 15 months, Iqbal has entered into multiple strategic global collaborations to support the health care we've posted in the fight against the pandemic and using our full purpose of caring for life. We continue to stay committed to servicing demand across global markets, monitoring the critical filings, continued portfolio expansion, return on cost control, digital engagement along with seamless coordination in our manufacturing, supply chain and distribution. Coming to this quarter, we are pleased to report another quarter of robust performance, which historically the highest reported quarterly revenues with a 27% year on year growth. As we have communicated earlier, we have made a conscious 8.5% and good share of the operating efficiencies and the expense of life, which has also helped us deliver sustained EBITDA margin of 24.5% for the quarter. We expect these efficiencies to continue in the coming period as well. The revenue growth for the quarter was driven by sustained momentum in our branded markets of India and South Africa as well as U. S. And ACI. As alluded in our prior quarterly interactions, we did experience significant traction in our One India business led by the strong core portfolio tailwinds the prescription and telogenics business, along with the support from the COVID portfolio during the second COVID wave in India. Excluding for COVID, the portfolio momentum continues to be on track with solid double digit growth during the quarter. You would have noticed The elevated inventory levels which have been the constant digital on our part to ensure the continuity of supply for our medicines. This also includes a portion towards the antiplate cocktail inventory that we launched in May. We continue to see strong traction in our U. S. Revenue run rate, Both are sequential and wire business led by further expansions in the undue drop of share and continued risk risk and blocking with the addition of Our core metrology in our portfolio. This has helped us offset the overall in the rest of the portfolio. Our profitability for the quarter continues to track well above our full year target. For the quarter, there is no significant increase in OpEx on a sequential basis. The Y o Y increase is in line with the core revenue growth. We believe that there is reasonable headroom to drive EBITDA on a full year basis versus fiscal 'twenty one. Our free cash generation and operating efficiency Coming to the financial performance for the quarter, we'd like to highlight certain specific items which are subsumed in the reported numbers. At a company level, the contribution of COVID It's in high single digit for the quarter and after adjusting for this, the revenue growth maintains a strong trajectory of 5 fees for the company and restricted businesses. While there is a low base rate in these numbers, we are happy to see well diversified growth in the therapeutic regions. Our reported API numbers include a profit share on the commercial sub labs and API to a partner. Our Emerging Markets, the business was slightly impacted by A time in April pertaining to in country currency allocations for our Middle Eastern supply during the quarter. We are highly optimistic That the issue is getting resolved. And as we are speaking, in fact, the initial funding release has happened. As you may be aware that South Africa in the early part of this month went through challenges related to civil protests, and turbine plant operations did not get impacted much Other than some marginal damage to equipment and storage items, we had sufficient inventory on hand also on And we look forward to starting full scale in our operations of the plant soon and resume suppliers of the life saving medicines. We have been very closely monitoring the progress of our specialty assets I evaluated options to structure this part of our business for a sustainable future. As you are aware that Aveli received the second complete response letter on IG Drim et al and subsequently concluded a Type A meeting over June July 2021. In light of this development and from a good accounting practice So I'm calling, we have taken a one time investment of INR125 crores on our investment in Avenue during the quarter. It's captured as an exceptional item. But our overall income from operations is INR 5,504 crores. Gross margin after operating cost is at INR 62.4, The 100 basis point decline on a wire basis is attributable to contribution from relatively low margin COVID and COVID Unfiltered Products and lower contribution from international market capture, which was offset partly by one time However, on a sequential basis, there is almost 200 basis points expansion, driven by the improved mix. Total expense, which include employee costs and other expenses, is INR2,094, increased by 5% on a sequential basis. Employee cost for the quarter is at INR887 crores and that's a function of the increment as well as the COVID linked compassionate release to employees. Other expenses increased by 2.5% sequentially. Total R and D investment is INR 64 crores. As a percentage of revenue, spends are lower owing to the scale of improving. The absolute trajectory is intact and the portfolio development efforts Santee, doing full screen through the quarter. The reported EBITDA is $13.46 or 24.5 percent. Stock charge It's $284,000,000 and the ETR is $28,500,000 The higher ETR is a function of the fact that we have taken the charge of the impairment. This does not have a tax shield. Profit taxes, profit after tax is about INR 7.15 crores. As of 22, our long term pay is USD38 million towards the U. S. Acquisition and South Africa ranks over USD20 1,000,000 for the operational requirements in Cipla, South Africa. We also have working capital loans in dollars and rand, which act as natural hedges towards its receivables. Given by the relentless focus on cash generation and regard on cost discipline, we continue to be a net cash positive company. Outstanding derivatives at the hedge for receivables are USD 144,000,000 South African rand 651,000,000 Aussie dollars 20,000,000 GBP 7,000,000 €5,000,000 We also hit a certain portion of our forecasted export revenues. With growth, we saw strong tailwinds across portfolio geographies for Q1. Growth driven to the subsequent quarter will include continued market leading growth across branded and consumer Overstraction in our respiratory franchise across Alutro and ArcelorMittal, sustaining and driving expansive growth operating profitability and pretax ROIC, reinvesting the incremental free cash flow into suitable growth opportunities. With that, I would now like to invite you once to prepare the business and operational performance. Thank you. Thank you, Kedav. I would like to wish all of you and your families sorry, I would like I would like to wish all of you and your families good health and well-being. Amid the looming threat of a third COVID-nineteen wave in India, our topmost priority is supporting the government efforts on increasing availability of our COVID and other life saving products. Our teams have been working relentlessly to ensure supply continuity for the entire COVID portfolio. We have also conducted large scale COVID vaccination drives for our employees, people associates and families. We have also We've initiated a compassionate relief policy to the bereaved families of deceased colleagues to stand by them and support them in these moments of grief. Coming to the strategic updates and operational performance, in FY 'twenty one, we laid the foundation of our strategic reimagination journey led by the Digital transformation of our value chain, including stakeholder engagement, R and D, manufacturing, supply chain and business functions. I'm pleased to see the continued delivery reflected in the robust performance of the quarter, driven by branded markets of India and South Africa and the continued unlocking of our respiratory franchise in the U. S. Last year, we redefined our earnings strategy both in terms of absolute and EBITDA margins at over 22%. Our EBITDA margins for this quarter came in at 24.5%, in line with our commitment to maintaining this trajectory in the current year as well. Our endeavor will be to closely match the operating profitability in the coming quarters despite significant moderation to the contribution of COVID versus last year. In India, our One India strategy continues to see seamless execution. The One India business grew 68% year on year, driven by traction in core therapies along with a contribution from the COVID products during the 2nd wave. Adjusting for the core COVID portfolio, the revenue growth was still 47% over quarter 1 of last year. While the impact of COVID-nineteen will continue to play out in line with the spread of infections and the results of the vaccination drive, We continue to witness strong volumes across core therapies, which is likely to sustain over the coming quarters. The prescription business continued the market leading performance during the quarter driven by the strong volume growth in core therapies and support from existing and new introductions in the portfolio. Our acute and respiratory nebulization businesses have also recovered well. As per IQVIMAT June 2021, we continued to deliver market leading growth against the IPM. We grew at 20% versus the 14% growth of the IPM. On the therapy side, our MAC growth versus broader market for respiratory is 14% versus a 4% anti infective is 10% versus 9% Antidiabetic is 11% versus 9%, derma is 13% versus 12% and cardiac is 10% versus 15%. Gastro is 13% versus the 17% in urology, we are slightly de growing versus the market. Cipla consistently ranked Number 2 with a market share of 8.2% in chronic therapies and grew by 16% versus the market growth of 12% as per the March June 21. We intend to maintain the market leading momentum in the coming quarter and ensure serviceability across our portfolio. The generics business delivered Strong growth adjusted for product transfers to CHL. The quarter witnessed healthy quarter flow across regions benefiting from strong demand tailwinds across the core portfolio and the other products that were linked with COVID sales. Our Consumer Health business reported healthy revenue The quarter led by growth in organic anchor brands as well as continued traction in all of the 6 consumer brands transferred in FY 'twenty one from the generic business. Coming to our North America business, we are happy to report that we have entered the top 10 generic companies in the U. S. By prescription driven by the respiratory The franchise developed a strong limited competition launches over the last 2 to 3 years. Our portfolio efforts on selection and execution have limited the impact of price erosion on our portfolio, and we hope to continue this momentum and scale up as new launches come in. The U. S. Generic core formulation Sales for the quarter were USD 141,000,000 with a growth of 5% over a high Q1 FY 'twenty one base, which included Albutrochop. It's also in line with the sequential ramp up despite incremental competition in select product categories. The albuterol share is also ramped up. And Today, Kedar has already covered the market share that we have in the external reported numbers. I'm also delighted to see the continued unlocking of the portfolio with the launch of ARFOR METROL during the quarter. Our contracted shares for ARFOR METROL look extremely well, And we are working with the channel towards achieving our fair share of maintaining adequate supplies. Our focus on 'twenty two will continue to deliver complex launches along with driving growth in the institutional channel, which will accelerate in FY 'twenty three, which we expect to be a big year of launches. On Advair, we are working with the FDA in responding to the queries and will continue to share the updates on the progress of the file. We continue to work with the FDA on the observations in the Goa plant. We record the plant with the required infrastructure to facilitate Any virtual audit in case the agency requests 1. Coming to Saga, which includes South Africa, Sub Saharan Africa and CGA, the overall region reported a robust revenue growth of 13% in U. S. Dollar terms. Our South Africa Private Business reported a 7% growth over last Yes, for the quarter. In secondary terms, we continue to maintain market beating growth of 7.6% versus the 5.7% as per IQVIA MAT. We continue to maintain the 3rd position with a market share of 6.6% in the OTC and 7.1% in the overall private market. The sub Saharan business also witnessed strong demand in markets impacted by COVID-nineteen as compared to the previous year. Coming to international markets, we include the emerging markets and Europe business. The Europe business and the emerging Business was impacted by issues of timing deferral that Kedar mentioned in his commentary. We are optimistic that this issue will get resolved and subsequent billings shall happen in this quarter. The API business reported a growth of 69% in U. S. Dollar terms and includes the profit share on the commercial supply of an API to a partner. Turning now to our outlook. We look forward to building this strong start to FY 'twenty two. The underlying momentum of our growth drivers for the portfolio continues to be robust across markets. We will allocate capital to enriching our capabilities across and digital technology platforms to enable the patient care continuum. Our near term priorities include The continued execution on the demand levers in the chronic and acute therapies improving the manpower productivity across branded and generic markets of India and South Africa Active advancement of innovative consumer centric products to accelerate the augmentation of our global consumer wellness franchise across India and South Africa Continue to lead the respiratory categories such as for albuterol and for arfometrol and strengthen and accelerate our young leadership aspirations. Maximizing the value opportunity in the U. S. Complex generics space with launch momentum and with facilities always in compliance and control and continued vigil on cost and cash management, operating margins and return on capital employed. I would like to thank you for your attention and will request the moderator to open the session for Q and A. Thank you very much. We will now begin the question and answer session. Ladies and gentlemen, we will wait for a moment while the question The first question is from the line of Mia from JPMorgan Chase. Please go ahead. Yes. Thank you for taking my questions. My first question is on the U. S. Business. We have seen a fair bit of momentum in Albatrol market share over the last few quarters. I'm not even looking at this quarter, but over the last few quarters. But our U. S. Business has been sort of range bound in the €135,000,000 to 1 This quarter, RMB141 1,000,000. Is the core portfolio seeing higher than anticipated erosion? And then do you see the net inflection in the U. S. Business, any of you? Neha, I think The portfolio actually has done quite well overall. We've grown it to this level and I think the new launches will take this The big year for launches is next year for us. We have a few launches coming this year, which will improve the trajectory further. But The next material shift will probably happen after a few quarters. Okay. More in the FY 'twenty three time frame? Around that time, because all the we're expecting launches of some of the big products then. Understood. And Kedar, on the operating cost, despite the 2nd wave and lockdown, it seems like we did see some increase in operating costs quarter on quarter, despite the restrictions. How should we look at this cost So from the current level that is reported in the Q1, as things have opened up completely, should we see acceleration of SG and A spend in the India business And other branches, Mark, is going ahead? Yes. So Neha, there are certain elements in the operating cost which are quite responsive to revenue. So with some coming shares, some data fees and all that. So I think that will respond to the revenue growth, which we have seen very high this quarter. So part of the increase is towards those variable costs. And balance is something where activity was there in the market. So a lot of other Salesforce is operating in the market. The operations and the manufacturing plants, Dayforce and All the offices is continuing. So while most of the office space staff is working on home, everything else is having a physical operation. So that's going on. In addition, there is an increase in R and D as well which is presumed in OpEx. So from what I'm understanding, other than the fact the number that is linked to revenue, most other costs is at a normalized level in this quarter? Yes, that's correct. And maybe I think sequential quarter comparison is probably more appropriate comparison as we continue to believe that We have been able to retain some efficiencies that we realized last year. Understood. And one other question, if I can squeeze in. In terms of the R and D cost, you said that the absolute number, Gine should maintain the projected efficiency. So On an absolute basis, will the spend this year be similar to what we've been doing in this quarter or more like FY 'twenty, which also included some cost or other? It will be somewhere in between, and that will be a function of how the trials get initiated. Thank you. The next question is from the line of Nitya Bala from Bernstein. Please go ahead. Yes. Thank you. So my question is on some of the complex products that you're expecting approvals for in FY 'twenty three. So Advair, for example, or Abbrexchange, for example, will these require a prior approval inspection by the FDA? And if that is the case, do you have any visibility on when that might happen? Or is that likely to prove to be a bottleneck? For the sites that are our belief is for the sites that Clear, I don't think there will be GMP inspections required. And there might be PAI inspection that could happen virtually, but for sites like Goa, which is there's probably a prior approval issue. Specifically for Abraxane and Advair Umar, would that require a prior approval in Section, this is a physical inspection or has have you any indications from FDA that they would be okay with the virtual inspection? Correct. That's something that we have to get more guidance. Okay. Got that. Second one is on India. Umu, you had mentioned that removing COVID therapeutics, the base portfolio actually grew at 47%. Would that include the benefit that your base portfolio got from COVID, for example, the Butycote or Aussie, So that's another anti infective brands as well. So does this 47% include the benefit from those COVID therapeutics? Yes, partially. It does. Understood. Thank you so much. Thank you. The next question is from the line of Anubhav Agrawal from Credit Suisse. Please go ahead. Yes. Hi. Thanks guys. Am I audible? Yes, Anubhav. Okay. Great. First question was on the cash position. So we already have got $200,000,000 cash, which is Sorry, Anubhav, we have beaten you a bit. Hello? Is this better? Yes. Yes. This is better. Okay. So I was talking about the cash question, because it's $400,000,000 right now. And with consumer estimate that will achieve double next year to $800,000,000 So in the past, you talked about expanding consumer healthcare business, etcetera, Going for inorganic initiative there also. So what I just wanted to understand what are the 1 or 2 things top of your mind in terms of different businesses You have if you're looking for inorganic opportunities, like, is consumer healthcare your top priority right now? Or what was your first or second priority there? See, actually, there is some date on the balance sheet. So I think some of those date submitting obligations do exist. There may have to be some payment towards some of the stocking, which we have done and not paid And dividend, which we have enhanced. I mean, several I mean, 2 years back, it used to be around INR 2 per share. Now we increased it to INR 4, then INR 5. So the dividend, etcetera, will get paid. But you're right. I think the cash buildup is likely to happen. And While organic CapEx may be high in selected areas like respiratory APIs, the wrong product APIs, etcetera, There might be some sterile capacity enhancements that we have to do. We will be left with sizable gap. And All the possible value, value enhancing initiatives are open, Anubhav. And that might include acquisitions, that might include other strategic uses Specifically, the targets which do often get evaluated are around India branded markets, South Branded Markets and Consumer Health as well. I mean, potentially, anything which is a longer term is a candidate. And in the unbranded generics, this is U. S. 0 for other markets, I think capacity, niche capacity is the target. So it's difficult to give with precise with precision, which target will work out and which will not. But I think the capital area is meaningful enough. The idea is to pursue value enhancing initiatives. Thanks, Gilan. And second question will be on this complex launches. So we already see generic LOVENA launched on U. S. But for the remaining of fiscal 'twenty two, how many launches are you expecting which is categorized in the category of Amplex Financial? Sorry, what was the question there? On the complex branches in the U. S, so we have already seen the generic Bovana being launched right now. But for the remaining part of the year, how many complex funds are you expecting? Bhuban, you want to take the question? Yes. Anubhav, we are not disclosing exact numbers. I think there is there are a few. And I think we will wait to launch before giving the details there. And Mohan, just one clarity on this So last quarter also you mentioned that you're responding to SG and A. So in terms of response, when do you guys think that You will go back to FPA with the completed response of the trade which you have raised earlier? I think this month. Perfect. Thank you. Thank you. The next question is from the line of Nitin Agarwal from BAM Capital. Please go ahead. Hi. Thanks for taking my question. Umam, just to clarify one of the earlier comments about the EBITDA margin sustainability. So we had 24.5 percent EBITDA margins for the quarter. So is it understanding right that for the year, we're expecting to maintain margins around these levels Despite the COVID impact not hitting in there in the numbers? No, I understand where you're coming from. We are saying that we will maintain our trajectory versus the last year, despite the last year having COVID, right? So there might be a quarter where COVID may have taken our margin to 24% or 25%. But net of that, We will continue to maintain our trajectory at the 22.5%, 23% that we have guided quarter on quarter. Got it. That's understandable. Secondly, on the India sales. Now, obviously, April may were a huge sales for industry and for especially for people like you who've done a phenomenal job in servicing the demand. Now assuming there is no major fresh outbreak of Wave 3 which comes through, how should one really think about India sales For the industry and for ourselves, for the balance 9 months? I don't I'm not sure that I can give you a You know, a day to look at it. What I can say is that minus COVID, the market should show the 10% to 12% growth. With COVID, obviously, the COVID product sales take over. So I think doctor visits have resumed more or less people are So I think the 10%, 12% growth in the market is possible, Minus the COVID impact. So last year, we had lots of COVID quarters as well. So if you take out COVID core product portfolio, it should Probably show that amount of growth for the industry. And we should continue to outpace the market growth as we've done in the last several quarters now. Yes. We are hoping to do that. But I think the market should come. So it's at the same time, I have to say, it's very difficult to predict when a wave will come or not. Right. And also there will be a shift in what gets used in every day. So I think that is also going to make a change. If I can squeeze in the last one. In the recent annual report, you had a mention about a Tight in licensing strategy, peptide products. So and there's one NDA peptide also that we filed. So can you just probably we haven't discussed much of this in the past around the septide portfolio. Any can you just throw some light on that? Well, we have about 3 peptides now in our portfolio. And peptide as an API is a it's a pretty specialized game. So we've got an in licensing strategy where we worked with some peptide companies that deliver the API. And I mean, just like everyone else, there's a lot of characterization, etcetera, that is needed in our peptide product. We're working on these 3, and I think we had alluded to filing 1. Thank you and best of luck. Thank you. Thank you. The next question is from the line of Kunal Dandaria from Wedelweiss. Please go ahead. I want to first talk about ADRAXANE. So I believe the first genomics could enter the market in March So would you be also entering at that point in time? Or would you come maybe a few months later? I think this is a settlement agreement that the innovator has signed. So I cannot give any information on this. But I don't I would not be surprised if the person who enters first has got some level of exclusivity in the market. Sure. Sure. Second question is on antibody cocktail. It Seems to be getting increasing traction from the medical community in the developed world as a means to prevent COVID infection. So I'm just wondering what your What's around this potential in India? And what are your commercialization plans? So I think India, the antibody cocktail, I think as a therapy in terms of data that's available to us now both for prophylaxis internationally, available in terms of prophylaxis as well as Both vaccinated and unvaccinated people who are getting COVID outside of India are being administered this cocktail If they do need it. And remember, a cocktail is only approved for mild to moderate conditions. So I think the use outside is significantly higher today, many fold compared to what the use in India is. And I think this market needs to be I personally think from somebody who's not been vaccinated or who's had just one shot But has unfortunately got COVID. I think the antibody cocktail has a very has a fair amount of utility, especially if the patient is very high risk, right, has another comorbidity or is high in age. So we have seen a lot of data in India where this has been administered to people and They have and even several old people, and they have had good results after the administration of the cocktail. So I think it's really a function of the medical community agreeing with this. And it will over time, we've seen that the numbers are growing of people who Who are administering it and actually even patients who are asking for it. Asking for it as an option from a doctor. And then the doctor decides whether they are eligible for it or not. So I think it's not something which is a created market. It's not a remdesivir. But it will take some time to play. But I think we stay positive based on the scientific data that we've seen on the quarterly. Sure. So it's fair to understand that it could potentially have a longer tail? That is correct. That is correct. And considering even the vaccination That is in India. I think that this I mean, the tail could be longer, but I also think the product may have More utility over a longer period of time as well. Got it. Thank you very much and all the best. Thank you. Thank you. The next question is from the line of Sameer from Morgan Stanley. Please go ahead. Hi. Thank you and good evening, everyone. Umman, just on the margins, if I see the pattern over last Five quarters for example. So, 1st 3 quarters last year had growth 23%, 24% and suddenly it dipped to 17% in the Q4. And now that you are guiding for 22.5%, 23% of this, I was just wondering, so one down quarter, and that's kind of Messerabdee, fully average. So just your thoughts on this. No. Actually, Sameer, Kedar will probably add more color. So just to stand a little corrected, I think quarter 4 for us seasonally is the weakest quarter. And it's across. I mean, the U. S. Pretty much stays where it is. But I think if you look at India sales, If you look at sales in emerging markets, it is actually our weakest quarter, right? And it's seasonal. It's not any other factor. So when I mentioned 'twenty two, 'twenty three, what I was trying to guide to was that we will try and match the previous year and Try to be higher than the previous year quarters, minus COVID. So, our base portfolio will deliver that much. Right. But in quarter 4, if there is reverse seasonality, I think the margins fall on account of that. It's not for any other reason. So I think product mix and margins fall in that quarter. So we will hope to do better than the previous quarters for sure in our core business without COVID. But I can't predict the COVID rates and how they will work. So for example, quarter 1 of the previous year had no COVID with relatively no COVID sales. But quarter 2 of the previous year has very high COVID sales. But in quarter 2, it's unlikely that we'll have COVID sales to the same amount In this quarter, but we will we are quite confident that our core business will beat last year's core business in this quarter and quite significantly. So that's how we are planning the quarter. So at least the endeavor is to beat last year's core business profitability, which we believe was in the range of 21% to 22% most quarters other than quarter 4 where Reverse seasonality reduces our margins. And therefore, in quarter 4 also, we tried to beat last year. We may not be at 'twenty one, 'twenty two. But average for the full year, we will come in at that level. Okay, Wang. This is very helpful. Thanks. And just on this Q1, there were 2 big One off item, if I can. One more fee onetime And profit share on API and versus 125 crore, I think you mentioned on write off on avenue prepudates. So if I just offset one versus the other, then would you say that your 7.15 crores net profit Is the core underlying profit for the quarter? Maybe Kedar can answer that. Yes, yes. So I think on a P and A basis, one can offset that, Sameer. But I mean, there is a growth Which is linked to Korex. So that's something which we won't be able to predict going forward. Got it. Got it. So that's a third adjustment. Got it. Okay. And just one last question from my side, and that's on the India pricing environment. Anything that you can share how was Q1, which I think is when A lot of pricing fees happened in the outlook for fiscal 'twenty two for India pricing. Yes. So besides, I mean, we don't understand your question. You are referring to the YOY pricing? That is correct. The pricing season that you would say for India portfolio. So what's your outlook for this year? And how was the Q1? Yes, yes. So that's all regulated, as you know. I think we do have almost 30% and upwards of the portfolio under VPCO of the prescription business. And that follows the WBI pattern, which was minuscule this year. And the balance one, I think we our attempt is to see to what extent Price increase gets absorbed in the market, and then we do take price increases. But would you say that for that 70% 3% to 4% increase is what is a normal and that's what you would take for fiscal 'twenty two? Yes. So actually, it comprises several buckets from here. I think one bucket is injectable where actually we do take price dips. And there is another bucket which is highly competitive and we get the call a lot to repeat everything. So I think there are 2, 3 buckets. And There is surely one bucket where the pricing window is available. And then we go to the right hand what is allowed, By the regulations. Okay, great. Thank you so much. Thank you. Next question is from the line of Harry Diamond from Spark Capital Advisors. Please go ahead. Hey, good evening. Thanks for taking my questions. Last quarter, you had indicated your plans to initiate clinical trials for a couple of independent products this year. So are we on track for this? And any have you initiated this already? We are in the process of initiation. We are not yet initiated, but I think the So we've taken out impairment this quarter. So does this mean that we will not be exercising the option to acquire the remainder of the company? Yes. I guess so. We have not yet chosen that option. I think the impairment is a function of the fact that It's a listed company, and the investment needs to get mark to market at any quarter. So Appropriate discount has been applied and the impairment has been taken. But at this stage, it's not definitive Whether we are going with it or not going, right? So that is where we are going still on. And lastly on trade genomics business. Last year, we had a very strong growth for this segment. We talked about growth of around 18% Y o Y. So, what are the trends we're seeing for this business Currently, and then what's the contribution from TradeRevix towards our One India business for the quarter approximately? That continues in the same zone if you take the COVID uplift away from the prescription business. On a normalized basis, the profit upgrade generates to overall one day is fairly in the same range which it was. And the tailwinds do exist in this Even in this quarter, I'm sure it's seen very healthy growth. And we believe that will continue. Okay. That's all for me, sir. Thank you, Nish. Thanks. Thank you. The next question is from the line of Prakash from Axis Capital. I just missed the India growth breakup, so are you breaking down into ex COVID and generics growth, please? And what we said, Prakash, is we should take the direct COVID products out. I think the 1 in the world is 47,000,000,000,000, which we have reported. And split of that into 3, we are not giving at this stage, but also you have grown in very healthy at very healthy ratios. But would it be fair to say Rx would be higher given the low base last year? Or Not necessarily. I mean, all three businesses have grown with In very healthy percentages. Okay. Got it. And on capacity and the CapEx. So capacity wise, What is our capacity utilization currently? And with U. S. Maybe coming in the next 6 to 12 months, How do we see this capacity ramping up? And what would be our CapEx requirement for this year and next year? So the CapEx is in the zone of INR 700 to INR900 crores on a normalized basis unless we choose to enhance, Let's say, some greenfield or inspiratory API or in the existing blocks. So that will be additional. But On a normalized basis, I think you should expect us to spend about INR 700 crores. And work on capacity for new launches is ongoing from the last 1.5 to 2 years impact. So both API and formulations, the work is ongoing. And at selected plants, meet Indore and OR, other places, I think With respect to Coral State launch, capacity should not be a constraint. And what would be our current capacity utilization? See, maybe plan by plan, I don't have a proper to give it to you. It varies side by side and unit by unit. So tough for me to give you one number, Pradej. But this $700,000,000 to $900,000,000 is like what, Largely maintenance with some add on or how do we think about this? I mean, are you adding some more blocks? So one theme, that's the interesting question. I think one theme which is emerging and that's Contributing to this CapEx is digitization. So I think we are on a very ambitious automation program across all of our manufacturing facilities. And be it sensors or other technologies that could get deployed, I think that work is going on. So that is something which is, as a mix of the CapEx, is going up from this year. It was smaller to the extent last year, but I think this year onwards, that But it's partly maintenance by growth CapEx but Not necessarily in terms of new currency. Thank you. The next question is from the line of Vishal Manchanza from Nirmal Bank. Please go ahead. Hi. Thanks for the opportunity. Could you give us a guidance on R and D spend as a percentage of sales, How it would look in FY 'twenty three? I believe, Ghishal, R and D Spend is a function of the portfolio and the activity, okay? So based upon certain High state activities like clinical trials based upon which quarter or which year they fall into, I think the overall Percentage of sales would get determined, but that's the corollary. I think we don't have a percentage of sales on here. What we try to do is as long as the product has I think we initiate and continue the development. So tough to give you. But over long term, I have seen, I think, At a scale up which we're seeing on the Vemeko line, I think anything of the sales performance should be enough Okay. And just one more. Just a clarification on the Profit contribution that you have booked as part of the API sales. So will this not record in subsequent quarters? Yes. I mean, it's for the quarter. So we have received that share for the quarter. Unlikely, it will be at back levels in the balance quarter. It will be slightly lower and Significantly lower. It will be more operated to a great extent. The next question is from the line of Sujeet Pal from Pravadag Kleelander. Please go ahead. Thanks for the opportunity. You have guided that you will be, in your formulation, will be beating the IPF. Could you please give some idea? I mean, I can understand the IPM. What could be your idea of IPM growth and what could be your book in that area, Yes, yes. So Suraj, I think Mohan clarified that. I think what you said is on a normalized basis, you could expect pipeline to be between 10% to 12% On a non COVID basis. But I think the whole thing is becoming a bit smarter to take COVID out or the, what we call as an extended COVID process I think there is a large set of products which do benefit from the COVID. So let's see how does it It was on a month to month quarter, a quarter basis. But we do hope that we'll be able to outperform the ICS. Okay. And in U. S, when could we expect that typical range which we are seeing of, let's say, is RMB140 1,000,000, RMB145 1,000,000 per quarter. So could we expect that range could be crossed and getting into new hires? That will be a function of a meaningful launch. And I think let's see how does the coming 3 quarters go And how does the next year go? But that will be a function of a large mix of launch. But any guidance that when could you see that barrier to be broken? Surjit, not at this stage. I think let's take it as the way it sounds. Thank you. The next question is from the line of Surya Patra from Philip Capital. Please go ahead. Yes. Thanks for the support, Surya. First question is that on the COVID side, you see that this Antibody cocktail, that is still not, I think, part of the common treatment protocol for ICVA has released. Any specific reason for that, means whether it is because of the availability is limited and that's why it is not being part of the common treatment protocol. And also if you can just add something on the Modern AveXin opportunity, what it is being talked in the media And the approval that is also that we have seen. Yes. See, the work is on. I mean, there's no specific reason why it's Not the work is on it. Let's see how it pans out in the coming years. But on the availability, there is no constraint at this stage. I think The awareness among the doctor community continues to be high. And we do hope that wherever it's required, I think it gets picked up On the market? So that's on the cost then. On the Moderna vaccine, we have spoken in the past that There is no commercial arrangement in place, and our arrangement For facilitating the importation was only for the donated bank. Okay. My second question is on the potential benefit that we can get Out of the kind of top 10 positioning that we have achieved in terms of prescription generation in the U. S, despite being a kind of a late entrant to that market, We have now achieved a kind of sizable position in terms of prescription generation. So given our specialty product portfolio and All this innovation product pipeline and all that, can you give some sense how you'll be capitalizing this achievement for your subsequent pipeline and hence better growth, qualitative growth in the U. S? No, I think you have seen over the years a bigger basket of portfolio. I mean, reputation and credibility for A sound supply chain and customer relationships always help. All the factors come together along with your ability to long term time. I don't think these are the, Obviously, some of the fundamentals of the other exciting. And in that sense, I think this helps us. Okay. Okay. But you have no specific, like, okay, the pipeline, what you are building that would be meaningfully benefited Or it is just a facilitation or something or you think that even a much demanded product like The revenue which is going to be there in the portfolio, which is a 4 gs selling like this will really be complemented significantly. Do you see those kind of scenario, Amazigh? No, very interesting question. And there are off rates of synergy, which is inherent in portfolio, in supply chain, in customer relationships, It's in, as I said, ability to launch on day 1. So all of those come together. And obviously, every factor would support Okay. Just one clarification, Kedar. So Rather, two clarifications. One is on the global consumer business front. So what is the profitability of that business or Whether it has achieved breakeven or if not, then when do you think that it can be achieved? And secondly, on the depreciation side, See, last few quarters, almost 8, 9 quarters that it has been flat, although there is some or other kind of CapEx that has been continuing. So any specific reason, just a clarification, please? Okay. So consumer business comprises the India and South Africa. South Africa It's a very healthy and profitable business. The Indian part is incubation, but we do hope that We achieved a breakeven soon enough. So I wouldn't want to tell you whether this quarter or this year, but the target is to Get to a breakout scenario soon enough on that. So that's on the consumer business. And your second question was on depreciation. I think that line includes I think what is happening is the there's an interplay of depreciation and amortization in that line. The fact that some of the acquired intangibles are running from their useful life, I think that gets to work in the last couple of years maybe. So that must be what's happening. But I can check and come back. Sure. Thank you, Nikhil. The next question is from the line of Forum Barak from Choice Investment Equity. Please go ahead. Hello. Am I audible? Yes. Yes. Congratulations on a good set of numbers. I just wanted to understand as the North America shines Yes. Albuterol has a overall generic albuterol market is a large market. And there is a meaningful headroom for us to grow even on the current day. I think that's where we are targeting. It will stop to give you specific So targeting the top market share, but you're seeing the traction every month over the last 40, 50 months, the amount of products. Okay. And that would be a good time. Okay. And so you spoke on the new launches in the next year in North America region. I just wanted to understand how much percentage of the sales would it be for new launches? I think that and it's extremely difficult. Just timing and decision here. Okay. And on the India business, I just wanted to know like how much percent of the branded business would be the Branded portfolio would be your Pingas business? That would be upwards of 70%, 75% Ladies and gentlemen, we'll take the last question from the line of Krishnendu Saha from Quantum Asset Management. Please go ahead. Yes. Hi. Thank you for giving the question. Kita, just once again, sir, from Aldebo, hello? Yes. Just Just to get an understanding of the margin, sorry to come back to the margins again. If I look at the revenue, just on a quarter on quarter basis, it's just because of the COVID and the India business is doing well. Besides that, Besides API a little bit probably, in every region is like flattish or flattish types. So what I'm trying to understand is the EBITDA margin and with the cost In Manpower and Materials, there's a shape up of 1.5%, 1%. So going ahead, just to understand the EBITDA margin a little bit more. Do we see, 1, the costs being contained at the absolute level as it is right now at the till the EBITDA level? And what happens if The COVID-nineteen starts falling in the next two quarters. So how does it look? Just I know you said it's 20% to 25% 23% margins what you're going to get. But just can you is it because of a lot of being driven by cost or a lot of being driven by revenue? Is there a lot of because of that and when the cost come back, that's what I'm trying to understand. Priscilla, I will give you 2, 3 pointers to help you understand how it will evolve. So firstly, the gross margin of COVID products we have seen usually lower than the 4 or so the reported gross margin, okay? So that makes us think determining how much is the gross margin going forward. The OpEx includes a portion which is linked to sales. So there are coming sales and other discounts and some of the data feed, etcetera, which are linked to sales. So I think to the extent sales Move up or down, I think that portion of the OpEx would change. And R and D is basically based upon the progress of respect to market. So I think that's how The P and L would get stepped up, which can do. But I think like what Omar clarified that our attempt is to, despite not having as much COVID as last year, Our attempt is to beat or exceed what we reported for the last year. Sure. And just last question on the Bravada point, we just I got to understand like you got 11% market share. Do you think it's going to be meaningful going ahead perhaps for us? Yes, yes. It will be. It will be. The contracted market share, by the way, is far higher than what we've reported. Obviously, there's a lag effect, but it is an important product. And in Proventil, what is the market share you can give us for that, if possible? I mean, it's Kanti, double digit, I can give you the exact More than fair share. We really have more than fair share in our market. Sure. Thanks. Best of luck. Thank you. Thank you. Thank you very much. I'll now hand the conference over to the management for closing comments. Thank you. Thank you so much, everyone, for joining us on the earnings call today. In case you have any follow on questions, you can reach out to us or write to us at investor.today@supplier.com. I wish all of you have a great evening ahead. Thank you so much and stay safe. Thank you very much. On behalf of Corex Securities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.