Q1 21/22

Aug 6, 2021

Quarterly report

Hi, good morning, everyone, and a very warm welcome to IITCALABS Q1 FY22 Earnings Call hosted by Sam Capital Advisors Federal Limited. On the call today, we have representing IITCALABS management, Mr. EK Jain, Joint Managing Director and Mr. Harish Kamath, Corporate Counsel and Group B. Secretary. I will hand over the call to Mr. Jain to make some open comments and then we will open the floor for Xue. Please go ahead, sir. Good morning to all participants. Next, we are taking our time and joining us on Q1 FY twenty twenty two Earnings Call. Today's earnings call and discussions and answer given may include forward looking statements based on our current business expectations that must be viewed in conjunction with risk for pharmaceutical business basis. Our actual future financial performance may differ from what is projected or perceived. You will use your own judgment on the information given during the call. Our business performance is still better than our own expectations for the quarter. Domestic formulation business delivered 25% growth over previous year. And excluding R54 crores of domestic hydroxychloroquine institutional business, which we had done in last year's first quarter, if we exclude that, the Domestic Formulation business has grown almost around 41% in Q1 on a lower base. Some of the therapeutic area recorded a very strong performance. Our K and N products have driven almost around 36% growth, which contribute almost around 39% of our businesses. That is excluding hydroxychloroquine business what we have done with institutions. Including that, same segment has just given around 6% growth overall. Cardiovascular and antibiotics have grown by almost around 15%, which has contributed almost around 80% of the business. Anti materials has done really very well. The business from '84 has gone to almost around 54%. It contributes around 80% of the business. And overall, growth in this business segment was almost around 173% for the quarter. Thermite, another business where last year, first quarter, we were facing problems because of lockdowns and other things. The recovery has been very strong. The business last year was almost around INR 50 crores. That has gone to almost around INR 25 crores. And the business growth has been almost around INR 80 9 percent. And derma composite is almost around INR 50 percent of the business. Similarly, when and malaria since this quarter has done well, almost around 58% rate of growth and its contribution is around 6%. The 20 crores business last year first quarter has gone to almost around 39 crores. Coffee coal is another segment where continuously in last financial year, there was a decline. There is a in this quarter, first quarter of the F5, there is a sharp recovery in coal business, and it has also grown by almost around 83%, and it contributes almost around 3% of our overall business. So overall, it's a broad base. Most of the traffic area, we had very strong growth in the first quarter of the current financial. If you look at CAGR growth of domestic business in first quarter, on a base of FY22, it works out to be almost around 16.34%. So that has been a really good growth from the base of FY 'twenty two if we look at when it becomes almost around 16% kind of growth. Because there is no point in looking growth from the year of FY 'twenty one because that was a the business was facing because of growth. On a year of Q1 first 'twenty two, it's almost around 16.33.4% growth. The broad based treatment of hospitalization helped the industrial business growth. At the same time, selective lockdowns did not much disturb the overall market in the first quarter of the current financial year. Excluding almost around $250,000,000 exceptional business in Q1 last year on account of chloroquine and hydroxychloroquine that we had done last financial year. If we exclude that and then on lower base of last financial year, we have recorded that business growth of almost around 23% in the current year overall for the company as a whole. We have achieved an EBITDA margin of around 27.1% for the quarter in spite of 30% lower currency realizations compared to the last financial year higher material costs at market pace increasing basic chemical prices and immediate prices Petroleum prices are at petroleum curve prices are at very high, which include all the solvents which are used for API. So a lot of those costs and pecimetry costs because of commodity prices going up is also very high. And higher energy costs, transport costs and shipping costs, shipping costs more particularly the container costs significantly smoother. And also the promotional costs have started returning back in the first quarter of the current financial year as the situations are becoming normalized now. COVID-nineteen has posed tough challenges due to COVID infections at plant and loss of life due to COVID as well as selective lockdown also disturbed plant productivity. Due to less availability of land cover at certain of our plant during the first quarter. Having given the brief presentations, I would now like to open the floor for question answer. Thanks once again for taking offline and participating on this call. Thanks, Naveen. Thank you very much, sir. Ladies and gentlemen, we will now commence the question and answer session. The first question is from the line of Vishal Manudani from Mubila Lothal. Please go ahead. Yes. Thanks for the opportunity, sir. So just on this on raw material costs. So how do you see the outlook now or the coming next three to six months, whether the costs are stabilizing or continue to rise? There is still continuing rising trends are there. More particularly again the flood in China and lot of other issues are still disturbing the markets more particularly for the basic chemicals and your intonages here. And so what would be the logistics cost as well? Logistics cost is also in fact, your container hiring cost is further going up. European container, which was available much earlier at a much lower price now, is almost around preferred containers are almost around $6,000 7 thousand dollars now. And U. S. Containers has because of some of us, the shipping companies are from China and the tremendous amount of distributors. And we have to do container well in advance. And so there is a lot of disturbance as far as the freight is concerned and that cost is moving up here. So given that we had some amount of inventory which would have taken to you for this quarter, so maybe will that cost impact to be more reflective in the coming quarters? Cost increase is there, but at the same time, the pricings are also continuously revised, needs to be revised. In domestic also, we are getting a little higher pricing. Normally, we take around 4% kind of price, right? This year, our average price rise may be around 6% now. So that to some extent, that will take compensate. And the API business is a major plague because much of investment you have, you price in line with that and then price goes up again to divide the prices in the market. So we don't sign any kind of long term contract. So the prices keeps on dividing. So it doesn't have much of impact there. Maybe it's on short term, some kind of impact may come. And just lastly, if you could also like extending the API on the sales aspect, like how do you see for the full year? Is there any one off quarter or this is kind of a normalized unit to go by? Let's say, we have the business was good in the first quarter of current year. Domestic API business, we were expecting very significant decline because of last year we had almost around INR 136 crores of API business which is an APA company which had in term excluded the product to U. S. For COVID. But excluding that also against our expectations, the API business has been very well. And the demand also appears to be good as far as domestic incidents are concerned. Domestic market is also growing very well. So domestic decline is a little better. On export side, we have projected for whole of year around 10% growth. There's some impact here and there because of we were exporting some API to market like Iran where there are issues currently because India is not buying the oil and therefore your implements mechanism which is there, the TUK is not available. Even those you have orders in hand, shipments are not happening. So that may have, which is slightly impaired here and there. But more or less, it's going to be a win Please limit your questions to your group or participants. For any further questions, you may come back for follow-up. The next question is from the line of Puneal Damesha from Bank of Good morning. Just in case you could see my question. So first question is regarding the gross margin. So if I look at our mix, it has not sequentially, sequentially. I know the domestic is still around 40% of our revenue, but if we look at the gross margin, Basically, there are two reasons. One is, let's discuss which is sold in this particular business. As I told you that there are significant junk in some of the other portfolios like here Bacteria, Anti Malerials, so those kind of soft and cold and all those kind of portfolio. Traditionally, their margin levels are low. Their cost of manufacturing is higher. And some of the Anti Malerials, we have very, very low margins. And their business growth has been significant. So there's also impact. So we cannot take some of our business sequentially. It has to be seen with reference to the control of the quarter. We cannot see that. It has to be with reference to each quarter. Nut mix is little different. So that's one factor. Of course, the cost of material has also gone up, but it's also the nut mix, which is also impacting overall on metal and cost side. And lastly, first speaker, if you look at most of those business were committing chloroquine, hydroxychloroquine, which has happened, that has happened at much, much higher margin level. And material cost was almost around 27 percent. But if you look at overall, our material cost for whole of year, it was around 30% to 30%, thirty % to 32% kind of material cost. And currency for this quarter is around 33.2 percentage points, 33.4%. So it's a little increase also because of overall product mix changes, yes. Sure. And second question is on other expenses. So, you alluded that, we know that some mutual activities are coming back. But still, I believe we are still at around 300 crores. So do you expect this 300 crores cost line to move up materially in the coming quarter? More or less, like I say, cost increase trend would remain similar kind of debt which you have achieved in the first quarter. First quarter, there is some kind of exceptional entries also there of some provision of elimination and value of investment around 16 crore we have provided on that. So, actually, that there are no exceptional as far as the future of that. If we look at your energy cost as almost your gift cost has moved up almost around 50%, fifty five % in this quarter. So, energy cost has significantly moved up. Then your promotional cost, shipping cost has significantly moved up. And promotional cost has come back. Last year, first quarter, most of the field staff were sitting at home. So, they were only paid the salaries. Normally, there are almost around 5,000 people who travel separately on that level cost and also there are allowances. So, that cost was not there. So, that cost has risen back. And secondly, on Human Resources cost side, if you look at since the domestic business has outperformed and has given a significant growth, so we also made a much higher provisions for the incentive demand to the overall to the fleet people. But all of those incentive demand also depends on how they perform in subsequent quarter. So it's based on our judgment, we made higher provision, maybe approximately the most amount we have made provision. So, it all depends on how in future that will work out. There could be reversal or there may be requiring additional provision. Let's say but generally trend is good. Japan trend has been very good and the process has also opened very well. So we don't see any kind of concern as far as domestic is concerned. And just for Abinu, a small flow of on time, you are expecting to add around $200,000 in this year. So has that cost also been incurred during half end of compare those Let's say, we have added people in CNS segment in one segment, we have added people. Another we have added people is in Optimal segment we have added people. And some people we added in towards the derma business. Derma business for us is doing very well now, very good recovery business has happened. So it's not that these trucks people have become productive, their cost has come in the first quarter. The next question is from the line of Ramyant Sekharai from HSBC. Please go ahead. Hello, sir. Thank you for the opportunity. Sir, my first question is on India business. So you have mentioned we have seen very good recovery in some of the segments. So just to understand like, are these understand like both of these are features, how does it see hospitalized patients and therefore there is a sharp recovery in the antibacterial. But the antibacterial sales happens very good in your rainy season because a lot of infections happen around there. The portfolio is one where those infections are at a lower level. But this year, there's also the overall kind of infection. And overall, let's pretend, interest will be good. We are projecting for the current year that Okay. So this 60%, twenty %, you might revise later on. But so far, you're seeing good trends. Yeah. We are seeing good trends. Yeah. Okay. Sir, my specific question is on your capacity expansion for API. So can you please provide a date there? We are still facing problem because the whole expansion got delayed because of COVID. In Nevas, we were we are setting up plant. But we also created very quickly loaded COVID hospital because of the fact that the workers run away. And we had almost around three months gap in project implementation. So project complexity is some operational during the end of third quarter. That will go to the fourth quarter to dilute your entire validations and also the plant will not be available for any kind of commercial production in current year. It will become operational in the next financial year only. And we are setting up one more project plan that also got delayed. And I think that should be somewhere in the end of third quarter, that should be the operational year. So some kind of additional quantities may be available in fourth quarter for business, yes. So broadly, we should be expecting these new plants will be contributing from the next fifty years onward? Next fifty years onward, yes. Okay, sir. I'll keep talking to the queue. Thank you for your answers. The next question is from the line of Natasha Grewal from Michael Turpin. Please go ahead. Yes. Hi, sir. Thanks for the opportunity. On the export side, just wanted to understand the outlook. I mean, clearly, this quarter is the impact of the base of last year's quarter. On the outlook side, how do we see the branded business and the generic business shaping up, especially in Europe of the rigid business? Some of the branded business which we are doing currently in the SACS market, there is also in domestic currency that Google has moved almost around to 72, 70 three level from 68, 60 nine level. So there is a minor impact of that will be there. Some of the markets are also disturbed like Myanmar. We were doing business currently because of all those turmoil which are there. So that market is disturbed. But some of the other markets maybe in Africa and South African, African markets are doing really very well. So, it's an exchange. We have projected almost around 15% growth, but it's likely to be little less than that, maybe around 12% or something like that. That will have some kind of a little disturbance as far as that business is concerned. Generic businesses, last year we did a lot of businesses relating to hydroxychloroquine and also the para prices customer is also one of the good products which goes in Europe and other markets in a big volume because of data prices moving up to almost around till the level in past financial year. Currently, the buying levels are low. So the generic European business may have some kind of impact of that. But overall, your supply business, we should be able to achieve around 10% range of growth. Domestic supply should be able to do better than that. And overall, our guidance continue to remain around 10% growth, 8% to 10% growth for the next year, for the current financial year. But looking at overall trends after semi cut, we will decide on and revise our overall guidance for the current financials. Okay. Thanks. And any outlook, sir, for the gross margin? You mentioned not to look at quarter on quarter, but there is a sharp drop in the high margin domestic business. How do we see the upcoming year as the gross margins? Because this seems pretty low to us seeing your past performance. Yes. Our guidelines for this year on EBITDA margin side was almost on 25%. And in first quarter, we have recorded around 27% kind of growth. And it's likely to be better. So in the future, we will revise our guidance upward here. Any color on gross margins? Gross margin is a quarter on quarter kind of, let's say, in this quarter, a lot of those businesses happened where cost was on higher side. But that trend may not continue for a longer period. So overall, the material cost will come down a little bit. The gross margin levels will improve. Okay. And lastly on API business, we're looking at your annual report. So currently, this is the time they're still at loss making at the PBT level and how do we see that turnaround? I mean, there was a thought that we'll consolidate and scale all these businesses. This is a one, two outlook on these subsidies. Yes, Sky and Frontier may continue to remain a loss making. As you said, we are different set for the expense business. And now the business is happening. We already want projects and there are good amount of working progress is happening on that. So it takes time to for a new entity to establish there and all that. So that work is currently happening. So we don't expect that to make money. And that's why we are changing the complete product portfolio because they were more on intermediate side. And we in EBITDA, we don't do much of intermediate business. There are no intermediate business. So we are now focusing more on API side. So a lot of APIs are taken for qualifications and lot of stability and those kind of works are going on. So, maybe current year, there will be some losses, but on a longer term, maybe next financial year, we should be able to turn that down. Okay. Thank you, sir. And all the rest. Thank you. The next question is from the line of Sanket Gupta from Philip Capital. Please go ahead. Yes. Thanks for the opportunity and congrats to the good stuff number, sir. So just in the system also in Aurangabad as well as in Jivas, why are we changing here, sir, from These are small or small. Ampere is not a very big plant. It's more small, high value small, the API kind of thing. So it's not a plant that we need there. So people are doing mostly intermediates for smaller products which are not there in Yes. Yes. So that's the change. Wherever we are setting up your intermediate production is only to Okay. Then my first question is about respect to that. So, you mentioned that this Deva's project, obviously, will be commercialized So fourth quarter, there should be available for business. As per the mass is concerned, it's a new side. So, we will have to after qualifications and we do everything, it may not add immediate business because we allow to generate the plan file everywhere with the regulators and then invite them for inspection. Even if for intermediate? No, in intermediate, we don't do. So, what we do is the initial phase, we will produce intermediates for our own N minus one as here and then and we will increase our alarm productivity. And by the time, let's say, six, eight months' time, all the data will be submitted and then submit to the regulators and then there will be some time for your time lag for their inspections and all that. So after that, once the site is qualified, then only you can export the API from that site. So any kind of new site you create, there is some amount of payment for a time to set all those kind of approval. So even in 'twenty three, there will be some that gain will remain because it's a process by itself. But the process has to be completed, regulatory approvals need to be taken and then you start exporting. So that time will be required for any new greenfield site. Mhmm. Additional additional your existing site, whatever expansion you go from there one step there so you can do the business. Just on the device, it is the objective to have a external sale or it is largely to have more of a virtual integration for the existing operations? No, and JVAS is purely for external business. And Shatri, you mentioned. Okay. It's basically an API site. Okay. Okay. Fine. Second question is on the if you can just talk something about the how should one really look at the associated companies where we have gradually expanded our holding, let's say, Crave or the Toxic Wellness or the Havix. So, obviously, we are having some unique capabilities, but we are at the almost negligible level before having a competitive majority sales. So your view from those, what are the kind of outlook that you have for IPPSA? Overall, let's say, Copic Wellness is a company which is drilling into a new facility product and there's a different kind of marketing model there. And we have direct selling to the customers kind of model is there. And that business is doing very well. I think overall last financial year, we did a, I think, business of almost around INR 100 crores and that's something else. And a little bit more than INR 20 crores. So that is there as far as wellness is concerned. And that business is also shaping very well for Nutraceuticals. So and wellness is one particular area where in longer term, that businesses will do well and will have a much higher growth. So we have increased our overall holdings. When this company was started, there were three partners who were there. And one of the partner wanted to exit, so we bought there his stake. So there were three partners in this, right? Kava was also one of them. And with that, your overall R6 has gone up and we have become now it has become our subsidy company. So that's one. And I already talked about Raman We can say. The plant is more switching for the high value small volume kind of production. That's the journey we are having from that particular plant. As far as our business is concerned, it's more on the steroid side, steroid and that business. We have not increased any our stake in that company. More on the same level. And as far as Gert is concerned, yes, it's specifically a fermentation plant. There are two plants. One is Nelor and Anadhi that they are very large. Nelor plant is only on 51 and it's started earning money. But as far as your fermentation plants are concerned, we are still facing some kind of issues there. But hopefully by this year end, we should get approved because we have overall a lot of changes we have already made there and we are also changing the line. And we should be able to now cancel the BK1 in which I think maybe the third or fourth quarter of the current financial year. And it's basically a fermentation plant with a very, very high, very large fermenters basis, not a small fermenter base, very large classic fermenters are there in that plant. Basically, he was producing Simba, but their process is not efficient, so those also we are changing now. Excuse me, this is the opportunity. The question may be requested to come back for a follow-up, please. The next question is from the line of Kunal Rangheri from Yieldweiss. Please go ahead. Thanks for taking my questions. So first on the domestic business, a lot of demand and renewal and extension, HDDs, CapEx, CDE are number one in the market and have no huge market share. So I'm just wondering if you're upside at least in terms of market share expansion seems challenging. I was just wondering what your thoughts are for the longer term growth for these brands? 0 Dollar is a very large brand today. And at that level also, if you look at in last whole year, we have grown by around 18% from $0 and the whole market was challenging. And currently given in first quarter, zero dollars as if RAC has grown almost around 36 percent. And we are very confident that we will take the brand to the newer level. So, there is a huge, huge potential to keep on this kind of work. So, there is nothing as far as we are there are no worry as far as your growth is concerned. As far as your high transaction brand, security is concerned, yes, we have market conditions and we are expanding the overall more offering as far as in terms of your combinations and efforts on the activity brand. Again, here, as far as overall hypertension markets are concerned, it's very small if I look at it that way. And we have long, long way to go quickly and to make it further very big. So I don't think so we have any concern on that. So that's why there are these concerns like rheumatology, we have more than one percent kind of market share where most of those brands are having a leadership client at the marketplace. All remote logic brands, most of those brands we have leadership. Recently, we have launched, I think, in November, Kofat Tekhanib also in the market. And Tekulok is also having leadership in the market and we are doing very well on that. And your reduced prevalence of rheumatology is very high. It's also meant to be. Continuously expanding the market. It's only last one point five year of because of COVID, there are challenges in expanding market. So, overall, little growth has come down on Rheumatology side. But on a medium term and longer term, we don't foresee any kind of issue in growing that market further and continue to maintain leadership and still grow that market very well. And others, most therapies of ours are basically growing. We are like, say, derma, it's a growth market for us. It's or urology is a growth market. CNS is a growth market. Our ophthalmology, all these are high growth markets for us. So they will continue to do very high growth. At the same time, we don't foresee any kind of issue in growing our existing these kind of portfolio. Our challenges are only related to anti malarial, which has become very small part of the overall market overall in our pie. Of course, in first quarter, it's 6%, but overall for the whole of the year, it is only around 4% of our business. So, it's the only one which is a declining market. And some of the they are called legacy products like BINJA blockers and all, they are on declining side on 20%. So, rest is all our portfolio is more linked to the overall growth of this year. Sure. Just a follow-up to this CapEx as a compound. Is that also you believe can cover 2015? Yes. Ecyclophanix is continuously taking your market share from other because the GI issues with Ecyclophanix is much less compared to all other NSAIDs. So and it's all continuously taking the market share from others. And we are driving that basically. Sure. What would be the tax rate guidance for this year and next year? I think current year and next year, we will remain on net and thereafter, we will opt for that lower rate of 25% because by the time then the net credit should be almost whatever accretion net credits are there that will consume. The next question is from the line of Charulata Gaidani from Dalal and Broja. Please go ahead. Yes. Congrats on the good set of numbers. My question was more pertaining to the certain prices. How do you see growth with the decline in certain prices? The certain prices are sharply come down. Los Arjun was the main product for us and there also prices are sharply come down, overall intermediate prices coming down. And that whatever cost reduction is there on mix of things that we have passed on overall to the market. But what we have done, overall our business has not grown up on that, but our volumes has gone up. So we are taking more market share in quantity terms. But our overall top 9 rupee terms has not moved up in first quarter of the current year. But we have sold higher volumes in the market. More market shares in terms of productivity we have seen. So let's say, your overall revenue going down, but we have to produce more quantity to compensate for the reduction in the prices. So are you looking at I mean how do you plan to overcome this? Plan to overcome is, let's say, the market will always play. Sometimes the immediate prices are higher, sometimes the prices are lower. We also are developing your sourcing from India also on that. Your knickinger connections are not there to these kind of markets. It's a dynamic situation sometimes there are more number of users come to the market of intermediates and intermediate prices fall. And sometimes some plant gets some issues or sugar plant has issues relating to any kind of pollution issues or some kind of breakdowns or all, then suddenly demand moves up. Those demands are not fulfilled and market prices move up. So these are the issues can only be addressed if you are having the captive reductions of some of the intermediates or some of those are in your supporting manufacturers are provisioning that. So that's the long term focus for us to internalize some of those implementations. Okay. And do you expect improvement in the profitability going forward? The industry last few years are moving on and we'll continue to move, of course, as the prospects are moving towards the higher value chain. Year. The next question is from the line of Kunal Dameshia from MCT. Please go ahead. Hi. Thank you for holding the opportunity again. So we are planning to push today with regards to February in FY 'twenty three. But do we have higher operational costs related to it? So once we get the plant in self treated or and what could be on top of those operational costs initially? Let's see. When you start immediately, their operational costs may not be fully recovered. But as I said, we will produce N minus one from this particular plant and ship it to our plant producing API from there. So, we will it's not going to be complete loss or no revenue. This situation will not be there. We'll be transferred. N minus one will be transferred to Ratlam and then from there, the APIs will get reduced. So that's going to be initial journey. In the time, plan gets your regulatory approvals from the regulators. So, it's not that this will be incurring huge amount of losses on operational costs and all. Sure. And the first question I have is again on We have said that we have second We said that we have set up one particular continuous process plant to produce one particular intermediate. It's a three step process in there. And we have successfully done that to improve the yields and others. But on one particular step, we are continuously facing the problems for the MOC of the particular issue point. And that challenge is continuously there. We are in process of consulting with a lot of experts and finalizing now that what kind of reactions need to be taken on that. So it may be another few more months here and there and thereafter that plan will be completely operational because that's one particular step challenge is still there. So we will reduce the intermediate cost of that particular product significantly. Sure. And lastly, beyond FY 2022, what about CapEx plan? More or less now because almost on API side, we don't have certain capacity. There will be also some kind of intelligence journey will be there. And formulation side, as the business started moving up, some kind of balancing equipments and all will be needed. Maybe I think one, one point five years after we may need even capacity for our domestic production also because six gig plant is almost coming at three capacity. So, we need to make some kind of more investment there. So, overall FX-ray cycle may remain around 400 growth level for next two to three years. Thank you. The next question is from the line of Deepali Pankariya from Samish Kapil. Please go ahead. Hi, Am I audible? Yes, you are audible. Hi. Aptaval, congratulations for such a good set of numbers. I understand that you said that you might advise your guidance on revenue growth and margins. But specifically on the EBITDA margin, like we guided for 25% by 2022 and now we are at 26.6% for this quarter. So, directly, how we should be looking at what the upcoming quarters at the 2022 as well? And what will be the growth levers? Could be the levers that will be driving the margins? And also in the longer term, if you could help us understand how better margins might shape up? Basically, if domestic business does build, then overall margins will definitely improve. And the second quarter is always very heavy for us. So as I said that July was very good and August trend is also very good. So if the second quarter, your overall business is good, then overall for the whole of the year, then there'll be much better EBITDA margins compared to the overall guidance what we have given. So after looking at second quarter numbers and all, we will revise the overall, your guidance for the whole of the year. But as I said, that trend is good. The business trend is very good. Okay. Thank you. And my next question is on institutional business. So we saw a good set of numbers there as well. So can you understand what drove this kind of numbers in institutional? We are completely supported to make even most of the APIs and we are most cost competitive as far as all the materials, assets and vendors. Two years back, because of certain changes in your policies for U. S. Donations to the world, most business has come down a little bit. And what challenges we had with the global fund and also, those all issues are behind us now. And we are getting the good businesses from business centers and also from institutions. And on the portfolio side, we have adjusted injectables on Artisanet and that's also doing very well for us. So overall, the business is good and we have 50 plus pipeline also there on that. So overall, this business will continue to do well. Thank you. Next question is from the line of Pulte Shah, an individual investor. Please go ahead. Yes. Thank you. Sir, overall plan for our investment in Mekkers Laboratory and Resonance Chemical, if you can give some color? Iftahi has no investment in Mekkers in Resonance. Separate company. So I have to consider anything of makers and as a result, I will not be able to give you any answer on that. The next question is from the line of Desmukhanshu from Nomura. Please go ahead. Yes. Thank you, sir. Sir, can you on the API business, once those expansions are in place, so what kind of capacities we will have compared to the current levels? Overall, capacities will increase by almost around 20%, yes, with all the three plants, two plants at Devasan, One which is coming up in Raflam itself, yes. So around twenty, twenty, 20 capacity will go up. Do you think it is enough on or should we think about I'm just thinking about a medium term growth for the API business as these capacities in the product mix that you have. So how should we think about growth, sir, over a medium term API business? All these capacities on API is our core success is captured. All these products which are taken up for API manufacturing are basically linked to our formulation journey. And while these capacities which we are creating is, let's say, that at some point in time, The U. S. Will get cleared, and then we'll fall short of capacity. So it's also we are building those kinds of hedges. Otherwise, when U. S. Get cleared, we may not have the API jurisdiction even to have for our taxi conversions because we can't then whatever customer base we have created and servicing them, they cannot be denied those APIs. So and at the same time, our API volumes are also moving up. So that because of that, we are creating this kind of capacity. So that when the consumption grows on formulation side, we have sufficient facilities to meet our demand. And sir, I mean, I was looking for like external sales. How will that grow? It should take a three, four year view? We don't foresee that API business, but it's growing by more than 10% year on year. Okay. So that's limited you see on the API business. Yes, yes. Okay, understood. Sir, just on the domestic business, is it possible for Utica, the underlying volume growth? Of course, this quarter is exceptional, but otherwise, how much volume growth and price increase that you see? You mentioned 4% in a normal year. What is the volume? This year, average price increase is 6%. Yes, that's I think this year, right? But generally, it's more Normally, our price increases are around 4%, yes. So, answer one We can more or less see our closer to your wholesale price increase overall. Here, since all inflationary trend is there, and also because all the material costs are moving up and energy costs are moving up, all those costs are moving up. So therefore, we are typically higher price increase in the industry. So rest is all volume growth. If we have grown by 23%, twenty four %, it's only the 6% is coming from price increase. The rest is all volume growth. Okay. And this is $0 I mean, what kind of volume growth that brand is, I mean, how can the brand growth you record, volume growth in $0? 0 dollars is, last year it has grown by 18%. So it's almost around 13% in volume growth. The first quarter, it's almost around close to 15% in volume growth. And since this 14%, fifteen % volume growth in $0 you think over the is this sustainable you think over the medium term? We still see a huge amount of volatility as far as zero knowledge can go on. Okay. And any kind of competitive pressure you have here, sir? I mean, competitive dynamic, you know, any kind of price pressure that could be used here or you think the market itself is, there is enough opportunity to grow this, so there is space for everyone to grow. As far as the competition from brands of 0 Dollar is concerned, they were there always and they will continue to remain there. We have leadership across products and across all the states of the country. So every state we have leadership and there is a huge difference between us and the second state. So and therefore those some kind of price completions and all that is not there. And Zirall is also not priced aggressively. It's placed around the competitors' prices only. It's not as a larger brand, we are not taking any kind of premium on pricing because it has a good huge amount of volume growth. So price growth are more when the it's somewhere on maturity side, the product start moving on maturity side. So we are not too aggressive on taking prices growth on that. So more or less around the competitions only. Okay. And the last question, so just quickly on the tax rate. You mentioned FY 'twenty two, 'twenty three, we should get 19%, eighteen %. And FY 2024, we should take 25%? Yes. Okay. Thank you. Management. Please go ahead. Yes. Thanks, Fortunity. On that, any guidance you said is to be present and you might consider it rising upwards. So does this guidance So, last year or whatever, income of SWS, equity, everything is included in the guidance. Okay. I guess last year you guys had said FY 'twenty three we will revert to 35% tax because in FY 'twenty two we will absorb all the 38. Yes. Ashish, FY 'twenty two that is current financial year and next financial year. That is FY 2023, we will remain more or less in math actually. We will be realizing the math credit available. In the subsequent financial year, we will revert to that lower tax rate which is about 25%. Okay. In FY 2022. In FY 2022, it will be extended tax rate will continue. If by the cheaper it will perhaps change to that 25% ratio. Okay. The next question is from the line of Kunal Randhuri from Wedelweiss. Please go ahead. Just one question on the new JETRICS business, are The UK issues particularly behind you now, results that affect your launches there, just any guidance longer than guidance to be like? During Q1 FY22, UK, business has grown by about 16%. As mentioned in our last conference, we have already started marketing generics in UK in our own trade name. Slowly, one after another products are getting registered and we will export the offering in our label in UK market in the quarters to come. So, any aspirational guidance in the next three years in UK? More or less, UK market should continue to grow around 10%, twelve % of growth year after year. And European market I should grow much differently UK market that is overall guidance as currently. So, generally, the market is growing slower coming We are highly competitive. The margins in The UK, generic business is the lowest margin what we get amongst all our generic The next question is from the line of Surya Bhutar. Please go ahead. Yes. Thanks for the follow-up, sir. Just one more question on the cost of the company. This quarter, as I explained is, if I see on what we have seen, Rajur, in the previous year, we had is up to 50% to what we are currently seeing. That is lower to the kind of trend. This saving is like one off quarter or within any directional indication? Whatever other expenses of this quarter minus whatever small exceptional item of about 16%, seventeen % should continue in the coming quarters. The other expenses, you do measurement vis a vis our FY 'twenty Q1, not FY 'twenty one. For FY 'twenty one, there were hardly any promotional expenses, there were no incentives, there were no really allowance. And you could see there apart from those things coming to be also higher on the basis of CL energy plus 15. So I'm saying that it is still getting that year, which I'm not saying that it has got elevated. The absolute number could be looking higher, but I am saying that in terms of what it is to sales, it is a kind of meaningful Yes, Surya, it will be our CAER growth in the sales of over two years. It's more than 17%. But then the cost, the inflationary trend won't be to that extent. So, this particular trend will also going as we move ahead. If you see all these costs, it will go up according to the inflationary pressure, not beyond it. Of course. Yes. And when your sales go higher, as a percentage, it will go on reducing. Okay. And just one question on the Onex data. How is the performance there? Whether the COVID related thing that is is there any continued impact on that or what is the outlook that you are going to give on that front? As ONIX is concerned, since last three years, Quatron quarter share growing. And as far as this COVID related, we have not felt anything as far as the Pony corporations are concerned. Okay. And just one statement that Suraj mentioned about, very definite kind of clearance of the plant from The US India side. So, any progress that you had with this? Yes. In the last quarter and this quarter, there is status quo. Sure. Ladies and gentlemen, that was the last question. We will hand the conference over to Mr. Natsanag Raval for closing comments. Sir, do you want to make any last comment, sir? Yes, nothing. I think most of the things were covered during the session on Circulation. I don't think anything is further left. Okay, sir. And then thank you very much everyone for taking the time out and pursuing the call. And thank you, the IFRS management team for the valuable time. Good day, everyone, and stay safe. Thanks, Nitin and all participants. Thank you.