Thanks, Nitin, and DAM Capit participants, and thanks for taking out time and jo ining us for Q3 FY '24 Today's call and discussions and answer given, may i nclude forward on our current pharmaceutical business faces. Our actual future fi nancial performance may differ from what is projected and perceived. You may use your own ju dgment on the information given during the call. Our domestic formulation business has delivered 11% growth for the quarter, and we are ranked as the 16th Indian pharma company as late De cember '23. Market beating growth in both acute and chronic therapies are achieved for t his quarter. The ch growth was 11%. growth was 9.1% and MAT December 2023. With two range jump over corresponding period maintained its rank in the Chronic segment. December '23 as against 1.89% in the December '22. So from 1.89%, it has gone to 1.95%. Our export formulation business ha crores to around The branded formulation business in ROW declined fro m This is mainly due to certain shipment could not go to the CIS market. Myanmar b impacted because there are issues and licenses are getting delayed for a long period of time. So without import licenses in that country, shipmen t cannot go. And certain business of West Africa affected for the market also. So because of that, the branded bu siness in this quarter is down. Ladies and gentlemen, good day, and welcome to the IPCA Laboratories Q3 and FY '24 Earnings Conference Call hosted by DAM Capital Advi sors 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. Sh ould you need assistance during the conference call, please signal an operator by pressing star an d zero on your touchtone phone. that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal. Thank you, and over to you, sir. Thanks, Azhar. Good afternoon, everyone, and very w arm welcome to IPCA results earnings call, hosted by DAM Capital Advisors Private Limited. we have representing IPCA Management, Mr. A.K. Jain, Joint Managing Director; and Mr Harish Kamath, Company's Corporate Counsel. I will hand over the call to Mr. Jain to make open comments, and then we'll open the floor for questions. Please go ahead, sir. Thanks, Nitin, and DAM Capit al Advisors for organizing this call. Good afternoo n to all participants, and thanks for taking out time and jo ining us for Q3 FY '24 Today's call and discussions and answer given, may include forward -looking statements based on our current business expectation that must be viewed in conjunc tion with the risk that pharmaceutical business faces. Our actual future fi nancial performance may differ from what is projected and perceived. You may use your own ju dgment on the information given during Our domestic formulation business has delivered 11% growth for the quarter, and we are ranked as the 16th Indian pharma company as late De cember '23. Market beating growth in both acute and chronic therapies are achieved for t his quarter. The ch ronic market, market growth was 11%. IPCA has grown by almost around 15.9%. And on Acute segm ent, market growth was 9.1% and IPCA has achieved around almost arou nd 11.3%. This is as per IQVIA MAT December 2023. range jump over corresponding period , IPCA is 13th in Acute segment and maintained its rank in the Chronic segment. IPCA 's market share has improved to 1.9% MAT December '23 as against 1.89% in the December '22. So from 1.89%, it has gone to 1.95%. Our export formulation business ha s given a growth of around 8% for the quarter from crores to around INR433 crores. The branded formulation business in ROW declined fr om INR 128 crores to This is mainly due to certain shipment could not go to the CIS market. Myanmar b impacted because there are issues and licenses are getting delayed for a long period of time. So without import licenses in that country, shipmen t cannot go. And certain business of West Africa affected for two reasons. One is Red Sea reason and another, some kind of slowness in the market also. So because of that, the branded bu siness in this quarter is down. IPCA Laboratories Limited February 15, 2024 Laboratories Q3 and FY '24 As a reminder, all only mode and there will be an opportunity for you to ask ould you need assistance during the conference call, please signal an operator by pressing star an d zero on your touchtone phone. Please, note to you, sir. IPCA Lab's Q3 FY '24 On the call today, Jain, Joint Managing Director; and Mr I will hand over the call to Mr. Jain to make open comments, and then we'll open the floor for al Advisors for organizing this call. Good afternoo n to all participants, and thanks for taking out time and jo ining us for Q3 FY '24 Earnings Call. looking statements based business expectation that must be viewed in conjunc tion with the risk that pharmaceutical business faces. Our actual future fi nancial performance may differ from what is projected and perceived. You may use your own ju dgment on the information given during Our domestic formulation business has delivered 11% growth for the quarter, and we are ranked as the 16th Indian pharma company as late De cember '23. Market beating growth in ronic market, market has grown by almost around 15.9%. And on Acute segm ent, market nd 11.3%. This is as per IQVIA is 13th in Acute segment and IPCA has 's market share has improved to 1.9% MAT December '23 as against 1.89% in the December '22. So from 1.89%, it has gone to 1.95%. s given a growth of around 8% for the quarter from INR400 128 crores to INR105 crores. This is mainly due to certain shipment could not go to the CIS market. Myanmar b usiness is impacted because there are issues and licenses are getting delayed for a long period of time. So without import licenses in that country, shipmen t cannot go. And certain business of West another, some kind of slowness in the market also. So because of that, the branded bu siness in this quarter is down. Institutional antimalarial business has declined from the same quarter last financial Export generic business in U INR 189 crores to around formulation business has grown by around 8%. API bu siness declined from around INR 285 crores for this quarter. We continue to face vo lume decline in certain API, but pricings are now getting stabilized. On margin front, on stand to around 18.55% for the year. The material cost to sales ratio also improve d by 2.65% for the current first 9 months of the current year. So overall, material cost to sales ratio from 34.8 shipping costs and energy cost prices has moderated as against prevailing prices in December '22 last financial year. And we are also witnessing a price stability on majority of our procurement. Consolidated EBIT by 1.12% during the quarter. From 15%, it has moved to around 16.12%. Consolidated material costs to operational income has improved b y around 2.39% from 36.34% to 33.95% for the quarter Having given the broad numbers, now I request participants to ask questions, if any.

Thank you very much. is from the line of

So the first one on now that we have updated thoughts on synergies that we can generate in terms of call it quantitative synergies over the next 2 years? And what are the primary dri vers that you see to g synergies? And then consequently, what that can lead to our total profitability?

So we are working on lot of things. As we have disc ussed earlier, like market extensions, the improvement in the processes of APIs and improving at the Unichem and all those and cost reductions an d all those kind of things. And also to scale up their production. So you can witness that the to tal income in the current year and the first is almost growing 43.6%. So their productivity definitely are improving now. And as far as there are time table a involved. So that process is going on. And even cos t reduction process and everything is going on. It will take some time, but the improvements ar e seen in the results now for the have achieved almost around antimalarial business has declined from INR77 crores -- INR 277 crores from the same quarter last financial year. Export generic business in U K and other market has delivered a growth of around 33% from 189 crores to around INR 252 crores. So overall brand, the generic formulation business has grown by around 8%. API bu siness declined from 285 crores for this quarter. We continue to face vo lume decline in certain API, but pricings are now getting stabilized. On margin front, on stand -alone basis, EBITDA margin improved by around to 2. 78% from to around 18.55% for the quarter from 15.77% in the corresponding period of last financial year. The material cost to sales ratio also improve d by 2.65% for the -- and also for current first 9 months of the current year. So overall, material cost to sales ratio from 34.8 6%, it has come down to around 32.21%. Both shipping costs and energy cost prices has moderated as against prevailing prices in December '22 last financial year. And we are also witnessing a price stability on majority of our Consolidated EBIT DA margin before exchange gain loss or exceptional income has gone up by 1.12% during the quarter. From 15%, it has moved to around 16.12%. Consolidated material costs to operational income has improved b y around 2.39% from 36.34% to 33.95% for the quarter . Having given the broad numbers, now I request participants to ask questions, if any. Thank you very much. We will now begin the question-and-answer session. is from the line of Kunal Dhamesha from Macquarie. So the first one on now that we have -- had a full quarter with Unichem updated thoughts on synergies that we can generate in terms of call it quantitative synergies over the next 2 years? And what are the primary dri vers that you see to g synergies? And then consequently, what that can lead to our total profitability? So we are working on lot of things. As we have disc ussed earlier, like market extensions, the improvement in the processes of APIs and improving the overall productions and productivity at the Unichem and all those and cost reductions an d all those kind of things. And also to scale up their production. So you can witness that the to tal income in the current year and the first is almost growing 40% plus. And in this quarter also, overall top lin e has grown by around 43.6%. So their productivity definitely are improving now. And as far as -- none of those activities are concerned -- its -- a lot of -- there is for everything there are time table a nd it takes a lot of time because regulatory filing s and so many things are involved. So that process is going on. And even cos t reduction process and everything is going on. It will take some time, but the improvements ar e seen in the results now for the have achieved almost around INR38 crores kind of EBITDA number to 8.8%. IPCA Laboratories Limited February 15, 2024 277 crores from INR83 crores in K and other market has delivered a growth of around 33% from 252 crores. So overall brand, the generic -- the export formulation business has grown by around 8%. API bu siness declined from INR329 crores to 285 crores for this quarter. We continue to face vo lume decline in certain API, but alone basis, EBITDA margin improved by around to 2. 78% from -- quarter from 15.77% in the corresponding period of last financial and also for -- in the 6%, it has come down to around 32.21%. Both shipping costs and energy cost prices has moderated as against prevailing prices in December '22 last financial year. And we are also witnessing a price stability on majority of our DA margin before exchange gain loss or exceptional income has gone up by 1.12% during the quarter. From 15%, it has moved to around 16.12%. Consolidated material costs to operational income has improved b y around 2.39% from 36.34% to 33.95% Having given the broad numbers, now I request participants to ask questions, if any. The first question had a full quarter with Unichem -- what are your updated thoughts on synergies that we can generate in terms of call it quantitative synergies over the next 2 years? And what are the primary dri vers that you see to g enerate those synergies? And then consequently, what that can lead to our total profitability? So we are working on lot of things. As we have disc ussed earlier, like market extensions, the the overall productions and productivity at the Unichem and all those and cost reductions an d all those kind of things. And also to scale up their production. So you can witness that the to tal income in the current year and the first -- 40% plus. And in this quarter also, overall top lin e has grown by around there is for everything nd it takes a lot of time because regulatory filing s and so many things are involved. So that process is going on. And even cos t reduction process and everything is going on. It will take some time, but the improvements ar e seen in the results now for the Q3. They kind of EBITDA number to 8.8%. And the company, which was incurring losses has now shown some kind of PBT in the current quarter also, around are on right track, and we are confident that because the company will make profitable have discussed earlier.

Sir, any quantitative number as to where their marg ins next 2 years with al

It all depends on how the journey is actually the where the regulatory approvals and all are required . Even if processes are chang need to be again refiled, then after approval only they can be, let's say, commercialize and all those kind of things are there. So giving quarter talked earlier that margin. That's very much achievable. We are very co nfident, every day after looking into and seeing the progress, here we feel that we are on the right path here.

Sure, sir. And the second one on the generic busine ss, which has seen a lot of growth 33% year-on-year. Is there any one let's say, next quarter and for the next year?

Gene ric business, if you look at in last 3 quarters on a continuous basis, that has done the similar kind of growth. And in fact, at the beginni ng of the year, we were looking at generic business may not grow that much because of businesses in South Africa, but we are expecting almost around the South Africa business is also moving up in curre grown by almost around 12%. So there are no decline. Europe business is also going on very well. The Eur ope has seen good growth in last first 3 quarters in the current year. And overall, it's gro wn from INR371 crores launched in UK. So that business will continue to have good growth. Only concern is little bit on this Red Sea level an d certain customers p shipment and all those kind of things, in the time frame is going to be normalized. And in time to come from first products with shipment and marketing will should be growing well for us

Sure, sir. And one more, with your permission. On t he US products, can you provide incremental update as to where are we, for the sake that we could be the potential upside on that shipping that will start in quarter 1? And then how are you looking at the number of products that will start shipping, starting from quarter 1 FY '25 to end of FY '25? And the company, which was incurring losses has now shown some kind of PBT in the current quarter also, around -- almost around INR16 crores before the exceptional income. Als are on right track, and we are confident that because the company will make profitable have discussed earlier. Sir, any quantitative number as to where their marg ins -- annual margins could end up in the next 2 years with al l that we have in place now the entire plan that we have in place? It all depends on how the journey is actually the -- taken up because there are many things where the regulatory approvals and all are required . Even if processes are chang need to be again refiled, then after approval only they can be, let's say, commercialize and all those kind of things are there. So giving quarter -wise numbers and all may not be right now feasible. But yes, what we have talked earlier that INR2,000 crores turnover and INR300 crores kind of 15% kind of EBITDA margin. That's very much achievable. We are very co nfident, every day after looking into and seeing the progress, here we feel that we are on the right path here. Sure, sir. And the second one on the generic busine ss, which has seen a lot of growth 33% year. Is there any one -off kind of component? How should we look at that b usiness, let's say, next quarter and for the next year? ric business, if you look at in last 3 quarters on a continuous basis, that has done the similar kind of growth. And in fact, at the beginni ng of the year, we were looking at generic business may not grow that much because of -- we were looking -- we have lost certain kind of businesses in South Africa, but we are -- in South Africa, also we are growing and we were expecting almost around INR40 crores, INR50 crores kind of losses, but we are looking that, the South Africa business is also moving up in curre nt year also. I think in first 9 months, it has grown by almost around 12%. So there are no decline. Europe business is also going on very well. The Eur ope has seen good growth in last first 3 quarters in the current year. And overall, it's gro wn from INR240 crores crores , almost around 54% growth. There are a lot of prod ucts which are yet to be launched in UK. So that business will continue to have good growth. Only concern is little bit on this Red Sea level an d certain customers p ostponing some kind of shipment and all those kind of things, in the time frame is going to be normalized. And in time to come from first -- maybe in the first quarter of the next financial year -- products with shipment and marketing will start. So overall generic business should should be growing well for us in time to come. Sure, sir. And one more, with your permission. On t he US products, can you provide incremental update as to where are we, for the sake that we might do some shipping, but what could be the potential upside on that shipping that will start in quarter 1? And then how are you looking at the number of products that will start shipping, starting from quarter 1 FY '25 to end of FY '25? IPCA Laboratories Limited February 15, 2024 And the company, which was incurring losses has now shown some kind of PBT in the current before the exceptional income. Als o they are on right track, and we are confident that because the company will make profitable -- as we annual margins could end up in the l that we have in place now the entire plan that we have in place? taken up because there are many things where the regulatory approvals and all are required . Even if processes are chang ed, processes need to be again refiled, then after approval only they can be, let's say, commercialize and all wise numbers and all may not be right now feasible. But yes, what we have kind of 15% kind of EBITDA margin. That's very much achievable. We are very co nfident, every day after -- then we are looking into and seeing the progress, here we feel that we are on the right path here. Sure, sir. And the second one on the generic busine ss, which has seen a lot of growth 33% off kind of component? How should we look at that b usiness, ric business, if you look at in last 3 quarters on a continuous basis, that has done the similar kind of growth. And in fact, at the beginni ng of the year, we were looking at generic lost certain kind of in South Africa, also we are growing and we were kind of losses, but we are looking that, nt year also. I think in first 9 months, it has Europe business is also going on very well. The Eur ope has seen good growth in last first 3 to almost around , almost around 54% growth. There are a lot of prod ucts which are yet to be ostponing some kind of shipment and all those kind of things, in the time frame is going to be normalized. And in time -- some kind of US start. So overall generic business should -- say Sure, sir. And one more, with your permission. On t he US products, can you provide might do some shipping, but what could be the potential upside on that shipping that will start in quarter 1? And then how are you looking at the number of products that will start shipping, starting from quarter 1 FY '25 to

I think overall, what we have worked out that there are a lot of products where work needs to be done with reference to of years 2014 to now. So some kind of processes, th e change of API some processes where the post approval are required , which has 6 months' time and some pre approvals are required. So all those kind of things are there. But I think, overall, looking at the be launched in the next 12 months. That's what is v isible. And thereafter, the process upgradations or somewhere, the site changes are there and all those things will take time. So -- over a period of 2 years, I think it' of number. So that's how and all. So it will take some time. It's not that e verything can be done together. So it's over a period of time

The next question is from the line of

Sir, my first question is on branded market. So you obviously mentioned som has impacted quarter during business to say from next 2 to 3 quarters perspective?

Overall, see our expectation from this business fro m next financial year could kind of growth. And current year, it may grow around by 8%, yes.

Okay. But some of the challenges which you mentione d, that remains in near term, right? And then maybe it will take some time for those 2 sectors.

Yes. Yes. But in spite of those difficulties, the business could grow around 10%.

10%? Okay. And sir, you mentioned, say, like Red Se a situation, commentary you also mentioned that freight costs ar e down year-on-year. But I think what we are hearing that logistic costs are going up, should we look at your operating cost especially fr eight, et cera, again, from a near perspective?

That's -- for freight cost comment I have given only with ref erence to that last year, what kind of prevailing rates were there compared to that the rates are significantly lower. And that even if it's a little bit the logistic cost goes hi gh, it may not have muc profitability and all.

So you don't expect much impact from these higher freight costs,

Only certain European customers are postponing the shipments. But now let's say, Houthi attacks has come down and things may normalize agai n. That's what days, we have not heard any kind of those attacks. I think overall, what we have worked out that there are a lot of products where work needs to be done with reference to -- because in US, we are coming after a long number of years 2014 to now. So some kind of processes, th e change of API and all those, there are some processes where the post approval are required , which has 6 months' time and some pre approvals are required. So all those kind of things are there. But I think, overall, looking at the -- we feel that almost around 8 products be launched in the next 12 months. That's what is v isible. And thereafter, the process upgradations or somewhere, the site changes are there and all those things will take over a period of 2 years, I think it' s possible to launch around 16, 17 product kind So that's how -- its a journey now. There's a lot of revalidations a nd all those need to be taken and all. So it will take some time. It's not that e verything can be done together. So it's over a eriod of time -- say, in current year, 7 to 8 products definitely can be launched. Yes. The next question is from the line of Damayanti Kerai from HSBC. Sir, my first question is on branded market. So you obviously mentioned som has impacted quarter during -- performance in the quarter. So how should we look a t this business to say from next 2 to 3 quarters perspective? Overall, see our expectation from this business fro m next financial year could kind of growth. And current year, it may grow around by 8%, yes. Okay. But some of the challenges which you mentione d, that remains in near term, right? And then maybe it will take some time for those 2 sectors. Yes. Yes. But in spite of those difficulties, the business could grow around 10%. 10%? Okay. And sir, you mentioned, say, like Red Se a situation, etcetera commentary you also mentioned that freight costs ar e down -- fre ight costs have moderated year. But I think what we are hearing that logistic costs are going up, should we look at your operating cost especially fr eight, et cera, again, from a near for freight cost comment I have given only with ref erence to that last year, what kind of prevailing rates were there compared to that the rates are significantly lower. And that even if it's a little bit the logistic cost goes hi gh, it may not have muc h of impact on overall profitability and all. So you don't expect much impact from these higher freight costs, etcetera . Should we... Only certain European customers are postponing the shipments. But now let's say, Houthi attacks has come down and things may normalize agai n. That's what -- yes. Yes. Last few days, we have not heard any kind of those attacks. IPCA Laboratories Limited February 15, 2024 I think overall, what we have worked out that there are a lot of products where -- some kind of because in US, we are coming after a long number and all those, there are some processes where the post approval are required , which has 6 months' time and some pre - or 9 products can be launched in the next 12 months. That's what is v isible. And thereafter, the -- whatever the process upgradations or somewhere, the site changes are there and all those things will take s possible to launch around 16, 17 product kind its a journey now. There's a lot of revalidations a nd all those need to be taken and all. So it will take some time. It's not that e verything can be done together. So it's over a say, in current year, 7 to 8 products definitely can be launched. Yes. Sir, my first question is on branded market. So you obviously mentioned som e regions which performance in the quarter. So how should we look a t this Overall, see our expectation from this business fro m next financial year could be around 10% Okay. But some of the challenges which you mentione d, that remains in near term, right? And Yes. Yes. But in spite of those difficulties, the business could grow around 10%. etcetera . But one of the ight costs have moderated year. But I think what we are hearing that logistic costs are going up, etcetera. So how should we look at your operating cost especially fr eight, et cera, again, from a near -term for freight cost comment I have given only with ref erence to that last year, what kind of prevailing rates were there compared to that the rates are significantly lower. And that -- h of impact on overall . Should we... Only certain European customers are postponing the shipments. But now let's say, Houthi yes. Yes. Last few

Okay, sir. And my last question is, can you provide an update on some of the new plant expansion, et plants will start contributing to your numbers?

Dewas almost around 7 to 8 product commercializatio n work is going on. Some products are already filed with European take around 6 months' time for at least 5, 6 produc t to get approved. So thereafter, the shipments -- your production

Okay. And Nagpur?

Nagpur -- concerning Nagpur we have not done anything much on the site. We have just got the -- now consent to operate. So first one, intermediate, the planning is going on there, but that's for captive consumption. So not only some kind of reduction in the cost and all will happen. Yes.

Okay. And sir, a clarification on the US business c ommentary which you already provided. So you're expecting that 1 like a good footing in the U etcetera , or you need to add on like more product say, next 3 years?

We have almost around basket of around 40 products. So we are expecting good number of product approval to come. So this is from the curre nt list I'm talking which is approved list. Yes. So it's basically the more number of p more number of launches will also happen.

The next question is from the line of Surya Patra from PhillipCapital.

Yes. Sir, my first question is on the margin profil e x of Unichem fo adjusting for the EBITDA margin what we had reporte d for or what we had indicated for Unichem in the previous quarter that was part of ou r number. And this quarter's reported number of Unichem, it looks like that the margin ha meaningful correction sequentially from almost like So what is this leading to? Is it the operating neg ative leverage that you're seeing out here because your export is seeing some kind of margin sequentially weak for our base business.

Let's say, overall, if you look at the improved because more value additions a kind of improvement is there on material cost. And prices are more or less 2.78% improvement. So there are not much of fluctuations on my procuremen t prices and a added businesses are happening on formulation side, and that's giving the better margins overall. Okay, sir. And my last question is, can you provide an update on some of the new plant et cetera, which you're doing at Dewas, Nagpur, etcete ra ? And how soon these plants will start contributing to your numbers? Dewas almost around 7 to 8 product commercializatio n work is going on. Some products are already filed with European authorities. One product approval has recently come . So it may take around 6 months' time for at least 5, 6 produc t to get approved. So thereafter, the your production -- regular shipments can start from Dewas plant. kay. And Nagpur? concerning Nagpur we have not done anything much on the site. We have just got now consent to operate. So first one, intermediate, the planning is going on there, but that's for captive consumption. So not hing we laid on as far as the top line is concerned , it's only some kind of reduction in the cost and all will happen. Yes. Okay. And sir, a clarification on the US business c ommentary which you already provided. So you're expecting that 1 6 to 17 products can be launched in next 2 years. S o that will give y like a good footing in the U S business given like your advantage on the cost ex penses, , or you need to add on like more product s to gradually come up in the U next 3 years? We have almost around basket of around 40 products. So we are expecting good number of product approval to come. So this is from the curre nt list I'm talking which is approved list. Yes. So it's basically the more number of p roduct approvals will come and with that, even the more number of launches will also happen. The next question is from the line of Surya Patra from PhillipCapital. Yes. Sir, my first question is on the margin profil e x of Unichem fo r this quarter. If I see that adjusting for the EBITDA margin what we had reporte d for or what we had indicated for Unichem in the previous quarter that was part of ou r number. And this quarter's reported number of Unichem, it looks like that the margin ha s -- for IPCA has seen a kind of meaningful correction sequentially from almost like 300 basis point kind of impact. So what is this leading to? Is it the operating neg ative leverage that you're seeing out here because your export is seeing some kind of -- so if you can clarify what is that is driving the margin sequentially weak for our base business. Let's say, overall, if you look at the -- as I talked earlier, that material cost to sales ra tio has improved because more value additions a re there. And that improvement is almost about 2.6% kind of improvement is there on material cost. And prices are more or less 2.78% improvement. So -- and prices are also now stabilized. So there are not much of fluctuations on my procuremen t prices and a ll. And overall, more value added businesses are happening on formulation side, and that's giving the better margins IPCA Laboratories Limited February 15, 2024 Okay, sir. And my last question is, can you provide an update on some of the new plant ? And how soon these Dewas almost around 7 to 8 product commercializatio n work is going on. Some products are authorities. One product approval has recently come . So it may take around 6 months' time for at least 5, 6 produc t to get approved. So thereafter, the -- your regular shipments can start from Dewas plant. concerning Nagpur we have not done anything much on the site. We have just got now consent to operate. So first one, intermediate, the planning is going on there, but hing we laid on as far as the top line is concerned , it's Okay. And sir, a clarification on the US business c ommentary which you already provided. So 6 to 17 products can be launched in next 2 years. S o that will give y ou S business given like your advantage on the cost ex penses, s to gradually come up in the U S market in We have almost around basket of around 40 products. So we are expecting good number of product approval to come. So this is from the curre nt list I'm talking which is approved list. roduct approvals will come and with that, even the r this quarter. If I see that adjusting for the EBITDA margin what we had reporte d for or what we had indicated for Unichem in the previous quarter that was part of ou r number. And this quarter's reported has seen a kind of 300 basis point kind of impact. So what is this leading to? Is it the operating neg ative leverage that you're seeing out here so if you can clarify what is that is driving the as I talked earlier, that material cost to sales ra tio has re there. And that improvement is almost about 2.6% and prices are also now stabilized. So ll. And overall, more value - added businesses are happening on formulation side, and that's giving the better margins And as far as the personnel cost is concerned, that 's growing around 12%, which includes around 7% to 8% kind of normal increments perso nnel cost is written on higher and other expenses side, there are hardly any incre ase. So compared to operating income t there is good amount of reductions is there because overall, that cost has not moved up.

Y-o-Y that is correct, sir, what you said. I'm just ask ing that sequentially about 300 basis point kind of impact, Unichem numbers. So what sir?

The margin improvement will right now, say, in the current quarter growth was l ow. And from next year onwards, I think we should be continuously growing by around 10% to 12% kind of growth. So at that level, the margi US business margins will margin over and above this normal margin. So we fee l that overall EBITDA margins will definite ly move by around 2% point plus kind of things. Yes, in next financial year.

Okay. Okay. Sir, with your permission, can I just a sk about the Unichem also here. Because the margin performance for this quarter, what we se e sir, here in Unichem i or 15% around. So I think it is already reached to your guided level almost nearer to that. So is it fair to believe that the margin expansion, what you have been targeting with the initial kind of corrective measures. The full benefit of any of the benefit of integration for

Let's say, margin there are driven by their overall increase in overall revenue. Let's say, they are growing by almost around 40 grown by around 43%. And improvements in business i s there across, whether it's our business, whether there its a Brazilian business, w hether it is European business, except they have suffered that is impacted and little of the Russia business is impacted. So -- but -- and even the CRAMS business is also also done well. So overall overall top line growth has been good. Now as far as margins are concerned in Q3, I think the EBITDA margin has been around 8.8%. So they were around 3%, 4% from there. They h ave come to because there is some kind o think Unichem in P&L account that has declared sepa rately because that is on sale of this residual shares, which they had of Optimus whic INR68 crores And as far as the personnel cost is concerned, that 's growing around 12%, which includes around 7% to 8% kind of normal increments and since we added people in the field. So the nnel cost is written on higher side. But our -- overall, if you look at your manufacturing and other expenses side, there are hardly any incre ase. So compared to -- we have the overall operating income t o other expenses, manufacturing -- other expenses, that -- there is good amount of reductions is there because overall, that cost has not moved up. Y that is correct, sir, what you said. I'm just ask ing that sequentially about 300 basis point kind of impact, IPCA 's base business would have seen, if I adjust for t he Unichem numbers. So what -- sequentially, what would be driving or dampening th e margin, The margin improvement will continue as -- let's say, that with the overall growth picking up, right now, say, in the current quarter growth was l ow. And from next year onwards, I think we should be continuously growing by around 10% to 12% kind of growth. So at that level, the margi n level will further improve by around 1.5%. And wh en we add the business margins will -- because capacity utilizations will add. So that als o will add to the margin over and above this normal margin. So we fee l that overall EBITDA margins will ly move by around 2% point plus kind of things. Yes, in next financial year. Okay. Okay. Sir, with your permission, can I just a sk about the Unichem also here. Because the margin performance for this quarter, what we se e sir, here in Unichem i s around 15% or 15% around. So I think it is already reached to your guided level almost nearer to that. So is it fair to believe that the margin expansion, what you have been targeting with the initial kind of corrective measures. The full benefit of that flown in to Unichem and whether we have seen any of the benefit of integration for IPCA's base business? Let's say, margin there are driven by their overall increase in overall revenue. Let's say, they are growing by almost around 40 % plus in the current year. In this quarter also, t hey have grown by around 43%. And improvements in business i s there across, whether it's our business, whether there its a Brazilian business, w hether it is European business, except they have suffered on ROW market business, again, because Myanmar they had good business. So that is impacted and little of the Russia business is impacted. and even the CRAMS business is also -- the contract manufacturing business has also done well. So overall -- let's say, the overall productivity there are impro ving and your overall top line growth has been good. Now as far as margins are concerned in Q3, I think the EBITDA margin has been around 8.8%. So they were around 3%, 4% from there. They h ave come to 8.8%. It's not around 15% because there is some kind o f exceptional income is there. S o that you need to exclude. So I think Unichem in P&L account that has declared sepa rately because that is on sale of this residual shares, which they had of Optimus whic h they have disposed of and almost around crores kind of surplus has come. So that has been shown as exceptional income. IPCA Laboratories Limited February 15, 2024 And as far as the personnel cost is concerned, that 's growing around 12%, which includes and since we added people in the field. So the overall, if you look at your manufacturing we have the overall -- there are also -- there is good amount of reductions is there because overall, that cost has not moved up. Y that is correct, sir, what you said. I'm just ask ing that sequentially it looks like near 's base business would have seen, if I adjust for t he sequentially, what would be driving or dampening th e margin, let's say, that with the overall growth picking up, right now, say, in the current quarter growth was l ow. And from next year onwards, I think we n level will further improve by around 1.5%. And wh en we add the because capacity utilizations will add. So that als o will add to the margin over and above this normal margin. So we fee l that overall EBITDA margins will ly move by around 2% point plus kind of things. Yes, in next financial year. Okay. Okay. Sir, with your permission, can I just a sk about the Unichem also here. Because s around 15% -plus or 15% around. So I think it is already reached to your guided level almost nearer to that. So is it fair to believe that the margin expansion, what you have been targeting with the initial kind that flown in to Unichem and whether we have seen Let's say, margin there are driven by their overall increase in overall revenue. Let's say, they % plus in the current year. In this quarter also, t hey have grown by around 43%. And improvements in business i s there across, whether it's our US business, whether there its a Brazilian business, w hether it is European business, except they on ROW market business, again, because Myanmar they had good business. So the contract manufacturing business has let's say, the overall productivity there are impro ving and your Now as far as margins are concerned in Q3, I think the EBITDA margin has been around 8.8%. It's not around 15% o that you need to exclude. So I think Unichem in P&L account that has declared sepa rately because that is on sale of this h they have disposed of and almost around kind of surplus has come. So that has been shown as exceptional income. So overall margin has not reached to what level and what kind of improvement, which we are looking in Unichem, they will take tim to be filed with the regulator, then approval. After regulatory approval, you take the after you put the stability, then again, file with regulator, take their approval. And then those revised processes become effective in your formulat ion. So it's a journey, it cannot happen in over a period of 3 to 6 months time. It take a long time. So ma those kind of things. So I would say that those kind of improvements will come in time to come. Currently, sir, the margin improvements are because in Q3 '22, '23 they had negative margins of around 14.1%. EBITDA was that kind last financial year, they had almost around From there, they have come to the profit and margin s have started improving. So we are what we ar e seeing is only the improvement in operations, lit tle bit on overhead side, little on cost side, improvement in productivity side and imp rovement in business. That has resulted in some margin. Yes.

Okay. Sure, sir. Sir, My next question...

And that journey will continue

Sure, sir. My next question is on the US business f ront. So you mentioned that some sort of supply commencement to US can start that the activation of the dossiers could take a lo nger time, even the process has to be updated. So this -- the procedural aspect itself will take around 12 mo nth or so. So then on what basis that we are saying the few of the...

Sir, we have been working almost around 7 products, we need not to do much. So that's our updated dossiers are there. So these 7 products can 7 products can go. So that think 2 or 3 products first quarter of the current year. And the launches quarter of current year. The financial year. And the other products are there are post approval are there, somewhere pre processes need to be incorporated. And all those wo rks are there. Plus, we expect we have almost around a good number of more than 20 more fi lings which are there, where everything is -- most of the approvals can come. So based on that, I'm telling t hat around 15 to 17 products can be launched over a period of 2 years' time. So overall margin has not reached to what level and what kind of improvement, which we are looking in Unichem, they will take tim e because processes when they are corrected, they n eed to be filed with the regulator, then -- after that, based on that, you need to do the After regulatory approval, you take the -- again, the formulation basis put them on stability after you put the stability, then again, file with regulator, take their approval. And then those revised processes become effective in your formulat ion. So it's a journey, it cannot happen in over a period of 3 to 6 months time. It take a long time. So ma ybe 1 year, 1.5 years and all those kind of things. So I would say that those kind of improvements will come in time to come. Currently, sir, the margin improvements are because in Q3 '22, '23 they had negative margins of around 14.1%. EBITDA was that kind of negative margin. So they were in losses almost I think third quarter last financial year, they had almost around INR 60 crores kind of losses was there. From there, they have come to the profit and margin s have started improving. So we are e seeing is only the improvement in operations, lit tle bit on overhead side, little on cost side, improvement in productivity side and imp rovement in business. That has resulted in some margin. Yes. Okay. Sure, sir. Sir, My next question... And that journey will continue -- that journey will continue. Sure, sir. My next question is on the US business f ront. So you mentioned that some sort of supply commencement to US can start -- starting first quarter for FY '25. B ut knowing the fact that the activation of the dossiers could take a lo nger time, even the process has to be updated. the procedural aspect itself will take around 12 mo nth or so. So then on what basis that we are saying the few of the... Sir, we have been working almost around 7 products, we need not to do much. So that's our updated dossiers are there. So these 7 products can -- see, currently, I have 21 approval. Out of 7 products can go. So that -- in a closed manner these products will be launched. But initially, I think 2 or 3 products -- production is already going on. So there would be s omewhere in the first quarter of the current year. And the launches -- market launch will happen in the first quarter of current year. The shipment from here may take early part of the first quarter of next financial year. And the other products are -- there are somewhere there are site changes are ther e, somewhere there are post approval are there, somewhere pre -approvals are there. Somewhe processes need to be incorporated. And all those wo rks are there. Plus, we expect we have almost around a good number of more than 20 more fi lings which are there, where everything most of the -- lot of review has already happened and -- i n a phased manner, those approvals can come. So based on that, I'm telling t hat around 15 to 17 products can be launched over a period of 2 years' time. IPCA Laboratories Limited February 15, 2024 So overall margin has not reached to what level and what kind of improvement, which we are e because processes when they are corrected, they n eed after that, based on that, you need to do the -- take again, the formulation basis put them on stability after you put the stability, then again, file with regulator, take their approval. And then those revised processes become effective in your formulat ion. So it's a journey, it cannot happen in ybe 1 year, 1.5 years and all So I would say that those kind of improvements will come in time to come. Currently, sir, the margin improvements are because in Q3 '22, '23 they had negative margins of around 14.1%. of negative margin. So they were in losses almost I think third quarter 60 crores kind of losses was there. From there, they have come to the profit and margin s have started improving. So we are -- e seeing is only the improvement in operations, lit tle bit on overhead side, little on cost side, improvement in productivity side and imp rovement in business. That has resulted in Sure, sir. My next question is on the US business f ront. So you mentioned that some sort of ut knowing the fact that the activation of the dossiers could take a lo nger time, even the process has to be updated. the procedural aspect itself will take around 12 mo nth or so. So then on what basis Sir, we have been working almost around 7 products, we need not to do much. So that's our see, currently, I have 21 approval. Out of launched. But initially, I production is already going on. So there would be s omewhere in the market launch will happen in the first shipment from here may take early part of the first quarter of next there are somewhere there are site changes are ther e, somewhere approvals are there. Somewhe re the new processes need to be incorporated. And all those wo rks are there. Plus, we expect we have almost around a good number of more than 20 more fi lings which are there, where everything n a phased manner, those approvals can come. So based on that, I'm telling t hat around 15 to 17 products can be

Okay. Okay. Just last one question, sir, from my si de. So far as the domestic formulation performance going ahead is concerned, let's say, FY '25. Obviously, we have seen a double digit growth better than the industry growth, IPM growth in the current financial year so far. Sir, knowing the fact that around slightly more tha n 20% of our portfol Enelium-based and the limited scope of a price taking price rise there and the volume growth trend, what we are seeing currently. So is it possi ble to continue double for next year as well?

Le t's say, Elenium did not impact much in current yea r also because there was a good amount of price rise was there on Elenium, but similar kin d of reduction was there few months back because of readjustment of prices, and reappraising and all. So on Elenium there is hardly any advantage or even if there is a dvantage, it's only 1%, 2%. So there was hardly any. Much of the advantage was not there. So -- and what we have seen in current year is that your acute portfolio growth in the market is low. So it's a very exceptional year. So financial year. And on the chronic side, market has started reporting double So overall, we see that from 11% to 12% growth possible to increase the overall growth to around 13%, 14% in domestic market.

The next question is from the line of Ajay from

Yes, sir. So sir, I have a question about our group companies. Si companies are doing any con calls or giving any gui dance. And if you say the top lines and bottom line from last few quarters are almost stagn ant and also into losses. So can you please provide any update around our subsidiary perform Laboratories.

Makers has nothing to do with independent company. Then as far as Lyka is concern ed, their business growth is good. They have -- overall, they would be doing better, I think, overa ll. Their plant is under shut down a little bit because of upgradations and all. So that is also getting completed renovation part is going to complete in first quart er of the current y validations and filings of dossiers and all will ha ppen in the developed market and all. So that journey is going very well. In spite of all those kind of things, they have per formed reasonably well. And they also had almost around 100 market. And that business has also now they can add more number of people in next financia l year. So overall, we are s journey for as far as Lyka is concerned. As far as Unichem is concerned from losses, they ha ve started now performing, and we have already said that Okay. Okay. Just last one question, sir, from my si de. So far as the domestic formulation performance going ahead is concerned, let's say, FY '25. Obviously, we have seen a double digit growth better than the industry growth, IPM growth in the current financial year so far. Sir, knowing the fact that around slightly more tha n 20% of our portfol io possibility is part of based and the limited scope of a price taking price rise there and the volume growth trend, what we are seeing currently. So is it possi ble to continue double -digit kind of growth for next year as well? t's say, Elenium did not impact much in current yea r also because there was a good amount of price rise was there on Elenium, but similar kin d of reduction was there few months back because of readjustment of prices, and reappraising and all. So on Elenium there is hardly any advantage or even if there is a dvantage, it's only 1%, 2%. So there was hardly any. Much of the advantage was not there. and what we have seen in current year is that your acute portfolio growth in the market is low. So it's a very exceptional year. So -- and acute side, the growth should pick up in next financial year. And on the chronic side, market has started reporting double - So overall, we see that from 11% to 12% growth -- what current le vel we have, it should be possible to increase the overall growth to around 13%, 14% in domestic market. The next question is from the line of Ajay from [Wealthify 0:29:01]. Yes, sir. So sir, I have a question about our group companies. Si nce none of our group companies are doing any con calls or giving any gui dance. And if you say the top lines and bottom line from last few quarters are almost stagn ant and also into losses. So can you please provide any update around our subsidiary perform ance like of Krebs and Lyka and Makers Makers has nothing to do with IPCA. IPCA doesn't have any kind of holding in Makers. It's an independent company. Then as far as Lyka is concern ed, their business growth is good. They overall, they would be doing better, I think, overa ll. Their plant is under shut down a little bit because of upgradations and all. So that is also getting completed renovation part is going to complete in first quart er of the current y ear and thereafter, validations and filings of dossiers and all will ha ppen in the developed market and all. So that journey is going very well. In spite of all those kind of things, they have per formed reasonably well. And they also had almost around 100 people in current year to do the direct marketing of their -- market. And that business has also now -- they're giving good results to them now. And in fact, they can add more number of people in next financia l year. So overall, we are s journey for as far as Lyka is concerned. As far as Unichem is concerned from losses, they ha ve started now performing, and we have already said that -- it's possible to achieve almost around INR 2,000 crores turnover there. And IPCA Laboratories Limited February 15, 2024 Okay. Okay. Just last one question, sir, from my si de. So far as the domestic formulation performance going ahead is concerned, let's say, FY '25. Obviously, we have seen a double - digit growth better than the industry growth, IPM growth in the current financial year so far. io possibility is part of based and the limited scope of a price taking price rise there and the volume growth digit kind of growth t's say, Elenium did not impact much in current yea r also because there was a good amount of price rise was there on Elenium, but similar kin d of reduction was there few months back because of readjustment of prices, and reappraising and all. So on Elenium product, in fact, there is hardly any advantage or even if there is a dvantage, it's only 1%, 2%. So there was and what we have seen in current year is that your acute portfolio growth in the market is and acute side, the growth should pick up in next digit growth now. vel we have, it should be possible to increase the overall growth to around 13%, 14% in domestic market. nce none of our group companies are doing any con calls or giving any gui dance. And if you say the top lines and bottom line from last few quarters are almost stagn ant and also into losses. So can you please ance like of Krebs and Lyka and Makers doesn't have any kind of holding in Makers. It's an independent company. Then as far as Lyka is concern ed, their business growth is good. They overall, they would be doing better, I think, overa ll. Their plant is under shut down a little bit because of upgradations and all. So that is also getting completed -- your whole ear and thereafter, validations and filings of dossiers and all will ha ppen in the developed market and all. So that In spite of all those kind of things, they have per formed reasonably well. And they also had -- injectables in the they're giving good results to them now. And in fact, they can add more number of people in next financia l year. So overall, we are s eeing a good As far as Unichem is concerned from losses, they ha ve started now performing, and we have 2,000 crores turnover there. And significant impr companies. As far as Krebs is concerned, there are good improv ement there. The losses are reducing now and some more products validations and all are goin g on there. Some products on side are getting approved in our dossier. So once t hat happens, their volume So we are seeing good improvement in Krebs also. Bu t it will take time. It's not those approval comes, even though you have valida intermediate and use those capacities and all. So those issues are there. But overall, let's say, there are overall improvement in all operations. Onyx is giving good returns, good profitability the re. We are the good business on selling the neutraceuticals and th eir busine overall. So there are was set up for marketing of Unichem will be doing the marketing So Bayshore will, overall, maybe business and also their team synchronizations and a ll that work is going on. And certain costs will there also will come down. So associated subsidiary kind of business.

The next question is from the line of Ashish from JM Mutual Funds.

Yes. Sir, on this API thing, since you have the Dewas facility also some price pressure on the APIs we have heard from some of the channel checks. In terms of our realization, like what products we might have s elected for versus now, how are the product prices beh

As far as Dewas products are concerned, it's only t he products are getting transferred from Ratlam and Ratlam, we are creating the surpluses ca pacity so that the products which are required for captive consumption for newer kind of products to be launched and newer pro ducts are maybe few. It's more of a site transfer from Ratlam to Dewas and those kind of products are there. And there are have seen significant kind of price reduction. But otherwise, the prices have stabilized now. There are not much concern on as far as the prices of API is concerned currently. From these levels, they are not going

Yes. Fair enough. Sir, secondly, on the business. So prior to the 2013, '14 level, we used to do around $30 million to $40 million in the US business. And there was this one product, Toprol, engagements like used to supply Toprol to AstraZene ca and some other players, I guess. So all those engagements will restart or you feel you will have to make a fresh start? significant impr ovement in the EBITDA margin from current level. So these are the listed As far as Krebs is concerned, there are good improv ement there. The losses are reducing now and some more products validations and all are goin g on there. Some products on side are getting approved in our dossier. So once t hat happens, their volume So we are seeing good improvement in Krebs also. Bu t it will take time. It's not those approval comes, even though you have valida ted process, you can't use those kind of intermediate and use those capacities and all. So those issues are there. But overall, let's say, there are overall improvement in all operations. Onyx is giving good returns, good profitability the re. We are the -- Trophic Wellness has done good business on selling the neutraceuticals and th eir busine ss is also in good profitability overall. So there are -- except lets say, somewhere, I think the Bayshore which is a setup which was set up for marketing of IPCA product. So now that setup is no longer required be cause Unichem will be doing the marketing because that's a much bigger setup. So Bayshore will, overall, maybe -- that business will get overall merge with the Unich em business and also their team synchronizations and a ll that work is going on. And certain costs will there also will come down. So overall, there are much of -- not much of concerns in that associated subsidiary kind of business. The next question is from the line of Ashish from JM Mutual Funds. Yes. Sir, on this API thing, since you have the Dewas facility also coming, but globally, there's some price pressure on the APIs we have heard from some of the channel checks. In terms of our realization, like what products we might have s elected for -- from Dewas versus then and versus now, how are the product prices beh aved? As far as Dewas products are concerned, it's only t he products are getting transferred from Ratlam and Ratlam, we are creating the surpluses ca pacity so that the products which are required for captive consumption for our US business that can be accommodated. So it's not a newer kind of products to be launched and newer pro ducts are maybe few. It's more of a site transfer from Ratlam to Dewas and those kind of products are there. And there are -- the price stability is there on those kind of products, except sartans where we have seen significant kind of price reduction. But otherwise, the prices have stabilized now. There are not much concern on as far as the prices of API is concerned currently. From these levels, they are not going down. Yes. Fair enough. Sir, secondly, on the US , since we are in the process of starting up the business. So prior to the 2013, '14 level, we used to do around $30 million to $40 million in the business. And there was this one product, Toprol, which is metoprolol. So all those engagements like used to supply Toprol to AstraZene ca and some other players, I guess. So all those engagements will restart or you feel you will have to make a fresh start? IPCA Laboratories Limited February 15, 2024 ovement in the EBITDA margin from current level. So these are the listed As far as Krebs is concerned, there are good improv ement there. The losses are reducing now and some more products validations and all are goin g on there. Some products on intermediate will also pick up. So we are seeing good improvement in Krebs also. Bu t it will take time. It's not -- till the time ted process, you can't use those kind of So those issues are there. But overall, let's say, there are overall improvement in all operations. Trophic Wellness has done ss is also in good profitability except lets say, somewhere, I think the Bayshore which is a setup which product. So now that setup is no longer required be cause that business will get overall merge with the Unich em business and also their team synchronizations and a ll that work is going on. And certain costs not much of concerns in that -- coming, but globally, there's some price pressure on the APIs we have heard from some of the channel checks. In terms of from Dewas versus then and As far as Dewas products are concerned, it's only t he products are getting transferred from Ratlam and Ratlam, we are creating the surpluses ca pacity so that the products which are that can be accommodated. So it's not a newer kind of products to be launched and newer pro ducts are maybe few. It's more of a site kind of products, except sartans where we have seen significant kind of price reduction. But otherwise, the prices have stabilized now. There are not much concern on as far as the prices of API is concerned currently. From these , since we are in the process of starting up the business. So prior to the 2013, '14 level, we used to do around $30 million to $40 million in the which is metoprolol. So all those engagements like used to supply Toprol to AstraZene ca and some other players, I guess. So all those engagements will restart or you feel you will have to make a fresh start?

Let's say, tactically all those there is no shipment of API to any formulators for those kind of talk that wherever is possible to get those kind of business once again. But it' time-consuming thing again because lot of places, our process has also changed. So we need to update those kind of parties with revised sampling. And then the approvals and all those things are there. So API business will be a little slower to start wi consumptions will come from Ratlam. So Ratlam capac ity which is getting freed by shifting of products to Dewas will be utilized for the purpose of our captive consumption more. And the and API business, if you look at around 10% to 12% year

Okay. Fair enough. Sir, lastly, on this Unichem, so in terms of liking operational changes like putting our processes, going for the yield improvem ent. So whe of things? Have we achieved enough kind of success in what we were planning to do with Unichem?

If you look at their results of the third quarter a nd all, they have significantly improved because they were i improving from minus 14% in Q3 last year, it is now 8.8% kind of margin. So the operations has started improving, their productivity have started coming. Their sales are growing by mo impr oving in various markets like U business improvements are there. And they have Goa products so that they have much larger capacity, but the bigger basis they can produce. So with that, there could be a further improvement in their overall operation. As far as process changes and all those are happening everywhere on market extension, process i mprovements and all those kind of things. But your pharma industry being regulated, everything need a regulatory approval. Once you do a process, again, go t APIs or intermediates to the other formulators, all that. And then they need to again do processes and generate stability, file And thereafter, It's more for the captive consumption. So that jour ney will have to have, and it will take time. It's a maybe 1 have envisaged. There could be some delay here and there, have envisaged

Just lastly, sir. So 2 years down the line, could t his be a 15%, 20% EBITDA margin business? Is that number achievable for Unichem? Let's say, tactically all those kind of businesses because -- has completely come there is no shipment of API to any formulators for US in last 10 years. So we have restarted all those kind of talk that wherever is possible to get those kind of business once again. But it' consuming thing again because lot of places, our process has also changed. So we need to update those kind of parties with revised sampling. And then the approvals and all those things So API business will be a little slower to start wi th for US But the API for captive consumptions will come from Ratlam. So Ratlam capac ity which is getting freed by shifting of products to Dewas will be utilized for the purpose of our captive consumption more. And the and API business, if you look at -- now from next financial year, we should be able to grow around 10% to 12% year -on-year. Okay. Fair enough. Sir, lastly, on this Unichem, so in terms of liking operational changes like putting our processes, going for the yield improvem ent. So whe re are we in the overall scheme of things? Have we achieved enough kind of success in what we were planning to do with If you look at their results of the third quarter a nd all, they have significantly improved because they were i n losses. And now they have come in overall and mar gins has also started improving from minus 14% in Q3 last year, it is now 8.8% kind of margin. So the operations has started improving, their productivity have started coming. Their sales are growing by mo re than 40% in current year. And that is also resul ting -- businesses are also oving in various markets like U S, Brazil, Europe. everywhere, we are seeing some kind of business improvements are there. And they have Goa two their plants, the validation of processes are going on for the bigger products so that they have much larger capacity, but the bigger basis they can produce. So with that, there could be a further improvement in their overall operation. As far as process changes and all those are -- i t's a journey. It takes time. That's happening everywhere on market extension, process i mprovements and all those kind of things. But your pharma industry being regulated, everything need a regulatory approval. Once you do a process, again, go t o regulators, file with them, wait for their approvals. Then give the APIs or intermediates to the other formulators, all that. And then they need to again do processes and generate stability, file -- give those data to regulator. And thereafter, the fructification happen. Here, most of those impr ovements are not for sale. It's more for the captive consumption. So that jour ney will have to have, and it will take time. It's a maybe 1 -, 1.5- year journey. But I would say that, yes, the journe y is happ have envisaged. There could be some delay here and there, but journey is happening as we envisaged . Just lastly, sir. So 2 years down the line, could t his be a 15%, 20% EBITDA margin business? Is that number achievable for Unichem? IPCA Laboratories Limited February 15, 2024 has completely come -- US related in last 10 years. So we have restarted all those kind of talk that wherever is possible to get those kind of business once again. But it' s a consuming thing again because lot of places, our pr ocess has also changed. So we need to update those kind of parties with revised sampling. And then the approvals and all those things But the API for captive consumptions will come from Ratlam. So Ratlam capac ity which is getting freed by shifting of products to Dewas will be utilized for the purpose of our captive consumption more. And the -- now from next financial year, we should be able to grow Okay. Fair enough. Sir, lastly, on this Unichem, so in terms of liking operational changes like re are we in the overall scheme of things? Have we achieved enough kind of success in what we were planning to do with If you look at their results of the third quarter a nd all, they have significantly improved n losses. And now they have come in overall and mar gins has also started So the operations has started improving, their prod uctivity have started coming. Their sales are businesses are also Brazil, Europe. everywhere, we are seeing some kind of of processes are going on for the bigger products so that they have much larger capacity, but the bigger basis they can produce. So with t's a journey. It takes time. That's -- work is happening everywhere on market extension, process i mprovements and all those kind of things. But your pharma industry being regulated, e verything need a regulatory approval. Once o regulators, file with them, wait for their approvals. Then give the APIs or intermediates to the other formulators, all that. And then they need to again do -- their the fructification happen. Here, most of those impr ovements are not for sale. It's more for the captive consumption. So that jour ney will have to have, and it will take time. year journey. But I would say that, yes, the journe y is happ ening as we but journey is happening as we Just lastly, sir. So 2 years down the line, could t his be a 15%, 20% EBITDA margin business?

We have guided for 15% kind of EBITDA margin.

The next question

My first question is with respect to the guidance. I mean if I see our international business, earlier, you said it was what you're expecting in your Q3. Just wanted to un derstand for the different subsectors, what are the guidance? Are you holding in? Or is there any change?

As Mr. Jain has said, generic business will continu e to grow. There will be some slowness in the API business for the time being and to some ext ent, in the ROW branded business. The growth has been lower than what we gave projection in the beginn

So API, you are lowering and international branded you're lowering. The others are sticking directly...

Right. And both these business should give reasonab le growth in the next financial year. That is what our guidanc going forward.

Understood. Helpful. And the other thing I just wan ted to know, obviously, the generic business, Unichem's also business is growing very s trong. Just wanted some kind of what are the other reasons behind this sudden surge in demand? Because at the start, you only said that at the start of the year, the generic, you were expecting a single digit, but now it is upwards of 25%, 30%. So wanted And going ahead, is it a one

No, no. Lot of operational changes are also made in the bargain. So their productivity has improved. Their production capacity has also benefit in US business. And they are also commercia lizing few of the new formulation for which, in the past, they have received approval. And few more new products will also get commerciali zed in the next fin also have a basket of products to be commercialized . So all that is giving benefit. And in few products, maybe because of shortage in the market a lso, some benefit would have come to them.

Okay. And with respect to your generic,

They're only into generic business. Nothing else.

Your generic business also saw a very...

No. My generic bus fact, in first 9 months, the growth has been about 100%. European generic business has done very well. South Africa, we were looking for some d egrowth, but that has also grown. So generic business, we don't see any concern as far as growth is co We have guided for 15% kind of EBITDA margin. The next question is from the line of Shiva from Purnartha Investment Advisors. My first question is with respect to the guidance. I mean if I see our international business, earlier, you said it was -- you were expecting a 12% growth but now you just sa id that 8% is what you're expecting in your Q3. Just wanted to un derstand for the different subsectors, what are the guidance? Are you holding in? Or is there any change? As Mr. Jain has said, generic business will continu e to grow. There will be some slowness in the API business for the time being and to some ext ent, in the ROW branded business. The growth has been lower than what we gave projection in the beginn ing of the year. So API, you are lowering and international branded you're lowering. The others are sticking Right. And both these business should give reasonab le growth in the next financial year. That is what our guidanc e is. So from this period on the API business shoul d stabilize and grow going forward. Understood. Helpful. And the other thing I just wan ted to know, obviously, the generic business, Unichem's also business is growing very s trong. Just wanted -- if you could just add some kind of what are the other reasons behind this sudden surge in demand? Because at the start, you only said that at the start of the year, the generic, you were expecting a single digit, but now it is upwards of 25%, 30%. So wanted to understand what changed in this high end? And going ahead, is it a one -off? Or is it more structural? No, no. Lot of operational changes are also made in the bargain. So their productivity has improved. Their production capacity has also improved substantially, and that has given them benefit in US business. And they are also commercia lizing few of the new formulation for which, in the past, they have received approval. And few more new products will also get commerciali zed in the next fin ancial year. So they also have a basket of products to be commercialized . So all that is giving benefit. And in few products, maybe because of shortage in the market a lso, some benefit would have come to Okay. And with respect to your generic, is it more -- because of any shortages or is it... They're only into generic business. Nothing else. Your generic business also saw a very... No. My generic bus iness, what has happened? The U K business is growing very fact, in first 9 months, the growth has been about 100%. European generic business has done very well. South Africa, we were looking for some d egrowth, but that has also grown. So generic business, we don't see any concern as far as growth is co ncerned. IPCA Laboratories Limited February 15, 2024 Purnartha Investment Advisors. My first question is with respect to the guidance. I mean if I see our international business, you were expecting a 12% growth but now you just sa id that 8% is what you're expecting in your Q3. Just wanted to un derstand for the different subsectors, what As Mr. Jain has said, generic business will continu e to grow. There will be some slowness in the API business for the time being and to some ext ent, in the ROW branded business. The ing of the year. So API, you are lowering and international branded you're lowering. The others are sticking Right. And both these business should give reasonab le growth in the next financial year. That e is. So from this period on the API business shoul d stabilize and grow Understood. Helpful. And the other thing I just wan ted to know, obviously, the generic you could just add some kind of what are the other reasons behind this sudden surge in demand? Because at the start, you only said that at the start of the year, the generic, you were expecting a single digit, to understand what changed in this high end? No, no. Lot of operational changes are also made in the bargain. So their productivity has improved substantially, and that has given them benefit in US business. And they are also commercia lizing few of the new formulation for ancial year. So they also have a basket of products to be commercialized . So all that is giving benefit. And in few products, maybe because of shortage in the market a lso, some benefit would have come to because of any shortages or is it... K business is growing very nicely. In fact, in first 9 months, the growth has been about 100%. European generic business has done very well. South Africa, we were looking for some d egrowth, but that has also grown. So

I just wanted to know, like the next 1 year, you're looking at a very strong growth, like the runway of this? Or is it

On a conservative basis, we can guide anywhere. for generic business. Over and above that, whatever business will come out of on.

Understood. Helpful. And just one small question. I wanted to understand your MR productivity. So we've seen the last quarter t get -- update the MR productivity? And what is the current strength and the plan for any additions going ahead?

Overall, MR productivity is around 4,25,000 current ly. We are almost around 7,000 medical reps as of now. We will be adding cer tain number of people in current year. That process is going on. But additional will be no t more than 5% increase in overall field force size.

Okay. So last quarter, it was slightly MR?

Wait. Second quarter is always more productive. Bec ause of seasonality issues and all. And this quarter, because of season not being that cond ucive, sales are also a little bit lowe what we expected. If not nothing, nothing abnormal. Second quarter is always the best quarter in the domestic branded business.

On per man side, I think we have added almost around current year.

Understood. And just there's some notification from the government with respect to the medical professionals kind of antiviral or anything they should be slightly on a conservative basis. Did you feel anything on the ground or is it more just a stateme

Pardon. We didn't make out what was your question actually.

There were some rules that the government officials have told the medical representatives to be slightly on a conservative basis in prescribing pain o basis. So in that...

We have not seen any impact, anything like that in the market place. No.

The next question is from the line of Rashmi Shetty from Dolat Capital.

Sir, for the products, which you mentioned, 16 to 7 launches, which we will be doing in the business. That will be through Unichem. I mean, the sales will be the part of Unichem or will that be included in subsidiary or it will be part of generic business? I just wanted to know, like the next 1 year, you're looking at a very strong growth, like the runway of this? Or is it -- this year has been a one-off, etcetera? On a conservative basis, we can guide anywhere. between 12% to 15% growth going forward for generic business. Over and above that, whatever business will come out of Understood. Helpful. And just one small question. I wanted to understand your MR productivity. So we've seen the last quarter t hat there was an improvement. So if you could just update the MR productivity? And what is the current strength and the plan for any additions going ahead? Overall, MR productivity is around 4,25,000 current ly. We are almost around 7,000 medical reps as of now. We will be adding cer tain number of people in current year. That process is going on. But additional will be no t more than 5% increase in overall field Okay. So last quarter, it was slightly higher, right? It was I think 4,60,000 was Wait. Second quarter is always more productive. Bec ause of seasonality issues and all. And this quarter, because of season not being that cond ucive, sales are also a little bit lowe what we expected. If not nothing, nothing abnormal. Second quarter is always the best quarter in the domestic branded business. side, I think we have added almost around INR 20,000 productivity Understood. And just there's some notification from the government with respect to the medical professionals kind of antiviral or anything they should be slightly on a conservative basis. Did you feel anything on the ground or is it more just a stateme nt from the government. Pardon. We didn't make out what was your question actually. There were some rules that the government officials have told the medical representatives to be slightly on a conservative basis in prescribing pain o r anything with respect to the acute basis. So in that... We have not seen any impact, anything like that in the market place. No. The next question is from the line of Rashmi Shetty from Dolat Capital. products, which you mentioned, 16 to 7 launches, which we will be doing in the business. That will be through Unichem. I mean, the sales will be the part of Unichem or will that be included in subsidiary or it will be part of generic business? IPCA Laboratories Limited February 15, 2024 I just wanted to know, like the next 1 year, you're looking at a very strong growth, like the 15% growth going forward for generic business. Over and above that, whatever business will come out of US will be add Understood. Helpful. And just one small question. I wanted to understand your MR hat there was an improvement. So if you could just update the MR productivity? And what is the current strength and the plan for any Overall, MR productivity is around 4,25,000 current ly. We are almost around infilled around 7,000 medical reps as of now. We will be adding cer tain number of people in current year. That process is going on. But additional will be no t more than 5% increase in overall field higher, right? It was I think 4,60,000 was -- 4,63,000, Wait. Second quarter is always more productive. Bec ause of seasonality issues and all. And this quarter, because of season not being that cond ucive, sales are also a little bit lowe r than what we expected. If not nothing, nothing abnormal. Second quarter is always the best quarter 20,000 productivity per man in Understood. And just there's some notification from the government with respect to the medical professionals kind of antiviral or anything they should be slightly on a conservative nt from the government. There were some rules that the government officials have told the medical representatives to r anything with respect to the acute products, which you mentioned, 16 to 7 launches, which we will be doing in the US business. That will be through Unichem. I mean, the sales will be the part of Unichem or -- and

Rashmi, earlier what was happening, I was manufactu ring, and I was selling it to my marketing partner, right? We had 2, 3 marketing par tners in the US. So on profit sharing basis. Now what will happen, we will manufacture and sell to Unichem in my books also and in their books also. In any ca se, their books will get consolidated ultimately with my books. So there is no change bec ause manufacturing they will do selling and distribution there.

Marketing. Understood.

That is correct. Right.

Okay. That is one thing. And secondly, on the India business, if you can give little bit color on how your pain segment has performed during the quar ter, even about the performance.

Overall, pain portfolio in current year has grown b y around 12%. This quarter, pain segment growth is a little lower at around 8% to 9% kind of thing. But overall, let's say, therapeutic wise on cardiovascular in current year, we have grow n by around 13%. And the antibacterial growth is low at around 3%, CMS around 20%, Derma o n 19%, urology around 24%, ophthalmology around 17% kind of growth. And others maybe around 8%, 9%. So overall, tha t's broadly the performances..

And your product Zerodol is still contributing significantly and it is growing double digit?

Current year, Zerodol growth is arou

Okay. At the consolidation. How much would be the amortization t hat would be recognized due to this acquisition? Annual amortization?

Rashmi, it is an investment. There is no amortizati on. Earlier, what was happening, all acquisition costs used to get capitalized. Now all acquisition cost gets debited to P&L. That is why that INR we purchase share and give considerations. So there is nothing to be amortized over a period of time.

The next question is from the line of Mukherjee Saion from Nomura.

Sir, just one Unichem, your guidance of crores EBITDA. What's the time line for that you're looking at?

FY '26.

And sir, with the process changes and market extens ions, which i term, how should we think about growth in margins f or Unichem from a slightly longer perspective? Rashmi, earlier what was happening, I was manufactu ring, and I was selling it to my marketing partner, right? We had 2, 3 marketing par tners in the US. So on profit sharing basis. Now what will happen, we will manufacture and sell to Unichem US. So sales will get booked in my books also and in their books also. In any ca se, their books will get consolidated ultimately with my books. So there is no change bec ause manufacturing IPCA they will do selling and distribution there. Marketing. Understood. That is correct. Right. Okay. That is one thing. And secondly, on the India business, if you can give little bit color on how your pain segment has performed during the quar ter, even Zerodol, if you can tell us about the performance. Overall, pain portfolio in current year has grown b y around 12%. This quarter, pain segment growth is a little lower at around 8% to 9% kind of thing. But overall, let's say, therapeutic ise on cardiovascular in current year, we have grow n by around 13%. And the antibacterial growth is low at around 3%, CMS around 20%, Derma o n 19%, urology around 24%, ophthalmology around 17% kind of growth. And others maybe around 8%, 9%. So overall, t's broadly the -- here numbers -- in various therapeutical performance performances.. And your product Zerodol is still contributing significantly and it is growing double digit? Current year, Zerodol growth is arou nd, say, around 8% to 9%. Okay. At the -- in the range of 8%, 9%. Understood. And one more qu estion on this Unichem consolidation. How much would be the amortization t hat would be recognized due to this acquisition? Annual amortization? Rashmi, it is an investment. There is no amortizati on. Earlier, what was happening, all acquisition costs used to get capitalized. Now all acquisition cost gets debited to P&L. That is INR 40 crores deficit has come in the second quarter . Otherwise, all is investment. So we purchase share and give considerations. So there is nothing to be amortized over a period of The next question is from the line of Mukherjee Saion from Nomura. Sir, just one Unichem, your guidance of INR 2,000 crores and a 15% EBITDA margin, crores EBITDA. What's the time line for that you're looking at? And sir, with the process changes and market extens ions, which i s probably slightly longer term, how should we think about growth in margins f or Unichem from a slightly longer IPCA Laboratories Limited February 15, 2024 Rashmi, earlier what was happening, I was manufactu ring, and I was selling it to my marketing partner, right? We had 2, 3 marketing par tners in the US. So on profit sharing basis. US. So sales will get booked in my books also and in their books also. In any ca se, their books will get consolidated IPCA will do -- only Okay. That is one thing. And secondly, on the India business, if you can give little bit color on Zerodol, if you can tell us Overall, pain portfolio in current year has grown b y around 12%. This quarter, pain segment growth is a little lower at around 8% to 9% kind of thing. But overall, let's say, therapeutic - ise on cardiovascular in current year, we have grow n by around 13%. And the antibacterial growth is low at around 3%, CMS around 20%, Derma o n 19%, urology around 24%, ophthalmology around 17% kind of growth. And others maybe around 8%, 9%. So overall, in various therapeutical performance -- area And your product Zerodol is still contributing significantly and it is growing double digit? in the range of 8%, 9%. Understood. And one more qu estion on this Unichem consolidation. How much would be the amortization t hat would be recognized due to this Rashmi, it is an investment. There is no amortizati on. Earlier, what was happening, all acquisition costs used to get capitalized. Now all acquisition cost gets debited to P&L. That is . Otherwise, all is investment. So we purchase share and give considerations. So there is nothing to be amortized over a period of 2,000 crores and a 15% EBITDA margin, INR300 s probably slightly longer term, how should we think about growth in margins f or Unichem from a slightly longer -term

Saion as far as this market expansion and change in sourcing, it's a regulatory business, and it will take time near future, whatever we can do, that is what guidance we have given over next 2 years.

Okay. And sir, any assessment on the that you would be launching in the market?

It is too early to give any guidance. See, nobody i s waiting for your product. Even though I have cost competency, I will have to again relaunch product one by one and go on taking market share. There are only 3, 4 customers who matter in this business, you know very well. And they are already sourcing those products from a third party. It will take some time, but we are confident because of our processes in the API. And our cost com do well in the US market vis

Okay. And sir, when you mentioned 13%, 14% kind of a growth in India, what's the assessment on how much is price and volume mix in this g

It will be around 4%, 5% price increase and the res t are all volume. This year, the growth has been little lower because of the seasonality and al l, it is slightly below our expectation. Otherwise, compared to market, we

As there are no further questions from participants , I would now like to hand the conference over to the management for closing comments.

No, nothing. Most of the issues. We have already di s is nothing further to add. Thank you very much.

Thank you. On behalf of DAM Capital Advisors Limite d, that concludes this conference. Thank you for joining us. You may now disconnect your lines.

Thank you, everyone. Thank you. Bye. Saion as far as this market expansion and change in sourcing, it's a regulatory business, and it will take time . So the margin expansion will continue over a peri od of time. But immediate near future, whatever we can do, that is what guidance we have given over next 2 years. Okay. And sir, any assessment on the US revenues for the next 2 years with that you would be launching in the market? It is too early to give any guidance. See, nobody i s waiting for your product. Even though I have cost competency, I will have to again relaunch product one by one and go on taking market share. There are only 3, 4 customers who matter in this business, you know very well. And they are already sourcing those products from a third party. It will take some time, but we are confident because of our processes in the API. And our cost com petency, we will certainly do well in the US market vis -a-vis our formulations going forward. Okay. And sir, when you mentioned 13%, 14% kind of a growth in India, what's the assessment on how much is price and volume mix in this g rowth expectations? It will be around 4%, 5% price increase and the res t are all volume. This year, the growth has been little lower because of the seasonality and al l, it is slightly below our expectation. Otherwise, compared to market, we continue to do well. There is no issue. As there are no further questions from participants , I would now like to hand the conference over to the management for closing comments. No, nothing. Most of the issues. We have already di s cussed. All questions are answered. There is nothing further to add. Thank you very much. Thank you. On behalf of DAM Capital Advisors Limite d, that concludes this conference. Thank you for joining us. You may now disconnect your lines. everyone. Thank you. Bye. IPCA Laboratories Limited February 15, 2024 Saion as far as this market expansion and change in sourcing, it's a regulatory business, and it . So the margin expansion will continue over a peri od of time. But immediate near future, whatever we can do, that is what guidance we have given over next 2 years. revenues for the next 2 years with 15, 17 products It is too early to give any guidance. See, nobody i s waiting for your product. Even though I have cost competency, I will have to again relaunch product one by one and go on taking market share. There are only 3, 4 customers who matter in this business, you know very well. And they are already sourcing those products from a third party. It will take some time, but we petency, we will certainly Okay. And sir, when you mentioned 13%, 14% kind of a growth in India, what's the -- your rowth expectations? It will be around 4%, 5% price increase and the res t are all volume. This year, the growth has been little lower because of the seasonality and al l, it is slightly below our expectation. As there are no further questions from participants , I would now like to hand the conference cussed. All questions are answered. There Thank you. On behalf of DAM Capital Advisors Limite d, that concludes this conference.