Thank you, Atharva, and good afternoon, everyone. I, Rashmi Shetty, on behalf of Dolat Capital, welcome you to the Q1 FY27 earnings call of Indoco Remedies.

We thank the Indoco Remedies management for giving us this opportunity to host the call. Today we have with us the senior management of the company represented by Ms.

Aditi Panandikar, MD, Sundeep Bambolkar, Joint MD, and Mr. Pramod Ghorpade, CFO.

I will now hand over the call to the management for the opening remarks. Over to you, sir.

Thank you, Rashmi. Good afternoon, everyone.

Thank you all for joining this call today. Let me draw your attention to the fact that on this call, our discussion will include certain forward-looking statements which are projections or estimates about our future events.

These estimates reflect the management's current expectation of the future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied.

Indoco does not undertake any obligation to publicly update any forward-looking statement, whether as a result of new information, future events, or otherwise. Thank you.

Now I will hand over this mic to Ms. Aditi Panandikar for her opening comments.

Thank you.

Thank you, Pramod. Good afternoon, everyone, and a very warm welcome to our Q1 FY27 earnings call.

I will commence with perspectives on our performance during the first quarter of financial year '27. Despite operating in a very dynamic market environment, Indoco has maintained its growth trajectory and focus on strategic execution.

During Q1 FY27, our standalone operational revenue grew by 5.8% year-on-year to 4,081 million with consolidated revenue reaching 4,662 million, up by 8.2% year-on-year. Standalone EBITDA saw expansion to 422 million, delivering an EBITDA margin of 10.3%.

This steady performance highlights our operating momentum backed by strong execution across our core domestic formulations franchise, regulated international markets, and our vertically integrated API platform. On the regulatory approvals side, I am pleased to share that our Baddi Unit 1 successfully completed Malta Medicines Authority audit, while our Baddi Unit 3 facility received EU GMP certification from the German health authority, Berlin.

Adding to this, our Goa Plant 1 successfully cleared the Malta Medicines Authority audit. The facility has EU GMP certification from the authority, confirming that it complies with the good manufacturing practice requirements as referred in the EC directive.

I am happy to share that Indoco Stability Centre, IAS, at Chhatrapati Sambhajinagar, Aurangabad, successfully completed a pre-approval inspection by the US FDA with zero observations. Moving to our domestic operations, our domestic formulations business recorded revenues of 2,040 million in quarter 1 FY27.

As per the IQVIA MAT June '26 data, Indoco continues to maintain a solid position in the Indian pharma market at the 33rd rank while maintaining an impressive 20th rank MAT May '26 in prescription volume. The strong doctor connect is driven by a field force that reaches over 2,42,000 prescribing doctors across various specialties.

Through an emphasis on building and scaling high-margin brands as per IQVIA MAT June '26, our top 5 flagship brands now contribute 42% to our total domestic portfolio. Cyclopam continues its trajectory as a major growth champion, achieving 44% absolute growth since 2022 to now reach 196 crore, on the verge of becoming a landmark 200 crore mega brand.

Following the post-COVID market realignments, acute products like Febrex Plus have now stabilized and rebounded to a turnover of 118 crore. Mid-sized brands are emerging as primary growth drivers for our domestic business.

Our focused portfolio, including SM Fibro, Rexidin M, Oxipod CV, and Dropizine, recorded an aggregate growth of 86% with Dropizine delivering a 3x breakout to reach 14 crore. Furthermore, Indoco has established multi-brand market leadership in targeted sub-segments, boasting 4 distinct brands in the top 20 of the stomatological market.

It is worthwhile to mention that the divestment of the ophthalmic division in India and agreed territories in Africa is an important step in sharpening our focus on core therapeutic areas with stronger potential. Now turning to our international operations, international formulations contributed 35% of the quarter 1 FY27 revenues at 1,451 million, while our active pharmaceutical business delivered a stellar performance this quarter, surging to 42% YoY and a turnover of 522 million.

With consistent growth, this platform provides crucial backward integration for our formulations pipeline, ensuring both cost competitiveness and supply chain security. Looking ahead, I am confident in our ability to sustain profitable growth across all core businesses.

In India, our priorities are scaling mid-sized brands into mega brands, deepening specialty prescription share, and expanding our chronic footprint. Internationally, we will leverage our integrated R&D, CRO, and API capabilities to accelerate high-value filings in complex ophthalmics, injectables, and oral solids.

Crowning these ambitions is our relentless commitment to cost optimization, operational excellence, and long-term shareholder value. Thank you.

I will now hand over to Mr. Sundeep, who will present the detailed financial highlights.

Good afternoon, all. Thank you, Aditi.

Let me first begin with the business highlights. Standalone net revenues of the company for the first quarter of FY26-27 grew by 5.8% at ₹4,081 million compared to ₹3,856 million for the same quarter last year.

Consolidated net revenues of the company for the first quarter are at 4,662 million compared to 4,309 million for the same quarter and ₹4,559 million for the immediately preceding quarter, that is Q4 FY26, at 8.2% and 2.3% growth, respectively. Standalone EBITDA to net sales for the quarter is 10.3% at ₹422 million compared to 3.8% at ₹148 million for the same quarter last year.

For the immediate preceding quarter is 14.7% at 630 million. Consolidated EBITDA to net sales for the quarter is 8.8% at ₹410 million compared to 4.1% at ₹175 million.

For the immediately preceding quarter, Q4 FY26, EBITDA is 10.9% at ₹497 million. Domestic formulation business: revenues from domestic formulation business for the quarter are at ₹2,040 million as compared to ₹2,028 million for the same quarter last year.

Major therapeutic segments like urology, gastrointestinal, vitamins, stomatology, and dermatology performed well during the quarter as compared to the same quarter last year. Now on the international formulation business front: revenues from international formulations grew at 2.8% at ₹1,451 million compared to ₹1,411 million same quarter last year.

Revenues from regulated markets for the quarter grew by 19.3% at ₹1,133 million as against ₹950 million. Revenues from the US business for the quarter grew by 62.2% at ₹459 million as against 283 million.

Revenues from Europe for the quarter grew by 2.5% at ₹650 million against ₹635 million. Revenues from South Africa, Australia, New Zealand are at ₹24 million against ₹32 million.

Revenues from emerging markets for the quarter are at ₹317 million as against ₹461 million. Revenues from API business for the quarter grew by 42.4% at ₹521 million as against ₹366 million.

Revenues from AnaCipher CRO and Indoco Analytical Solutions for the quarter grew by 36.2 million—sorry, 36.2% at ₹69 million against ₹50 million. That's all about the business highlights for the quarter, and I now request the participants to put forth their questions.

Thank you.

Yes, thank you for the opportunity. Ma'am, my first question is any update from the US FDA about the plant?

No, we've not heard anything yet. Let's keep our fingers crossed, hoping in the next couple of months.

Okay. Secondly, on our international business, when we see revenues are largely flat, the US business has grown, but Europe business has not grown, and there's a de-growth in the emerging markets.

Are there any concerns, or do you expect these markets to grow for this year?

I'll start with the emerging business. As emerging is a branded formulations market, and sometimes for the March quarter end, there is a bit of a push, and especially with the war-like situation and there were shortages of products, there was a good amount of primary billing in March.

If you look at the March-April in combined, then we are still doing a much better per month sales. I'm sure this is only a temporary, one-quarter glitch.

Even for the European market?

Europe is about rolling orders, probably it is just about the timing must have not been able to sort of release products on time, etc. I'm sure there is nothing fundamentally wrong.

Okay. On the domestic business, Indoco standalone business plus the Warren, I think even that business has been flat.

Any comments on both of that?

If you look at the top 10 large brands of the company, then we have got almost all segments in double-digits positive growth except two products, two segments, one is anti-infective and the other is respiratory. Both are very seasonal, and this year we did not get rains in June, there was almost a one-month pushover.

I expect that is why on a Q1 to Q1 basis, you see that drop. If you look at performance on the immediate preceding quarter basis, you will see a good growth because the season has started to come in, but it is not equivalent to what it was last year.

Sadly the wonderful performance by all other brands, whether you look at Cital, Cyclopam, you look at some of the other brands like, I think, even your all the dental products have all done very well. It is only Febrex Plus, Karvol Plus, and one antibiotic which are heavily de-grown on the primary, that too.

What would be the potential for the India business? Can we grow double-digits here for next one, two years, or these are high single-digit growth brands?

How do we look at these?

As the top 10 brands contribute more and more to total turnover, we are much more in control of delivering a more consistent performance. You should expect higher single-digit to double-digit growth in India business going forward.

Ma'am. Lastly, on the margins, while the margins have grown year-on-year, but our gross margins have taken a hit for the quarter.

You expect these gross margins—

Gross margins, this quarter we had an impact of the increase in cost of goods because of the war situation, and a lot of the products, there were shortages even in availability of materials, let alone the increased pricing. For this particular quarter, you see COGS impacted, and almost by 2 percentage point our cost of goods has gone up.

Otherwise, the performance would have been even better.

We'd expect double-digit margins for the year? EBITDA margins?

That is what we're aiming for.

Sure, ma'am. Lastly, just on the debt and interest costs, Pramod sir, if you can highlight the debt number and how do we expect the interest costs to pan out for the year?

Overall debt we have reduced by about 30-odd crore as compared to what we used to have in March '26. Overall debt level remains at around 930 now as against 964 as of March '26.

We have repaid a certain term loans. This is both put together, long-term and short-term put together.

While the interest cost, as we discussed last time also, it is in the range of sub-9 overall, which is quite competitive at this point of time.

That's it from my side. Thank you, and all the best.

Thank you.

My question is if I look at the US business, we have a fair basket of ophthalmic products. If we look at dorzolamide, brimonidine, and certain other products as well, like brinzolamide, etc.

If you can give some color with respect to how do we see launches in the US and probably traction in the existing products, and also some color with respect to how do we see pick up in the European market going forward as well?

European market, as I said already, this was a one-off quarter where there was a dip, but otherwise we expect very good, consistent performance for Europe. There is a good product basket, very predictable.

We supply Europe from our Baddi sites, and some also comes from Goa. For US, you asked specifically about new launches, so as for the sterile business, our new product approvals are held because of the US audit, which is yet to happen.

All the same, current products, including brimonidine, dorzolamide, dorzo-timo, as well as solid orals like allopurinol, glimepiride, varenicline are doing exceedingly well. For the solid orals of the future, of course we have some products we will be able to launch post patent expiry in '27.

There are some early patent expiries expected in Europe next year. We will talk of them as the time approaches.

Do we have any aspirations for, say, FY27, FY28 for European and US business? Specifically with respect to bevacizumab, how do we see this product gathering momentum, and how big could this product be?

As I said, at this stage, it is better to not say anything about ophthalmics too much. I would wait for the US FDA audit to happen, after which we should discuss more concretely numbers.

Yeah.

Ma'am, with respect to the cash that is coming in primarily post the transaction, one, what should be the use of it? Because if I look at the domestic business, as you mentioned, I think the anti-infectives has been a little bit of a joker in the pack, a little bit more volatile than what was expected.

Would we be primarily looking to repay debt, or is there a way where we can buy growth in certain—

Going forward, definitely company will look to invest in acquisition of brands, possibly for India business, but at this point in our journey, it was more important to repay debts, I think. Some of this money that is accrued has gone towards that, for sure.

Sure. With respect to one is the operating leverage as the scale picks up, probably the last few quarters is clearly not the right representation of the business trend.

Where do we see the steady state margins going forward, say in next 6 months or in the next 2 years?

You must have noted, we are not giving any definite guidances on margins exactly, but if you have looked at the performance of the company over the last 9 quarters, you will agree the last 2 quarters show a very clear upward trend in improvement in performance. Okay.

Although I agree that international business this quarter has given a bit of a dip, but otherwise consistently across domestic, international reg, and as well as API, you see a very consistent growth. API division particularly has done very well.

We expect margins to keep improving quarter-on-quarter from here on.

Sure, ma'am. One last question before I join the queue is one is of course operating leverage, but do you see any areas where we can reduce the cost, improve the efficiency given that we have seen challenges as far as growth is concerned?

Right. You remember we must have spoken earlier about our master manufacturing plan, whereby we increased efficiency in the plant, increased batch sizes, looked at reorganizing the product mix across various locations, looked at reducing process time, increasing speed of packing, etc.

All that now structurally is in place. As the orders start flowing in, this will result into requisite numbers.

Even for this first quarter, if I have to tell you, if we look at the value of products made first quarter last year and first quarter this year, and if you look at the number of batches taken, we have actually manufactured 26% less batches. That definitely will result in efficiency over a period of time.

We have also reduced the number of people engaged in operations because due to the high-speed machines, due to automation, we're able to optimize that. All of this eventually will slowly start showing in the margin.

Does that answer your question?

Yes, ma'am. Thanks a lot.

I'll join back.

Yeah.

Ma'am, just wanted to know any particular reason why we haven't scaled up our emerging market and European business, because over last few quarters you were very bullish

on that. Kenil, like I answered earlier, emerging business is a branded business.

Also, to Africa, emerging business, when it is sold, is like booking primaries. I just looked quickly at the secondary growths in the emerging business quarter-on-quarter, they're extremely steady, good double-digit growth in secondary demand.

This kind of fluctuation you see over the March quarter and then the first quarter next year, of course there were challenges of product availability because of war issues, there were some challenges related to being able to get the right freight at the right cost. Those things were there, but they have not impacted much.

The real impact is that after a very high range, because emerging was on 110%, 101% last year, you expect a little bit of that, and then the first quarter does take an impact. To that extent, there has been a bit of a impact from emerging, but fundamentally secondaries are doing really well, and I therefore expect primaries to rebound immediately as in second quarter.

Coming to Europe, again, international business reg did a record-breaking number for the March quarter. For this quarter, looking at the rolling plans from some of our European customers, it is just one quarter where we've not been able to ship a lot and therefore not booked it, but I don't expect this to be a very big problem.

I think as of now, we have in excess of 250 crore of orders in hand for execution. This is not on account of not having orders, it is probably just the timing of it.

Okay. This order book is for three to six months or for one year?

That is the thing. Most of our buyers and partners, we've been in partnership for a very long time, and I think some of my boys when they do their KRAs work it out, they push a bit here, push a bit there.

What I'm trying to tell you is that the order book position is really very good, and fundamentally there will be good growth, not to worry.

Okay. The target we feel like that doubling our export business in two to three years, is it in line?

650 crore.

We are definitely in line for that.

Understood. Does that include all the new products also?

Yes, definitely.

Okay. Wanted to know the capacity utilization for Baddi plant MFP, both plants, and the Goa injectable separately and OSD?

Okay. I think Goa Plant 1 right now on a single-shift basis is occupied to 80% roughly,

70%

to 80%. Baddi 1, which is a smaller capacity, high-value kind of plant, is also occupied to the range of 70% to 80% on a single shift, that too.

Baddi 3, which is the large plant which makes paracetamol, again in the range of 70% to 75%, if I'm not mistaken. Yes.

Yeah.

Okay. All the incremental, as we expand our quarterly exports to 200 crore mark, will lead to higher efficiency in margin expansion?

Yes. This quarter, inavailability to supply has not resulted in the top line this, and as you correctly said, as these capacities get further utilized, you will start seeing the efficiency.

Understood. Going forward, do you think in this financial year we will see a PAT profitability for a quarter going forward in coming quarters?

That's what we're working for.

Understood. Ma'am, just a suggestion, can you give the break up on PPT about FPP, what is the revenue of FPP and profitability and Warren separately so we can get to know where the hanging fruit is, because if FPP is getting profitable during this quarter, then the Warren should also improve the numbers going forward so we can get to know the consolidated numbers in a simple manner and where the ratio is and whether it is improving or not?

We'll send this information.

Understood. Thank you.

Hi. I'll try to ask this question in a different way.

If I look at your FY26 numbers and I add your interest cost and depreciation, that's around 250 crores around, right? The last two years, our operating profit of the company is probably half of this number, half of this 250 crore number.

Obviously debt has increased, which has increased your finance cost, which is a key trigger to this finance cost increasing in this 250 crore number I spoke about. What I'm trying to understand is moving forward in the next couple of years, could you identify the key possible triggers that take this 150, 160 crore operating profit towards higher than the finance plus depreciation cost together, so as to turn profitable on a PBT perspective?

If you look at our business, there are three main segments really. One is the India business, which is the most profitable obviously.

Emerging follows very close, almost same levels. These businesses, there is nothing to worry about how profitable they are or whether they return cash and things like that.

As these businesses grow fast, of course this will come into operating profits. The international business, especially the one to Europe, is now of a quite a substantial size, and given the kind of investments we have already made in improving efficiency at the plant, this business on the high number, when profitability of this business improves, it will also come down into operating profit.

US on the other hand is right now in a high-growth phase, meaning it's very small, and we will continue to sell more, and while this US business at a GC level is very profitable, US has its own challenges on working capital cycles, etc. It will add, but it will not dent too much.

As per me, from a scaling of operating profit angle, one should look at India and emerging steadily adding to it, and one should expect increased profit coming from Europe.

Okay. What about your debt levels?

How do we plan to get this down? Do you have any targets?

I'll let Pramod handle that.

Yes, Kaustav, our long-term debt is at currently ₹600 crore. We have another about 100 crore plus repayment schedule, which is for this particular year, July to March.

Short-term is in the range of 325. Both put together, we are at around 930 crore at this June end.

We are repaying as per our repayment schedule. This particular year, as you would have seen our EBITDA number, and probably we'll have better numbers going forward in next three quarters, we'll be able to repay the principal as well as interest component for remaining three quarters.

Is it realistic to talk about 500 crores long-term plus short-term debt together in a few years, or that's too ambitious?

Certainly. Our objective is to repay 110 in this year and another 150 crore in next year.

Around 260 crore we are going to repay within next about 17 to 18 months.

Understood. Thank you so much.

Thank you.

Hi, good afternoon. First, ma'am, this excellent numbers on other expense and employee, we've been talking about it, but finally we are seeing it in numbers.

These are sustainable, and if you can just highlight what went behind this to get to these numbers?

Yeah. Thank you for that.

This is something we've been working on for a very long time. As the company employs close to 6,000 people, and half of them are in field as sales, and good 40% are employed across various manufacturing sites in particular.

Here we have seen maximum efficiency. As I mentioned earlier, 26% less number of batches have been taken to get equivalent or more sales for international business this year.

Consequently, we've been able to bring down the number of people engaged in operations by quite a large number, quite honestly, close to 900 people have been reduced. In addition to that, with the hiving off of the ophthal division, 200 people engaged in that activity, their cost also for one, one and a half month this quarter has come down.

We are consistently looking at bringing down employee cost. We're consistently looking at reducing cost of repairs and maintenance, stores and spares.

There is a very deep planning involved in operational efficiency to the extent that if we have to run one shift, we run only one shift, nothing more. Keeping utilities in check, looking at unnecessary expenditure which can be postponed, a lot of work going on, and I think you're able to see that.

Great. Second—

Sure. Is this better?

Yeah.

Yeah. To Pramod sir, 930 crores of debt, 9% interest, that doesn't reconcile with this 28 crores a quarter, or even if we look at last 5 quarters, it's been upwards of 25 crores.

Just highlight where is this—

Yeah. Pratik, there are two component.

One is term loan and secondly is working capital, the short-term component. Short-term, 320, as I said, it depends on the cycle of collection.

In case of domestic, as we have 7 plus 21 days of kind of collection cycle, while in case of exports, each market has different terms. Depending on the collection cycle, our short-term also varies.

Sometime it will be less than 300, sometime it will be 320, 330, kind of short-term cycle. Based on that, interest value or in terms of quantum will change, that is one.

Secondly, certain exchange losses are also factored as a part of finance cost. Purely finance cost 9% on an average of 900, you can see roughly about 81.

If I split between a quarterly, it is around 20 crore. That is why average interest cost is about 20, 20.5 crore on a overall debt.

No, but this FX loan that you have, this is in dollar and you'll be paying in dollar, right? It's not notional, it's actual loss.

Euro, euro. Euro, euro.

We have euro loan. We have very good exports in euros, euro to euro repayment can happen.

No, when you say FX notional, it's not actually notional.

No, it's not notional.

See,

there are two component: MTM is notional, while the interest payment on the loan repayment which is in euro is actual.

Correct. The 28 crores is actual in rupees, when converting euro to rupee.

Yes. Correct.

Yes, perfect.

Correct. Last, I'll second the earlier participant's question.

If you can share the SPP revenue numbers and the losses or profit of your Warren and SPP both?

Sure, Pratik, we'll share.

Done. Thank you.

All the best. Sorry, one last.

On the debt part, right, we got 100-odd crores from ophthal, and last quarter we called out the land parcel that we intend to sell. This is over and above the 140 crores of debt repayment that we intend to do?

We've closed that in the month of September, definitely.

No, there is nothing additional. I think what we're trying to say is the 140 crore repayment that has to be done, part of that will come from some of these proceeds.

All of these proceeds will not be used for paying debt.

Correct. Debt repayment this year can be higher than 140 that is scheduled?

We will do what is required.

We'll

see

for the working capital requirement also we require funds,

right. This 100 which came from ophthal, have we utilized that, or that's lying on our balance sheet?

Partly lying in as a investment also.

Correct, great. Thank you, and all the best.

Hello. Thanks for the opportunity, ma'am.

Actually, I have just one query. Can you share the A&P expenses on a standalone and on a consolidated basis?

Which expenses?

A&P expenses.

Sorry, Sujoy?

Advertisement and promotional expenses on a stand—

A&P. Got it.

Approximately in quarter 1, at consol level we have about 30 plus crore of advertisement and sales promotion.

There has been substantial done at Warren on the toothpaste, if that is what you are wanting to check.

Yes. Actually, ma'am, what I've seen actually, on a standalone basis also, as a percentage of sales, our A&P expenses has increased over the last couple of years.

That is why I am asking this question.

Right. Okay.

Can you color on that? Because on a standalone basis, why it is increasing as a percentage of sales?

Because on a consolidated basis, you are building the brand, you are investing through Warren. Correct.

On standalone basis also, if you're looking at last three, four years, then post-COVID naturally there will be increase because in COVID times they were completely dampened. Otherwise also, if you looked at our new product performance, close to 100 crore is now coming on a MAT level from new introductions.

There is a lot of investment by way of new products, etc., for India business, as well as in emerging.

Thank you, ma'am.

Good afternoon. Thanks for the opportunity.

The first question is on the COGS. You mentioned that there is a 200 bps increase that is affecting the gross margin.

Just wanted to know whether that impact will be there go forward, or there'll be price actions taken to curtail that?

As I said, this is on account of the price increase of starting materials, and since we've had to procure so that the running production does not suffer, I expect partly impact of this to continue a little bit into Q2, Q3, but after that it should normalize.

That's good. Then the good work that you have done on the other expenses, do you expect some more work to be done in the upcoming quarters, or this number is to be taken as steady-state?

There will work work will continuously go on, sir, but this number I think is decent right now. I wouldn't like to unnecessarily guide you to something better than this, but I think 110 is what we can 110, 120 is what we can— Consol level.

Yeah.

Below 150 at consol.

Yeah.

Okay. The last question is on the other operating income.

There is a significant drop, is anything driving this drop?

That was, if you look at same quarter last year, there was a 20 crore incremental on account of the exchange, export incentives earnings booked versus. If you look at immediate preceding also, I think it is 8 crore or something like that.

On that front, we've not got it for this quarter.

Ma'am. Got it.

Thank you so much.

Thanks for the opportunity. Am I audible?

Yes.

Could you please provide me some perspective on the evolution of our oral care business, that is most specifically toothpaste business? I would be keen to understand its current scale, how has it been performing over the last few months or years, and whether the business is operating at healthy unit economics today or not, and what are we expecting in short to medium term?

I didn't hear the last but one question. Whether it's operating at—

Healthy unit economics today or not.

Healthy, oh, okay. Yeah.

For the first quarter this year, the OTC business of Warren Remedies has delivered a top line of 34 crores with a healthy growth. Looking at the kind of expenses, you have to understand this is a very competitive sensitivity and general oral care market.

Some products like Kidodent have done exceedingly well. On Sensodent K, KF, also gradually we are able to get better returns, but there is significant investment to be done for consumer awareness, digital marketing, and also for the other advertising to come to the level of, since Sensodent is such a big brand and they do so much of it.

I expect that at least for 3 years, very consistent support will be required by these brands to build a good portfolio, but it is very exciting. Sensitivity market is growing, and so is overall oral health care and general toothpaste market, and I'm sure we will be able to make a dent here.

Okay. Could you please put some picture on the numbers?

For example, are we in losses, are we in profit or not?

For this quarter, there is a marginal loss

because I think close to a couple of— Loss of ₹6 crore.

Yeah, 6 crore for Warren Remedies overall between API manufacturing and the OTC sales.

Okay. Thank you.

Ma'am, you had told that you are operating at 75% for the Baddi plant. Is it for one shift or two shifts?

One shift.

One shift.

Okay. If the demand improves, then we can—

No problem.

No problem. There will be no capex expansion?

No expansion as of now.

Okay. Understood.

Ma'am, on the API side of Warren plant, are there any customer audit done?

Yes. Couple of companies in the top 5 in India have already audited and started procuring from Warren.

As we intend to use this site largely for giving us KSMs for conversion at Patalganga as well as for finished API from Warren, and these are meant for consumption to make formulations for the regulated markets, and that is where we will actually start making money. Yes, we have been audited by some very large players, and most customer audits have gone well.

Our CEP has also been logged, and we expect in 6 to 7 months for US FDA also to come in.

When will be the Warren site as a combined API and all the oral care business will be starting to ramp up as per your—

It will, like I said, the dental sales business, you will see a ramp up in sales soon, but those sales are going to come at the back of consistent support in advertising and promotional expenditure. API business on the other hand is very heavy on initial investment in capex, which is already done.

As we now are able to sell more and more through the regulated markets, I feel from probably Q4 this year, we should see some improvement in API sales coming out of Auric facility.

Understood. Ma'am, cumulatively going forward, we should expect a 12% to 15% sales CAGR for next two years based on our investment and our product basket and customer commentaries?

For Warren you're saying?

No, overall level.

Overall. Yeah.

Yes. We target that.

Understood. No questions.

Hello, ma'am. Thank you for the opportunity.

Hello. Am I audible?

Yes.

Thank you for the opportunity. Ma'am, can you please tell me what's the capex utilized this quarter and what are we expecting for FY27?

We are expecting just maintenance capex this year. On a total, we expect not to spend more than 50 crore, not even 40 to 50 crore overall for the whole year.

Okay. The tax rate guidance for this year?

Tax guidance,

that's regular tax bracket. Considering losses during last year, we have the carry forward loss also.

Effective tax will be much less than the current tax rates.

Okay. You said gross margin is impacted majorly due to the COGS.

Are we expecting this in second quarter as well?

As I mentioned some time back, partly it will have the impact on this second quarter also, yes.

Okay. Can you please give me R&D guidance?

R&D currently less than 5% of our revenue is the R&D spend.

Okay. Product launches you have planned to do in US in oral solids?

Like I said, couple of oral solid launches will come by Q4 for Europe. For US, we'll have to wait a little longer for incremental, whereas in India we continue to launch new products depending on the opportunity.

Okay. Are we profitable in US and Europe business?

EBITDA profitable, and margins are deteriorating, it's why?

Europe we are definitely profitable, but as I said, after master manufacturing plan execution, in a couple of quarters we should be able to see even more improvement happen. US, on the other hand, especially at the back of the remediation costs, etc., that business is not able to deliver profits as yet, especially the sterile part of it.

We'll have to wait a little longer.

Okay. Any guidance for the US and Europe business for this year?

No, we'll wait.

Ma'am. Thank you, that's it.

Ma'am, thanks for the opportunity. Am I audible, ma'am?

Yes.

Ma'am, just want to understand it from a 3-4 year point of view. As you said, the base business, like the India and emerging markets, would be growing at lower digits, and how should we look at the regulated markets growth, ma'am?

What do you see the potential for that? One is in terms of the potential, and the second thing is the coming out of this regulatory issues.

If these two things are sorted out, what is the potential revenue that we can see in that market, from the reg market, like Europe and US?

See, Mr. Raghu, as madam also explained, we see all three businesses in a different way.

Domestic and emerging market, you mentioned about a good growth, about 10% to 11% kind of CAGR in next two to three years. While in case of reg market, Europe is almost settled.

We have been able to supply as per the order book. US market, it depends on the regulatory approvals, certain regulatory challenges.

We don't want to comment very much on US market at this point of time. Once we get certain clarity about US FDA, then only we'll be able to give some guidance on US market.

According to you, what could be the timeline for clearing those US FDA issues? How much time will it take?

We have been waiting for an US audit for almost more than 6 months now. Completely ready.

We have been also getting assurances from FDA saying that it will happen soon. It has not happened, I think at this point now we stop saying it will happen now or it will happen next month and wait for it if we are keeping fingers crossed for an early audit.

Okay. Thank you, ma'am.

Thanks a lot. That's it.

Ma'am, just one last question. I wanted to know earlier we were planning to procure or send our products to Europe also if the US issue doesn't get sorted out.

Have we started contacting customers in Europe for our injectable business because it's EU GMP approved plant?

While Europe business is interesting, Europe is not one country really, it is several small countries. For niche segments like sterile, it becomes even smaller niches.

Certainly we'll look at it, but at this stage, we don't think it will kind of make up for US. Rather maybe some other geographies like LATAM or emerging might look interesting.

Somebody asked me the other day whether we will endlessly wait for US FDA to come. Obviously not.

Soon running out of patience, but something we will have to design around that plant and how to get the best out of it otherwise.

What will be the, ma'am, operating cost of that business?

Operating cost would depend on how many batches are made, how many lines are run, for how many days. Currently, because of the many restrictions that are there on the plant, it would be very difficult to come up with a single figure.

It is quite high. Naturally, it's a sterile plant, all utilities run 24/7, and we are working to try and trim down any excessive costs at the site.

That work is continuously going on. Whatever we may do, unless the plant is audited and we are able to run it full steam, we will not be able to show any great upside.

Ma'am, last quarter we had face problem supply cash flow issue of not paying suppliers on time. Now is it sorted out after doing this transaction and all the cash flows we accrue from our emerging business?

Yes, yes. Much of it is settled.

Okay. Going forward, we aren't going to see a cash crunch like we have seen last few quarters due to hike effects?

No, no,

no. That's all taken care of.

Okay. Understood.

Ma'am, any plans if the US issue doesn't sorted out of selling down the sterile plant or something or hiving off?

I think at this stage we should stay hopeful. After all the work we have done and all the expectations we have on this build business, we will wait.

I'm expecting as we speak, maybe the FDA will walk in.

Understood. Understood.

Ma'am, US subsidiary is profitable going forward after the one-off adjustment sorted out of inventory write-off, is it correct now?

Yes. This quarter it is positive.

Positive. Yes,

yes. Understood.

Thank you.

Thank you, everyone, for participating actively and for the very interesting call questions. Have a good week and a good weekend ahead.

Thank you.