Good day, everyone, and welcome to Q1 FY27 earnings call of Jagsonpal Pharmaceuticals Limited. We have on call with us Mr.

Manish Gupta, Managing Director; Mr. Amrut Medhekar, Chief Operating Officer; and Mr.

Nirav Vora, Chief Financial Officer. Please be reminded that discussions on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risk pertaining to the business.

I now request the management to take us through the same and provide some more insight on the quarter and year gone by. Post that, we'll open the floor to Q&A.

Thank you, and over to you, sir.

Thank you, Sowmya, and good afternoon, everyone. Thank you for joining us.

We are happy to share that we have started the first quarter on a positive note. The green shoots of growth which became visible in Q4 of last year are gaining roots, and we have started the year stronger with a 9% growth in Q1.

The strong performance is also reflecting in the PharmaTrac data, where JPL grew by about 18.9% in the quarter as against the industry growth of 11.6% in the period. I do believe that we are now on track of getting our growth to 1.5x industry growth rate in the quarters to come.

This 9% growth in sales has translated into a 21% growth in operating EBITDA, as well as a 22% growth in net profits for the company. A key milestone during the quarter was the acquisition of controlling stake in Equitas Healthcare at an enterprise value of about ₹25 crore.

With FY26 revenue of ₹53 crore, Equitas provides JPL an immediate and meaningful entry into the hospital segment, thereby creating new opportunities through hospital formulary access, cross-selling, and operating synergies. I'm confident that this acquisition will start contributing meaningfully to JPL's business from second year onwards.

Alongside investing for growth, continuing our tradition for rewarding shareholders, we completed a ₹40 crore share buyback, which has strong positive impact on our already healthy return on capital employed by another 340 bps. The buyback, which was subscribed 3.6-- 3.67 times, was made at a premium of about 40% to the then prevalent market price.

Importantly, we have recouped almost 50% of this payout within this quarter, reflecting the strength of our business model as also discipline of execution. Over the last 4 years, we have focused on building a business that consistently delivers profitable growth, strong cash generation, and disciplined capital allocation.

Between FY22 and FY26, our EBITDA and PAT has grown 2.5x, compounding at almost 25% annually, while our free cash flows has increased 8x. This transformation has enormously strengthened our balance sheet, which, coupled with our integration skills, has positioned us well in pursuing strategic, inorganic opportunities.

The quarter gone by also saw a change in the board of directors. We acknowledge the valuable contribution of Ms.

Pallavi Dinodia Gupta over last 4 years, who stepped down citing personal commitments. We are delighted to welcome Mr.

Anil Kumar Mathai Mathai, who joined the board as an independent director. Mr.

Mathai brings with him more than three decades of distinguished leadership experience across pharmaceutical and healthcare sectors. With his rich experience and deep understanding of the industry, Mr.

Mathai brings immense value as we continue to scale our business and pursue growth opportunities. Looking ahead, our priorities remains unchanged: accelerating organic growth, successful integration of Equitas, and evaluating value-accretive inorganic opportunities, all while maintaining disciplined capital allocation.

With that, I now hand over the call to our Chief Operating Officer, Amrut, to discuss the operational performance.

Good afternoon, everyone, and thank you, Manish, and thank you all for joining the call. Let's talk about how we are moving Jagsonpal from good to great in the Indian pharma market.

This quarter wasn't just about steady execution, but we believe that some of the steps taken in the right direction has started showing some positive outcomes. We have laid the groundwork for a new phase of value creation built on four clear pillars: one, which is accelerating organic growth; second, brand building; third, productivity increase; and fourth, inorganic value-accretive opportunities.

Here is the plan and what we have started delivering. In terms of accelerated organic growth, our branded prescription business is the engine of Jagsonpal, and this quarter, we tuned that engine.

We are deliberately shifting the portfolio away from high volume and low margin acute therapies towards higher value, stickier semi-chronic and specialty segments. The increasing focus on semi-chronic and specialty therapies has significantly enhanced our quality and productivity of our new launches, with average monthly sales run rate almost doubling for these new brands.

This is a structural change, and it won't happen overnight, but we are confident that we'll see more meaningful results in the coming future. This strategy isn't just about chasing geography and scale; it's about deepening our clinical relevance.

By launching some complex generics and niche formulations, we are taking share in the premium tier. Our semi-urban push, backed by a highly trained field force, is already improving month-on-month market share as well as rankings.

We are growing faster than the industry, and the revenue that we are adding is of superior quality. Second pillar is our brand-building efforts.

In India, products meet the need and brands earn loyalty. We have rebalanced our marketing investments to move Jagsonpal from a product-centric to brand-centricity.

We're shifting our traditional volume-led promotional practices to a more focused, scientific promotion model, enabling more meaningful physician engagements and better long-term brand building. We are launching brands with patient education ecosystem, as well as building trust with our HCPs.

When a doctor prescribes our Jagsonpal brand, they are choosing our good reputation for quality and efficacy, and not just a molecule. That premium is already showing up in our bottom line.

The early green shoots from the brand premiumization are visible. As Manish ji said, even it is visible in our gross margin, as well as on the PAT growth.

Our power brand portfolio is also reflecting a growth of 19% versus the market growth of 16%. Today, our five brands rank number one in respective molecules, while 14 brands are amongst the top five.

During this quarter, brands including Maintane, Indocap, Endoreg, and Lycored continued to outperform their respective therapy markets. Third initiative is on the productivity improvement side and high-order operational excellence.

Growth without margins improvement is hollow. As our MD sir said, we will grow revenue, and that growth must translate into stronger profits.

What may appear as a small operational changes, including redesigned training interventions, more effective residential briefing meetings, aligned incentive structures, and focused one-on-one mentoring of BU heads has started showing some transformation. One of the significant constraints of growth for the industry has been attrition.

We have implemented a range of people-centric initiatives, including MBA program for our sales team, we have a very exciting incentive which is named as Bahubali, our in-house reward and recognition system for the team. These seemingly very small but impactful interventions has strengthened our engagement, improved our retention, and driven meaningful behavioral changes across the organization, supporting our long-term sustainable growth agenda.

This quarter, we rolled out a company-wide lean and green productivity improvement program. We are doing more with less, while maintaining our quality standards.

This productivity gain has already started contributing towards better EBITDA margins and healthier P&Ls. Last and most important, which development has happened in this quarter, about Equitas acquisition.

Organic growth builds the base, whilst smart inorganic moves multiplies. I'm proud to announce that Jagsonpal has completed the acquisition of Equitas in this quarter.

This is strategic and not transactional. Equitas brings complementary capabilities.

It expands our network by almost 49 institutional medical representatives, access to over 1,000 hospitals, and relationships across 4,000 specialty doctors. Not just this, but it will give distribution muscle to accelerate JPL brands' entry into high-growth hospital segment.

This will certainly save us years of market entry time. Due diligence was done, integration planning is already underway, and we expect the projected synergies to create significant value over the next 36 months.

Equitas is the catalyst, and that will help us move from a solid prescription player to a market leader. On the road ahead, combined accelerated growth, organic growth, brand pricing power, productivity-led margin expansion, and the contribution from Equitas, the outcome is going to be, hopefully, compelling.

Starting with a revenue base of ₹53 crore, we are targeting ₹10 crore EBITDA by year two post-integration, driving higher revenue contribution and improved profitability from FY27. Jagsonpal is now positioned for a greater compounding growth.

We have the vision, we have execution capability, and we expect to deliver on the promise. Thank you so much for your trust once again.

I now look forward for Mr. Nirav for his perspective on the performance.

Thank you, Amrut, and good afternoon, everyone. Q1 FY27 was another quarter of strong execution and consistent financial delivery.

During the quarter, we delivered healthy revenue growth, expanded operating margins, strengthened our return ratios, and continued our commitment to enhancing shareholder value through the successful completion of our share buyback. Revenue from operations increased close to 9% year-on-year to ₹82 crore, while gross profit grew over 10% to ₹54 crore, with gross margins improving to 65% plus.

Operating EBITDA increased by around 21%, standing close to ₹19 crore, with margins above 23% plus, expanding by 240 bps. PAT grew by 22% to ₹13 crore, while margins improved by 176 bps to 16%.

Strong operating cash generation is one of the key source of our strength, supported by disciplined working capital management that enables us to convert a significant portion of our earnings into cash. Our commitment to enhancing shareholder value is reflected in successful completion of our ₹40 crore buyback, half of which has already been added back to the closing cash and cash equivalent, thereby maintaining a healthy closing cash balance of ₹170 crore.

Our capital efficiency also stands improved, with ROCE and ROE expanding by approximately 340 bps and 250 bps respectively. I'm pleased to share that we have successfully completed the acquisition of 80% 85% stake in Equitas Healthcare for a consideration of ₹20.8 crore.

This strategic acquisition marks Jagsonpal entry into the fast-growing hospital segment and is expected to create value through commercial and operational synergies. Integration is underway, and we expect the benefits to become progressively visible in the coming quarters.

Before I conclude, let me briefly reflect on the company's progress over the last 4 years. During this period, we have generated over ₹250 crore of operating cash, which has been judiciously deployed towards strategic acquisition, including Yash Pharma for over ₹90 crore, as well as shareholder returns through dividend of over ₹40 crore and buyback of ₹40 crore.

You may also recollect that the board recommended a dividend of 200%, including a special dividend of 75% in May '26, which will be paid out on receiving approval from shareholders at the ensuing AGM. Going forward, we remain committed to disciplined capital allocation, balancing investments in organic as well as inorganic growth, while creating sustainable long-term value for our shareholders.

With that, we conclude our prepared remarks, and we now will be happy to take you through questions. Thank you.

Hi. I have a few questions.

The first question is what explains the difference between external sales growth and our domestic growth? For the 18% IPM growth, we've only reported 9%.

Is it a function of timing? Is it a function of higher discounts?

Or would you like to give a bit more color of why is that the case?

Sorry, I didn't get your name. Mihir, thank you for your question.

Mihir, see, these are the sales which are not primary sales. The primary sales is what the company sells to the stockists.

The reports that you get from the market research companies is secondary sales, which is from stockists happening to the market. These are stockist-out data.

Therefore, there'll be always a variance in terms of growth or even the value which is reported between this report and any pharma company in the industry. These variances should not have been so higher.

We are looking into it as to why this has happened. Sometimes it happens in terms of the statistical, I would say, consideration of some geographies, which may not be so very well represented by Jagsonpal, but yet when you do a universal count of the representative universe of stockists, you try and statistically correct that.

Sometimes that happens, which I've seen during my last 30 years of experience in the pharma industry. For many companies, it will happen often.

Got it. Let's say, would you realistically say that a mid-to-high teen growth for Jagsonpal Pharma on a revenue front is something which is likely?

When you say you're going to outgrow the market 1.5x, is it on a secondary sales front? Is it on revenue front?

How do you actually go about entering that?

Now, our belief is that both these sales, primary and secondary, ideally should always move in the similar direction and similar line. However, there will be always a buffer of inventories which will also be built in between.

We continue to maintain our guidance that our objective will be to breach this 1.5x of our promise as compared to the Indian pharma industry.

Got it. One more question which I have is, over the last, I would say, a year and a half or so, last 4 months seems to have Jagsonpal Pharma seems to have grown materially faster.

What actually has changed in the last 3-4 months or maybe it would have started a few months back, but the rewards of which we has been reflected in the numbers at least for the last 4 months? How do you see that?

Do you see this trajectory kind of continuing or accelerating as we move into FY27?

Pharma company will have large basket of brands. You have to carefully choose that which are those brands which you would like to build and have a focused marketing expenses as well as marketing focus on those brands.

I think our selections have gone right. That's one part.

Second part is that the delta that these markets are also delivering for other companies is also good. I expect this to only accelerate from here.

Second is, of course, we have done small, little things which are more technical in nature, which I can't be discussing on this call. I think, overall, we have been able to bring down our attrition, team building is happening.

We are able to strengthen our leadership. We are doing a lot of training and coaching programs to build the competencies and capabilities of the team.

I think some of these steps are also slowly and gradually translating towards the outcome.

Got it. My last question is on Equitas.

Seems like you have given a very aggressive guidance of almost like a ₹10 crore EBITDA from the current 50 lakh EBITDA which they reported in FY26. Can you give a bit more color on how do you accelerate EBITDA growth from 50 lakhs to ₹10 crore?

Does that EBITDA also have some component of, let's say, older promoters' salaries which kind of gets waved off? How will the progression be?

Will the ₹10 crore EBITDA be on a current ₹55 crore, or do you see acceleration in top-line growth as well, kind of driving a lot of incremental EBITDA margins going forward?

One is that on the asset side, this is primarily a brand asset, which has a very good reputation in the hospital pharmaceutical supply business. Second piece is that the kind of asset that we're talking about is a people asset, which is very good, very lean and thin, and very focused on the corporate hospital chains, where relatively you are able to get better margins as compared to the government institution accounts, whether it is public sector or whether it is state or central government.

Therefore, the quality and the trust that we got from this brand on Jagsonpal should help us cross-sell the brands. Some of the Jagsonpal growth engines will also get a fresh entry into hospital, which will give us incremental value, which we expect to directly flow into our EBITDA.

Second piece, which I would like to clarify, since you mentioned it, that the salaries will go away, but those promoters will continue to serve us, as you have seen that we had acquired only 85% and 15% still continues to be with those promoters, and they'll continue to drive the business, which they have been doing. Third, very value-accretive thing that we're planning to do is some of the new-age brands, which are very high usage in terms of value per patient, as well as in terms of volumes per ICU bed.

Those have been identified very carefully, and we are ready to launch them. Hopefully, some of them will see very large value accretion happening over next 2 to 3 years' time.

Therefore, the window which has been given to you is 2 years and ₹10 crore.

Got it. Thank you and all the best.

Thank you for taking my questions. Hi, team, good afternoon.

I have three questions. First is what will be the earliest evidence that Equitas integration is working?

Earliest?

Interesting. Would you complete all three, or shall I go one by one?

I can. That's one.

Second is, as you build the hospital business, what is the hardest capability to develop? That's the second one.

If I could ask the third one as well, I would say what has surprised you the most since you acquired Equitas?

I'll go in the reverse order, if you allow. The last question, there had been no surprises.

As Sajal, that we are not a very, very large organization which can afford to take decisions and ignore few of the shortcomings which might be there in each business. Therefore, a lot of due diligence has been done.

Accordingly, the value fixation or enterprise value has also been decided. There has been no shock or surprises for us post-acquisition.

Second piece is you asked me the evidence of first instance of success for Equitas. I'm pretty sure about it that numbers will speak maybe in the next two quarters.

You also asked, I think, the second question was what is success, what is the challenge, yeah, for running a hospital business.

Hardest, yeah.

We all know that obviously most of these hospital chains are also run by the private equities, and there are a lot of pressure in terms of top-line and bottom-line growth for them also. They are hard negotiators.

I think one skill which we need to learn as a team is how do we have a good proposition for the hospital, which is making both the sides win-win. Number two is it's a lean and thin team.

You have very, very small 49 people on board, which are completely focused on these corporate hospital chains. Most importantly, they bring with them on table very long and very strong and deep relationship with these hospitals, be it with the doctors, HCPs, or be it with the nursing staff, or be it with the administrative and purchase teams.

I think that's going to be a lot of value addition for us also at JPL, in Jagsonpal, to learn from them and grow on that. It's more of a piggy ride for some of the JPL brands' entry, Jagsonpal entry into hospital, besides the value that they have been already delivering.

I hope I answered to your satisfaction, but I'm open to further questions.

No, that's helpful, Amrut. I've got more questions.

Perhaps I'll rejoin the queue, and thank you.

Thank you.

Sajal, your UK behavior shows up. He will rejoin the queue rather than taking all the time.

Hello? Am I audible, sir?

Yeah. You have to be a little louder.

Hello, can you hear me, sir, now? Is it better?

Please.

Yes, sir. Congratulations on a great set of numbers, sir.

Sir, I just had two questions. Sir, one, can you mention what would be the size of Maintane as compared to MAT?

At what point does it become large enough to change the portfolio-weighted growth rate, sir? That'd be my first question.

Sorry, come again? Can you repeat your question, please?

I'm sorry, sir. I'm saying can you specify what would be the MAT value for Maintane?

At what point does it become large enough to change the portfolio-weighted growth rate?

Second part, I'm not able to understand only, because maybe your--

Can you repeat at what stage would you be wanting to change what?

At what point does it become large enough to change the portfolio-weighted growth rate?

Portfolio-weighted

growth rate, no. See, Ansh, our portfolio is primarily, if I have to give you the numbers, I'll give you in terms of percentages, so that our internal numbers are not fully in public in terms of brand value.

I can tell you what is coming in the public domain, which is PharmaTrac numbers, which talks about a value of close to around 46 ₹46 crore is what it is showing in PharmaTrac. Out of which, if I give you a break-up, ₹34 crore is Maintane injection and ₹13 crore is Maintane tablets.

In terms of growth, on both the SKUs, we are ahead of the molecule market growth. Second piece, I think, if I have understood correctly and deciphered correctly your question, is whether it will change the portfolio picture.

I think it is a very big brand for us. It is I think one of the top three brands for our company.

Therefore, if this brand fires well, it does well, obviously, it is extremely value-accretive and extremely good for the organization, because our priority focus continues to be in gynecology.

Sir. That's helpful.

Sir, what would be the PCPM, sir, for this quarter? I'm assuming this is what is leading our guidance, right?

Exact PCPM numbers, I'm sorry, Ansh, I would not be able to give that. You can safely assume from our report, because you have the top line and you have the number of people.

However, across businesses, there are different sets of PCPMs, because we have four different verticals into prescription business, which is dermatology, which is gynecology, which is orthopedics, and we have GP/CP. Each vertical has a different PCPM.

However, we are targeting upward of 2.5 lakhs in terms of people productivity.

Sir. That's helpful.

Thank you, sir.

Thanks, Ansh.

Hi, thanks for the opportunity, and congratulations on some good set of numbers. My first question is on the Equitas acquisition.

Could you help us understand what is the current product profile, what are the key therapies, leading products, and the mix between branded products and institutional tenders?

Institutional tenders? Okay.

I will give you the mix of products. Primarily, since it's a hospital business, it is a ICU usage portfolio, which comprises predominantly antibiotics, including the latest generation antibiotics.

Number two would be some of the volume enhancers. Number three would be some of the injectables which are used in perioperative usage, including a bit of anesthesia, bit of nutrition.

The fourth piece is around the pain reliever and little bit of antacid, which is used inside the hospital post-operative for the patient. These are the four broader buckets under which the product lies today.

What was the second question? I think Seema, you asked second.

Neelam. Sorry, Neelam.

I just wanted to know the mix between branded products and institutional tenders.

These are all branded, Neelam. All of them are branded.

Since we don't participate in the government tenders, it's a purely corporate hospital chain pharma business.

Understood. What would be the product concentration look like?

Like top 10 products, how much does it contribute to the ₹53 crore sales?

Top 10 products would be anywhere upward of 50%, half of our total sales. Similarly, close to around 50 hospitals would contribute majority of our top line out of the total 1,000 hospitals that we cover.

We have a lot of headroom to grow.

Got it. In terms of Jagsonpal's existing products cross-sell opportunities, could you identify which products would be most suitable for hospital cross-selling?

From the Jagsonpal side?

Yes, yeah.

Obviously, all the current existing basket. We'll be primarily looking at our power brands, which I think in the earlier question also I answered.

Obviously, all our prescription brands which have very good equity outside the hospital, we would like to also have our presence inside this corporate hospital, starting with Indocap, Endoreg, Maintane, and also Eukroma and KTC, all of them.

Got it. Okay.

Generally, hospital businesses have longer working capital cycles. Could you give us some sense around how is the working capital cycle for Equitas currently and how are we looking at the overall Jagsonpal's lean working capital cycle going forward with this acquisition?

Obviously, the productivity is also bigger there. The volume and ticket size is also bigger.

Productivity is much larger in the hospital segment. The flip side is that how do you manage your credit cycle.

We have a strategy in place, and we'll be trying to align our strategy along with the Equitas current credit terms that they have.

Neelam, to add on to that, obviously, we cannot work with the same working capital cycle in Equitas as we do in JPL. Therefore, you'll see that, A, it's a subsidiary route and not a BTA route that we have adopted.

We don't want to mix up the two businesses in terms of practices. Both will have their own working capital cycle.

Clearly, Equitas' working capital cycle is longer than JPL. We intend to improve it, but it'll not get aligned with JPL.

Understood. Okay.

Sir, lastly, on our indication of ₹10 crore EBITDA by year two for this acquisition, for this business, could you give us some roadmap in terms of what kind of scale can we achieve in this business, what margins are we targeting in the next 2 years, and how much of it would be probably Jagsonpal's cross-selling, and how much would be organic growth of the existing business?

From Equitas alone you're talking?

Yes.

Equitas alone, we are looking at around ₹100 crore of business within 2 1/2 years' time starting from now. We're looking at 28-29 as the FY.

I think we had given that in the board deck as well, and we are certainly targeting upward of ₹10 crore of EBITDA. These are the two numbers that we want to chase here.

Got it. That's helpful.

Thank you so much.

Hi, sir. Thanks for the opportunity.

My question is related to Maintane brand. Basically, if I look at the growth profile of Maintane, most of our company's growth has been coming from that molecule itself.

How do you look at the concentration risk here, and how do we mitigate it? Similarly, what are the other products you think have the potential to scale up like an Indocap or a Maintane in our current product basket?

Your question, I'm not able to fully decipher it. The brand is doing well internally for us.

If your question is that it's going to have a resounding effect on the portfolio, then of course, yes, the way currently it is performing. Other brands are also doing reasonably well.

You look at Metadec, you look at Lycored, you look at Equirex, you look at Divatrone, all the brands, including Endoreg or Proo. These brands are also doing better than the market, for sure.

However, as I said that these are only small steps. The growth is yet to pick up, and we expect that this momentum will only get stronger in the coming quarters, because these are all prescription brands.

Growth of prescriptions over a period of time, it always depends on the new patients' journey, stickiness to the prescription which doctor has prescribed, but most important is how do you get the brand loyalty from the prescriber community itself.

Sir. Okay.

Thank you.

Hi, sir. Thank you for the opportunity.

Am I audible?

Yes, please.

Right. Thank you, sir.

Sir, can you just please share what are some of the key hospital chains in which Equitas has currently empanelled, and that you believe will be key drivers of your growth that you envisage for the next 2 years, and also the geographies in which these hospitals are located?

This is pan-India presence, predominantly all the top corporate hospital chains. In our deck that is shared yesterday on the Investor Day, it contains the names of those hospitals as well.

The top six hospitals are, of course, Max, Manipal, Medanta, Cloudnine, Rainbow.

Right, and those are-- Then

we have AIIMS also, we have Aster DM as well.

Right. These are the top customers from which you are envisioning the next 2 years of growth from Equitas, right?

Yes.

Got it. Sir, just a couple of more questions.

I believe you had hinted at some first-in-India or breakthrough molecule pipeline that the company was developing. Can you please shed some developments on the same if you have any?

Come again, sorry?

Sir, in the prior quarters, I believe the management had hinted at some first-in-India or breakthrough molecule pipeline. Can you please shed some light on the developments on the same if you have any?

No, we never mentioned this. I don't recall this in the earlier calls if it has been discussed, but obviously, we are looking at some of the opportunities wherein we are able to get first-in-India opportunity in our leader basket of our therapies, which is gyne, ortho, or derma.

If we are able to get first-to-launch opportunity, great. Or otherwise, at least in the first wave of launch, which may be five companies or select 10 companies only, would like to be part of that.

Are there any such products under development for this year, sir?

This quarter, sir, we have been able to launch one product, which is amongst the first wave of launches. We expect one more such opportunity in the current quarter to happen.

Got it, sir. Sir, just for the growth that the company is envisioning for the next 2 years, not just the Equitas portfolio, but the organic growth, can you please shed some light on the brands that you are focusing on, the key brands that you believe will propel the growth for the company going forward?

See, I'm extremely positive on one of the largest brand in our portfolio, which is Indocap. It has a lot of meat and a lot of scope and opportunity both.

We'll be trying our level best to see that this brand exponentially increases in terms of its current versus its recent past, I will say. Second, of course, Maintane is already doing better, and we expect it to continue to do better.

The third brand that certainly is on our radar to gain momentum is Endoreg, which is going to be our mainstay in terms of our gynecology prescription basket currently. On the dermatology side, obviously, two brands, which is Proo and Eukroma.

That's what we are looking at.

Got it, sir. That's all from my end, sir.

Thank you so much.

Thank you.

Hi, thanks again. It's a bookkeeping question, maybe it's related to working capital.

I see a pattern. What execution habit changed after FY24 that unlocked such a step change in working capital?

Working capital has improved dramatically since FY24, I'm not taking hospital acquisition into consideration, obviously. I'm just trying to understand what has changed in the operating system to make such a dramatic improvement in networking capital?

I don't think we are any different in our working capital management compared to all good companies. It was just that--

Hello?

Sajal?

I lost you, Manish, for the last 20 seconds or so.

Okay. I'm saying our practices now are in line with the best in the industry in terms of collections.

That's what we have kind of ensured, and therefore, it is reflecting in the quality of business. Fundamentally, it's all about better collection that makes the difference in working capital.

All others are important, but collecting money on time is what really matters as far as working capital is concerned. Here now we are in line with the best in the industry.

No, appreciate that, Manish. See, the quality of business was good in 2024 as well.

I'm just looking at the screener data. You may be tracking it slightly differently, but take the rate of change as an example.

Debtor days were 19 days in 2024, and they are largely similar. 2025 was 18 days, 2026 was 22 days.

Again in that ballpark of 20, give or take. Inventory days has improved from 68 days in '24, we drop to 51, so that's positive, thumbs up.

Payable days, I think has gone worse actually. That's, again, 35 days versus 40 days, same ballpark.

The material improvement that is happening in the cash conversion cycle as a result of working capital days. Working capital days used to be 52 in March '24.

That dropped to 9 in '25 and 11 last year. That's a significant change.

Two major changes which, Sajal, you have highlighted is in terms of value, you look at it. Value contribution is primarily from the pie of inventory control.

Say that again, Amrut, I didn't quite catch that.

I said the material change is primarily happening because of the inventory control, while our collection cycles have continued to be same in spite of organically growing the business. Yet, our collection cycles have only become stringent.

Number three, of course, there is a debtor control which is much, much better in terms of any overdues in the market. The last piece that possibly is working for us is--

Because we are paying on time. Now the very clear dictat is same-day payment as per due date, there's not a single day extra.

Sajal, I think if you look at the data, our larger dip in working capital came between FY22 to FY24.

Correct.

When it dropped from 59 days to 22 days. Cash conversion days dropped from 59 days to 22 days.

Thereafter, yes, it has gone down, but see, now numbers are so small that they feel extrapolated. Actual, real benefit came between FY22 to FY24.

Manish, is the digital transformation you took about a year or maybe 2 years back, is that also contributing, because it may have been a paper-based system, manual tracking, and now we have better analytics and digitization is kind of yielding the results that you might have expected?

Sajal, I'll partly have Amrut respond to this, but my own experience is you cannot attribute improvements to single factors in the kind of industry we operate in. There are hundreds of initiatives going on across all the fronts, and each one of them matter.

Individually, there's no one which is bigger than the other. Every initiative, as Amrut mentioned in his speech, these are all things that have been initiated.

Digital is one of them, that also is contributing, but there's no singular parameter which has dramatically changed our way of doing business. Amrut, you want to add?

No,

I think, Sajal, it's very difficult to list out, but there has been also a classification of importance of specialty, therapy, which molecules are delivering more delta in terms of market, how our brands are tracking, what is our strength in which specialty, what should be the increased frequency of doctor visits, customer visits, in what calendar cycle we should be doing it, what will be our order cycle, how do we split up the order so that there are no bent rates at the end of any quarter, you have split up order for each stockist. A lot of discipline has been worked upon.

These are all granular, very small, little things, Sajal, but eventually, I think these will create a very strong foundation for the organization where the growth is profitable and sustainable both. No, understood.

That's helpful.

Thank you so much, and all the very best.

Thank you.

Hello, am I audible?

Yes.

Yeah. Sir, I just have one question.

The gross margin profile for Equitas, since we know for a completely branded business and also much lower than our business. Can you share some color on why is that?

For hospital business, it will be like this. The margins will be much thinner versus a branded prescription business, because there you have a doctor's choice towards or bias towards a particular brand due to its name, image, quality associated with it over a long-term use.

In hospital setting, it's more than the brand, it's always the price that comes first. Obviously, brand becomes number two there.

Largely, if you look at, all the large organizations will have similar kind of quality, all the large companies and good companies. What makes the difference in terms of which brand they will have choice to stock would be the price.

Therefore, your margins always come under pressure while dealing with the corporate chains. You can't have comparison between these two business models.

They are independent. As Manish sir said, this will continue to operate as a subsidiary.

We are making effort to improve the gross margins as well with some identified products where you are able to charge a bit premium from the market being a little more innovative, being a little more novel in terms of your entry point. I hope it answers partially to your question, or fully, maybe.

Sure. Sir, the margin improvement for this business, like Equitas, will come from like you are alluding to gross margin improvement, but will it come mainly from that gross margin improvement or productivity gain and operating leverage?

Both things will happen. One is, of course, productivity increase will continue to be our objective, but at the same time, we're looking at a product mix improvement.

The products which will have higher gross margin, that's where we are going to be more aggressive, that will be our primary focus. Number two, we have already pre-identified and pre-populated some of the innovative products where you have a differential delivery or a differential, I would say, entry point, where you will be able to charge a little more premium as compared to your current basket.

Therefore, in the longer run, I feel slowly and gradually, these gross margins will also go up. Now, it all depends on how quickly we are able to unfold it and execute it on the field.

This is too early. I think this not even the first month, I think we should be able to convey to you more clearer in the coming quarter.

Got that. Thanks.

That's all from me.

Thank you all participants for your valuable questions and engagement. We appreciate your interest in Jagsonpal.

Should you have any further queries or any requirement of additional information, please do not hesitate to contact our investor relationship team at Go India Advisors. We remain committed to engaging with you all, fostering transparent communication as we continue advancing our objectives of creating value for our stakeholders.

Thank you once again for your participation. Wishing you a very good evening.

Thank you.