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Alembic Pharmaceuticals Ltd
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Ladies and gentlemen, good day and welcome to the Alembic Pharmaceuticals Limited Q4 FY '18 Results Conference Call. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. R.K. Baheti, Director Finance and CFO. Thank you, and over to you, sir.
Thank you very much. Good evening, everyone. Thank you once again for joining the fourth quarter annual results conference call. Most of you would have received the results when we are in [indiscernible]. Let me quickly go through the numbers. During the quarter, the total revenue grew by 15% to INR 853 crores, EBITDA at INR 165 crores is 19% of the sales, pre R&D EBITDA is 33% of the sales, almost on similar numbers as last year. The net profit after tax is flat at around INR 93 crores for the quarters. EPS for the quarter is INR 4.98 per share, INR 4.94 per share in the previous year same quarter.The full year numbers, the full year numbers total revenue was flat at INR 3,131 crores, EBITDA at INR 642 crores is 20% of sales. Pre R&D EBITDA is 33% of the sales. Net profit after tax up by 3% to INR 409 crores. EPS for the year INR 21.89 per share, INR 21.39 per share previous year. CapEx for the year, including the capital advances, are INR 604 crores. The gross borrowing and the consolidated balance sheet, including our subsidiaries, are INR 708 crores, and company has INR 90 crores of cash, cash equivalents in place. So the net borrowings as on 31st of March '18 are about INR 620 crores.The board had recommended dividend on total shares at the rate of INR 4 per share. You are aware we are at INR 2 par value, so it works out to be 200% '17-'18, same as last year. Dividend payout stands at around 22% of net profit in the current year.I will now hand over the discussion to Pranav for the business operations.
Thank you, Mr. Baheti. We have managed to move the international business. As you know, it's been a challenging environment due to price that have been [indiscernible] through the international business. Let me start off -- let me start with talking about the recent FDA audits at our facilities. Our Panelav Formulation facility was audited by the U.S. FDA on 12th March, 2018. We were issued 3 form 483 observations. These observations were relating to invalid OOS investigations, full-time study and analyst requalification.We are addressing these comprehensively and have responded to the FDA. The API 1 and API 2 facilities were inspected by the FDA on 16th April, 2018 and were not issued any observation. The API 3 facility at [ Karakhadi ] is in the midst of a non-FDA audit which started on 14th May, 2018. GMP compliance continues to remain a focus area for us and we are approaching this with abundant caution.R&D. R&D expense was INR 121 crore in the fourth quarter, approximately 14% of sales. For FY '18, we have spent INR 411 crores, approximately 13% of sales on R&D. At the start of the year, I guided for about 15 or 20 ANDA filings. I'm happy to say that we filed 12 ANDAs during Q4 which takes us to a total of 26 filings for FY '18. These include fees for annual.Our efforts to add capabilities are also progressing well. The oncology OS oral solids dosage facility is ready and the exhibit batches are under progress. The Aleor Dermaceutical facility is also ready. Both the oncology injectable and the general injectable facilities will be ready in this year FY '19. New oral solid dosage facility in Jarod will be ready in the second half of FY '19. 13 approvals including 4 tentative approvals were received during the year. They cumulatively have 70 ANDA approvals including 9 tentative. We launched 8 new products during the year.Coming to the business side of it, the International Formulations business grew by 29% to INR 352 crores for the quarter. The U.S. generics business grew by 45% to INR 290 crores for the quarter. There was a onetime payout in the U.S. generic business, but if you take that apart, we would still grow over 30%. For the full year International Formulations business was relatively flat at INR 1,200 crores whereas the U.S. business was flat at INR 920 crores. The API business grew by 9% to INR 198 crores in the quarter and by 1% to INR 651 crores for the year ended FY '18.The India Formulation business had revenue of INR 304 crores in the fourth quarter. The India Formulation business was at INR 1,200 crores versus INR 1,254 crores last year. As you know, the numbers are strictly not comparable due to the GST accounting effect. Specialty segments [ decreased ] by 2% in the current quarter and decreased by 1% in the year. The actual grew by 19% in the quarter and 5% in the year.I would like to open the floor, open for Q&A if anything.
[Operator Instructions] The first question is from the line of Anmol Ganjoo from JM Financial.
My first question is on the U.S. performance. Pranav, could you detail the nature of the one-off benefit we got in the U.S. International Formulation because idea here is to kind of reconcile the gross margin performance that we've seen around at 380 bps drop in gross margins year-on-year? So what was the nature of this onetime thing? And how should we be looking at margins, especially the gross margins from an FY '19 perspective?
So Anmol, the onetime was related to an audit or a one-off factors on some charge back reversals. So that was under 4 million, 5 million, at about 4 million, 4.5 million or so. That is the one time that we had from past profit payments which came at this quarter. So how to see the business moving forward? It's an interesting phase. We've picked up some market share while there has been price erosion on some of the larger products on -- there has been supply constraints as you know some of the bigger pharma companies are backing up -- backing out of some products. So we are seeing a lot of volume growth happening.
And this volume growth would be coming at some cost of margins relative to what you recorded in the past?
Yes.
Okay.
Yes.
That's interesting. So thanks for that. My second question is on the U.S. FDA issue that you highlighted. Now you would have had initial discussions and feedback from your quality teams. We have seen although not similar, but these kind of issues surfaced also with some of our larger peers. Do we have reasonable confidence that at least the 2 of the 3 observations that we've seen out of specifications, results and old time studies, we should be able to address them without any adverse or any scar on the U.S. trajectory because this is a fairly critical facility for us. And just if you could share what the parts from consultants or your quality teams are and what your assessment in terms of resolution timelines and pathways?
Yes. So Anmol, yes, it's a very valid question and I think we are taking the utmost care with this in abundant caution as I mentioned. And you're right, some of our peers on the industry, larger peers, have had similar observations as well. We have seen these before. So we agreed already on a cost correction. As I said, we are assessing and we've responded to the FDA. We have been using proactively inducing consultants as well.
Even before the audit started.
Yes, right. So we've been using and consultants and we are addressing this. We've sent our responses, we should hear back to them in the next month or so. So let's see how this goes. But yes, it's very important and we've taken a lot of care in responding to all observation. The other thing is it is not a repeat observation for us, it's a first-time observation.
[Operator Instructions] The next question is from the line of Damayanti Kerai from HSBC Securities.
So my question is on the India side. So obviously this year had some like aberrations, but I was looking at your territory-wise performance. So there like in key growth areas which is targeted by most of the players like anti-diabetes, cardiac and gastro, we are lagging there. So what exactly is like pulling down there or like what we need to achieve above industry growth in those key areas?
So you are right. I mean I think when the overall industry got affected due to GST and other issues, we also had an impact on our specialty business which has been our focus area for last few years. So you would have observed that in last few years we have been growing faster than the RPM growth rate and [indiscernible] like quite decent. And on that decent rate, I think we lost some market share and some listing because of the disruption on GST rates. Acute still did well and then much better than the peers. Acute still did well based on it's own old legacy and [indiscernible], but we suffered in chronic. I think in the second quarter, I had addressed the peer answer as changing our promotional strategy where we are trying to be more proactively compliant with the guidelines which are still not valid, but which are faster issued. And we think that that's a sustainable way to grow business. That also has more impact on this facility as you would all know in the business. Hopefully, the most strategy is already in place. Last quarter was not bad, last quarter was good and hopefully moving forward, we should be recovering our lost bank.
Sir, going forward we remain confident about mid teen kind of growth for India Formulations?
So we are -- yes, we are fairly confident of regaining higher than industry growth rate, RPM growth rate meaning.
And sir, what is our MR productivity currently as of FY '18 end?
So our MR productivity is between the range of -- I mean, okay, they are different for different divisions, but on an average we think about 275,000 per MR per month.
And last year how much it was?
Almost flat because we didn't grew the business and we didn't -- there was no yearly change in MR size also.
[Operator Instructions]. The next question is from the line of Sweta Karia from UBS Securities.
I think my question is answered, so thank you so much.
The next question is from the line of Charulata Gaidhani from Dalal & Broacha.
My question pertains to your...
Excuse me, this is the operator. Ma'am, may we request you to please speak closer to the phone?
Yes, is that okay?
Yes, slightly better. Thank you.
Yes. My question pertains to your acquisition of Orit Laboratories. You have 7 approved ANDAs and 4 pending approval. Do you plan to -- when do you plan to launch these products and what is the addressable market size?
In terms of the pending approvals, it will be launched, I guess, when we get approval. The ones which are already approved, the ones which make sense for us are going to take it over. I think within the next few months we'll take it on our label and we'll sell it. They are already being marketed through the existing partners that Orit has. So over the next few months in this year, we will get them back on our label and we'll relaunch them.
And how much is the revenue from these products that the audit is making?
We haven't disclosed that.
Yes, my second question pertains to your R&D expense. How much of R&D do you project?
That we project for this year? So the year ending FY '18, we've done about INR 410 crores. So we should inch up gradually. I would say depending around the projects, we'll progress. But anywhere between INR 450 crores to INR 500 crores.
INR 450 crore to 500 crore, okay. And the CapEx?
So we already shared that we have spent about INR 600-odd crores of CapEx during March '18. I think we need another INR 600-odd crores to complete the existing projects. So you are aware that we have 4 [indiscernible] projects under education, one for Formulation facility at Jarod, the details already will be available. The one at Karakhadi which is a general injectable plant, and the one, OSD -- I am sorry, the onco injectable plant which is under education at Panelav. So that would complete the -- this doesn't include the regular maintenance CapEx, I mean the regular what we call expansion for the existing facility, and these are new projects we are focusing on.
I'm sorry, I missed the third one. One for Formulation, one for injectables and third for?
Third is for onco injectable, which is a different site, different plant. So like Pranav said, OSD injectable plant, OSD onco plant is off and on and now it is 18 eligible batches. Onco injectable plant is under education.
The next question is from the line of Sriraam Rathi from ICICI Securities.
Most of the questions have been answered. Just 2 more. One is on the balance sheet, the receivables seems to have increased significantly this year from 338 to 526 despite the revenue being flat. Any particular reason for the same?
Sure. So this year our U.S. subsidy company sales have gone up significantly while the -- okay, so lot of sales, lot of products have been transferred. These are the process for the whole year. Lot of products have been transferred from our side partners to our own subsidiary. I mean there were 2 partners, obviously the receivables to work for a much shorter period than our own subsidiary. Marketing is done and the collection is -- collection cycle is little longer. So the entire working capital, not only the receivables, also the inventories, are -- I mean it's a direct fallout of higher business value, the contract. When we look at the numbers, the number we calculated in a whole year sale and 31st March receivable. And if you look at the last quarter sales, there was a significant increase of the receivables represent the last year -- last quarter sales.
So basically this is something which we should assume going forward now, this level of receivables?
Yes, I think so. I think that both inventory and receivable levels will be at elevated -- will stay at elevated levels. But I'm very happy to report also that the receivables showed the domestic [indiscernible] which were very efficient even earlier has been further [ ceased ] by almost 2 days. So I mean I think our current receivables will be less than 23 days.
And secondly on the quick CapEx part, I mean more than INR 600 crore is still to be spend. So this INR 600 crores will be happening in FY '19 itself?
Yes, I think hopefully by March '19, most of our projects CapEx should be over.
And then maintenance CapEx should be around INR 200 to INR 300 crores, that...
Not so much happening in our case, and it will be further expansion only. Maintenance CapEx should be in the range of INR 120 odd crores. Then some R&D.
[Operator Instructions] The next question is from the line of Nitin Agarwal from IDFC.
So Mr. Baheti, on the gross margins, I mean, this has been after a pretty long period of 70% to 73% gross margins. Gross margins have sharply dipped this quarter. How should we look at gross margins going forward, sir?
So, yes, that's a set of lines because we have been facing price erosions from international generic business like all other companies. So while volumes have gone up, the price realizations have gone down and that will directly impact the gross margin. I think I mean you can draw on this earnings quarter number as a indicator for moving forward.
And Pranav, on the U.S. business, so how are you looking at the new launches for this year in terms of even the new launches as well as the products that you're going to be getting from the partners? So overall how many of these such products we're looking at as far as things sole and [ delivery ] for this year?
So as regards what we have with the partners, I think most of the stuff that we are going to take back, we've taken back directly. There's handful of products which are still with the partners, the up until the given [indiscernible], that's only handful of them. Most of the pending approvals that we have, those are all not partners. So they will come on R&D efforts. As and when we get approvals, we should launch these whenever we get a chance.
And how many do you see -- how many approvals of the launches do you see this year?
So the first step would be the getting [ BCI ] after the facility. Once that happens, I'm assuming we'd get anywhere between 10 to 15 approvals.
Apart from [ RTO ], whatever the tentative approvals you may be launching or even that is going to be an issue without the EIR?
See, I think until the EIR comes and I think we'll have to wait for the [ CSS ] which is wait and see. There's some which maybe from a CMO, that shouldn't be an issue. But the rest we -- until the FDA gives a go-ahead. It's tough to me to say, but I think we'll know in the next month or so.
And secondly on the [indiscernible], ANDA has did file from [indiscernible] through the Aleor JV this year?
Three ANDAs from Aleor JV.
And what's your thoughts on the dermatology market? The market dynamics have undergone a favor of change over the last say couple of -- last year, 1.5 years. I mean how has that changed your own dermatology strategy?
I'm just going to hand it over to Jesal, Head of Strategy, to answer that.
Yes. Thanks, Pranav. Yes, I think on the derma states, you are right. I think as we are checking most of our segments, competition is increasing everywhere. And I think kind of that is anticipated. So the same thing is also reflected in derma. But as we look at the entire space from our perspective, we still think that the space offers good opportunities. And there are still a number of products where there is enough room. And I think for us, I think the entry is set at the right time where it's not too late. So from our perspective, I think the derma segment still holds enough potential.
And lastly, Pranav, of the -- we've had a pretty sharp ramp-up in our overall ANDA filing this year. Is there also been any qualitative change in the profile of the filing that you've done this year or if there is some way to sort of segregate -- to call -- to define that?
Nitin, it's tough to say that, but as you know, what we've been mentioning is in our portfolio, we do have a few tough products from old ones, I'm actually [indiscernible]. So the mix remains the same, but progressively, yes, we do try doing better filings, but the mix remains the same.
[Operator Instructions] The next question is from the line of Bharat Celly from Equirus Securities Private Limited.
Sir, just wanted to ask how many products are we seeing in the high value launches for the FY '19? I understand that the Panelav facility is under the FDA issues. But considering that if we get an perfectly okay from FDA, so how many approvals could we see in terms of high value ones?
Yes. I think total we would see about, as I mentioned, anywhere from 10 to 15 depending on our boost. We haven't disclosed what type of approvals that we haven't seen, what -- at least 10 if not 15 approvals.
And sir, how -- where are [ Almeron ] approvals stands? Is there any query or you have responded to all and we should see approval in time soon?
Sorry, can you just repeat? I hadn't quite understand what you said.
I'm asking where Almeron approvals stands, ANDA filing. We have filed for Almeron, right?
Almeron, no. We don't disclose product-wise approval, sorry.
And sir, I missed the commentary on increasing debt. So what is the particular reason for the increasing debt?
So the capital expenditure is being put on for new projects. We have discussed all the new projects and I think we are putting on a -- cumulatively, we are putting about INR 1,200 crores. And the borrowings is a [ facility ] to fund the new projects.
The next question is from the line of Dheeresh Pathak from Goldman Sachs.
Sir, this 2% growth for India business in FY '18, this is like-to-like adjusted for the GST and excise adjustment?
No, those are not like-to-like. If you do -- I mean if we do a like-to-like comparison, then that would -- I mean we'll have to add about 6.5%, 7% to the growth rate. So this 2% of them become [indiscernible] million.
So if 2% like-to-like growth is 8% for the full year?
Yes. So I think somewhere we have mentioned since these are not really comparisons.
And can you give plant-wise pending ANDA numbers?
So most of it core ANDA findings have been somewhere furnished. I mean some of us. [indiscernible] there's just one single plant and here filings have just started. So most of the filings we have now are for [indiscernible]. Some very helpful, very few of them are [indiscernible].
[Operator Instructions] The next question is a follow-up from the line of Anmol Ganjoo from JM Financial.
My question is a follow-up to the comments Jesal made that there is incremental greater anticipated competition in some of the key target therapy areas that we were focusing. I know this was expected and anticipated, but has the magnitude surprised us for any particular therapy area? And if that's the case, then is there merit in probably looking at some of the pipeline projects where the hierarchy is sort of [indiscernible] might not be worth all the effort or spend in the new world of generics pricing regime?
So Anmol, it's actually an ongoing thing that we do. As we know, there are people trying to approach all these new areas and every body wants to get in debenture. So it's not something that's shocking. At the same time, it's not worrisome to us either. This is something that is anticipated. So that's the first thing. Secondly on a overall portfolio, this is something that we keep reevaluating and we keep re-jigging as we go along. We keep trolling down if we feel, [ depends ] as various aspects. And one is competition, IP is another one, complexity is the third one. So it really depends. So we keep fine-tuning our portfolio and IRRs based on what we see and we drop products or we put them on hold as well.
And have we kind of done any exercise of late where things have kind of dramatically changed because that's what a lot of your larger peers seem to be hinting at? And as to the hold back in R&D spend that we see...
No, no dramatic exercise. No dramatic changes that we have seen. But product wise, we may take some, we may prioritize, take off some, but we keep evaluating. But nothing overall that we feel like we want to do, nothing dramatic.
The next question is from the line of Rahul Sharma from Karvy Stock Broking.
I probably missed out on that milestone payment which we have received in this quarter. What was it for, sir?
So actually it was just from one of the partner products, actually portfolio partnered products. There was some old chargebacks related stuff which they got to credit back. Hence the profit share came a little later. That's it. There's no milestone.
And just in case if there is a delay in the EIR, what would be the sort of launches that you are looking at in the current year?
Rahul, it's tough to say. As I said that assuming on a base case, so there's nothing and the EIR comes on time. Then, well, we're looking at renewing it and plus kind of launches. If there is an issue, I don't know, it's tough to say. But right now, we pull that we've prepared is holding at so.
No, but you have Orit. You have your other approvals which have come in. Wouldn't you be able to launch...
Yes. That Orit launches will happen, but again they're already in the market. So they'll just come in our labels. I'm not counting Orit or any of the [indiscernible] products. Those are unaffected by this.
But those which are already approved and we have not launched, what is the number of products which are yet there?
Number of products which are approved and not launched? Number of products approved and not launched, I think it's somewhat 10 or so, but...
9.
9 products.
Any meaningful products which you could probably launch in a worst case scenario?
It's tough to say. I can't disclose that.
The next question is from the line of Tushar Manudhane from Motilal Oswal.
Sir, just 2. If any target action based over next couple of months from the Formulation facility?
Target action based what?
For any of the products over next couple of months from the facility -- Formulation facility?
Yes, we do have a few products and few products which hopefully we should have some of rules coming in the next few months. As I mentioned, we have given our responses to the FDA and we should hear back from them within the next month or so. Then we'll give little more color.
And any specific -- so is this so economic viability or any specific other reason for the approved product not launched or is it through with this regulatory hurdle?
No, no, only economic viability or opportunity. We generally don't sometimes don't launch. This is same path. Of these 9, it's been definitely in the system for a while.
So these are not the recent ones, that's so you say?
No.
The next question is from the line of Rahul Jeewani from IIFL.
Sir, have you received any approvals from the Panelav facility post the 483?
No. This has only been like 1.5 months, so beyond this, I can't.
And sir, over the past 2 years, we have seen a strong ramp-up in both your ANDA filings as well the Ind team's trend. But do you see, one, given this scenario which we have in the U.S generic market, do you see there are enough opportunities out there for you to continue filing 25 to 30 products every year?
Yes, I still feel the U.S. market is an interesting space. You do have pricing pressure which is there we've seen. They're still an interesting space. If you do a good job, you can get remaining from market share, you can earn some good money. You can add some still odd few relatively limited competition opportunities. And the other thing is right now as you're seeing is and what you might have heard from the commentary of other players as well is some of the larger companies are pulling down the portfolios which opens it up. So let's see what happens there as well.
So you would see an opportunity to gain volumes on some of those products?
Yes.
And sir, when do you -- when do again start seeing filings happening from the onco oral facility?
So onco oral is something that the batches are under progress right now. So in the first of the filings would happen, maybe at the end of FY '19 or most likely first quarter FY '20 or so.
And sir, my last question is on the fact that we will be commercializing 2 to 3 additional facility over the course of the next one year. So what kind of operational cost increases can we expect from these facilities?
Yes, that's true.
Yes, what kind?
As in the quantum, anything would be helpful.
It's difficult. We generally don't give guidance for that.
The next question is a follow up from the line of Dheeresh Pathak from Goldman Sachs.
This on the balance sheet I see this other intangible asset and intangible assets under development which has increased by about INR 135 crores year-over-year. Can you just provide some light on that?
So like you are aware that Alembic Pharma has been charging off all its R&D expenses to P&L account. This is a R&D expense done by Aleor which is a joint venture partner. And they have -- since we are seeing non-introduction, they have been clubbing it as individual assets. And we do a consultation, line by line consultation in a subsidiary. So our portion of or our share of that [ intangible is ] appearing on our consolidated balance sheet.
So both the line items, other intangible asset and intangible assets under development, about INR 162 crores, that refer to Aleor?
Yes.
And you have stake in that JV is?
Sorry? No, no it's [ free company ].
So basically under development is the -- by the effect belongs to Aleor while the other one is for the acquisition that we made for Orit. Those are the ANDA values of those acquisitions.
I mean, what is the other intangible asset? Sorry, I didn't hear the last part.
Okay. So we made an Orit acquisition in November.
Orit, Orit acquisition.
Yes, yes. So that INR 60 odd crores belongs to Orit.
Okay. And what is our stake in Aleor JV?
Aleor is 60%.
60%. So this INR 100 crores of 99 whatever rounding off 200 as of 31st March 2018, this refers to 60% share of the cost of developments of ANDA in Aleor?
This is -- no, it's...
100%?
-- not 60%, it would be of full value because what happens is that as the new standard goes, you put in a 100% value there and then you take it out as a minority interest on the balance sheet basically. So this represents [indiscernible].
So the right way to think is that till date Aleor has spent about INR 100 crores in R&D?
That's true.
On P&L, there is a share of loss from JV this quarter which has increased. What is that coming from?
Yes. So that is largely attributable to some returns that we got on our Algerian joint venture. You are aware that the plant got -- there was accident in the plant and there was fire. After that, we got some sales return and there are some fixed overheads pertaining to that joint venture. That is the loss attributable to that JV.
[Operator Instructions] The next question is from the line of Nitin Agarwal from IDFC.
One more housekeeping question. On SG&A, our cost had been sort of moving around all over the place in this current year. I mean how should we look at as -- is there any particular reason why these costs are lower on a QoQ basis this quarter and how should we look at it in general?
Which number are you referring to?
Sir, SG&A number.
No, meaning that other expenses, G.
Other expenses.
What is your question? I think it has been fairly [ colonized ] or drained. But what is your question?
Sir, in last quarter, it was INR 180-odd crores. It's fallen off again in this quarter. I mean sir, how should we look at this cost item as we moderate going forward?
And then I think we are looking at 2 different numbers. G, other expenses is INR 258 crores this quarter. You are looking at consolidated or you are looking at standalone?
Sir, console number excluding the R&D spend.
Okay, excluding the R&D. Okay. So you have done that calculation. No, but that entire R&D you can't exclude from other expenses. When R&D gets clubbed, that is the end. So R&D -- okay, so now what the accounting standards says that you have to -- you can't have a function by the expenses. You have to have the set of expenses. So R&D expense would come from the material, R&D expense will also come employee cost, R&D expense will come in depreciation and amortization and other expenses. You understood, no?
Got it, sir. And sir, have you also some of the newer plants, the operational costs, have they already started appearing in the P&L or all of them will come incrementally going forward?
No, all of these will come incrementally going forward.
[Operator Instructions]
I think we can take last couple of questions. There are not many questions coming also. So then we can -- we can conclude the call. You can take all the pending questions whatever is there.
Sure, sir.
And then you can conclude the call.
Right. The next question is from the line of Kunal Randeria from Antique Stockbroking.
What is that cost of debt?
Cost of debt is -- okay, it's a moving number. You can't have one fixed number. So during the year, it has moved from between 6.75% to about 7.25%, 7.35% in INR.
Okay. And also I just have...
And some, what you call, dollar loans in subsidiary accounts, could be at around LIBOR plus 100, 125 basis points.
And sir, what is the proportion of foreign debt in this INR 700 crores?
What is the proportion of foreign debt? Foreign debt is about, how much, $20 million, $20 million about. All in dollars money.
The next question is a follow-up from the line of Dheeresh Pathak from Goldman Sachs.
Sir, this interest you must be capitalizing, right, because you have to be showing interest expense in the P&L?
So interest, what we -- the direct interest cost on borrowings are projects we are capitalizing that we are not -- we are obliged to capitalize that. But interest tax rate -- interest expenses on all other borrowings used for maintenance CapEx or for the [ virtues ] has been charged off.
So we will see like we are seeing INR 910 crores of CWIP. You are saying INR 600 crores extra you will spend. So INR 1,500 crores of assets will come up for depreciation, and interest expense, that will happen from FY '20 onwards, right?
Absolutely.
As there are no further questions from the participants, I would now like to hand over the floor to Mr. R.K. Baheti for his closing comments. Over to you, sir.
Thank you very much. Thank you all participants for -- everyone, joining the conference call. And we'll continue our dialogue of finding if any of you have more questions. And I look forward to see you in next quarter again. Thank you very much.
Thank you very much, sir. Ladies and gentlemen, on behalf of Alembic Pharmaceuticals Limited, that concludes this conference call. Thank you for joining us and you may now disconnect your lines.