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Hester Biosciences Ltd
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Ladies and gentlemen, good day, and welcome to Hester Biosciences Limited Q4 and FY '22 Financial Results Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Rohan John from ICICI Securities. Thank you, and over to you, sir.
Thank you. Good afternoon, everyone, and welcome to Hester Bio's Q4 and FY '22 Earnings Conference Call. We have the senior management, Mr. Rajiv Gandhi, CEO and Managing Director; Ms. Priya Gandhi, Executive Director; and Mr. Nikhil Jhanwar, the CFO, participating in this call. I expect the management to give ICICI Securities an opportunity to host this call. Over to you, sir.
Thank you all for joining in today's call. Good afternoon, and thank you, rather. Our results were declared today, the press note has also been sent and we try to make it as positive as possible more so because of the results that what you would have already read rather than going continuously [indiscernible]. I would like to address the subjective part of the matter. And then, of course, we could take questions for which...
[Technical Difficulty]
Ladies and gentlemen, the line for the management seems to have got disconnected, please stay connected while we reconnect the management.
Ladies and gentlemen, thank you for patiently holding. We now have the line for the management reconnected. Over to you, sir.
Yes, actually before this disconnection, I was just saying that I would try to address the subjective part and then would be open to questions from all of you, which my team and I, we would try our best to answer that.
Looking into the results broadly, our revenues have just gone up marginally, that is by 5% for the whole year, and our PAT in fact, is down by 1%. The poultry healthcare division has shown a little bit of a degrowth in Q4, while growth of 11% in terms of the full year. And the animal healthcare division has shown a growth of 22% in the whole year and 17% in Q4. Looking into specific vaccines and health products; vaccines have grown -- sale of vaccines has grown by 5% and the health products by 44%. One thing is to keep in mind that whatever the growth are in terms of revenue, all have been in terms of numbers because our prices have not changed. So this is just to [ hope ] that it's not any price increase that has shown this revenue, which is definitely an important factor.
On the outset, I would just like to talk a little bit on the poultry industry at this point. The industry is going through a tough time, a tough situation. Egg prices, meat prices all are lower than the production cost. And therefore, it becomes extremely difficult for poultry farmers to actually apply their resources towards rearing the poultry. In fact, some would have shrunk their population, some would try to not use certain inputs, et cetera, and try to just pull on and push on and take it further. I mean, this is cyclical. This is not going to be a permanent thing. So we definitely hope that this turns around and it -- as the situation changes.
Looking at a little bit of a comparison between FY '21 and FY '22. FY '21 being the COVID year as what normally it has been referred to as in these days. Overall, it had been a bad year for most of the people. But for Hester Biosciences, the end of Q3 FY '21 and the whole of Q4 FY '21 has been extremely good. In fact, we had the highest all-time record sale in Q4. In Q3, we did all-time high, then again in Q4, it even broke that record. This was mainly due to big demand for poultry coupled with a disease problem in the poultry industry, which forced people to look at preventive, curative measures in order to make sure that their poultry population grows properly and that they are able to generate the desired revenues. So therefore, as FY '21 had reached a very good peak, a very good high, therefore, FY '22 in comparison has been much lower, the industry being the #1 reason for things being slow. So that's one thing which I wanted to tell all of you.
Another thing is that equally from our press note, our health products have grown by 44% in the FY from '21 to '22. Now health products are formulations. It comprises of vitamins, antibiotics enzymes, other pharma raw material, chemicals, et cetera. The prices of all these have shot up tremendously in the last one year for various reasons. Earlier, the freight prices went up, then the geopolitical reason, raw material coming less into the country, et cetera. And we have been continuously buying these products, raw materials at the available prices, but we have not increased our sales prices. And that is one of the reasons which has definitely caused us ...
[Technical difficulty]
Ladies and gentlemen, the lines of the management has got disconnected. Please stay connected while we reconnect the management.
Ladies and gentlemen, thank you for patiently holding. We now have the lines of the management reconnected. Over to you, sir.
Yes. Sorry for this disconnection. I do not know whether the fault is at my end or in the connection, but anyway. So the raw material prices had gone up. So therefore, our selling prices were not changed and we had to absorb all this. So that was another reason why our bottom line got hit. One more, and that is the third factor, which I would like to highlight is the licensing and the service fees. If you would notice from the press note, in the year FY '21, we had the licensing and service fees, we earned INR 17.57 crores as against only INR 3.85 crores in the financial year '22. So this also directly impacted the bottom line as these were just 1-way fees that we would have got in these 2 years.
So these 3 factors have totally impacted our earnings as well as our bottom line. But as I said, this is cyclical. And I'm sure in weeks or probably in a month or two, everything would be set right. And there are -- these cycles always come at one time, it is touching bottom and then again, it touches the peak. So we are reasonably confident that we should be able to have this turnaround sooner than later, and we should be back bouncing up.
We have also started additional penetration to cover all India with the health product -- with the animal health product range as well as the poultry healthcare division with the health products. And our thrust has now always been, as I've mentioned, regularly in our press notes, at times in our calls, in our last annual report, as far as poultry is concerned, we already have an approximate 30% to 35% of the market share while we are extremely small in the animal health care division and that is something which we are now focusing on, and we want to reduce the gap, in fact, reduce the dependency on any 1 division, not by reducing the sale in that, but by increasing the sales of the other division.
Coming on to what next from here? Our pet division has already been launched. And in fact, it's just been this month that our products -- 3 of our products, they have been on the shelf, and we should be launching 6 other products in the next few months taking the total to 9 and aggressively marketing the pet products. And we hope that next year, we should also be able to launch 2 vaccines for the pets.
Talking a little bit about the COVID-19 drug substance; manufacturing. The facility, the construction is over, all the machinery -- plant and machinery, which got a lot delayed because of, again, various reasons, not getting shipped from various countries and that delayed the whole project. But now we have put that behind. All the machinery are in the place. We would be soon beginning the -- we should be beginning the validation of our facility and then get on to trial production.
One question that would come in everybody's mind about the COVID-19 vaccine as the incidences are going down all over the world, also in India, what is the future of this? This has also come in our mind. And in fact, this was always in our mind when we even initiated the project. It is just to tell you all that the facility that we have created a BSL-3 facility that is a multipurpose facility. We could use it to grow other microorganisms, some other virus, some other bacteria area for vaccine development. And it is not that this is COVID-19 specific facility for the drug substance for the inactivated bulk antigen. So while we continue -- while we continue right now towards the COVID-19 drug substance manufacturing, we are also looking...
[Technical Difficulty]
Ladies and gentlemen, the lines of the management has got disconnected. Please stay connected while we reconnect the management.
Ladies and gentlemen, thank you for patient holding. We now have the lines for the management reconnected. Over to you, sir.
Yes. Sorry, I think there is a problem in my phone. We'll have to live with this today. From next time, we will make sure that this does not happen. So yes, as far as the drug substance is concerned for COVID-19, our focus remains to produce that and sell it to Bharat Biotech who in turn will make the Covaxin vaccine. But at the same time, we have already started putting in our minds together on what next to do in case if the demand for the COVID-19 vaccine goes down. So that's on the COVID side.
Looking at Hester Nepal, it's been a good year for us as far as Nepal is concerned. We have done an all-time high turnover in Nepal. We had the business -- in fact, we did a turnover of INR 13.9 crores as against INR 4 crores of the earlier year. And this sales has just not been restricted to the FAO tenders. We have even got orders directly from countries for PPR. It also includes turnover of around INR 2 crores something from local sales, which still -- this year, we had no sales within Nepal. We are putting in a lot of thrust to even capture the domestic market in Nepal. So overall, Nepal seems to be looking good.
Talking about Hester Africa, we have already commercially launched the Newcastle disease vaccine for poultry. We have launched the PPR vaccine. We have already produced CBPP vaccine, which is for the bovine, that is for cattle, which is under test right now, so we should be getting the selling license in the next week. One thing that has happened in Africa that earlier, as per the commitments that we have got from various countries, including Tanzania, for their countries to buy these vaccines. Due to their current situation in the country, there is slow movement on those front, not firm commitments they are able to give at this point of time. But having said that, we are putting in a lot of thrust for the private market. We are trying to make vaccines available throughout the country as far as Tanzania is concerned. And this is the first time that people in Tanzania are able to buy these vaccines off-the-shelf from distributors.
See the cost of each of these vaccines, whether it is poultry, cattle, sheep, goat, swine is never too high. It's just that the people -- the market in the African continent is very fragmented. And even though it is of a small value, people are hesitant in spending by themselves, but we are trying to educate them and we are trying to revolutionize, change the whole marketing and distribution in Tanzania. Let's see how this is accepted and how do we take it further, but we are reasonably confident that this should work out.
Talking about other developments over here. As already mentioned in the press notes, I would not like to really go much in detail. The PPR tender was floated by the government of India. We were L1, and the supplies which were to start from January or February, they have not yet started. But I think in the next one month -- the supply should start within a month's time. Am I audible still?
Yes sir, you are audible?
[Technical Difficulty]
Ladies and gentlemen, the lines of the management seems to have got disconnected. Please stay connected while we reconnect the management.
Ladies and gentlemen, thank you for patiently holding. We now have the lines for the management reconnected. Over to you, sir.
Yes. So I was talking about the PPR vaccine. We have been awarded the tender and the business should start within a month's time. And the approximate business, what we are expecting in this year is approximately between 9 crore to 15 crores. The tender was for 20 crore doses of PPR vaccine, which would be valued at approximately INR 24 crores, INR 25 crores. But as the year has already begun, I think there would be some spill off onto the next financial year. There are other vaccines which are under development, and they would be soon launched.
And last but not the least, the expansion plans that we have already mentioned in our earlier calls, the bulk inactivated antigen for the animal vaccine, the fill/finish. The bulk antigen facility should be going onstream in this quarter itself, while the fill/finish should go on in Q3 in this financial year. But with the -- with this, our capacity would go up by 2x, and that would give us a lot of strength to push products and even push the sale of inactivated bulk antigen, try to export to certain European countries for the production of their vaccines. So this is an overall of our this quarter and the financial year.
And with this, I would like to hand over the call to the organizers and accept questions.
[Operator Instructions] The first question is from the line of Ankit Kanodia from Smart Sync Services.
Good to see that after lot of struggle we have finally got good traction in our Nepal business. So my first question was related to our international foray only. As in both in case of Nepal and Africa, what we have earlier projected and how things have panned out that there has been a complete difference in that. So standing today, how do we see these businesses, say, 2, 3 years, 5 years out compared to the domestic market here? How do we see that in -- I don't want anything in numbers perspective, but qualitatively thinking, how do you think the impact of these 2 big markets would be compared to the domestic market of India?
So let me first talk about the PPR disease situation and the vaccine. United Nations stands committed towards eradicating PPR from the world. So that is something which is going to gain traction in the next few years' time. Though delayed, but it will gain a lot of traction. Then that is going to churn a lot of business as far as Hester Nepal is concerned as well as Hester Africa. Regularly, at least once in 8, 10 months, we have a discussion with FAO, and they always keep asking us, I hope your you are with the quantities that we would need, et cetera, et cetera. And we always tell them that you just worry about your orders and leave the manufacturing to ourselves. .
Now with Africa plant also ready, we have 2 locations from which we would be able to export. So I definitely see this as a good business opportunity. Today, if you really go to see PPR vaccine, you take a worldwide survey of the supply of PPR vaccine. Hester Biosciences actually produces and sells -- has a more than 70% to 75% market share in PPR all across the world, including India as the country. It's just that the volumes are small, but these volumes are bound to go up in the next few years. So that's talking about Hester Nepal. Even if the volume goes up by 2 or 3 times, FAO is talking about some 15x or 20x more of volume than this. But even if it goes up marginally, we would be -- we have sold out and -- all our manufacturing capacity as far as Nepal is concerned.
Now coming to Hester Africa, the vaccines that we are producing over there, the African continent is having all of these diseases over there. It's just that how it is addressed and how this vaccine reaches to the cattle farmer, poultry farmer down the line. Unfortunately, what has happened since the beginning of the year -- calendar year 2020 until today, there has been something or the other that has been coming up in terms of COVID, then in terms of the geopolitical situation across the globe. So things have been a little bit in a turmoil. I think our plans are that we will just continue trying to develop the private market, educate people, create a good marketing network. And I can also tell you that the margins by selling it in -- through the private -- through the trade are immensely high than what it would be in terms of the tenders, et cetera, are concerned. I think there has been a little bit of a delay, but I don't see any reason why we should fall short of the original plans we had except in terms of time.
That really helped. So my next question would be related to -- if you can see over the last, say, 3, 4 years, our contribution of our healthcare products are increasing to our total revenue, right? And we all know that vaccines are far more margin accretive compared to the healthcare products. So how do we see -- again, 2, 3 years, 4 years down the line our margins and definitely about our ROE as well, return metrics as well? I mean, how do we look at when we have more and more of healthcare products? And what would be the competitive intensity there? Because I think if my understanding is correct, the market of healthcare product is far more competitive compared to vaccine. So how do we position our sales against that?
Yes. I mean your questions have been quite a few. Point number one, that healthcare products definitely have a big market, and definitely, there is immense competition. I would not just say little competitions, immense competition, okay? Two is margins. poultry -- sorry, health products are always less in terms of margins than vaccines, which is definitely an acceptable fact but the growth can come immense in these health products. Now look at it, you mentioned on return on investment, capital invested, et cetera. If you look at vaccine entity, a vaccine company, the ratio for capital is to turnover is very adverse as what it is in health products. .
So given a situation that our health product business increases up to grade with lower gross margins, but overall, we will still be as profitable. And at some point of time, if the volume in the whole business becomes big and it goes up to INR 1,000 crores, et cetera, or even more than that, then you see the total amount involved, the total profits would be reasonably high and the capital invested to churn out as much business of health products is definitely far less than what it would be for vaccines. So in the long run, we would definitely be able to make up. Yes, but the margins are low, and these are the ways that we will be able to make up.
That clearly helps us. So in that case, if I could understand it right, like in our recent foray into the companion market where we are not going into the vaccine first, but rather we are going into the healthcare products. So that would actually help us in that sense of scaling up faster compared to what we were doing earlier. Is that understanding correct?
Perfect, without a doubt.
[Operator Instructions] The next question is from the line of Aditya Nahar from Alpna Enterprises.
So if you could just talk about the capital work in progress, which has just shot up on an annual basis from last year to this year?
The capital expenditure has gone up because of the COVID-19, the facilities as well as the expansion on the animal vaccine side for the bulk antigen as well as the fill/finish unit. So these are the 3 areas which have led to a high capital expenditure. The total expenditure as far as the COVID vaccine project is concerned, it is around INR 70 crores from our side. And as far as the other 2 projects is concerned, that is INR 60 crores. So this is the total -- I think it is -- sorry, INR 50 crores from the other 2, and 70 in this, yes.
'
And just my second question and my last question is grant that you received from the BIRAC under COVID Suraksha, this will be -- will it be contingent on specific milestone as you have mentioned. Could you mention those milestones please, if that's okay.
The [ Meds Board ], one, signing the agreement, done. Two is with the civil work, done. We have yet to get the disbursement. Third is regulatory approval. So I think that's about it.
The next question is from the line of Manoj Dua from Geometric.
As you told that this facility which we are making for Bharat Biotech can be used for other products also in case COVID subsides and becomes a pandemic -- endemic sorry. And can you give some more color into that, it will be used only for human vaccines or it can be used for animal vaccines also?
The facility is a BSL-3 facility. It could be used for handling microorganisms for -- of animals as well as human beings. So it is capable of doing either.
[Operator Instructions] The next question, this is the line of Ankit Kanodia from Smart Sync Services.
Thank you so much for allowing a follow-up. So sir, in terms of plant-based beef, which has been catching a lot of attention in the Western market...
Sorry. Can you repeat?
I'm talking about plant-based beef.
Beef?
Beef.
Okay.
So that is being -- this is something which is catching our attention in the Western market -- Western country. So do we have any vision or idea as to where this kind of market can be in 5 to 10 years? And how does it affect the demand of our products in that sense?
I think the first thing after this call, I'll do a Google search on this, and beef thing. I have to be very honest, I'm not aware of this at all, and I don't have the ability to answer you on this.
No problem, sir. Maybe we can include that in our annual report if it is possible.
Okay. Just make a note, plant-based beef?
So basically, sir, this -- in Western countries, just there are many people who don't want to become a nonvegetarian so they are coming up with options, which is -- where you don't eat actually non-veg food you're eating plant-based food, and it tastes like non-veg food.
Beef. I think they can be -- I mean, I don't even know on the lighter why even waste time in doing all these things. Just eat vegetables. Anyway Sorry.
I agree with you, sir, because I'm also a vegetarian, but this is how the market is moving.
The next question is from the line of Manish Jain from GormalOne.
I just wanted to know about the animal health products where you have grown quite well, although on a low base. What are the kind of opportunities you see in India, Nepal and Africa? .
The opportunities are humongous as far as health products are concerned. And at all the places, only thing is that in India, the competition is high, Therefore, the market penetration activity takes a little longer time. Even in Nepal, it being a very small market and quite a few people over there. But we are able to make dents in Nepal. But Africa, the opportunity is humongous. Anything sold over year at, say, INR 100, is sold at nothing less than INR 150, INR 200 anywhere in the African continent. And that's the minimum. It could be 3x the price also, 4x the price also.
So that is an area which we are looking at aggressively. One of the reasons for us to invest in Thrishool which we have taken 50% is to make inroads with health products because it's an existing company. They are selling health products. Last year, even they had a turnover of approximately INR 4 crores -- or USD 4 million, and they are hoping to do around USD 6 million to USD 8 million this year. So that is a focus area for us, and we are very confident. And as I earlier mentioned, the cost of -- for manufacturing these products is not as high as the investments that are required in vaccines. So overall, we see a good opportunity as well as a good focus from our side on to this segment.
Great. And the second question I had was in Thrishool, you have a 50% stake. Would you want to continue that 50% the way you have in Texas, where the existing management team will continue? Or do you have aspirations to increase your stake here?
One is stake and one is management. We would want to continue these units to be managed by the old 100% owners who today are also partners in both of them. As far as stake is concerned, we have not yet given a thought. We want to just continue at this level because stake issues become quite sensitive issues and then the discussions lead to too many other thoughts. For the moment, we just continue the way it is. Let's see how things take us if there are additional investments needed, if the partners have the ability and willingness to invest, we will take it at that time. But for the moment, no change.
And one quick last question before I join the queue is when do you expect to start your Egypt operations where you had an alliance with an Egyptian company?
Our alliance is of 2 types. One is technology transfer and the two is rights for international business. Their project has also got a little bit delayed. In fact, had their project not been delayed, our service fees and licensing fees would have again gone up in this financial year itself. But their project has got delayed, and we will -- and we will continue. We understand their current situation. I think their project would go on stream at the earliest after 2 years.
The next question is from the line of [ Vijay Kapur ], an investor.
Just a couple of questions. I think one, I'm joining late, you might have already discussed this. Could you share a little bit more plans on the pet division? And what kind of numbers you're also looking at that. And that was one question. And a related question would be, if you could share broadly where do you see Hester in 2, 3 years, like 2025 if I were to look at. In the past, you've indicated that for India, you were looking at primarily growing 20% year-on-year and reaching about INR 500 crores in the next 2 to 3 years. And for Africa about INR 200 crores and INR 250 crores. Would you continue to maintain that guidance overall or anything would change given the change in the environment? Those are my 2 questions.
Let me take the second question, and then Priya, she will talk on the pet. In terms of our growth plans forecast, we -- the African market and the current geopolitical situation, which was again preceded by COVID, et cetera, has definitely put a little bit of, I would say, has slowed down the rate at which what we wanted to do. But in India, we are reasonably confident that in the next 2 years we should have a very good and a massive jump as far as our business is concerned, considering that we are going to put in a lot of focus on health products on pets and take it further.
On Africa, we would wait and watch for another 1 year's time on how things are going to shape up, how the economies are going to again get back to where they were. But at the same time, we are pushing hard, as I just mentioned, on the private sector market, creating awareness, creating a good marketing and a distribution network. I think a lesser quantity in terms of number sale would still help us get a higher revenue, higher top line, higher bottom line because the prices are good, the margins are good. I would not really want to comment on the guidance or give you any figures at this point of time, but this is exactly as what we think we would be able to take it further. Talking about pets, I would just give the phone to Priya.
So speaking of the pet division, which we have just launched this year, as mentioned, when he was giving a brief overview, we are starting off with a couple of health products to begin with. And then going in the next year, we'll be looking at a few vaccines since that always has been one of our strongest points. So to begin with, right now, so pet care is very similar to pediatric care, where you begin with a lot of growth promoting a nutritional products, grooming products for the pets. So our first 2 products, in fact is already out, which is like an omega supplement, which is very much well in demand amongst the pets. So that that's one of our first few products, which has already come out with good feedback.
So we will be launching other 3 to 4 products in this month and the following month and a roll of 6 products through the year. Speaking of revenue, we're aiming at doing a top line of around INR 3 crores to INR 4 crores for the first year and then following to that probably hopefully increase substantially based on how we do.
Just as a quick follow-up on that pet business. So from a distribution perspective, is it the channel we're looking to go through vets through the pharmacies or through pharmacists or e-pharmacies, any specific route that we are taking for that?
No, nothing really specific, very similar to what we are already falling with our existing poultry and animal healthcare division where some are distributed directly to retailers, veterinarians. We're also looking at going online because this is also a lot to do with direct B2C wherein pet parents themselves, just based on what the doctors recommend, want to buy products themselves. It's going to be really like -- it's going to be a mix of all kinds of distribution channels.
The next question is from the line of Manish Gupta from Solidarity Advisors.
Rajiv, I just wanted to get your perspective on what organization learnings you think we have got based on our experience with the Nepal plant? Because the opportunity is clearly there. There is so much of excitement and passion in your voice when you talk about it. The fact that we have 75% market share and complete dominance in that. But if we look at the financial metrics on the Nepal plant and obviously completely in hindsight, I don't know if that investment will have a payback of, say, 6, 7 years, right? Because it's been a couple of years since we made that investment.
And I just was just trying to understand that as we are looking to grow the company, how do we think about putting incremental CapEx when a lot of the demand for our products is really dependent on circumstances, which are quite outside our control. In this case, it might be development aid by governments to FAO, which one really has no visibility for. So I was just keen to understand what are -- what learnings have we got? How do we think about CapEx like this in the future?
Yes. Any markets that need to be developed or anything that you would want to take further, there are 2 ways to look at the whole thing. One is a balance sheet perspective. One is what you see yourself in the future and how you want to do it, et cetera. To give you examples, in India, companies like Pfizer, Glaxo, some of them, they would have been here pre-independence time. And I'm sure at that time, the hardships that they would have gone through, et cetera, would have been immense. But today, if you see all these companies are really big. They have made it big. And because of them being through -- passing through all the thick and thin of various economies situations in the country, social situations, political situations, there have been sometimes reasons that products have been challenged because of the content. Sometimes there have been political movements, et cetera, et cetera, maybe issues in their parent country, wherever they are.
So all these things are a part and parcel of long-term strategy, to withstand all these things and ultimately come out to be a winner after so many years. I think I would more talk on the subjective part rather than talk on the absolute balance sheet way of talking because -- I mean, objectively, 80% of the things are not possible. Objectively, 80% of the entrepreneur would have seemed to be failures even before they would have started. But I think there is a lot of subjectivity. One needs to be persistent in any business. I'm just talking in general and move further.
There is something that reminds me of in the earlier days in Bombay, right, when you move towards New Bombay, the only thing that you could see was the Pfizer tower. Pfizer had a plant in new Bombay years, years ago. And it used to always excite everybody seeing that big tower, the water tank over there. Today, it's not even visible, but the company has become so big. Likewise, we have taken a shot in Nepal. We are hoping that we are the first. As we are the first over there, we would definitely make a dent over there, create a name for ourselves that anything that we sell over there, sells because of our name, because of the quality, confidence people have and take it further, and we will withstand all these things.
Political situation, we withstood the earthquake that took place, of these trucks with the machine were on the road for 6 months. There was some transport strike and some political situation between India and Nepal. But I think this is all part of the thing and a balance sheet per se cannot reflect all these things, but then the valuation and being there and having withstood all these things, I think that's something which we are very keen to do. And the learnings from all these things are -- is that one just needs to be determined. Even in Africa, we started with so many presumptions, so many assumptions. There are so many things that have happened differently.
And today, if anybody challenges us from past forecast to today just based on excel sheet or a balance sheet, I mean, we might not be able to give an answer, but it's our determination to make sure that we become big and strong in this country. And one thing that I would like to say, any economy, any country that you go, you need to become a part of their country rather than trying to make them a part of your philosophy. And that's something which we have learnt. And at both the places, we have local people who are the heads of organizations and not to try to compare too much between India and the country where we have invested. So I think these are the few basic learnings that we have.
The next question is from the line of Manoj Dua from Geometric.
So this is my question, again, regarding this grant we are going to receive of INR 60 crores, which we will get in the phased manner. Apart from these milestones we have to achieve that to get the grant, any operational limitations are being imposed for that? Like you have to sell this product at this price, you have to keep that much facility...
No, no, no, there is nothing. There is nothing.
[Operator Instructions] The next question is from the line of Ankit Kanodia from Smart Sync Services.
Thank you for allowing the second follow-up. Sir, I wanted to know about the license and services fees. So we have seen that it has been very volatile in the last 2 years. So -- can we expect the same volatility going forward? Or can we have some more sense as to where we are going on that front?
Well, to be honest, in our internal discussions, we have taken a decision that we need to achieve the standard profitability as what we have achieved in the past considering that licensing and service fees are 0. That makes it a lot easy for us towards planning everything, let these fees be an additional, but we are working towards it wherein that we are not dependent on these fees specifically for a better bottom line.
So there is no sales and marketing efforts towards these fees, right?
No, no. There are a lot of efforts, but I think looking at it in a very realistic manner, I think we are not wanting -- our core business is manufacturing and distribution, we should derive full income, full profitability from that. Let this be the icing on the cake.
The next question is from the line of Anirudh Shetty from Solidarity Investment Managers.
I had two questions. So you had touched upon how you are seeing some margin pressure in your health products in this year? But when I look at your numbers, your gross profit margin in FY '22 was only slightly lower than FY '21. The 71%, 72% range, and it actually expanded in Q4. So just curious to understand what works somewhere else in our portfolio, which kind of offset this health product GP [ correction ], gross profit margin [ correction ] ?
Yes, I think I will request Nikhil, our CFO, to talk.
Yes. So on the gross profit margins on the product sales, primarily there is a nominal change of 72% to 71%. That's primarily because of the proportion of the health products being higher in the recent years as compared to the earlier year.
Okay. Earlier, I believe you used to give this split for India business into health and vaccine and what is poultry and what is animal healthcare. So would it be possible to start sharing that split because it will help appreciate what's moving in the portfolio and how one should interpret the margin numbers?
Yes. So primarily, this division-wise revenues, which gives the poultry healthcare and the animal healthcare division, and the vaccines and health products being bifurcated on the first page of the press release. You're asking for some other details also?
No, no. So if it's split between poultry vaccine, poultry health, animal vaccine and animal health that's the granularity I was asking for. Maybe I missed it. I'll just take another look.
No, no. Yes. Rajiv, you want basically a detailed breakup of each of the segment in terms of profitability?
In terms of sales, and if you all can give it at an EBITDA level also that would be helpful because it will help us...
Yes. But I mean, the point is that at the end of the day, we are looking at the holistic business. It's just that for our internal purposes, we do all these exercises to analyze everything. But I think giving it like this in a public domain would be a bit inappropriate for us to actually share all that information. I mean, not that there is any top secret about it. But I think we should leave our experts in the company to analyze this and take it further and do analysis.
So -- but just one point here that despite health products growing at 45% and vaccines growing at 5%, our GP margin is corrected by from 72% to 71%. So is it fair to assume that the GP...
I'll tell you, GP margins, see in health products also -- your question is that if I've understood that health products have a lesser profitability, but health products have grown so much and still the GP has only dropped a little. That is what your question is, right?
Yes.
Yes. So this all depends upon the product, the product mix, the sale of product B, C, D, E. Profitability of A, B, C, D, E, et cetera. So sometimes -- I mean, all health products are not unilateral less margin than vaccines. Overall, they are less but there are some health products where we have a very good margin. So then if that sales are high, then that actually even outbids the vaccine gross margin. So that's the -- it's all the product mix.
Okay. Got it. And sir, my next question is on the COVID facility. You had mentioned, I think, INR 70 crores is in capital work in progress. So what is the sales potential from the INR 70 crores? And what is the margin profile on this basis?
We are at this point of time dependent on the government of India to take all these things further as far as COVID vaccine is concerned, drug product sales, et cetera. So in consultation with them, with Bharat Biotech, we would take a call, decide and take it further. So this is a little bit open at this point of time, not only for us, for probably all COVID vaccine manufacturers, drug substance manufacturers. But having said that, I don't think that we should be worried about our margins, et cetera, on the sale of the drug substance.
Okay. And the INR 60 crores grant which as and when we get it, we will use to invest. Is there any sort of restriction on what we can do with this in the long term? Or should you also assume that this can also once they COVID subside, it can be used for either animal or health process, depending on what we think is the right approach?
It's very clear. And even on the press note on Page 3, we have mentioned, this facility is designed to be a multipurpose facility to handle other microorganisms beyond COVID-19. There are no restrictions on us, but we have a national responsibility today to talk about only COVID-19 as that is the basis of setting this thing up. But if that demand goes down, we are free to use it for anything else.
The next question is from the line of Manish Jain from GormalOne.
Nikhil, just one housekeeping question that of the debt of INR 222 crores, INR 164 crores, which is noncurrent liability and INR 58 crores in current liability. How much is coming from the Bill Gates Foundation?
So USD 12 million, so around INR 90 crores is coming from -- so INR 90 crores is coming from Gates Foundation.
Ladies and gentlemen, that is the last question. I now hand the conference over to the management for the closing comments.
Thank you all for being patient, hearing me out. And I'm -- I hope I have been able to answer all the questions. And we at Hester continue the hard work to make sure that the company produces the desired results, the expected results and that we live up to the expectations of all our shareholders, stakeholders. We all on behalf of every single employee of Hester [indiscernible] that we all are committed, and we are 24/7 on the job at Hester. Thank you.
Thank you. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.