IPCA Laboratories Ltd
NSE:IPCALAB

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Earnings Call Transcript

Earnings Call Transcript
2023-Q2

from 0
Operator

Thank you. Good afternoon, everyone, and a very warm welcome to Ipca Labs Q2 FY '23 Fourth Earnings Call hosted by DAM Capital Advisors Private Limited. On the call representing today Ipca Lab management, we have Mr. A.K. Jain, Joint Managing Director; and Mr. Harish Kamath, Corporate Counsel and Company Secretary. I'll hand over the call to the management team to make the opening comments, and then we'll take it forward from there.

H
Harish Kamath
executive

Thanks, Nitin, and then Capital Advisors for organizing this call. Good afternoon to all participants, and thanks for taking out time and joining us for Q2 FY '23 earnings call. Today's end earnings call and discussions and answer given may include some forward-looking statements based on our current business expectations, that must be viewed in conjunction with the risk that pharmaceutical industry faces. Our actual future financial performance may differ from what is projected and perceived. You may take your own judgment on the information given during the call. Domestic formulation business for the quarter, 10% growth and domestic anti-malarial business has shown a decline of almost around 19% for the quarter.

Ipca is second fastest growing in IPM among the top 20 players in mid-September 2022. We have gained 3 ranks over 2018, and now we are 17 players ranked 17 in IPM. Most therapy growth is better than the Indian pharmaceutical market [ made ] September 2022. Except the cardiovascular therapy, we have reorganized and restructured our business to build a strong focus. The team is stabilizing now, and we will see much better results in the future. Our market share has improved to 1.86% in last 4 years from 1.59% in 2018. And for Q2 FY '23, our market share has further improved to around 1.91% overall of the partial market. Our export promotional business has delivered a growth of almost around 33% for the quarter. Export generic business, including institutional, has delivered almost around 8% growth for the quarter.

Institutional business per se delivered around 12% growth and generics has delivered around 4% growth for the quarter. Our active pharmaceutical business has declined by around 15% for the quarter, mainly due to the lower demand in Latin America and Asia and pricing pressures witnessed in this business. Our overall for the year back overall for the year, API business is expected to deliver a negative growth of around 2% for the whole of the financial year 2023. Material cost to income is at around 32.83% for Q2 FY '23 as against 33.09. For the same period last year, there is an improvement of around [1.26% ]. We have seen -- we are seeing the softening trend in prices of intermediate and starting material, some like solvents, APIs, our aluminum foil, plastic, PVC, PVDC.

The paper marginal cost has gone up for paper and even the glass product that has slightly gone up. Overall, on other expenditure side, there is an overall increase of almost around 23% for the quarter. This increase is mainly on account of 2 heads. One is energy cost for the quarter is almost higher by almost around INR 16 crores because of increase in the overall coal prices, SSD prices and electricity rate [ recent spike up ] [indiscernible] and all. Marketing costs have significantly gone up. The marketing cost has also gone up on account of overall increase in the full strength, significant increase in strength in the current financial year in Q1 period. EBITDA margin has declined to around 21.04% for the quarter on a stand-alone accounts basis as against 23.05 in the same period last financial year. having given the broad numbers, now I request [indiscernible].

Operator

[Operator Instructions] Our first question comes from Nikhil Mathur from HDFC Mutual Funds.

N
Nikhil Mathur
analyst

My first question is on the RM front. You alluded to that RM prices are kind of softening. So can you give some indication on the CRM, what are the prices should have than what they were 6 months how much decline have you witnessed? How far are we from, let's say, 1 year or 2 years back?

H
Harish Kamath
executive

I would say that almost around -- on material to material is somewhere -- There are almost around 30% to 40% decrease somewhere around 18% to 20% decrease. On the main raw material, we are today consuming. So that's the overall on RM side. Broadly on the API side, let's say, a product like Paracetamol and all, there are almost around 18% to 20% kind of decreases that there product like erythromycin or pantoprazole or set of [indiscernible] we consume, there are around 10% to 15% kind of overall decrease is there on those kind of materials. If you look at your solvent prices, volume prices has gone up by almost around 2%.

But overall other solvents like, say, Acton, IPA, methanol, MDC, it's around 9% to 17% overall decline in all those materials. So that's overall range which we have. Like on metal prices, if you look at aluminum foil from -- this used to be a year back around INR 300 now comes to around INR 200 level. LuLu foil from INR 400 to almost around close to INR 320 kind of, a little less than INR 320. Or maybe the caps we use on bottle from INR 400 to INR 320, INR 325, that's the kind of thing. Plastic PVDC see similar kind of trends are there around almost from somewhere [ 303 ] 16% to 30%, 35% kind of reductions, so those kind of prices trends are there.

And on energy front also, if you look at the coal used to be almost around INR 15 AKG now it has come to around INR 12.9 at [ AKG ] [ an oil from, ] I think, for metric tonnes from 70,000 has come to around 45,000 level. That's the kind of decline is there. But somewhere, like, say, or what we are using is biofuel, those prices has gone up from maybe around INR 7 a kilo to almost around INR 8.7, INR 8.8 per kilo. Some where prices have gone up, but majority of the prices are coming down now.

N
Nikhil Mathur
analyst

Yes. Right. But sir, then, I mean, if I look at the mix, mix has improved right on last couple of quarters basis and the prices have come up. So why is the gross margin sale very short of what you to do, let's say, take over?

H
Harish Kamath
executive

Let's say, the gross margin, there is an improvement, but there is always a time lag because you keep on buying every month by month invent prices are going down. And you have inventory. So first, you consume -- we follow the P4 method. So greater impact will come now in the coming quarters.

Earlier in first quarter level when we will continue maybe on the prices [indiscernible] but their inventory was very, very high compared to what is prevailing today. What we bought in first quarter compared to the second price quarter inventory, but first quarter, whatever buyings are there, that's getting consumed in second quarter. So that process is on. I think overall impact will start coming in the subsequent months. And impact has already started coming in.

N
Nikhil Mathur
analyst

Got it, sir. Second question is on India. Can you help me with the growth of anti-malaria in 2Q?

H
Harish Kamath
executive

I think excluding antimalarials, our growth is almost around 13%, yes.

N
Nikhil Mathur
analyst

Okay. So sir, I mean, if I remember correctly, almost 120 have been added in last 2, 3 quarters. Why isn't the fulsome impact of those [indiscernible] additions yet reflecting in numbers?

H
Harish Kamath
executive

I didn't get you.

N
Nikhil Mathur
analyst

My point is that the 13% it would have a component of, obviously, volume and pricing increase as well. It doesn't seem that the kind of MR additions that we have done almost 30% of [ feeders ] over the last 2, 3 quarters, and the subscription uptick is not yet visible in domestic sales numbers. So a reason why?

H
Harish Kamath
executive

Domestic, we are already among the top 20 companies. We are the second highest growing company. The market growth is very bad. We are going around 1.5x of market growth overall. Whenever you recruit the new people, it takes time for them to become productive. It takes almost around 2 years' time for them to start giving break even to the company. So an initial 2, 3 months goes in their trainings and overall induction in the field and all that. They don't become immediately productive. So right now in second quarter, they have the burdens on the -- as far as the cost is concerned, there are hardly any productivity is expected. It's only now some kind of impact will start coming in. But overall, we will not be recovering cost if we take almost around 2 years' time to even recover their costs. Third year onwards, they will start contributing profit to the company.

N
Nikhil Mathur
analyst

Okay. So one last question on this one. Can you quantify the extent of cost buildup? I mean how much of cost is getting an observed today in the P&L from the MR additions and marketing initiatives that you are losing?

H
Harish Kamath
executive

No, we don't segregate the cost on new people and all people and old that, that doesn't happen. I'm telling you, generally, that's ... [indiscernible] It will take around us an overall cost increase on -- only on account of addition of people will be anywhere between INR 120 crores to INR 150 crores for the whole of the year. People are not added at a time, so in this financial year itself may be around -- it's around INR 100 crores kind of overall cost impact will be there for the whole of the financial. On the new people addition during the year.

N
Nikhil Mathur
analyst

So sir, got it.

Operator

The next question comes from Surya from PhillipCapital India Private Limited.

S
Surya Patra
analyst

Sir, delivering a kind of okay results despite challenges. So first question is on the U.K. market, where we have been registering out of our own [indiscernible] products who are only from the third party name. What is the progress there? What is the annualized revenue rate that we have achieved so far for our own registration base products?

H
Harish Kamath
executive

See, first 2 quarters are impacted because of overall significant business around that time we had with Crystal. So that business is not there in first 2 quarters. From third quarter onwards, the business was hardly any, may be around INR 10 crores of distributor-related business. So we will start seeing good growth as far as the U.K. business is concerned in the second half of the year. Overall for the year, there will be a marginal decline will be there in the business. But the business progression has been very good.

We have -- whatever products we have launched, we have got a good amount of market share on those kind of products. And there are at least around 7 to 8 products are under launch currently. Including SKUs, it will be maybe around -- more than around 20 products will be there for the launch in the next second half of the year. So we are seeing good traction coming on as far as U.K. is concerned. And whatever product we have launched, we have had a good market share on those kind of products.

S
Surya Patra
analyst

Okay, sir. Sir, second question... Yes... Yes, sir. So my second question is, let's say, on the API under performance what we are seeing. There could be multiple reasons. -- reason could be state also could be the nonactivation of the purified process, what we had filed for the [ liquidation ] and all that. So 2 things here, sir, could you give us some sense of what is the outlook for your API business share on for the export market? That is one. Secondly, it is the category, what is your outlook there because there are enhanced competition. That is what we are witnessing from other people who are claiming about qualitative products compared to the [ daproduct ] basis.

H
Harish Kamath
executive

As far as the API business is concerned, this impact is mostly not on account of patterns, pattern has impacted, but it's really very small. The major geographies where the impact has come is only in Latin America and one is in Asia. These are the 2 geographies where the major impact we have seen is basically because of a slowdown in the demand and customers postponing of the order execution. So that's one of the major reasons. Also, there is a significant because there is a slowness in demand since there is also a significant pricing pressure. So that is also there. So on that account, there is an overall decline in API business.

And -- if you look at geographically, only the 2 geographies where we have done well in European markets. We have done well in other like CIS market, we did well. India business also good, but it's only the LatAm and your Asia business. That has given us a decline of almost around INR 50 crores of business in API in the [indiscernible] . And overall, for the year, the overall API business, there will be some recovery. We see that overall for the year, API business may show around 2% to 3% kind of decline. So there will be some recovery is expected in the second half of the year.

S
Surya Patra
analyst

Yes. Okay. And now Sartan category, sir?

H
Harish Kamath
executive

Sartan category has a significant pricing pressure. So that's also resulting in the overall lower business. But that's not the only reason Sartan has not done that bed in the quarter. Sartan decline is very, very small. But overall decline as is there because of low demand and pricing pressure.

S
Surya Patra
analyst

Okay. So sir, regards distributional business, considering the kind of launch of anti-malarial vaccines in various areas and all that and the pricing pressure that is there for the institutional business, generally, what outlook concerned build for your institutional witness on going ahead?

H
Harish Kamath
executive

Vaccine has not made any significant impact as far as the anti-malarial business is concerned in the market. Anyway with [indiscernible] some kind of anti-malarial drug also need to be given. So that's not likely to have impact. But in the current financial year, I say that this is a year where the retendering was done and all that. And because of that, there is some clients -- some kind of slowdown in ordering. So that's the reason we have said that this year, overall, their anti-malarial business may not grow.

But as such, also, we don't foresee a very great long-term or medium-term increase in anti-malarial business. So by and large, because of all these climatic conditions and all. Anti-malarial as a category itself is not doing that well. In India, this business has significantly declined. Currently, these businesses are happening in the other markets, but we don't know what kind of impact that may have in the future. So we are not projecting a significant growth as far as this category of business is concerned -- and on institutional business, we are there on the anti-malarial. So that's the kind of scenario over a longer period of time, yes.

S
Surya Patra
analyst

Okay. Just last question, sir, from my side. About the Dewas, whether the second unit has commissioned the new [ circle unit ] and whatever is based on the first unit and obviously, you have already indicated that there was possibilities will be contributing meaningfully starting next year. But what is the current status of that? Also if you can say something about the progress on the [ Napco ] side?

H
Harish Kamath
executive

Dewas, we have planned to validate almost around 10 APIs, and that validation programs have started. And after starting off validation programs, we had to do around 6-month stability and then each market regulatory filings would start happening. So it has very recently started the first page, we started some intermediate business from Unit 1 for our [ cat ] consumptions or that did not contribute any kind of top line to the company. Now since that phase is over, so we have started now started validating API.

So during the next 1 year time, almost around 10 APIs will be validated there. Filing will start from now at least around 6 months' time, the first filing will start to take place from that side. Thereafter, say, at least 4, 5 filings happens, European authorities and other authorities will start maybe after filing maybe 3, 4 months, 5 months after, at least some regulatory inspection should start happening. Business will scale up only after that. So we see that overall for 1 year, nothing meaningful. Meaningful contributions would come from this site till the time we filed all the products and until the time regulatory inspections of this side happens.

S
Surya Patra
analyst

Okay. Okay.

Operator

Next question comes from Kunal Randeria from Antique Stock.

U
Unknown Analyst

Kunal. Sir, on the API business, just to probe a bit more. Can you tell us what exactly is the issue? I mean, why is the lower demand? Or why are customers postponing their orders? Is it because they anticipate better pricing in the coming months? Or what exactly is happening here?

H
Harish Kamath
executive

India itself market has started having overall lower growth. So similar kind of trend is also there in other markets. But there is a demand slowdown is there in the market. So that's a factor which is contributing.

U
Unknown Analyst

Okay. So demand slowed down Okay, fair. So in the...

H
Harish Kamath
executive

We're not growing to the level which they were growing earlier.

U
Unknown Analyst

And sir, this is happening across the world? Or is there any specific markets you would like to call out?

H
Harish Kamath
executive

I think the greater impact we have seen is one is in LatAm and another in Asia.

U
Unknown Analyst

Okay. Okay, sir. Okay, sure. Then the second question is on the branded business. I have been a bit lumpy rated generic with our export business. It has been a bit lumpy, perhaps because of the Ukraine issue. So should we consider this quarter as a base? Or was an element of some channel filling also happening here?

H
Harish Kamath
executive

So what has happened that as we have talked in earlier in the call, that when Ukraine war started, we were not sure because currency was at very, very high level. At that level, it will get settled and all that, and if you start selling aggressively around that time, that will result in a huge amount of losses because the Ruble, Dollar around that time, practically was more than double than the current level. So that was the scenario earlier. So we didn't make that kind of shipment.

We significantly reduced the overall inventories in those markets with the stockist and all- With our distributors and all. When that started stabilizing around 60, 70 level, I think we started making shipments. So first quarter, there was some kind of overall decline there, but not on account of sales in that market on account of overall reduction in the inventories and [ markets ]. Some of those inventories were replenished in this quarter. So what we see that this quarter far as the CIS market is concerned, because of higher shipment, it has almost around practically doubled the business, around 93% kind of growth. But our projection for the whole of the year in that market, the CIS market growth is around 15%. And we are on track.

U
Unknown Analyst

Got it. And just the last one. So if I want to sort of take a 3-year view on your domestic business, how do you see the composition changing in the sense do you still expect pain to be the growth driver and it's a contribution to move up from, say, 50% to 60%? Or all the other therapies should grow just as quickly as ...

H
Harish Kamath
executive

See, most of our therapies are growing, except a bit because of this year, we have reorganized our cardiac business. So that is having some kind of initial declines, some lower growth, not decline. Lower growth is there on cardiac business compared to market. But all other therapies, we are growing faster than the market. And the neurotherapies are all doing very well. But pain forms a significant part of our business. It's almost around 50% of the business is pain. And pain includes both rheumatoid arthritis and osteoarthritis.

In both segments, we have been, let's say, compared to the market growth, our growth has been significant, significant. Practically around -- if you look at -- I'll just give the number on a minute -- as far as the pain is concerned, I think overall market is growing by around 12%, and we are growing, I think, in September, May, so it's the first 2 quarters business. Almost around 21% is the growth in the pain segment. Whereas if you look at the cardiac market, the market is growing by 7%, we have grown by 14%. As far as [ NT-factives ] are concerned, market has grown by around 4%, we have grown by 5%. Dermatology market has grown by 3%. We have grown by 14%. And on [ caffein ] coal and that kind of portfolio, market has grown by 12%, we have grown by 24%. On CMS segment, market growth of 9%, we have grown by 30%. Urology market growth of 17%, we have grown by around 35%. After market growth was around 13%, we have grown by 2%. That's the kind of overall numbers we have as far as therapies concerned and this number is what we are talking is as per this IQ number.

U
Unknown Analyst

Got it. And just one last one. Sir, there have been reports in the media since the last couple of months that the government is looking to ban a few [ exclofinac ] combinations. Just want to gather your thoughts on this.

H
Harish Kamath
executive

There is no such report that market government is looking to ban any kind of cyclonic that's the wrong reading of the report. The report was saying that last quarter that it's on parliamentary question answer that relating to one of our products, which is there, others are also there in that market. That has been the product which was -- earlier, it was covered under that 300-some drugs, which was covered under Madras High Court and then the Government of India appointed Kokate Committee and Kokate Committee has gone into. Then thereafter, the Truck Technical Advisory Board has reviewed.

And finally, that combination is approved in the market. We have approval from DCGI of that combination, maybe almost around a year back that approval has come. But do you need to generate the kind of -- with that approval when [ rider ] was there that you need to generate some kind of data and give it to them. Safety and efficacy data. Now if you look at 50 millions and millions of people are every month receiving those kind of doses. So there are no -- and there are no side effects. So the question of anything going wrong on safety efficacy data that's not right. So that's not the issue. But we have submitted the protocol to the government, but government is yet to approve the protocol.

One step protocol approval and that's -- wherever protocols were to be approved for industry player, none of the player has got any kind of approval because government has -- in COVID times, they have not approved any kind of thing and subsequently, they are looking into it. Hopefully, there will be approval of protocol. It will take 6 months' time to generate those kind of data and submit to the government. But product approvals are already there in hand. So absolutely, there are absolutely 0 risk as far as that product is coming.

Operator

[Operator Instructions] You're having a question from [ Amit Kadam from Kendra Lekoa ].

U
Unknown Analyst

Sir, my question is on other expense. I think you have partly explained also, but then I just want further clarity on it. So this quarter, we had another expenses of somewhere around INR 45-odd crores, which is sequentially it's like INR 35 crores higher than quarter 1, of which you mentioned that INR 16 crore is related to the higher power costs that sequentially, there was INR 16 crores higher power cost. But the balance part is because of the marketing costs and promotional costs, is that fully related to that particular thing?

H
Harish Kamath
executive

95% of this increase in the cost on other expenditure is only because of these 2 heads. One is the fuel and power and second one is marketing cost. Because of, let's say, once COVID started opening up, during COVID time, there were hardly any non- neither there was domestic travel and international travel. So travel cost has gone up. We have recruited almost around, more than 1,200 people overall increase will be 1,500 people in the year -- during the year. So their traveling cost is also the part of it. And because petroleum prices have gone up, their overall traveling cost itself has gone up per kilometer rates and all those has moved up.

So people increase, travel cost increase and also promotional cost increase. These are the main factors for overall increase in the overall in that regard. Plus some expenditures has gone up on the analysis side because a lot of the [ nitrosamine ] related utility testings and all we have had a lot of equipment ourselves in the company, but some of the -- some validation studies or some kind of method development studies and all which in order to get it faster, we are also using the outside services. So that cost has a little moved up. And also during COVID time, overall maintenance of the plants and all because agencies were not available and all that. So those activities has also gone up, and therefore, little repair cost design. But by and large, the marketing costs, which include [ field ] stock costs and travel costs, end of your power and energy costs. These are the major factors which has increased our other expenditure.

U
Unknown Analyst

Just makes sense into this thing, sir, how do we look at this cost, like INR 435 crores, how do we think this as a quarterly run rate going ahead? Like example, like power cost, which is like INR 16 crores, I think that it is subjected to how the coal price behaves. But the balance, which is marketing and everything, it may not be a complete temporary one-off because some part is related to the increase in MR that will continue. So I just wanted to know what's the sustainable and what is just like something which is temporary, something training and anything which would pay up. I just wanted to know the bifurcation so that will help me to properly gauge what is the sustainable OpEx? How do we see this going forward?

H
Harish Kamath
executive

Normally, trend is of marketing costs that the second quarter and third quarter, it is at a higher level. First quarter and fourth quarter is normally at lower level. So I would not say that it is -- linearly, it is going up or going down. It also depends because these are the 2 periods where we have major domestic businesses coming in. And so therefore, major spending also happens in this particular quarter. Second quarter and a little lower in the third quarter. Fourth quarter, it comes down significantly because a lot of those kind of -- our domestic sales also little comes down in the fourth quarter because of a lot of seasonality and other factors that are there.

So the trend of marketing cost in current year would remain high. I would say that we have done the CAGR of that expenditure from 2019, '20, and that growth is around 10%. So compared to -- because a lot of these costs is looking higher because in later part of the year and COVID period, we have not spent that kind of money which was happening earlier. That's also one of the factors. So from next financial year, it will become like a normal cost increase of around 8% to 10% kind of.

U
Unknown Analyst

So is it like maybe for next year, whatever the base what we found in FY '23 from there, -- these numbers could just be growing at like 10-odd percent that is.... 8% to 10% right, yes. Okay. And this particular thing with that seasonal volatility in OpEx and this all coal price, hard to infer what will be the correct number, but it will broadly remain in this current range for the balance part of the FY '23?

H
Harish Kamath
executive

Yes.

Operator

Next question comes from Chirag Dagli from DSP Blackrock.

C
Chirag Dagli;DSP;Fund Manager
analyst

Sir, what is the INR weakening mean for us?

H
Harish Kamath
executive

Chirag, if you see that way, the second quarter realization of USD, for example, is actually lower than the price of it is there today. So even at today's USD, INR rate also, I will benefit if it continue like this for another 2 quarters. My average realization for first half of the current year is U.S. is less than $88.

C
Chirag Dagli;DSP;Fund Manager
analyst

Okay. So if this remains where we are, then 6 months down the line, we'll start benefiting ?

H
Harish Kamath
executive

In fact, if you look at -- in the Q2, our currency realizations on dollar was around INR 79.85. Yes. But other currencies which are cross currency there, that realization has gone down by almost around 7% to 8%, like sterling, euro, New Zealand Dollar, Australian dollar was around 2% kind of lower realization. So most other currencies, there was a lower kind of relation compared to dollar. Now dollar accounts for almost around 60% of business and other currencies account for 40%. Now dollar is a little gone, but I think, I think the realization in coming months would remain higher than 79%, 85%. But cross currency realizations would improve because dollar index is going down and other currencies are moving. Hopefully, that will be beneficial in time to come.

C
Chirag Dagli;DSP;Fund Manager
analyst

Yes. Understood, sir. And sir, what is our overall margin outlook? We are seeing quarters being very volatile, especially for margins. Given the large fixed cost base that we are carrying on the P&L. So if you just think about the sustainable margins for the business, and this is not this year, but generally, how are you thinking about margins?

H
Harish Kamath
executive

I think our EBITDA margin should remain around 21%. That's what we have given forecast last, we have guided in last first quarter and this year, this quarter also is around that. Hopefully, it would remain at that level be because material cost trend is better and except these energy costs and marketing costs, these are the 2 factors. So overall, it should be around 21% for the year for the rest of the period.

A
Ajit Kumar Jain
executive

Plus Jira, these people who are added, they also go on giving us benefit quarter-after-quarter, even that will also add a little bit to my EBITDA margin going ahead.

C
Chirag Dagli;DSP;Fund Manager
analyst

Understood, sir. Understood. And the India business margin should be materially higher than this 21?

H
Harish Kamath
executive

For India business, gross margins are at a consistent level of 67%, 68% always. They have not materially changed.

C
Chirag Dagli;DSP;Fund Manager
analyst

Understood. . And sir, the last question was on Dewas. Is this for the -- you talked about the second unit and you talked about 10 products. Is this for the continuous manufacturing... That we would...

A
Ajit Kumar Jain
executive

No, not continuous manufacturing.

H
Harish Kamath
executive

[indiscernible] but not continuous manufacturing. I'd say it's not a continuous manufacturing. Continuous manufacturing with [indiscernible] Aurangabad. We are likely to put second plant also at Aurangabad it's under process.

C
Chirag Dagli;DSP;Fund Manager
analyst

Any update on-- if you've had any successes on continuous manufacturing for any products?

H
Harish Kamath
executive

It's too early to give -- a lot of work is happening and it's bound to succeed, but it will take time because it's all -- a lot of R&D and other things are involved. Some of the states, what we are currently doing, we had significant success. Some of the chemistries are -- we are still consulting where we are more particularly using this cross chemical like [ phosphoric acid ] and [ phospho chloride ]. We are yet to get some kind of answers and all. So it's -- Today, those kind of products, everything is not going on a continuous basis. It's some steps, which are were yet to get the answers on a conventional basis from other steps are on a continuous basis. So it's a mixed kind of thing.

C
Chirag Dagli;DSP;Fund Manager
analyst

Understood.

H
Harish Kamath
executive

Lot of learnings are happening. With that time, we will learn more there.

Operator

Next question comes from Damayanti from HSBC.

D
Damayanti Kerai
analyst

Sir, any update on potential FDA question for the affected plant? And what are the current utilization for the existing facilities?

H
Harish Kamath
executive

No, made. As far as U.S is concerned, we are awaiting reinspection. It is status core. As far as the planned utilization is concerned, there were 2 formulation manufacturing units, which were meant for U.S. market, out of which the Silvassa facility is maybe working at 15%, 20% capacity. Silvassa facility was recently inspected by U.K. MHRA. Hopefully, we should get a credition in a month or so. And the second facility, which is there in SC indoor, it is working at around 35%, 40% capacity. At facility, we are using for Europe, Canada, Australia and New Zealand and South Africa market.

D
Damayanti Kerai
analyst

Okay. So is there a possibility of further increase utilization of this indoor plant for export markets because we are yet to hear back from the...

H
Harish Kamath
executive

As and when there is a demand and the quantity requirements increase, we are working on all that.

D
Damayanti Kerai
analyst

Okay, sir. My second question is on the MR adjacent front, you are done, right? Whatever you have targeted and now focus on our…

H
Harish Kamath
executive

That is correct.

D
Damayanti Kerai
analyst

My last question is how should we look at tax rate for this year and the coming year also.

H
Harish Kamath
executive

As we explained in the last quarter con call, we are now at a 25% tax rate, but there are certain expenditures, which are not allowed as a deduction for example, CSR expenses. Even though it is mandatory, you don't get any tax attention on that. Similarly, there are certain marketing expenses because of Supreme Court judgment. We don't take tax benefit on such expenses. Because of all this, our tax rate will be 25% plus another -- maybe around 3% more because of all these [ discolorings ].

A
Ajit Kumar Jain
executive

There will be some kind of element of deferred tax also because whatever facility you recently put the higher depreciation allowance. So [ Depot ] tax put together maybe around 28%, 29% kind of overall tax rate would be. Current the…

D
Damayanti Kerai
analyst

28%, 29% is the rate which we can work with? Okay. Thank you.

Operator

Next question comes from Tushar Manudhane from Motilal Oswal.

T
Tushar Manudhane
analyst

Sir, just on this cardio [indiscernible] therapy in the opening remarks, you referred to some restructuring. Can you elaborate on that?

H
Harish Kamath
executive

We have added more division and more people. So a little bit restructuring of the existing products going to a new division. Those things have also afford. But it will get streamlined, maybe a question of a quarter or one more.

T
Tushar Manudhane
analyst

Okay. So particularly for this quarter, what has been the growth for this -- for cardio [indiscernible] therapy?

H
Harish Kamath
executive

[indiscernible] our cardiovascular divisions are growing around 4% and market may be growing around 6%. That is what Mr. Jain said, our growth in the cardiovascular is lower than the market growth. Share therapy in all other therapy, our growth is better than the market growth.

T
Tushar Manudhane
analyst

Got it, sir. And just lastly on JV facility, how much operational cost would be there in the P&L now?

H
Harish Kamath
executive

I say till now there the cost is at any because it's commercialized now. Cost addition -- this may remain at maybe around INR 2.5 crores.

A
Ajit Kumar Jain
executive

Per month roughly, yes. Plus additional depreciation, whatever is there. And this is…

Operator

Next question comes from Rashmi from Dolat Capital.

R
Rashmi Sancheti
analyst

[indiscernible] Can you update on the [ Ana plant ] and the IPA plant in Rande plant, I think last year, you mentioned that we are looking to file some products for the European market. Have we done that? When do we expect approval and the commercialization of those products. Currently, it is taking only to the domestic market or the rest of the world market? Second question is on [ LICA ] plant. So I think going from this plant, have you started supplying products to any of the market? Is it then up based on vesting and also on the capacity utilization for both the plants?

H
Harish Kamath
executive

[ Ramdev ] Rashmi, many product development work is on way. New products are at the late stage and 1 or 2 saw have also filed use. But to get commercial benefit out of that will take time because you need the product registration and all. So earlier, most of their business was coming from intermediate sales, which were more or less completely stopped now. It will be another 3, 4 quarters for [ Ramdev ] to come to its full capacity utilization. As far as [ LICA ] is concerned, the work is ongoing.

R
Rashmi Sancheti
analyst

But from the Lapland we are not currently taking to any market?

H
Harish Kamath
executive

That is all I said we are taking to market where I am promoting my branded formulation. That is one of the reason why we acquired some stake in this company. The product those years are being prepared, and they will be filed in many countries going forward. But then filing and ultimate registration and commercialization will take time. There is a gestation period in this business.

R
Rashmi Sancheti
analyst

For both the plants?

H
Harish Kamath
executive

Country-to-country registration time also varies. Somewhere you get registration in 6 months, somewhere you get registration in 1 year, 2 year, some places even 3 years.

R
Rashmi Sancheti
analyst

Okay. And sir, on the guidance part, do you maintain your guidance for the India market and [indiscernible] market, what you are given in the last quarter...

H
Harish Kamath
executive

An API business where we gave a guidance of about 5% growth in that we believe by the end of this year, there will be some degrowth, 2% to 3%. Other than this, all other guidance, whatever are given, we maintain that.

R
Rashmi Sancheti
analyst

Okay. And on EBITDA margin trend this year, I understand, but you also mentioned that there will be operational cost still high, and we have added people. So next year, how do we see EBITDA margins from your career guidance of around 21%, whether we will be able to see any kind of expansion or it would remain more or less at the same level? Or we will see some kind of cost of in and that would actually some kind of expansion?

H
Harish Kamath
executive

Actually speaking, this financial year is very difficult cost pressure, demand issues, so many regulatory problems with the APIs, [ Niton Agio incubating ]. And [ less ] worrying about that we've added about 1,500 people in the domestic market. In spite of that, we are delivering this kind of EBITDA margin. We are very confident on these people become productive people who are added in the domestic market, plus all this demand issue and all other problems which are there regulatory. Once they are all resolved, EBITDA margin definitely improved. 24%, 25% EBITDA margin 3, 4 years down the line.

R
Rashmi Sancheti
analyst

Okay. And the guidance which you are giving is basically including the other income also, right?

H
Harish Kamath
executive

Other income madam is more or less, it is repeated to income every quarter, it is there. the as we are given into other income, definitely, yes.

R
Rashmi Sancheti
analyst

Okay, I got it. Thank you.

Operator

Next question comes from Rahul Jeewani from IIFL Securities Limited.

R
Rahul Jeewani
analyst

Again, on the EBITDA margin guidance, which you have provided of 21% for FY '23. I think we referred to the margins for the stand-alone business. But if we see between the stand-alone and the Consol business, there is a margin differential of almost 200 basis points. So if you can also comment that, how are you looking at the margins for the Consol business this year and potentially over the next 2- to 3-year period as well?

H
Harish Kamath
executive

Basically, the difference is mainly because in this quarter, there were some exceptional losses in the Bayshore accounts. All this COVID sale and the post COVID whatever returns and discounts and all because of that, it was exceptional thing this particular quarter. Otherwise, more or less they stand-alone and consolidated EBITDA margin should be more or less similar. Only 2 companies are facing difficulty a little bit, Pisgah and Ramdev. As I said, Ramdev should be back on track, maybe in another 2, 3 quarters, Pisgah may take another year or so. Other than that, whatever this difference is there, it will definitely come down going forward.

Operator

There are no further questions. Now I would like to hand over the floor to the management for the closing comments.

H
Harish Kamath
executive

Thank you, everybody, for participating in this con call. There is nothing further to add. Thank you. Thank you, everyone.

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