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Marksans Pharma Ltd
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Ladies and gentlemen, good day, and welcome to the Q4 FY '24 Earnings Conference Call of Marksans Pharma Limited, hosted by Elara Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Dr. Bino Pathiparampil from Elara Securities Limited. Thank you, and over to you.
Thank you, [indiscernible]. Good evening to all of you on the call. On behalf of Elara Securities, I, Dr. Bino Pathiparampil, welcome you all to the management call of Marksans Pharma to discuss the Q4 and full year FY '24 earnings release and the business outlook. We have with us Mark Saldanha, Chairman and MD; and Jitendra Sharma, CFO. I now hand over the call to Mark and Jitendra. Over to you.
Thank you, Bino. Welcome, everyone, and thank you for joining us in our Q4 FY '24 Earnings Conference Call. We appreciate your continuous interest and support for the company. We are pleased to report our strong performance for the year where we have achieved our highest revenue and EBITDA in FY '24.
Our revenue expanded by 18% year-on-year to INR 2,177 crores and EBITDA expanded by 35% year-on-year to INR 459 crores. The performance was mainly driven by volume gains, new product launches and an increase in the wallet share of our existing customers as well as addition of new customers. We witnessed a favorable demand in our key markets. The pricing pressure was moderate for our Rx products in the U.S.
In U.K. region, we are one of the leading Indian pharmaceutical companies and aspire to sustain a growth momentum. The profitability of the company has also improved due to the softening of raw material prices and the improved operating efficiencies.
Throughout FY '24, we achieved remarkable milestones. We exceeded our projected target of INR 2,000 crores revenue and a 20% EBITDA margin. We received key approvals on USFDA and market authorizations from UK MHRA in pain management, cough and cold and other therapeutic segments.
Our expansion and scalability of the acquired unit of Teva Pharma is proceeding according to plan, and we will see meaningful revenue contribution from the unit in FY '25. Our Q4 performance was flattish with a slight decline. Although our revenue was slightly lower as compared to the previous quarter, and this is mainly due to the seasonality of product mix, we were still above our projected target of INR 500 crores per quarter.
The transit time and freight time -- freight rates almost doubled in Q4 as compared to Q3 due to the Red Sea crisis. This escalation impacted the cost of approximately INR 9 crores. We're taking steps to include strategic route optimization to ensure no delay in delivery.
In the fourth quarter, obviously, we have hired over 200 new people in the acquired manufacturing plant in Teva. This strategic move has lead to an increase in expenses. This is crucial for growth as we scale and improve the utilization of this unit. The profitability parameters will start improving thereafter.
We have strategically increased our inventory levels of finished products and key raw materials in our U.S. warehouse due to various supply chain issues in recent times. And based on the nature of our business, we have large SKUs and are required to billable weekly orders to our customers. This buffer helps us to mitigate the risk of supply shortages and production delays.
This decision has resulted in an increase in our stock reserves by approximately INR 7 crores while consolidation of the account. We look ahead and feel optimistic on the coming year. Our strategic initiatives to increase our market share, enter new markets, expand capacity, strengthen our product pipeline, increase operational efficiency and focus on our execution should deliver a robust growth.
As a part of our commitment to enhance our shareholder value, I'm pleased to announce that the Board has recommended a final dividend of INR 0.6 per equity share, which is 60% of INR 1 face value.
With this, I'd like to turn it over to Jitendra to update you on the financials.
Thank you, sir. In Q4 of FY '24, our operating revenue was INR 560 crores, an increase of 15.2% compared to INR 486 crores in the same quarter last year. The U.S. and North America was at INR 245 crores, representing a 26.6% increase on a year-on-year basis. U.K. and EU formulation market grew by 12.9% year-on-year to INR 230.8 crores.
Australia and New Zealand formulation market recorded revenue of INR 63.3 crores, stable on a year-on-year basis. The rest of the world recorded sales of INR 18.9 crores in Q4 of FY '24. Gross profit was at INR 290 crores, up 19.8% year-on-year.
Gross margin for the quarter was at 51.8%. EBITDA for the quarter was at INR 109.6 crores, an increase of 0.1% year-on-year and a decline of 17.6% quarter-on-quarter. EBITDA margin for the quarter was 19.6%. The sequential decline is due to surge in freight cost, due to the Red Sea crisis from January '24 and increase in expenses related to the Teva acquisition. And also with the increase in hiring in the new facility in Q4 of FY '24.
Profit after tax was at INR 77.6 crores compared to INR 82.7 crores in Q4 FY '23, a decline of 6.1%. PAT decline was due to the increase in the tax rate. The EPS for the quarter was INR 1.73.
Talking about the full year financial performance. In FY '24, our operating revenue was at INR 2,177 crores, an increase of 17.6% compared with INR 1,852 crores in the same period last year. The U.S. and North America was at INR 918 crores, representing 18.5% increase on year-on-year basis. The U.K. and EU formulation market grew by 22.9% year-on-year to INR 943 crores.
Australia and New Zealand formulation market recorded revenue of INR 218.8 crores, a 4.4% on year-on-year basis. The rest of the world recorded sales of INR 97.4 crores. Gross profit was at INR 1,139 crores, up 22.4% year-on-year. Gross margin increased by 207 basis points from 50.3% to 52.3% in FY '24.
The EBITDA for the period was at INR 459 crores, an increase of 35% year-on-year. EBITDA margin stood at 21.1%, a 274 basis point improvement over the previous year. Profit after tax was at INR 314.9 crores compared to INR 265.3 crores in FY '23, a growth of 18.7%.
EPS for FY '24 was INR 6.92. In FY '24, The cash from operation was at INR 230 crores, while the free cash flow was at INR 21.6 crores. The CapEx incurred during the period was INR 208 crores, which increased INR 125 crores in acquired facility from Teva Pharma, INR 30 crores in the existing Goa facility, INR 31 crores in the U.S. facility and INR 22 crores in the U.K. manufacturing facilities.
We spent INR 34.6 crores in R&D, which amounts to 1.6% of the sales. We continue to remain debt-free and have a total of INR 674 crores of cash as of 31st March 2024.
With this, I would like to open the floor to questions and answers. Thank you very much.
[Operator Instructions] We have our first question from the line of Agastya Dave from CAO Capital.
Sir, a few questions on this increase in gross margins we have seen. So obviously, there is a seasonality impact there and also a change in product mix, right? So I was just wondering [Technical Difficulty]
I'm sorry, you're sounding muffled.
I am using the handset.
Now, you're fine. Please go ahead.
So on a like-to-like basis, what have you seen on the gross margin front?
This is Jitendra here. So gross margin for the year was at 52.3% as against 50% last year. And the improvement in gross margin mainly was on account of reduction in raw material prices and also some favorable product mix. So we expect the gross margins to remain in the range of between say 50% to 52% on a sustainable basis.
Okay. So this whatever benefits we are -- like this is sustainable, right, this range between 50% and 52%?
Yes, definitely.
Okay. So what would be the capacity utilization at the new plant due for, the Teva?
See, the capacity -- we are in the process of increasing the capacity of the new facility. And -- so in terms of the capacity utilization right now, it is very low. And -- but from this month -- see April onwards, we have started utilizing the newer capacities as well. So in coming quarters, we will see much improved capacity utilization at Teva facility.
Okay. In terms of the additional cost that we have incurred, so now if I look at the employee cost base, for example, it's at around INR 80 crores a quarter. So is that a good assumption? Like we are done with the hiring? Or are there any incremental hires that we need to make even now?
There will be some more incremental hiring, but I think the large part of it is already over.
Perfect. Perfect. And any other start-up costs that you will incur?
No, I think we have incurred almost all the cost.
Right. Sir, on a plant level, when do we expect the breakeven to happen? By when -- tentatively, sir, very, very tentative numbers -- time lines, not even numbers.
I think from this quarter itself we should be breaking even.
At an EBITDA level, sir, or PBT level?
At EBITDA level.
Okay. Great. Sir, finally, for next year, now that you have the plant in place and the production is ramping up, what kind of volume growth are you anticipating?
So for this, obviously, we have broken the CapEx and capacity to 3 phases. The first phase was 3 billion tablets and which we have achieved installing this capacity. So now we are scaling up to utilize this capacity and we will probably have that additional revenue, which comes out of 3 billion. But in the FY '25, we plan to increase this capacity towards the second half of FY '25 to 5 billion. And hopefully, by the end of FY '25, we will start -- this will be added value accreditations to already existing revenue.
So could you quantify that number, can we see like a 15% growth on the entire base? So this phase of 2.77...
Yes, sure.
Yes. 15%. I'm saying just volume growth, sir. I'm not talking about value.
Yes, yes. Definitely. 15% is definitely achievable.
We have our next question from the line of Nirali Shah from Ashika Stock Broking.
Could you provide insight into what percentage of our top line comes from ibuprofen and -- considering it is our largest molecule. And what our current market share is for this product? Additionally, what are our internal market share push for ibuprofen?
So ibuprofen is just one of the molecules that we have. Obviously, it does contribute decently to our revenue. I would say we are approximately about 15% contribution comes from this molecule, one point.
Okay. And the market share?
Again, depending on which market we are talking about, but it will pretty much be at 20% -- 15%, 20% -- about 15% maybe of the market share.
You mean globally or just North America?
It's a very broad question. So I would say globally. I mean, whichever markets we are in.
And my next question is, given that our focus on the U.K. and Europe regions, they have actually shown the highest growth over the past year, we see Y-o-Y comparison. Could you provide an update on the expected launch time line for new products in these markets?
Launch time for our new molecules in the markets are happening every quarter. So we do expect launches happening during the year, which will again fuel growth. We are very optimistic and bullish on our road map for the U.K. market. And for the Europe market, obviously, we do plan, we are working towards having our entry into the European market, hopefully in this calendar year. So we are working towards -- not calendar, financial year, we are working towards that.
That's great. And just one more, just previous perspective. So with the increasing demand for drug in the U.K. I just came across an article today. So how well are we positioned to capitalize on this opportunity considering U.K. is a mature market for us?
We're very strongly positioned. We are amongst the top 5 companies out there in U.K. So we are very strongly positioned in terms of inventory, in terms of our stock position, in terms of our inroads and market penetration. So we are strongly positioned out there in U.K.
We'll take our next question from the line of Sudhir Bheda from Bheda Family Office.
Congratulations on a good set of numbers for the FY '24. In fact, the last quarter was muted and that I think was very well explained by you why the margin was down. Sir, my questions are what's our outlook on U.S. market? I believe that the U.S. is a very, very big market, and you are trying to penetrate. And if we are able to succeed then huge market will open for you. So can you throw some light on your U.S. -- approach in the U.S. market?
Well, we are very bullish on the U.S. market. It is a growth driver for the next 2 years. We have increased our capacity. We've increased our [indiscernible], our product portfolio out there. So we are expecting to double our revenue, as a matter of fact in the U.S. market soon. So literally, we are quite optimistic and bullish where U.S. market is concerned.
So what kind of growth do you expect in the U.S. market in the next couple of years?
Well, in a short-term point of view, from a short -- from a span of maybe 1 to 2 years, we are looking at doubling our revenue. So if we are getting $100 million, a little at $200 million.
Great. Great. That's so nice to hear. And sir, I think somewhere the concern you have projected from INR 3,000 crores of revenue by '26 and 20% plus margin. Is it still achievable? Or -- how do you see your next couple of years spanning out?
It is still achievable. I mean, last year, we had projected INR 2,000 crores, and we landed up at INR 2,177 crores. So we did across our projection. I believe in the next 2 years, we'll definitely touch INR 3,000 crores.
Great. And sir, the last question, there are some reports on the shortage of drugs in U.S. So what's your opinion on that? And how is that opportunity...
Well, there were some reports of shortage of drugs, but I don't think we stand to gain on any of that. And these are spot shortages, which happen and then will go up after some time. So -- but again, I don't think it is basically within our portfolio to basically encash on that.
We'll take our next question from the line of Kashish Thakur from Elara Capital.
Sir, my first question is based on the Australian market. I'm just looking into your numbers for the past 2, 3 years. So your Q4 has been substantially stronger as compared to other quarters in the Australian market. So any specific reason behind it? And should...
Because Australia has reverse seasonal -- seasonality is different in Australia. So when it's summer, there's winter out there, right? So normally, the winter always is the peak season for any pharma industry which has -- which are strong in pain and cough and cold. So they have a reverse season out there compared to other markets in the world.
Understood, sir. Sir, my second question will be your R&D outlook. What kind of R&D spend should we expect for FY '25?
Around 2%.
Sorry, 2% to 3%?
No 2%. I would say 2% is more reasonable.
And any like specialization you want to target this R&D towards?
We are working on a diversified portfolio. So it is -- it basically covers a huge portfolio and segments and delivery systems. So it's difficult to pinpoint on any specialty, but it has different delivery systems involved in that.
Understood, sir. Sir, my next question will be on the U.S. market. Like what is the total number of monographs you have overall in the U.S. market?
About 30-odd -- 25, 30-odd.
And like how are we seeing this in FY '25?
The nominal growth that we would expect, maybe 40 plus.
So around 10 plus end of FY '25?
Yes.
Last question will be on the CapEx. What kind of CapEx can we expect in FY '25? And any -- like any kind of CapEx, which is going to be spilled over in FY '25 from the Teva plant?
So in Teva, we have invested about INR 125 crores. We had presented about INR 200 crores as what we have kept for Teva. What we needed to get adopt to you at least minimum the 2 phases that we have planned out for it. So we will be putting in another INR 75-odd crores into Teva, And then the nominal CapEx, which goes on to all our plants that whether it's U.S. or earlier plants, we normally do nominal CapEx, which goes to about INR 25 crores on per plant.
So optimally INR 100 crores is what we are expecting?
Yes, about INR 100 crore, INR 125 crores total.
Sir, last question, if I may. Again on Teva plant. On which -- by when can we expect the optimum utilization for the Teva plant.
So like I said, we book -- obviously, there's really so much you can do in a short span of time. And we have commercialized the plant. We have got it to 3 billion units. And we have just started attrition to capitalize on this 3 billion units. Now we are investing into the next phase, which will take us to 5-plus billion units. That 5-plus billion units will probably come after September -- in the second half of the year -- financial year. But hopefully, by the end of this year, we will have a decent run rate revenue coming out from the Teva plant.
The next question is from the line of Deepak Jain from SKS Research.
So my first question is to understand what is the next target or goal now that we have crossed our target of INR 2,000 crores in revenue and EBITDA of 20%?
Our next milestone will be INR 3,000 crores.
Okay. So my another question that I had was regarding the employee expenses. So is this a new base that would be with the onboarding of Teva's acquired manufacturing facility employees or will it increase in the coming quarters?
There might be a slight increase, not -- marginal, but not exhaustively, because all -- most of the people have boarded on. It just depends on what phase of the acquisition, what phase of the CapEx we are on. So as and when we go up, let's say, $5-plus billion, then we would need more people, if you are talking of the -- raising it from $5 billion to $8 billion, then we would obviously need more people to fill that growth.
Got it. From my side. I just wanted to understand, so any progress on the targets you were exploring in the European region?
Well, we are in dialogue. We are in advanced dialogue, but nothing concrete right now. But we are hoping the optimistic we're hoping. M&A is such an unpredictable thing even when we come to the last it may not happen. So right now, there's nothing concrete to discuss or put pen to paper right now.
We have our next question from the line of Dr. Bino Pathiparampil from Elara Securities.
You mentioned about doubling the U.S. revenues from current level of $100 million to $200 million in a couple of years. So how would this mean -- how would this work out? Would it be about penetrating into the existing customers? Or would it be new customers?
So obviously, it's a mix -- Dr. it's mix of both. Our order book status is quite healthy. So we have a good order book status to give us visibility of reaching to this number. And -- but it is a growth on existing plants as well as new customers coming in. And it's a mix of both, actually, that is feeling us to achieve this objective. It's still a very small number for a market like U.S. So it's not something that is novel or is unique in any way, but it's still at tip of the iceberg.
Understood. And when you say penetrating the existing customer further, is it to buy new products to the customer? Or is it that in the same product you will get more market share from a single customer?
So when it's a new customer, it's normally with existing products that we are supplying to another customer because that becomes our strength and our visibility for the new customers to see the performance and consistency. So it's normally the existing molecules, but there are cases where they have gone and opted for new molecules altogether.
Understood. Okay. And this is a big jump in -- jump in number from $100 million to $200 million in 2 years. So what would be the key risk to this -- achieving this in your mind?
What will be -- I'm sorry, you were not audible. What will be?
The key risk to this -- achieving this in your mind.
I don't think that's much of risk because, obviously, when we talk of these numbers, it is with a good understanding on the visibility of contracts, the order book status and where do you standby within the next 12 months and what will fuel the balance 12 months. So I can safely say that we are quite confident of achieving these objectives.
We'll take our next question from the line of Darshil Jhaveri from Crown Capital.
Firstly, congratulations on a great set of results. So sir, I just wanted to ask that I think we -- our target is to grow to INR 3,000 crores by FY '26. But also other target is to double the U.S. market from $100 million to $200 million. So majority of our growth on the full basis is going to come from U.S. because that only will account for around INR 700 crore or INR 800 crores plus revenue coming directly to us from U.S. and North America. So can we overperform on INR 3,000 crores because U.K. is also growing at a good pace. So I just wanted some color on that.
Yes. So this rapid growth, obviously, when you talk of it, you're right, UK's also growing. But based on this high jump within a short span of time, the U.S. will be our growth drivers to achieve this objective. This will constitute like we said earlier, INR 800 crores, the balance INR 200 crores will come from U.K. and other markets. But definitely, there's the possibility that U.K. may contribute more.
But here again we are talking of literally in the next 24 months. So U.K. may need a little more time as the base is already very big in U.K. compared to the market size. The U.S., the base is very small compared to the market size. So it's easier to go out there.
Fair enough. That makes sense, sir. And sir, just one another part, like once we scale up to this level, will our margins also improve because we'll get some leverage, right? So because currently also, we were impacted by...
So our margins will improve because of operational efficiencies will increase. Leverage -- operational leverage will also increase. So definitely, we are anticipating a much more robust bottom line.
So [indiscernible] roughly, right? Because like December quarter, we were able to get that with a higher revenue. So just wanted to...
It's difficult to actually put a number and say, but on a consistent basis -- are you talking of EBITDA?
Sorry?
Are you talking of EBITDA?
Yes, EBITDA.
I didn't get you. When you're saying margins...
EBITDA margin, sir.
So I think, yes, EBITDA margins will improve. I think it is possible to achieve those numbers. So we are willing for better numbers, obviously. So I think [indiscernible].
Perfect. Perfect, sir. And just a final question, sir, with some geopolitical risk as well as some wars going on. So will our -- how will that impact on U.S. business as well as elections coming up out there also? Is there like any sort of a risk for us out there or just anything that you could see in the environment that can hamper us?
Jhaveri, if I had that answer, I would have been a global leader right now. I honestly can't predict geopolitical issues and force measures which may be beyond our control. I don't have a crystal ball, unfortunately. And we literally have no saying on the wars that are happening. And hopefully, we all look for better times, and we don't like -- we'd like not to think of the worst case scenario, because -- I mean, we all want peach and growth.
Next question is from the line of Akshat Vijay from Hem Securities.
On to your financial number at the stand-alone level, the business has delivered a very strong growth in this quarter. But at the consolidated level, I mean it's a subsidiary share, the performance has been [indiscernible]. So can you throw some light on it, like why the subsidiaries have underperformed in this quarter and maybe this is not the right way to look at the operations.
Akshat, can you mute once you're done with your questions, there's some background noise on your line.
Yes. So stand-alone, obviously, there is a consolidation that happens at the corporate level -- at the group level. So stand-alone -- while stand-alone looks positive, subsidiaries and everything at the end of a consolidation that takes place basically results onto the end numbers and subsidiaries that are in U.K. and U.S., these are all related to again seasonal product mix that I mentioned about.
I would say we are flattishly okay. But that's said and done. Again, we have to look at the overall metrics of what we have projected and where we are, what we've achieved not so much quarter-to-quarter because the third quarter is the peak season in -- where you talk of cough and cold and everything [indiscernible] the better months compared to the summer.
Okay. Fair enough. And my second question is regarding these observations that we have received for our Goa facility. Could you please share the status of the same like how severe they are and do you see any impact on that operations in the short term? And by when are you expecting, any idea?
I don't see any impact on our operations, number one. Number two is, obviously, we replied to all the observations. And we don't foresee any issues in exhibitions. Now we have to wait for FDA to come back. But as far as we are concerned, there are just normal observations that were there.
And one final question which I had is that in your previous calls you mentioned that you're expecting some additional INR 600 crores of revenue from the Teva facility in FY '25. Will you reassure that you're expecting the INR 600 crores?
Well, we should be hitting, let's put a run rate number. I will not say we will hit INR 600 crores for the full year because these are ongoing CapEx. We never landed up spending INR 200 crores on Teva, we said only INR 125 crores like I mentioned in our call. We did only INR 125 crores, which is literally slightly more than half of what we have presented that we will be doing. We have achieved the first phase target of 3 billion tablets. And now we have to hit the 5 billion tablet plus mark. So once we start hitting that, we will definitely start hitting the run rate that would see us to this number that we used to talk of.
Next question is from the line of Viraj Mahadevia from MoneyGrow India.
Congratulations on stable results. Mark, a question for you regarding the new Teva facility. What is the envisage product portfolio? Is it likely to be a higher-margin product portfolio with better mix versus the rest of the Goa? Or is it likely the same?
It will be most likely the same, maybe slightly better. So I will put average -- at the end of the day, even our Goa doing decent margins, and we are being decent EBITDA than -- contribution on gross margin. So I would like to maintain it at the same portfolio, it may be slightly better depending on the product mix. But the product mix will be slightly different. So I'm hoping for a better margin to come out of the plant.
Right. And Jitendra, you touched upon this, but you likely break even at the EBITDA level in Goa in the next 6 months?
Yes, definitely. We are expecting in this quarter itself.
Right. Okay. And look forward to you using those cash balances for that acquisition.
We'll take our next question from the line of Aditya from MSA Capital Partners.
Congratulations on a good set of results. So I wanted to understand a few things. First is on Teva. So that -- now that Teva is in India and will be manufacturing in India and exporting majorly to U.K. and Europe, do we envisage a better gross margin profile? Not a lot, but a slight uptick from here because of Indian to export market?
It's pretty much what the other gentlemen, Vijay had spoken in the previous question. Yes, I mean, we do -- we have a product mix that we are planning -- that we are launching from this facility. So we do see better product portfolio and product mix coming out of the facility, but that's said and done our margins are quite decent. First thing, I mean, the most important thing in the Teva facility that we've acquired is to first breakeven. And basically, then you have operating leverage taking in to see that profitability kick in. For that we have to cross that bridge when we hire that.
So what I was trying to understand was, definitely you had answered the previous part of the question that the product profile will be similar. But just wanted to get a feel that because this facility is located in India, do we have any margin advantage when we'll supply to U.K. and Europe?
No. I mean all our facilities -- this is not the first facility we have in India. So in comparison, we have another facility, which does literally 100% of our facility what we manufacture goes to Europe and U.S. And I think from that standpoint -- point of view, our product portfolio in terms of gross margins will be very similar, maybe slightly better, like I said. So -- but I mean from a comparison, we are supplying into these markets. So what you see is what you see our historic numbers will basically increase, but the margins will remain relatively same.
Sir, in the previous few con calls, you had mentioned that U.S. is operating at a bit lower EBITDA margin than our overall company margin. Do you -- what would be the margin and where do you -- do you think that once we double the margins would be better?
Last year, we had a relatively better EBITDA margin in the U.S. as well. And as we increase our revenues in U.S., we are seeing like a lot of improvement in our EBITDA margin because of the operating leverage, which will get kick in. So I think we will see a much improved margin in the U.S. from this year onwards.
Sir, on that question only, just as an addition, because U.K. also we have similar revenue, but the margin profile is higher. So what is the -- is it idiosyncrasy in U.S. because having the same revenue but a lower margin profile than our U.K. and Europe operations?
The U.K. and U.S. are 2 different markets. So I think we can't compare the 2 and the product portfolio is also different. But on an average, I think if you can see that trending of the U.S., what is it showing, it is showing the same amount of gross contribution on margins, but the operating leverage had to be kicked in. And now that the operating leverage has kicked in and will -- it will improve from there on. But from a margin portfolio point of view, it's very similar. It is only -- the operating cost in the U.S. is different and that in U.K. is different.
Understood. Understood. And we plan [indiscernible] U.S. FDA audit on Teva?
Maybe in the near future, yes.
All right. Any thought process, maybe in the next couple of years? Or it is much -- it is a longer thought process that you have?
Probably a shorter thought process, like in a couple of years. I hope we can get it next year.
Our next question is from the line of Kashish Thakur from Elara Capital.
Sir, just one question. Like I was just going through your [indiscernible] posts of past few years. So like in FY '22, you had given time cap of financials, you have given EBITDA number and PAT number. So similarly, will it be -- will you be able to give us the EBITDA and PAT number of FY '23 and FY '24?
Yes, definitely. It will be like the subsidiary annual reports will be available on our website. So definitely those numbers will be shared.
Understood. And sir, like just following up on the question which previous participant asked. Sir, what kind of EBITDA margin we might be generating from our OTC segment in the U.S.?
See, we are at -- like we are at 10% plus EBITDA margin in the U.S. as well in terms of our overall U.S. portfolio. And that stands -- that is going to increase. That is what we are expecting in this year and to increase our revenues.
Understood. And sir, any bifurcation, can you provide us like what percentage of sales in the U.S. will be from prescription business and what will be from OTC business.
See, broadly, the mix in our U.S. revenue for OTC 80% and Rx is around 20%.
Next question is from the line of Shyamal Patel, an individual investor.
Few questions. I know you must be -- I don't know what to say but I cannot keep everything to my heart, that's why I keep on asking, of course, for the betterment of the company. In a INR 314.9 crore profit, just INR 27.18 crores is given as dividend. Don't you think you can improve the percentage of dividend linked to the shareholders who have been with your thick and thin, just 9%? Good companies give 85%. Okay. I don't expect 85%. But can't we have a benchmark of giving 25% back?
So Shyamal, we had a formula free cash flow that we have mentioned, and we are going -- actually, we have gone above that formula itself. Our free cash flow -- based on a free cash flow basis, it would have been much more lesser, but we've actually improved over the last year. So a lot of [indiscernible] we always do it based on free cash flow. We invested like we mentioned a substantial amount in CapEx. And based on the free cash flow that we've generated, we basically then distributed the balance amount -- full balance amount after that into dividends.
But we can't have a policy of 25% of the profits of the company, because we already have INR 674 crores in cash. I'm just asking.
The profit figure, basically, like eventually the funds get utilized in various areas, so working capital adjustment is an important aspect we need to see. The tax payments also are huge. And the CapEx is also there over and above that. So basically, as a company, we have decided -- we have a policy of distributing 1/3 of free cash flow to the shareholders. And we will definitely stick to that. Definitely, we are investing more money in CapEx and other growth-related avenues. So that also has a priority. So basically approach will be eventually to mix and follow the policy which we have established at those levels.
Yes, Mark and Jitendra ji, of course. But then till the people turn into buyers, Marksans share price cannot improve so much. And the people always see what is the return the company offers. I'm not trying to be selfish. I put it on record without knowing, I could be one of the largest shareholders of Marksans. I don't know individually. I'm not talking like Mahavir Prasad Agrawal or something.
But as individual shareholders, I must be one of the largest shareholders of Marksans. And I try to see the benefits which the company would get. Because if the company gets I will get. And what we are asking is not much. The 25% if you stick on -- even 20%, okay, we will get 20% of our declared profits. That should even offset the peace of shareholders. [indiscernible] I don't want to speak because much -- because this is already on record. Not that I have made any money.
We've lost the connection from Mr. Patel. [Operator Instructions] Next question is from the line of Deepak Jain from SKS Research.
So one more question that I had was regarding the backward integration, which is a great move. So I just wanted to understand when will the benefits start kicking in for this move?
So we have filed, like I said, 1 BMF already on one of the items. We have to basically get an approval to fill to basically use that BMF of that active into our formulation -- so we are now taking batches and we are going to put it on stability and file it for past -- we have to file a prior approval to FDA. So we are looking at a good 6 to 8 months -- a minimum 8 months and above time lines created for that.
Okay. Understood. Sir one more question is regarding, I think raw material prices have been on the lower end, at least the last few quarters that's been the trend. So do you expect the same trend to continue going forward? Or is there any correction -- like changes that you would be expecting?
I think the raw material has hit its bottom low. So I do believe that it will be stable. Another gentleman spoke about war or something like that, that we can't predict any of the post-major part of it. Bur right now, based on our outlook, I do believe it will be stable.
Okay. Sir, 1 last question from my side. Do we have any substantial launches coming up in FY '25? And can you just let us know any revenue contribution for this?
So yes, we do have launches coming in FY '25, definitely, but the revenue contribution is difficult to pinpoint to a launch -- product launch, because we have multiple products that we will be launching into various markets. So it's difficult to actually say that which product will be give you more revenue on accounts basically.
[Operator Instructions] The next question is from the line of Jayesh, an investor.
Yes, so my question is when 2 years down the line, when we will be achieving our desired revenue of INR 3,000 crores plus, so will we be able to maintain the sustainable net margin rate of 15% and more? Or will the Teva Pharma dent a little bit on the net profit margin?
I think if we hit our -- we were talking of 2 years down the line, I think it should be -- we should be able to maintain the margins. It may improve only, it is not going to go down.
[Operator Instructions] As there are no further questions, I now hand the conference over to management team for closing comments. Over to you.
Thank you all for participating. I know it's always tiring in the evening to get on the call. But once again, I'd like to thank you for your continuous interest and support in our company and be safe. I'm looking forward to talking to you soon. Thank you.
Thank you, members of the management team. On behalf of Elara Securities Limited, that concludes the conference call. Thank you for joining us, and you may now disconnect your lines.