Ipca Laboratories Ltd. — Call Transcript 2024

Nov 18, 2024

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THRU ONLINE FILING

November 18, 2024

BSE Ltd. Phiroze Jeejeebhoy Towers Dalal Street Mumbai 400 023 Scrip Code – 524494

National Stock Exchange India Limited, Exchange Plaza, C-1, Block-G, Bandra Kurla Complex, Bandra – (East). Mumbai-400051. Scrip Code : IPCALAB

Dear Sirs,

Pursuant to Regulation 30 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, we are enclosing herewith transcript of our Conference Call which was held on Thursday, 14[th] November, 2024 to discuss the Company’s Q2H1FY25 earnings and business update..

Thanking you

Yours faithfully For Ipca Laboratories Limited

Harish Pandurang Kamath

Digitally signed by Harish Pandurang Kamath DN: c=IN, o=Personal, title=1715, pseudonym=585f434c9c014c338904fe5f4cd8762a, 2.5.4.20=955479ec580ea690ffd8de8b74071cf6f1ee247da687a7ae82030a7ae82c443 b, postalCode=400063, st=Maharashtra, serialNumber=72050fb9fadcbc5de6404685117b8355792f5784c7617d9c4cae2a3887 d6b809, cn=Harish Pandurang Kamath Date: 2024.11.18 15:08:49 +05'30'

Harish P. Kamath Corporate Counsel & Company Secretary

Encl: a/a

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“Ipc a Laboratories Limited Q2 FY '25 Earnings Conference Call” N ovember 14, 2024

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MANAGEMENT: MR. AJIT KUMAR JAIN –MANAGING DIRECTOR – IPCA LABORATORIES LIMITED MR. HARISH KAMATH – CORPORATE COUNSEL AND COMPANY SECRETARY – IPCA LABORATORIES LIMITED

MODERATOR: MR. NITIN AGARWAL – DAM CAPITAL ADVISORS LIMITED

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IPCA Lab o ratories Limited No v ember 14, 2024

Moderator:

Ladies and g e ntlemen, good day, and welcome to the IPCA Laboratories L imited Q2 FY '25 Conference C all, hosted by DAM Capital Advisors Limited. As a remin d er, all participant lines will be i n the listen-only mode and there will be an opportunity for you to ask questions after the pres e ntation concludes. Should you need assistance during the conf e rence call, please signal an op e rator by pressing star, then zero on your touch-tone phone. Pl e ase note that this conference is being recorded.

I now hand t h e conference over to Mr. Nitin Agarwal from DAM Capital A dvisors Limited. Thank you, a n d over to you, sir.

Nitin Agarwal:

Thank you. G ood afternoon, everyone, and a very warm welcome to IPC A Labs Q2 FY '25 post-earnings conference call hosted by DAM Capital Advisors Limited. On the call today, we have represe n ting IPCA management Mr. A.K. Jain, Joint Managing Direct o r; and Mr. Harish Kamath, Co m pany Secretary and Company Counsel.

I will hand o v er the call to Mr. Jain to make the opening comments, and t h en we'll open the floor for questions. Please go ahead.

A.K. Jain

Thanks, Niti n and DAM Capital for organizing this call. Today's call an d discussions and answer give n may include some forward-looking statements based on ou r current business expectations. It must be viewed in conjunction with the risk that phar m aceutical industry business fac e s. Our actual future financial projections may differ from w h at is projected in pursuit. You m ay take your own judgment on information given during the c a ll.

Business per f ormance. Domestic formulation business delivered a growt h of 11% for the quarter. Mid-September 2024, IPCA is ranked as the 16th player in -- as per IQVIA and the fastest-growi n g company among the top 20 players. IPCA has outpaced the i ndustry in Q2 FY '25 and late S eptember '24. Overall, IPM growth is around 8% and IPCA has delivered almost as per IQVI A around 13% growth. And mid-September '25, IPM growth i s around 8% and IPCA has del i vered around 14% growth.

Both on acut e and chronic segment, IPCA has delivered better growth comp a red to the market. Acute segme n t in this quarter has grown by almost around 7% and IPCA growth is around 12%. And o n chronic segment, your market growth is around 10% and w e have delivered around 17% g rowth as per IQVIA.

IPCA contin u ed to improve its market share. In Q2 FY '25, our market sha r e has increased to 2.14% as ag a inst 2.04% in Q2 FY '24. And mid-September 2024, our mar k et share is around 2.03% as ag a inst 1.92% in mid-September '23. So overall, there is almost around 11 basis point improv e ment in the overall in market share. And in second quarter, t h e improvement is almost aroun d 10 basis points. We have now 6 brands among the top 300 b rands in the IPM. CTD-T has now entered in top 300 brands list with 193 rank in mid-Septe m ber 2024 with 88 rank gain.

On export fo r mulation business, we have delivered around 15% growth f o r the quarter. The branded pro m otional business has declined by around 6% in this quarter. G e neric business has

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grown by ar o und 8%, and institutional business in this quarter has grown by almost around 85%. So ov e rall business growth has been around -- generic business, business growth is around 15% overall for the quarter. Overall API business has decline d by around 5%. Domestic bu s iness has recovered and delivered a growth of around 14% f o r the quarter. But API business has come -- API export business has continued to show so m e kind of decline. And overall A PI business for the quarter is around INR319 crores as agains t INR335 crores in same period last year.

On margin fr ont, our stand-alone margin for the Q2 EBITDA margin is 22.89% against 20.86% in sa m e period last year, an improvement of almost around 2.03%. Our consolidated EBITDA m a rgin for Q2 FY '25 is at 19.10% as against 17.64% fo r Q2 FY '24, an improvement of around 1.46%. The improvement in the margin is largely d u e to improvement in product mix, lower input costs and lower manufacturing and other overhe a d. Both the standalone and co n solidated EBITDA margins are better than the guidelines gi v en before the FY '25.

Having givin g the broad numbers, now I request participants to ask question s

.

Moderator:

The first que s tion is from the line of Kunal Dhamesha from Macquarie.

Kunal Dhamesha:

So sir, the fi r st question on the FY '25 outlook that we had provided earlie r on the top line -- consolidated top line and EBITDA margin. If you can update us after H1 p erformance what are your revi s ed expectation for the full year '25 have a further impact on c o nsumption? Some of the banks in the recent phone calls have also highlighted...

Moderator:

Mr. Kunal, y our voice is fluctuating. I would repeat -- I would request y ou to repeat your question.

Kunal Dhamesha: Is it better no w ?

A.K. Jain Kunal, in the background also some noise is coming.

Kunal Dhamesha: Sorry, sir, so r ry, sir. Is it better now?

A.K. Jain Yes, better n o w.

Kunal Dhamesha:

Sure. Sir, I j u st wanted to ask, we had provided some guidance on top l ine and EBITDA margin on a consolidated basis with the H1 performance behind us, wh a t would be your updated expe c tation for FY '25?

A.K. Jain

If you look a t our margin side, our guidance for stand-alone margin was aro u nd 21% as against that -- I thin k , yes, incrementally, we have delivered around 22.89%. And therefore, overall, for the full y e ar overall -- your -- standalone EBITDA margins are likely to be around 22% as against 21% g uideline. And the similar line, overall consolidated margins w ill also be better. Overall grow t h projections given for the whole year was around 10% to 11 % . As against this, for the whole of the financial year, we will have a growth of almost around 9 % to 10% now.

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Kunal Dhamesha:

Okay. So pro b ably at the absolute EBITDA level, more or less the same bec a use lower top line and the marg i ns. Sir, for the Unichem business in terms of synergies, where are we in terms of achieving th o se synergies? What have you already realized in this results in the last couple of quarters? An d where do we see that going in the next 3, 4 quarters?

A.K. Jain

Unichem, w e have taken over -- we have spoken about many synergies p a rt. As far as your Unichem sou r cing product from us, work is still going on. That portion has not started, which will also ha v e some kind of cost reduction for them, a few of our API s , which they are currently buy i ng from outside. And I think May, it may take around 5, 6 mo n ths.

So in curren t year, practically nothing of that nature will happen. We also talked about Unichem's i m provement in the API processes, where I think almost arou n d 6 products, we have reduce d overall their manufacturing cost and validations are over. Now all these 6 products, the improvements are almost around somewhere between the 25% to 30% reduction in API.

Now the wh o le process of filing and then taking approval and that will st a rt. Fixed product increment is already done and the balance is in pipeline already. A n d as far as the procurements are concerned, a lot of benefit has already come as buying are now shaken up by the common g roup. And whatever IPCA benefits are there in terms of lowe r your pricing, that all got exten d ed to the Unichem also. So those advantages come.

As far as ma r ket extensions are come, there are a lot of work are in pipeline a nd we said that it is going to t a ke a little longer time because it's post validation then stabilit y studies and then filing in the m arket and all that. So this may take one more year to -- for th a t kind of things to start, only th e products where the -- no further bioequivalences are to be d one and wherever straight away your U.S. dossiers can be filed in Europe and various other ma r kets.

So that process is going on. Right now, a few products are already filed, w h ich approvals are yet pending. L arger product range to extend to the other market is going to t a ke another almost around 1 mo r e year because it's all regulatory process and what of data nee d s to be generated. But our initi a l calculations, where we were talking that on second year onw a rds, we should be able to get ar o und INR200 crores kind of EBITDA margin.

I think that w ill surpass in the current year itself. In first half of the current y ear, the EBITDA margin of U n ichem is INR113.75 crores. All these improvements will kee p on coming in the filing, the ap p rovals are received and all that. So the process is going on.

Kunal Dhamesha: And sir, last one, if I may. How is our own US business shaping up now s ince we have the plant clearan c es? Have you launched any products? And how is the uptake i n those products? A.K. Jain I think overa l l, we have spent almost around -- up to September around INR 3 0 crores worth of goods to US, But most of the goods had reached to them at the end of the period, I think they are highly o u t of that almost -- which is INR1 crores, INR1.5 crores sales has happened and these were al l in stock. And now sales will start reflecting from the third q u arter onwards. So technically, i t 's not eliminated in consolidation practically in the power. So nothing major has

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happened. We already sent these produces and another 3 are in pipeline. S o I think current year, we will launch around -- almost around 6 products.

Kunal Dhamesha: And this is U .S. sales will be recognizing in our P&L directly or will r ecognize through Bayshore? A.K. Jain No, we have said that Bayshore entity, wherever business is there, that was transferred to the Unichem. Be c ause in order to have entire synergies that U.S. business will be done entirely under one u m brella. So we think Unichem is very bigger business. All thes e -- the Bayshore's business is a l ready transferred to Unichem. And entire business will als o be done through Unichem. So there are no duplication of the old marketing and administr a tive and all those kind of setup . It will be all done through Unichem.

Moderator: The next que s tion is from the line of Dharmil from Dalmus Capital Manage m ent LLP. Dharmil: Congratulati o ns on really good set of numbers. Moderator: Mr. Dharmil, may I request you to please speak up. Your voice is coming ou t as muffled. Dharmil: Is this clearer now? Moderator: Yes. Please p r oceed with your question. Dharmil: My questions are again on Unichem. Earlier in the previous calls, you had g iven in balance of around INR2,000 crores revenue. So while in H1, we have all participan t s and somewhere around INR9 0 0 crores. So is the guidance still on the plan? Or I mean, whe r e are we up to on the guidance ? Is this still achievable for FY '25? A.K. Jain I think over a ll business of Unichem may remain around INR1,850 to INR1,900 INR1,900 crores in the c urrent financial year. Yes. Dharmil: Got it. And E B ITDA margins. A.K. Jain EBITDA ma r gins, let's say, first quarter was almost around 12.52%. Sec o nd quarter, it has improved to 1 4.35% Overall, I think it will remain 14% to 15% for the remaining period. Dharmil: Got it. And 1 1% revenue growth in the current quarter for Unichem, can y ou break it down into how mu c h was it volume driven and how much was price driven? And i n general, what is the pricing scenario for... A.K. Jain Pricing-wise, if you see that there is a margin decline is there, so pricing is h ardly -- 1%, 1.5% kind of price declines are there. So overall, like I said, U.S. business has grown by almost around 12%, 12.5%. There is some decline in Brazil and overall contr a ct manufacturing business has done well. So overall, for the second quarter, if you look a t the overall -- on consolidated sales, it's almost around 9.4% improvement is there in curren t . And taking into the other op e rating income and others including, it's around 11% kind of overall growth is there in the f u rther quarter.

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Dharmil:	Understood.A nd what would be the current capacity utilization in Unichem? And how do you
	expect it to ra mp up over the next 2 to 3 years?
A.K. Jain	Let's say, ove rall, Unit 1 and -- Unit 1 at Goa and I think Ghaziabad, bot h these plants are
	having goodc apacity utilizations, maybe around the 70% to 80% kind of util izations out there.
	Unit 2 Goa, th is is a bigger unit and larger capacity. That's, I think, hardly ar ound 20% kind of
	utilizations ar e there. So as the U.S. business and other businesses are extend ing the market of
	Unichem's pro duct in various markets and filings and all that.
	With that, the capacities of Goa plant will be utilized. So as far as theG haziabad plant is
	concerned, as far as the Bambi plant is concerned, that utilization is almosta round 30%, 35%.
	So those capa cities -- and that plant is having all other approvals also, all the ROW market,
	European app rovals and Australia and New Zealand. So there are so manym arkets, they have
	approvals.
Dharmil:	Understood.A nd are there -- I mean, what is the trend in terms of pro duct approvals in
	Unichem? Ar e there any pipeline of products to be launched in next 1 or 2 ye ars?
A.K. Jain	I think we wil l continue to launch around 4 to 5 products every year.
Dharmil:	Okay. And th is would be entirely formulations only?
A.K. Jain	Yes, formulat ions yes.
Dharmil:	Okay. And wh at could be your revenue guidance for FY '26 and '27 for Unich em?
A.K. Jain	So far, we ha ve not burned it out. So we will let you know in the last qua rter of the current
	financial year .
Moderator:	The next que stion is from the line of Surya Narayan Patra from PhillipCap ital India Private
	Limited.
Surya Patra:	Sir, my firstq uestion about the U.S. business. First of all, can you give uss ome update about
	the Piparia un it -- USA compliance? That is one. And secondly, after the integration of the
	Bayshore Uni chem with us, so in the way it has already been indicated th at US business is
	going to happ en through -- everything through Unichem.
	So while we are seeing a kind of a strong export growth number for Uni chem, but IPCA's
	export growth has been muted consistently. So how should one think about the U.S. business
	going aheadf or IPCA impacting the growth numbers? And that would bet he question about
	the U.S. busin ess, compliance of Piparia and the growth in the U.S. side.
A.K. Jain	All plants,w e already received the approvals and also there is no pendin g issue as far as
	Piparia plant is concerned. So all IPCA plants are cleared already, which includes Piparia
	plant. So there are absolutely no outstanding issues anywhere.
Surya Patra:	Okay. All the 3 units are cleared now.

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A.K. Jain

Surya Patra:

A.K. Jain

Yes, all 3 uni t s are clear simultaneously, yes.

Okay. Regar d s to the US business, since now everything is going to b e routed through Unichem, an d in terms of the performance so far, what we have seen in t h e recent quarters, Unichem is d oing well, but our growth numbers are on the export side s till the remaining muted. On th e formulation side, can you just clarify what is really impacting here for us?

As far as the b randed formulation business is concerned, we have muted gro w th. In fact, in the first half of t h e current year, we have minus 2% growth on branded form u lations. So that is largely because of all these currency fluctuations. And I think ruble from 8 0 level has gone to almost aroun d more than 95. So that has reflected and a good amount of bu s iness comes from that market, so Russia and all.

So that has a little impacted. I think from third quarter, I think in ROW m arket, we expect around 12% to 13% kind of growth. So all of the year, the business growth i n ROW will revive and is likely t o be around 7% to 8% kind of growth for the whole of the ye a r so as far as this ROW market, branded formulations business.

As far as yo u r generic businesses are concerned, by and large, let's say, fi r st -- as far as the European bu s iness is concerned, except UK, that business is good and w e have reasonably good growth around -- we should have almost for the whole of the year, ar o und 10% kind of growth. UK, t here are certain concerns are coming on pricing and all and o v erstocking in that market. So p r obably this year, the UK business growth will remain muted only or there may not be any gr o wth in that market. So that's the future. As far as Canada business is concerned, that business will have around 10% kind of growth.

Australia an d New Zealand in the first half was, because of some supply ki n d of constrain on APIs or cert a in APIs, and that has impacted the business. So that we e x pect the recovery because thos e shipments have started coming from outsourced API. So ther e will be recovery in those mar k ets. As far as overall South Africa is concerned, we will see so m e kind of decline there becaus e some tenders are lost there, and that business will have some k i nd of decline.

So overall, w e see a generic business -- your branded business to grow by a round 8% to 9%. Generic busi n ess will also have a similar kind of growth. Distributional business will have a better growt h this year because last year, the availability of injectables because of plant upgradations and installations of some additional machines and renovation p art. So that -- for half of the year, that plant was not operating. So this year, there will be bett e r growth in those businesses. S o overall generics, we will see around 12% kind of growth for t h e financial year.

Surya Patra:

A.K. Jain

Surya Patra: A.K. Jain

Sir, this the i n stitutional business this quarter, bump of what we are witnessi n g, it is not a oneoff thing? It i s sustainable.

No, no, no. L a st year in this period, injectables were not available.

Okay. So no w this is a kind of sustainable business and can see ramp up?

Yes, yes.

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Surya Patra: Okay. Sir, in regards to R&D. So now after the integration of the US busin e ss with Unichem, so how do yo u think about your IPCA's R&D versus Unichem R&D?

A.K. Jain Overall, Uni c hem R&D, let's say, we were doing some work on biotech that's completely stopped. The y will continue to do work on formulation development for U.S. market and IPCA will also do. S o the list will be some products, we will keep on developing, some -- Unichem will keep on d eveloping. Some products where synergies are better in terms o f our API basket, we will conti n ue to develop. So both the teams will work on process develop m ent. Surya Patra: In fact, in the current quarter, you are seeing a significant lower number for U nichem and other expenses whi c h generally captures R&D. So hence, that is why I wanted to h ave some clarity. What is the k ind of savings that we are seeing, whether it is from the reduc e d R&D spend on the Unichem side or it is something else? A.K. Jain R&D spend o f base is almost around 3% overall, the 3% to 4%, 3%, 3.5% w ill continue to be there. And O v erall, R&D spend is also around 3% of the turnover for the c o mpany, IPCA and Unichem put together, consolidated number. So more or less, it will remain. Once our biotech plant is com m issioned, which may happen during the, I think, in the e n d of the current financial yea r . Thereafter, once we start producing the batches and then cl i nical work -- and then the next financial year, the overall R&D cost may go up to around 4.5%, 4.25% here. Moderator: The next que s tion is from the line of Arun from FPL. Arun: I hope you ar e hearing me well? Moderator: Yes, Mr. Aru n . Proceed with your question. Arun: See, I just w a nted just a few short questions and probably short answers as w ell. See, the PAT comparison, c an you do sort of a ballpark figure as to how do we comp a re with domestic versus intern a tional? Because the revenue split as almost 50-50. Regarding the PAT, what is the percenta g e of domestic PAT and what is the percentage of internationa l PAT, profit after tax? A.K. Jain Normally, if y ou look at -- we don't divide that way, but we monitor the ov e rall gross margin levels. And i f you look at gross margins of -- we had better gross margin s in ROW market compared to I ndia market. We have -- the next business line is from -- gross m argin-wise is the India busines s , India formulation business. Then comes t he business which we do in Europe, Australia, New Zealand a nd Canada. Gross margin, there a fter, I think South Africa are lower and U.K. also, gross marg i ns are lower. And last comes is the API. So overall, we have highest gross margin or ROW branded. Next is we have domesti c formulation. And we have good overall margins in Generics a l so. Arun: Sir, regardin g the domestic formulations, in fact, I was referring to only the last quarter's performance, then your 52% comes from anti-inflammatories or NSAIDs, w h ich is presumably rated. Don't y ou think that there is overall dependence on one product? Or is it -- is the company pla n ning to also develop some products which could probably give a balance?

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A.K. Jain

Let's say, p a in management constitute of -- it's not NSAID only, it's completely pain management. So pain management has 2 segments. One is rheuma t oid arthritis and osteoarthritis . And rheumatoid arthritis consists of a large number of produ c ts. And there, we have disease- m odifying agents that are marketed.

They are m o re chronic than even cardiovasculars, but they are classifi e d as acute. And rheumatoid a r thritis, we have very strong leadership. We have more than 60 % market share. In every produ c t we market, we have market leadership. So that is also c lubbed with pain management group. So it's not overdependent. Every product has leadershi p in your segment where we ha v e a good number of products marketing for rheumatoid arthriti s .

As far as yo u r osteoarthritis and those segments are concerned, yes, Zerodol is -- the flagship brand is ther e . And -- but apart from that also, we have a good number o f other brands are there, which i s like a brand which is for etodolac and other drugs and some a l l marketing in the brand name o f Pacimol and there are other brands are there. So -- and they also have a significant m a rket share. So it's not only one product which has confronted. Zerodol is not the only product i n pain management. So, it's completely -- risk is divided here.

Arun:

Just one mor e question if you can allow me. Have the revenues of the valu e to the exclusivity started churn i ng? Does it come into the IPCA or it -- does it go to the Unichem? Because we have approv a ls of lamotrigine, etodolac, alendronate, risperidone and lev o cetirizine and all. Have these m olecules started -- generics started yielding revenue? Or will it come -- reflect maybe in the near future?

A.K. Jain

Some of thos e molecules, Unichem is already marketing in U.S.

Arun: Okay. Yes.

A.K. Jain Etodolac is I P CA products and that will be launched, I think maybe end of t h e year. So it may be, I think w e always shipped 3 products and another 3 are in pipeline. So la s t will be etodolac. Moderator: The next que s tion is from the line of Nirali Shah from Ashoka Stock Brokin g .

Moderator:

Nirali Shah:

I just have 2 quick questions. First one is that on the launches. So we hav e been planning to launch almos t around 6 -- 5 to 6 products in FY '25. So if any color on th e se products, what therapies are w e trying to target or geographies are we trying to target? If yo u could give some flavor on the how it will contribute our top line, any numbers, any word abo u t number? And if not that, the market size of these products. So anything meaningful -- o r any meaningful opportunity a n d data on this would be helpful.

Harish Kamath:

Yes, as Mr. J a in has already explained, 3 products, we have already shipped to Unichem and it has landed i n U.S. So whatever primary sales we have done, it go t knocked off in consolidation because that product is not moved to the market. So there will be always a gestation per i od between the time we shipped to U.S. and those produ c ts started getting marketed. So by the end of the current financial year, we should be launchin g about 6 products in the U.S. m a rket. That is what is our target. And whenever we were there i n these products in

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the earlier ti m e, we used to have a very good market share. But gaining mar k et share will take some time, b u t we are very confident these products will do well, as it was e a rlier doing. Nirali Shah: So what kind of market share are we targeting? Harish Kamath: For example, in U.S., maybe 10 years back, in most of these products, my m arket shares were anywhere bet w een, say, 20% and in one product it was 80%. Nirali Shah: Okay. That i s helpful. And for example, from a 2 years perspective, we pla n to launch around 13 to 15 prod u cts, so how are we planning now about that? Harish Kamath: We will be s hipping ship 6 products to Unichem US. Maybe identical n u mber in the next financial yea r . Nirali Shah: Okay. And... Harish Kamath: Unichem itse l f also will be launching 5 to 6 of their new molecules in the U .S. market in the current finan c ial year. Nirali Shah: Understood. A nd my next question is what could be possible growth dri v ers from a 3-year perspective? W hich geography do we see to be contributing the highest and followed by -- so basically, my question is what could be our possible growth drivers in terms o f geography? Harish Kamath: Practically, I P CA sales in U.S. today is currently 0. So you will see a ve r y good growth in IPCA produc t s being sold in the U.S. market going forward in the next 3 to 5 years. Similarly, one more op p ortunity will come. We will be taking Unichem products in all other markets where earlier they were not marketing, like ROW market, whole of Euro p e, Australia, New Zealand, Ca n ada, So Unichem will also benefit out of that. So as an entity IPCA Group will see a very go o d growth going forward in the generic formulation business. Nirali Shah: Understood. J ust a last one, if I can squeeze in. On the supply chain issu e s. So are we still facing any di s ruptions that persisted in Australia and New Zealand? Harish Kamath: Nothing as s u ch. No issues. Problem was there in the second half of the last financial year, non-availabil i ty of one material, which we already bought in the current f i nancial year. And the business h as already started. So as we speak, there is no problem as far a s material-related issues. There is no issue. Moderator: The next que s tion is from the line of Kunal Dhamesha from Macquarie. Kunal Dhamesha: On this U.S. b usiness arrangement that the U.S. business or the IPCA U.S. p r oduct will be sold by Unichem. Will there be any transfer pricing be there where IPCA will account for some profitability g iven our stake in Unichem is around 70%. So how the econo m ics basically work out for us wh e n we sell our product through Unichem? Harish Kamath: Kunal, if you recollect, whenever we were earlier there in the U.S. market, i t was only similar line, correct? Our products were marketed by other marketing partners on a profit-sharing

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arrangement. So similar way, Unichem operation will be done. So we will s e ll our products to Unichem US . There will be a margin in our sales. And US level, there wil l be profit sharing arrangement a lso, both. And most of these products are also backed by my o wn API, so there will be some b enefit out of API manufacturing also. Kunal Dhamesha: Sure, sir. U n derstood. And on the generic business revenue, Jain sir tol d that the growth guidance of a r ound 12%. Is that for the remaining part of the year? How sho u ld we think about it? Harish Kamath: Yes, for the s econd half of the current financial year. But overall, includin g the first half and second half, t h e generic business should grow anywhere between 10% to 12 % . Kunal Dhamesha: Sir, for gener i c business, first half is only 2% growth, right? So then... Harish Kamath: I understand because the shipment of IPCA did to Unichem US. So b e cause it was still remaining as a stock in Unichem on hand, it has got knocked off in the con s olidated business. I'm talking h e re consolidated business, not stand-alone. Kunal Dhamesha: Correct. So p robably INR30 crores -- or INR60 crores additional, and th e n there is a base business is th a t the way to understand? You would have signed maybe 1 qua r ter inventory. Harish Kamath: Yes, yes, that is right, yes. Kunal Dhamesha: Okay, okay, o kay. And sir, just one on the India business. What's the curren t sales force in the India busines s . And after addition, how is the productivity coming along for the India business in terms of s a les force? Harish Kamath: We currently have about 7,000 medical reps in the field. And whatever guid a nce we had given earlier, all th e additional people are contributing in the same way what w e initially thought. There is no i ssue absolutely. So they will become productive division-wi s e between 2 to 3 years. Kunal Dhamesha: 2 to 3 years. Harish Kamath: Some divisio n s, productivity will be faster than the other divisions like car d iac and all. So as per our plan, e verything is moving. There is no issue. Kunal Dhamesha: Okay. Got it. A.K. Jain And, Kunal, i f you look at around 4.62 lakh for the first half of the current year compared to 4.36 lakhs in the last financial year same. So overall, there is a good impr o vement in overall productivity in spite of addition of the people. Moderator: The next que s tion is from the line of Zain from Dolat Capital. Zain: Just wanted t o ask a question against institutional business, can you repeat t h e guidance for the business for F Y '25?

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Harish Kamath: Which one? I think you're not -- you're voice is breaking. Hello?

Zain:	Am I audible now?
Harish Kamath:	Yes, you area udible now. Yes.
Zain:	So I was askin g, sir, about institutional business guidance for FY '25.
Harish Kamath:	See, we have earlier also explained this institutional business consists on ly of antimalarial
	formulations. So this business will fluctuate anywhere between INR300 crores to INR400
	crores goingf orward. I'm talking annual business.
Zain:	Okay. And sir , for India business guidance for '25?
Harish Kamath:	So whateverg uidance we gave in the beginning of the year, anywhere betw een 11% to 12%,
	we stand by th at. There is no problem.
Moderator:	The next que stion is from the line of Tushar Manudhane from Motilal Oswal Financial
	Services.
Tushar Manudhane:	Sir, just with the earlier comment of the pecking order of the grossm argin. So just a
	clarification,s o even at the EBITDA margin level, would be ROW-branded generics would be
	higher than do mestic formulation?
Harish Kamath:	Yes, yes. Eve n at EBITDA level.
Tushar Manudhane:	Okay. Sir, sec ondly, with respect to relaunches of the products from IPCA' s plant, excluding
	Unichem prod ucts basically, so it seems it's almost about now 8, 9 years. So the price erosion
	in the produc ts which we are supposed to launch, like compared to what we were there in
	2013, '14, wh at kind of price decline would have happened in those product s, specifically the
	ones whichw e are going to relaunch?
Harish Kamath:	We don't seea ny price decline in them.
Tushar Manudhane:	So price decli ne there, there is no price difference.
Harish Kamath:	Better than wh at it was when we were there in the market 10 years back.
Tushar Manudhane:	Interesting. I mean, was it because that people have -- I mean, the companie s have exited, sort
	of reduced the competition? Or if you could throw some light?
Harish Kamath:	In these prod ucts, we were having a very big market share. The moment we went out, the
	prices increas ed. They have moderated, of course, subsequently. But still it is now better than
	what it was 10 years back.
Tushar Manudhane:	Got you. Soc onsidering these launches and subsequently in FY '26. So speci fically Unichem -
	- specifically IPCA ex Unichem, what kind of U.S. sales one can expect inF Y '26, if you can
	share.

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Harish Kamath:

It is too ear l y to give the combined sales of IPCA plus Unichem as a g roup in the next financial yea r . As we progress, maybe in the subsequent con call, we will g ive the guidance. But whateve r we said in the beginning of the year, our plan of launching 6 to 7 molecules in the U.S. in th e current financial year, that is progressing as we anticipated.

Tushar Manudhane: And sir, lastl y , on generics exports business, again. Like the first half numb e rs look lower. But in the base o f second half FY '24 is also low. So that way then, will -- 12% w ill be still a good enough num b er because even if I go by the run rate of what we have done in 2Q, the growth will be really strong in second half FY '23. Harish Kamath: I agree, but e verything ultimately depends on what kind of market. See, t he U.S. business, what we see, the market share improvement will be gradual. So it is very di f ficult to comment how much m arket share we will get in the immediate -- in the second h alf of the current financial ye a r for the products which are already launched. So all that permutation combination a nd question marks are already there. That is why, w e will do fair guidance in the latter half of the current financial year, maybe in the fourth qu a rter con call, what we are expecting in the next financial year as far as the U.S. business is c o ncerned. Current year, our generic business should be anywhe r e between 12% to 15%. That is w hat is the guidance. Tushar Manudhane: Even sir -- e v en if you go by the generics exports for the current quarter r u n rate when your U.S. product launches will be additional over and above this, still the n u mbers look quite strong for se c ond half of FY '22. Harish Kamath: There are ch a llenges. As Mr. Jain has already said in the South Africa, wh e re we lost certain tender produ c ts and in the U.K. market. Considering all that, we are giving a muted guidance. If the situati o n improves, we may do better than what we are committing. B ecause in the last year, second h alf, there was very good business from South Africa market. w hich looks today difficult. Moderator: The next que s tion is from the line of Arun from FPL. Arun: So just tryin g to understand the protocol, see, if a product that is approved b y the FDA in the orange book f or IPCA, still, it can be better for marketing and distribution by Unichem. Is it possible? Or i s it being done... Harish Kamath: It is possible . Earlier also, whatever products which were approved in ou r name, they were getting mark e ted by other marketing partners. Every company does that, an d it is the practice in the U.S. m a rket. Arun: In fact, I was thinking that products -- so that means only the manufacturin g is the one, which is the key. C o rrect? Harish Kamath: Yes, yes. Ma n ufacturing has to be from the site from where the product has g ot approval in the -- by US FD A . That is the only requirement. Marketing can be done by any o ther company.

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Arun: As far as I P CA is concerned, we have only Silvassa and Indore, whi c h have the U.S. approvals, co r rect? The other... Harish Kamath: Formulation f acilities, Silvassa and Indore. And API facility, Ratlam. Arun: Ratlam, okay . Is there any moves to make Kandla, Dehradun, Sikkim and all ? Harish Kamath: Purely for d o mestic market. From Kandla, we also cater to all other mark e ts other than U.S. Europe, Aust r alia and all, we're catering from Kandla. It is a better FM facili t y. Arun: And we are s a tisfying all the observations of US FDA, correct? Harish Kamath: Yes, yes. We have nothing outstanding as far as US FDA matter is concerne d . Moderator: The next que s tion is from the line of Kunal Dhamesha from Macquarie. Kunal Dhamesha: Sir, just one clarification. You said that the mix business guidance woul d include our U.S. revenue, which we have supplied. But then doesn't that U.S. revenue w ill go through a subsidiary, w h ich is Unichem? Harish Kamath: Was, but ult i mately, it will get consolidated in my account because Un i chem also is my subsidiary. Kunal Dhamesha: Sir, but then l ike-to-like there is a confusion, right? The generic business has grown at 2%. We are guiding f o r 12%, and then we might end up our doing double counting. Harish Kamath: That 2% gro w th was stand-alone IPCA, and guidance is for consolidated bu s iness. Ultimately, everybody w i ll see consolidated business. For example, stand-alone busi n ess, I have done some sales fr o m IPCA through Unichem, which is booked in my books. Bu t that material just to reach the U .S. and it has not gone to customer. In the consolidated, it is knocked off. So consolidated is more important than stand-alone. So as far as generic busi n ess is concerned, better let us g o by consolidated guidelines. Kunal Dhamesha: Okay. So sir , would you -- at some point, will you change our segment r e porting so that it helps us und e rstand the businesses better? Because I think Europe is also no w sizable business for us, right? Harish Kamath: See, Kunal, w hat has happened, actually, the issue is confusion. We took over Unichem in the last financial year in the month of August. Anything we talk today is not co m parable apple-toapple. Becau s e last year, consolidation of Unichem started in our books onl y from the month, say, from Se p tember. So last year, consolidation of Unichem was there only for 1 month and a few days. W h ereas currently, it is there for all 6 months. So in the next f inancial year, the apple-to-appl e comparison will become clearer, and we will be giving gui d ance market-wise consolidated g uidelines as far as the generic business is concerned. Kunal Dhamesha: In our consol i dated top line growth guidance for this year is around 9%. Is that correct? A.K. Jain Yes.

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Harish Kamath: Yes. Kunal Dhamesha: All the busin e ss included. Harish Kamath: Correct. Rig h t. Moderator: The next que s tion is from the line of Harshit Dhoot from Dymon Asia. Harshit Dhoot: My next qu e stion is on the order expenses. We have the tender business, in which gross margin is dir e ctly playing to EBITDA. Our domestic productivity has inc r eased a lot. Then still the data is a bit higher to see the way the business is getting ramped o ut. So is it fair to assume that t h e 27% -- I'm talking about a consol level, is 27% other expe n ses will continue going forwar d ? Harish Kamath: See, again, I said consolidated numbers are not strictly comparable b ecause last year consolidation, Unichem numbers were there only for 1 month and few days. This year, it is for all 6 months . So that confusion will be there in the current financial ye a r. From the next financial yea r , everything will be comparable apple to in. For example, in the current financial year, 6 mont h s, my other expenses also include entire 6-month expenses of U nichem. Whereas in the last fi n ancial year, 6 months, it was only for one month and a few d ays. So you can't compare that. Harshit Dhoot: No, see, sequential basis also, right, INR574 crores to INR637 crores. INR637 crores adjusted in the ForEx losses. Sir, I just want to understand the generics for the SG & A for these other expenses goi n g forward. So I just wanted to understand how this operatin g leverage benefit will play out a s we are focusing a lot on this. Harish Kamath: You can take whatever run rate of other expenses in the consolidated first q uarter and second quarter figur e s are there. More or less, it will continue. Don't see anything a bout last financial year. Current financial year, first quarter, second quarter, other expenses ar e all -- there is no exceptional e x penses in that, that will continue. Moderator: The next que s tion is from the line of Kunal Randeria from Axis Capital. Kunal Randeria: Sir, the Octo b er IQVIA data for India showed that the growth has slowed d o wn to around 6%. So to your in t ernal number also shows a slowdown? Harish Kamath: No, we are g rowing as whatever we have projected and all of the year, our growth will be anywhere bet w een 11% to 12%. Kunal Randeria: Okay. All rig h t. And just to kind of reconfirm, it's a broad-based growth, ri g ht, and not just at the European franchise? Harish Kamath: No, nothing, n othing. When they were showing 15%, 16%, 20% growth also, we are growing around 11% a nd 12%. Moderator: The next que s tion is from the line of Shiva from Purnartha Investment Advis o rs.

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Shiv: My first que s tion is with respect to the U.S. thing. Earlier, when we were i n 2013, 2014, '15. What was ou r total revenue in U.S. at that time? And if you could split bet w een what was the formulations a nd API? And what was the profitability at that time? Harish Kamath: Our total U. S . business at that time was around INR400 crores, includi n g about INR150 crores, INR1 6 0 crores API business. And in both formulation and API busi n ess, including the share of profi t , we had a very good EBITDA margin. Shiv: Okay. So it w as comparable to the ROE as well, the rest of the market was i n the top. Harish Kamath: Yes, yes, yes. Shiv: Okay, okay. G reat. And the second is with respect to your other businesses. O bviously, it's like somewhere a r ound INR80 crores. Obviously, you said last time that you we r e working on that and you are seeing some progress. Over the last few quarters, it's been I NR90 crores and INR80 crore s subsidiaries revenue and earlier, it was slightly higher. If yo u could just throw some light w h at is -- how is the progress over there? And going ahead, h o w do you look at your subsidia r ies revenue? This is excluding Unichem. Harish Kamath: Subsidiaries, one is Trophic Wellness, which is doing reasonably well aro u nd 10%, 12% top line growth and maybe 15%, 20% bottom line growth. Trophic Welln e ss which is into nutraceutical business. Then other subsidiary is Onyx Scientific, which is into CRAMS business, and it is based out of U.K. There also the business is steady. This year, they have a certain issue about discretionary spending coming down in the market. B ut still, they will sustain their o peration. Only subsidi a ry which is now not delivering, which going forward should d o better is, Pisgah, which is out of U.S. They are also partly into CRAMS and partly int o small-scale API manufacturin g for the U.S. and other markets, where certain projects are going off. So these are our opera t ing subsidiaries. Apart from that, we recently started marketin g our own products in the U.K. m arket through our own subsidiary, IPCA U.K. So these are m ajor subsidiaries, which are int o business. Moderator: The next que s tion is from the line of Zain from Dolat Capital. Zain: Sir, just one q uestion from my side. Sir, generic business guidance, excludi n g Unichem is, for FY '25? Harish Kamath: Excluding U n ichem, So it will be around maybe 8% or so. Zain: For the full y e ar? Harish Kamath: Yes, IPCA st a nd-alone. Moderator: Thank you v ery much. As there are no further questions, I would now like to hand the conference o v er to the management for closing comments.

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Harish Kamath: No, nothing. N othing from our side. If there are no further questions, I thin k we can close this con call. An d thanks all the participants for attending this con call organize d by DAM Capital. Thank you al l .

Moderator:

Sure, sir. Th a nk you so much. On behalf of DAM Capital Advisors Limit e d, that concludes this conferen c e. Thank you for joining us, and you may now disconnect your lines.

Harish Kamath: Thank you al l .

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