Aurobindo Pharma Limited (AUROPHARMA) Q3 FY22 Earnings Concall Transcript

Aurobindo Pharma Limited (NSE :AUROPHARMA) Q3 2022 Earnings Concall Feb. 10, 2022,

Corporate Participants:

Arvind Bothra — Investor Relations Department

Santhanam Subramanian — Chief Financial Officer

P. V Ram Prasad Reddy — Non-Executive Director

K. Nityananda Reddy — Vice Chairman and Managing Director

Puvvala Yugandhar — Chief Executive Officer of Eugia Pharma Specialties Limited

Satakarni Makkapati — Chief Executive Officer of Aurobindo’s biosimilars, vaccines and peptides businesses

Analysts:

Tarang Agrawal — Old Bridge Capital — Analyst

Manpuria Neha — Bank of America — Analyst

Deepak Gupta — Nippon Life Insurance — Analyst

Anubhav Aggarwal — Credit Suisse — Analyst

Nitin Agarwal — DAM Capital — Analyst

Tushar Manudhane — Motilal Oswal — Analyst

Shyam Srinivasan — Goldman Sachs — Analyst

Surajit Pal — — Analyst

Cyndrella Carvalho — Centrum Broking — Analyst

Prakash Agarwal — Axis Capital — Analyst

Praveen Kumar — — Analyst

Surya Patra — PhillipCapital (India) — Analyst

Naga Sridhar — Hindu BusinessLine, Hyderabad — Analyst

Presentation:

Operator

Ladies and gentlemen, welcome to the Quarter three FY ’22 Earnings Conference Call of Aurobindo Pharma Limited. [Operator Instructions].

I now hand the conference over to Mr. Arvind Bothra. Thank you, and over to you, sir.

Arvind Bothra — Investor Relations Department

Thank you, Aditya. Good morning, and a warm welcome to our third quarter FY ’22 earnings call. I’m Arvind Bothra from the Investor Relations team. We hope you have received the Q3 FY ’22 financials and the press release that we — was sent out yesterday. These are also available on our website. I would like to introduce my senior management team today on the call with us, represented by Mr. P.V. Ram Prasad Reddy, Chairman, Aurobindo Pharma USA; Mr. K. Nithyananda Reddy, Vice Chairman and Managing Director of Aurobindo Pharma Limited; Mr. Santhanam Subramanian, CFO; Mr. Yugandhar Puvvala, CEO of Eugia Pharma Specialties Limited, the entity housing Aurobindo’s sterile and generic injectable products, oncology and hormonal oral business. And we also have on the line today Dr. Satakarni Makkapati, CEO of Aurobindo’s biosimilars, vaccines and peptides businesses. We will begin the call with summary highlights from the management followed by an interactive Q&A session. Please note that some of the matters we will discuss today are forward-looking, including and without limitations, statements relating to the implementation of strategic actions and other information on our future business, business development and commercial performance. While these forward-looking statements exemplify our judgment and future expectations concerning the development of our business, a number of risks, uncertainties and other important factors may cause actual developments and results to vary materially from our expectations. Aurobindo Pharma undertakes no obligation to publicly revise any forward-looking statements to reflect future events or circumstances.

And with that, I will hand over the call to Mr. Santhanam Subramanian for the highlights. Over to you, Subbu.

Santhanam Subramanian — Chief Financial Officer

Thank you, Arvind, and good morning, everyone. Hope all of you and your families are safe. Q3 FY ’22 witnessed a spike in overall cases with surge in Omicron variant globally. The quarter performance reflected…

P. V Ram Prasad Reddy — Non-Executive Director

You can increase the voice, Subbu.

Santhanam Subramanian — Chief Financial Officer

Yes. The quarter performance reflected some of the impact on our business performance in select businesses. We will now discuss the results for the third quarter of fiscal year FY ’22 declared by the company. We’ll be discussing ex Natrol numbers throughout the call. For Q3, the company registered a revenue of INR6,002 crores, an increase of 1% quarter-on-quarter. The EBITDA before ForEx and other income declined by 20.6% year-on-year to INR1,016 crores. EBITDA margin for the quarter was at 16.9%. Net profit decreased by 22% year-on-year to INR604 crores. In terms of the business breakdown, Formulation business in Q3 witnessed a decline of 3.3% quarter-on-quarter to INR4,992 crores and contributed around 83% of the total revenue. The API business contributed around 17% and clocked a revenue of INR1,010 crores for the quarter, registering a strong growth of 48% on a year-on-year basis, led by improved demand for some of our key products. For the quarter, the revenue from U.S. Formulation decreased by 4.4% year-on-year to INR2,745 crores. On a constant currency basis, U.S. revenue decreased by 5.9% year-on-year basis to USD367 million. We have received final approval of four ANDAs and launched seven products in the quarter under review. We have filed 10 ANDAs, including three injectables during the quarter. In addition, we filed one 505(b)(2) NDA with the U.S. FDA. The total number of filings end of December is 719. Revenue for Aurobindo Pharma USA, the company marketing oral products in USA, decreased by 5% year-on-year for the quarter. Revenue of [Indecipherable] injectable business decreased by 7% year-on-year to USD63.2 million for the quarter. We have total 165 injectable ANDA filings as on 31st of December ’21, out of which 108 has received final approval and the balance, 57, are under review or are under tentative approval. The company as of 31st of December ’21 has filed 719 ANDAs filed with the U.S. FDA on a cumulative basis, out of which 494 have final approval and 30 having tentative approval, including eight ANDAs which are tentatively approved under PEPFAR and the balance, 195 ANDAs, are under review.

For the quarter, Europe Formulations revenue clocked at INR1,694 crores, an increase of 1.4% year-on-year growth. For the quarter, Growth Markets witnessed a growth of 2.8% quarter-on-quarter to INR397 crores. For the quarter, ARV Formulations registered a modest 7.4% growth quarter-on-quarter at INR155.7 crores, a degrowth of 64.9% Y-on-Y on a high base of last year. R&D expenditure is up INR393 crores during the quarter, which is 6.6% of the revenue. The average raw material cost increased by about 4% during the quarter, and the freight cost more than 20% quarter-on-quarter. Net organic capex for the quarter is around USD52 million. The average ForEx rate was INR74.82 in Q3 FY ’21, INR73.94 in September ’21 and INR73.68 in June ’21. The average finance cost is at 0.7% mainly due to availing multiple currency loans. The business generated a free cash flow of USD201 million during this quarter, which is highest. Net working capital for the quarter has been reduced by USD137 million, mainly due to the reduction in the inventory, and we continue to make further progress on this trend. Inventory alone, we have reduced by USD100 million and USD175 million for the quarter and year, respectively. As a result of the strong cash flow generated during the quarter, the net cash position, including the investments at the end December ’21, improved to USD211 million. The gross debt is USD499 million. And we have been reducing the gross debt quarter-on-quarter, and we will continue to do so.

This is all from our end, and we are happy to take your questions now.

Questions and Answers:

Operator

[Operator Instructions] First question is from Mr. Tarang Agrawal.

Tarang Agrawal — Old Bridge Capital — Analyst

Good morning. Good evening. This is Tarang from Old Bridge Capital. Sir, two questions. Firstly, on the U.S. business. If I look at the operating profitability hit versus the corresponding period last year, it’s almost entirely on account of gross margins coming off a sharp decline. Can you give us a more granular sense as to what all drove this? Was it — what kind of price in key raw materials, the kind of price erosion that you might have perhaps witnessed in the marketplace? And were there any failure to supply penalties, any provisions that are reflecting in the raw material cost? And how should we see this going forward from here on?

P. V Ram Prasad Reddy — Non-Executive Director

Subbu, you are telling?

Santhanam Subramanian — Chief Financial Officer

You carry on, sir, please?

P. V Ram Prasad Reddy — Non-Executive Director

No, the U.S. we sure that this quarter, there is a reduced of — cost of goods also increased because we have sent — our manufacturing costs are increased because of input material and services cost and everything. And the sale also has come down some extent as we hope it is a one-off thing. And naturally, the margins because of the — and quarter-on-quarter, the price falls than we last three, four quarters are fallen. And we have seen very much less in this quarter. But in the previous quarters, there is no penalty we paid, penalty we paid hardly USD one million out of USD250 million sale or something. And penalty is not much, very minimal. We have enough stocks of 2.75 months, including the pipeline. So this time because of input material always, our transfer from India cost is high. So that is the reason the profitabilities have come down, and we are hoping we touched the bottom. Things will improve from now onwards.

Tarang Agrawal — Old Bridge Capital — Analyst

Got it. So basically, what I understand is it’s a function of both erosion at the marketplace and input cost as far as…

P. V Ram Prasad Reddy — Non-Executive Director

Yes. Transfer itself from India went into a higher price. So naturally, there is a less [Indecipherable].

Tarang Agrawal — Old Bridge Capital — Analyst

Got it. Sir, you’ve purchased about $34 million of ANDAs this quarter. If you could give us some insight in terms of the significance of these purchases. And if I see the first nine months, it’s almost at about $150 million now. So do we anticipate more purchases in with direction [Indecipherable], so to speak?

P. V Ram Prasad Reddy — Non-Executive Director

No, no, no. We’re not going to purchase anything because we got where we don’t have the ANDAs, which is not under development or under approval list. So whatever we don’t have, we bought the company. Even you develop those products that will cost more than that. This is only the either [Indecipherable] or the change of APIs that we are working very aggressively. It is a total 40 products. Out of that 31 is the orals and four are injectables, three are dermatology. So like that whatever we don’t have only we got it because it came in a reasonable price because — so we bought it for the strengthening of our portfolio. Other than that, there is no reason. Previous also we have done like that wherever we have — we don’t have in portfolio, we feel that is required by the sales team, we will definitely make it. We’ll buy, but I don’t think in the next one or three years. We are almost majority of the generic formulation we are there, overall side.

Tarang Agrawal — Old Bridge Capital — Analyst

Got it. I have a couple of more questions, I’ll join back the queue. Thank you.

Operator

Next question is from Manpuria Neha

Manpuria Neha — Bank of America — Analyst

Yeah, thank you so much. This is Neha Manpuria from Bank of America. Subbu, just to clarify on the gross margin. If I understand this Q because of the API growth would have also impacted margins. So if you could just give a breakup in terms of the impact on gross margin because of U.S. price erosion versus raw material costs versus the higher sales of API.

Santhanam Subramanian — Chief Financial Officer

Yes, Neha. Yes, there is a change in the product mix during the quarter. And because of the mix, the impact on the gross margin is about 1.25%. Out of the total 3% [Indecipherable], 1.25% comes up. The balance is contributed both by raw material cost and the price erosion. Price erosion for the quarter is not very big, it’s decent. But overall, if you really see the year as a whole, there is a significant price erosion. So that is the thing. So out of the 3% gap which you have been talking, 3% to 3.5% gap which you are talking, around 1.25% comes out of the product mix.

Manpuria Neha — Bank of America — Analyst

Understood. And I didn’t really understand your comment that price erosion in the quarter was not significant. Because if I were to look at the oral solid business quarter-on-quarter, it seems to have come down about $34 million, $35 million.

P. V Ram Prasad Reddy — Non-Executive Director

No, definitely, the price erosion happened in the last three quarters — all quarters together itself, including shelf stock adjustment of around $10 million, $11 million because of price erosion. So almost $45 million something happened in this one. It means approximately 9% — in this nine months. And we are pretty sure seeing last one month or something, there is no much pricing reduction [Indecipherable].

Santhanam Subramanian — Chief Financial Officer

It’s a cumulative impact which [Indecipherable].

P. V Ram Prasad Reddy — Non-Executive Director

Cumulative impact.

Manpuria Neha — Bank of America — Analyst

So the cumulative impact is roughly about 9% in the nine months, you’re saying?

P. V Ram Prasad Reddy — Non-Executive Director

Yes. Absolutely.

Manpuria Neha — Bank of America — Analyst

Okay. And sir, you mentioned that in the last one month, you have not seen any more request for price. Is it fair to assume?

P. V Ram Prasad Reddy — Non-Executive Director

At least, one we have not got any request for reduce the price for the [Indecipherable].

Manpuria Neha — Bank of America — Analyst

Okay. So is it fair to assume, sir, that we’ve hit the bottom in terms of the sharp price increase we’ve seen because of inventory stocking?

P. V Ram Prasad Reddy — Non-Executive Director

In the normal products, other than the niche products, still very fair to expect this is the bottom.

Manpuria Neha — Bank of America — Analyst

Understood. And sir, therefore, going forward, how should we look at the growth for the oral solid business?

P. V Ram Prasad Reddy — Non-Executive Director

That is the only question?

Manpuria Neha — Bank of America — Analyst

Yes, sir.

P. V Ram Prasad Reddy — Non-Executive Director

Now the future is very clear. Going down is very fast. Nobody can stop it. Going up is a very, very slow process. It will take three years’ time or something, improve the existing products’ prices. And adding the additional orders of the existing products, adding the — our so-called 200, 225 products of the new products, this is the area we will slowly — both sides, we want to improve a little bit. That is our goal in the oral side. I’m talking oral side. In the injectable side, in one or two, Yugandhar can tell, except in one or two antibiotic injectable. So there is not much reduction in this nine months.

Manpuria Neha — Bank of America — Analyst

Understood. And sir, my last question on — there’s an announcement about Aurobindo exploring foray into domestic market. Can you give some color on the thought process on that? And what would be the strategy? Or would we look at organic, inorganic opportunities?

P. V Ram Prasad Reddy — Non-Executive Director

Yes. Now this is the time we feel we have the cash flow and we may get another $200 million, $300 million. We will get the extra additional cash flow in this — in the next four, five quarters. So this is the time we want to go to the — either branded, our OTC and all three together, the complete because things are changing in the branded formulation. People are not going multiple thousands of reps that Gemini is slowly going. So this is the time we want to go organic and inorganic within one niche. From the day we started the first inorganic, then we want to reach in three years around INR1,000 crores, INR2,000 crores sale is our goal, either organic or inorganic.

Manpuria Neha — Bank of America — Analyst

Understood. Thank you so much, sir.

Operator

Thank you. [Operator Instructions] Next question is from Mr. Deepak Gupta.

Deepak Gupta — Nippon Life Insurance — Analyst

Hi, good morning, sir. Thank you for taking my question. I’m Deepak from Nippon Life Insurance. Sir, first question is if you could give us some update on USFDA inspection status for all your key plants.

P. V Ram Prasad Reddy — Non-Executive Director

No. As on today, we have three audits. Unit I, which is already — and Nithyananda can tell, unit — it is already warning letter one, again, they came — again, they’ve given the repeat observation warning letter that we already — we are in discussion with the FDA, and we have a good advisers, and we will try to resolve in next one year. And the major issue has come in the — where we have the — in the U.S. plant. The U.S. plant, which is a very small sale, it is at 2.5 million, already loss-making. We ourselves are thinking to stop that plant. So that we had the warning letter that again, audit has come there also because it is a 68-year-old building, some leakages. There also, we may expect some warning letter. Anyhow, we are not interested to — that plant. We are moving to the new — there only we have got the new model, brand-new model, we are shifting from there. We are already doing that process. Unfortunately, they came in the meantime that rise. So these two. The third one, which we have [Indecipherable] already, Unit V, now the audit is going on in Unit V API, sterile API is going on.

Deepak Gupta — Nippon Life Insurance — Analyst

So sir, can you just give us an update on Unit IV [Indecipherable]? Any inspection due over there?

K. Nityananda Reddy — Vice Chairman and Managing Director

Yes. So it is — all the injectable plans, obviously, like as you know, we have — the last two years, FDA has not done any audits. So all of the units are obviously due for inspection. And we are — all the time we are ready to get inspected, but all the plants are due for inspection. I think across the world, across all companies, that’s the same status, so it is no different for Aurobindo.

P. V Ram Prasad Reddy — Non-Executive Director

Nitya, good answer. You need not ask me about Aurobindo. If you ask everybody, the audit is [Indecipherable].

Deepak Gupta — Nippon Life Insurance — Analyst

Sure. I understand, sir. And sir, the last question is, I missed the opening remarks, you may have addressed it, but there have been obviously a lot of media articles talking about the fact that you’re looking for investors in your injectable business. If you could give us some perspective of whether — what exactly the thought process of the injectable business.

Santhanam Subramanian — Chief Financial Officer

Yes. See, the BOD has considered the committee of principal and directors on November eight for comprehensive election of various options and alternatives, including the merger for restructuring Eugia-related arrangement. The evaluation by the COD is ongoing with inputs also being taken from certain advisers. We will inform the stock exchange once an option has been finalized and approved by the Board of Directors and as is required by the applicable law and regulations, right? The company is fully cognizant of the need to create shareholders’ value, and the Board is — the COD is also aware of this.

Operator

Thank you. Next question is from Mr. Nitin Agarwal. Please unmute yourself.

Anubhav Aggarwal — Credit Suisse — Analyst

Thanks for taking my questions, sir. My question is on Eugia. A, one, if you can tell us what is the global sales of injectable business this quarter?

P. V Ram Prasad Reddy — Non-Executive Director

Yugandhar?

Puvvala Yugandhar — Chief Executive Officer of Eugia Pharma Specialties Limited

Yes. I’ll just — let me just tell you like this. Eugia is all about — not only injectable, it is complete specialty business. It is general injectable, oncology injectable, oncology oral solids and hormonals. And we are like clocking at a range of around $100 million to $110 million every quarter. That’s the last three to four quarters performance. And we expect that it would go up to double-digit growth next year it. Nitin, any other question on that?

Nitin Agarwal — DAM Capital — Analyst

Yes. Secondly, sir, we are at about $400 million thereabouts run rate for this year. You’ve talked about in the past a $650 million, $700 million run rate for the injectable business in ’24. I mean, how do you see this gap, this difference between the — it’s a fairly large growth we’re talking about in the next two years. How do we see this getting bridged? Any specific geographies, any specific launches? Any thoughts on where we can get to in a couple of years along this target?

Puvvala Yugandhar — Chief Executive Officer of Eugia Pharma Specialties Limited

Yes. I think see, starting this year, like we are expecting significant launches happening from the April of FY ’23. So I expect like that. Starting from April, right, we have scheduled launches of around 10 to 15 products in FY ’23. That will drive the growth for FY ’23. And for FY ’24, also, we have significant assets and settlements for launches. So we are pretty confident of $650 million to $700 million in FY ’24.

Nitin Agarwal — DAM Capital — Analyst

Thank you.

Operator

Thank you. Next question is from Mr. Anubhav Aggarwal.

Anubhav Aggarwal — Credit Suisse — Analyst

Yeah, hi guys. First question is on the input cost inflation. So if we hear the comment from most of the companies, they have been guiding that the quarter four impact will be more than the quarter three. So is that true for Aurobindo as well? Because from the commentary, it seems like you guys are trying to say that most of the impact was there in this quarter, next quarter, it will be okay.

P. V Ram Prasad Reddy — Non-Executive Director

Can I answer the question? Yes. You see, quarter two itself, there is a fall is there because of one or two onetime sales are there in U.S. So we have — it looks better. It’s not exactly reflected at the time in quarter two. But this started quarter one onwards. Quarter one, two, three started because the pricing, as I told you from the beginning, we have three types of pricing reductions. One is the overall pricing reduction. Other is the oral price reduction and all input materials — every input material, either chemicals, intermediates, are the products and it has come down. And the ARV business, now only slowly improving ARV business this quarter, what was the running quarter. Definitely, it was better than last quarter. And we have visibility in next six to seven months, may not be at the same level of last year. And there is an ARV — loss of ARV business is the one area. Third area and most important area is input material cost increase and services cost increase. Services means like coal become double and the freight alone, we will send 370 containers in a month for a quarter. Our freight is increased around 8.5 million in the last two or three quarters net. So with all these things, we are very hopeful either freight or the coal has already come down, but that will be — will be used in that after one or two months because now we are using the double the cost to coal because our coal usage is monthly 2.5 million. So all these things, we are hoping that the costs will come down after Winter Olympics and ARV’s little improved. So that is the reason we are telling in the beginning, things — this may be the bottom. In one or two quarters, we will reach to the improvement stage.

Anubhav Aggarwal — Credit Suisse — Analyst

Sir, I redeem my question was very simple that did quarter three reflected the bottom of quarter four will be even worse and therefore, quarter four — March quarter will reflect the bottom?

P. V Ram Prasad Reddy — Non-Executive Director

I don’t think so, something. We feel quarter three is the — that’s what we feel that let us see, but we have January month is a little better, and quarter three is the bottom most level. After that, things should they have either stable or improved.

Anubhav Aggarwal — Credit Suisse — Analyst

Okay. That’s helpful, sir. And second is on the domestic market. When you talked about reaching about INR1,000 crores sales, what kind of capital you’re trying to commit here even when you’re going organic, inorganic? And in this INR1,000 crores target is what, maybe I missed out, maybe three years you mentioned or what time period?

P. V Ram Prasad Reddy — Non-Executive Director

Yes, three years from the date of the first launch.

Anubhav Aggarwal — Credit Suisse — Analyst

And what kind of capital are you committing to reach the INR1,000 crore number?

P. V Ram Prasad Reddy — Non-Executive Director

We cannot tell that whether we will buy the company’s brands. That’s difficult. But whatever the capital, we are prepared for that.

Anubhav Aggarwal — Credit Suisse — Analyst

But typically, the norm in the market, it’s about acquisitions typically happen at about three to four times sales. So are we talking — when we’re talking about INR1,000 crore number, we’re talking about…

P. V Ram Prasad Reddy — Non-Executive Director

Yes. Maybe, maybe, maybe. Yes.

Anubhav Aggarwal — Credit Suisse — Analyst

Thank you.

Operator

Thank you. ext question is from Mr. Tushar Manudhane.

Tushar Manudhane — Motilal Oswal — Analyst

Yes. Sir, just on U.S. generic piece, while the price erosion would have got subsided, but the pace of launches are also considerably reduced compared to the annual run rates in the previous years. So how do we see the launch pace improving if it is hinged on U.S. FDA inspections?

P. V Ram Prasad Reddy — Non-Executive Director

Yes. And once that we feel that [Indecipherable] U.S. FDA inspections are — things are improving now and inspections are coming, and the approvals also will drastically increase.

Tushar Manudhane — Motilal Oswal — Analyst

Okay. Even the injectable for which we are targeting 650, 700, I’m sure — I mean, at least for the near term, launches would be subject to the inspection and then subsequent approvals or the product, it’s more to do with the product review without inspections?

P. V Ram Prasad Reddy — Non-Executive Director

Yugandhar?

Puvvala Yugandhar — Chief Executive Officer of Eugia Pharma Specialties Limited

Yes, it is the product review without inspection and most of the filings and approvals are dependent on just ANDA review, nothing to do with the inspection review because we have not filed any product in the new lines where inspection is necessary. So from that perspective, FY ’23 and FY ’24, I don’t see anything which is hinged on inspection per se.

Tushar Manudhane — Motilal Oswal — Analyst

And just broadly, while you don’t — maybe not sharing the name of the products, typically, what the product size you are targeting, approximate range, if you could highlight?

Puvvala Yugandhar — Chief Executive Officer of Eugia Pharma Specialties Limited

No, it is in the range of — yes, I think like it’s an open news. There are a lot of products which are actually going off patent starting from May, and you do your research. And we are present in most of those off-patent molecules. There’s no significant launch and approval molecule. It’s mostly off-patent, and it’s in the range of $100 million to $1 billion.

Tushar Manudhane — Motilal Oswal — Analyst

Understood. Got it. And any update on the implementation of the PLI scheme?

P. V Ram Prasad Reddy — Non-Executive Director

Yes. We have started the plan. Sorry, we have started the work. We already spent INR400 crores, INR500 crores, and we are very much — we are really excited. This is going to be the good project. That’s what — because of the — in selectively, we are investing in the API, where we are strengthening the other [Indecipherable]. Nithyan Reddy, can you explain?

K. Nityananda Reddy — Vice Chairman and Managing Director

Yes. This PLI scheme that we are going ahead of the project for 15,000 tonnes of Penicillin G at [Indecipherable]. We have a — good thing is we have extended one more year for the manufacturing ability and stuff ’23. We got extension up to ’24 because of the COVID issues related to government that is happening. So the — already land is acquisition is over, that work is going on. CFP and environmental clearance has come. CFP, of all this coming, and now they started for the construction is going on full swing.

Tushar Manudhane — Motilal Oswal — Analyst

And why you highlighted for — on the API side, there has been improved demand for certain products, but is that like for this particular quarter? Or do you see this to be sustainable number to go by?

K. Nityananda Reddy — Vice Chairman and Managing Director

Generally, now the last quarter, also a little bit improvement is there. The same thing will continue. Last threer quarters, it is very low. The consumptions are like antibiotics and other things and COVID restrictions, there are not much of — sales has not happened. Now the sales are improving. We have a perfect basis there to we can grow [Indecipherable] growth.

Tushar Manudhane — Motilal Oswal — Analyst

And just lastly, whether out of this quarter-on-quarter, how much would have been due to the raw material cost pressure and maybe how much was more of a volume like?

K. Nityananda Reddy — Vice Chairman and Managing Director

Look, raw material side, we are almost 10% — let’s say, 8% to 10% of input raw material cost has gone up. Then solvents and other things, already Ramaprasad has explained for the logistics and all the input logistics also gone up. Now that will slowly — we hope that another one or two quarters, it will stabilize.

Tushar Manudhane — Motilal Oswal — Analyst

Thank you.

Operator

Thank you. ext question is from Shyam Srinivasan.

Shyam Srinivasan — Goldman Sachs — Analyst

Yeah, hi, good morning and thank you for taking my question. Just first is on the biosimilar and the vaccines business. So if you can give us an update on some of the key molecules that are there also on the vaccines, what’s happening to our COVID candidate?

Satakarni Makkapati — Chief Executive Officer of Aurobindo’s biosimilars, vaccines and peptides businesses

Yes. This is Satakarni. So in terms of the biosimilars, as you know, our second oncology biosimilar has been filed with the European Medicines Agency in January 2022. So this is according to the plan. We are having three more biosimilars at different stages in our Phase III licensure clinical trials, out of which an oncology biosimilar monoclonal antibody that is currently being evaluated in a large Phase III efficacy and safety trial, will potentially be filed in the next financial year. We are looking at Q3, Q4. We have the last bits of recruitment to happen. So that’s progressing well despite the COVID headwinds.

P. V Ram Prasad Reddy — Non-Executive Director

Q4 of this financial year, Satakarni?

Satakarni Makkapati — Chief Executive Officer of Aurobindo’s biosimilars, vaccines and peptides businesses

Of the next financial year, starting April, Q3. So our development efforts with our second wave of biosimilars are entering into an important stage, I would say, with one product which already advanced in this month as we talk into Phase I trials in Australia. And another product advancing into a clinical trial, early clinical trial probably in Q1 of the next fiscal. We remain otherwise on track with development of our other biosimilars, both in oncology and immunology segments. So we are reasonably convinced about the progress that we are making with our biosimilars portfolio in both oncology and immunology segments. To address your second question, Shyam…

Shyam Srinivasan — Goldman Sachs — Analyst

Dr. Satakarni, let me just interrupt because just can I quickly follow up on this, right? So we should assume a nine-month window for both this BP13 and BP14, right? Would that be a starting point? And in terms of market formation or when there is market formation already in terms of your launch strategy also?

Satakarni Makkapati — Chief Executive Officer of Aurobindo’s biosimilars, vaccines and peptides businesses

So essentially, what we are looking at is with the regulatory time frames during the COVID times, we assume about 267 to 270 days, which is roughly nine months. And the market formation depends on the natural phages that you are entering. Anywhere between two to five months, roughly, is the time that it takes to enter markets because you have to enter natural phages after getting the approval from the centralized procedure. I hope that answers your question. And with respect to your second question regarding the vaccines business. As you told, we have given an update in November, but the Vaxxinity project did not move forward because Vaxxinity failed to get an approval, emergency approval, from the Taiwan FDA. But our bacterial vaccine is currently in the first licensed clinical trial, and we will be able to make more commentary on the subject once we initiate the review of the pivotal data coming out of the trial somewhere in Q3, Q4 of the next fiscal and once we initiate regulatory process in India. Our other vaccine programs are at different stages of development. So we are interested in vaccines now. The realization from the COVID scenario is that we have a backbone of capabilities in terms of our GMP know-how, in terms of our presence and marketing outreach that we wanted to stay invested in other vaccines. So that’s building up really well. And we hope in next two to three years’ time, we will have some advances made in key vaccine segments.

Shyam Srinivasan — Goldman Sachs — Analyst

Very helpful. My last question is on the — or [Indecipherable] injectable number, I think, $63 million, so 6%, 7% decline. So what is still driving this? Is it still demand? Or is there a price erosion angle even in the injectable side?

Santhanam Subramanian — Chief Financial Officer

I think it is both. I think we are averaging around $65 million per quarter for the last three quarters, and we expect that it will be in the same similar range, $65 million to $70 million. And going forward, I expect that the significant launches coming in, in FY ’23, like the run rate, will significantly improve, right? It’s both like we have a slight price decreases here and there, and there is also volume increase in some products, so that they get offset with each other for the quarter. So it’s a running quarter like I’m just saying because there can be $2 million, $3 million gap here and there, but in general, it’s a stable, pretty good state of business. And starting quarter one of next year, we see significant growth possibilities.

Shyam Srinivasan — Goldman Sachs — Analyst

Got it. Sir. Thank you and all the best.

Operator

Thank you. ext question is from Surajit Pal.

Surajit Pal — — Analyst

Hi, thanks for taking my questions. Just one question, is that Mr. Rao, last time, told us that antibiotic sales in U.S. could be the precursor of better cycle for hospital business. Could you throw some light on update on how that antibiotic sales overall in the U.S. is ramping up?

P. V Ram Prasad Reddy — Non-Executive Director

Who is that told from our side? Antibiotics? Given that..

Surajit Pal — — Analyst

Overall antibiotic sales — pardon?

P. V Ram Prasad Reddy — Non-Executive Director

There is not — continue then.

Surajit Pal — — Analyst

Yes, yes. The antibiotic sales In U.S. is a precursor of overall sector-wise hospital sales to go up.

P. V Ram Prasad Reddy — Non-Executive Director

Yes, I remember. No, no, there is no much now things are stabilized. There is no antibiotics. It was normalized. Now things are slowly improving. The new patients in U.S. also is drastically coming down, except the deaths. So from next one or two quarters, things will improve the — antibiotic sale already increased and then other sales also will improve because last two quarters, the hospitals also are very busy. We are hoping in the next 15, 20 days, things will be perfectly all right, and things will improve. That’s what we feel in the U.S. injectables.

Surajit Pal — — Analyst

Okay. In domestic market, can you throw some light on which are the segments you could be targeting initially? Or is it possible that you might be encashing your R&D projects [Indecipherable]?

P. V Ram Prasad Reddy — Non-Executive Director

We can tell in next quarter, not in this quarter. [Indecipherable] We have lot of plans [Indecipherable] and we will come back to you in coming quarters. The coming one or two quarters, we will have a lot of clarity.

Surajit Pal — — Analyst

Okay, thank you and all the best.

P. V Ram Prasad Reddy — Non-Executive Director

Thank you.

Operator

Thank you. Next question is from Prakash Agarwal.

Cyndrella Carvalho — Centrum Broking — Analyst

Yeah, hi. This is Prakash. Good morning. Am I audible?

P. V Ram Prasad Reddy — Non-Executive Director

Good morning. Prakash, yes, Perfect.

Prakash Agarwal — Axis Capital — Analyst

Sir, question is on U.S. FDA. So you mentioned that it’s an ongoing process, which we understand. But tell me something with — they started quite a bit of inspection in October, November. And suddenly in December, January, I think it has again slowed down. What is the current conversation with the FDA for this year’s inspection, which are planned already? I mean are they coming on board or still desktop inspection is happening? Or what is the conversation that is happening?

P. V Ram Prasad Reddy — Non-Executive Director

No, no. There is — we feel in next two, three months, it will become normal.

Prakash Agarwal — Axis Capital — Analyst

And they would start visiting again?

Santhanam Subramanian — Chief Financial Officer

The physical inspectors will happen.

P. V Ram Prasad Reddy — Non-Executive Director

Yes, yes.

Prakash Agarwal — Axis Capital — Analyst

Okay. That you expect to start in the next couple of months?

P. V Ram Prasad Reddy — Non-Executive Director

In two, three months, at least in both sides, India as well as America, things are very drastically improving in COVID side. And we hope in two, three months, it will be normal way of [Indecipherable].

Prakash Agarwal — Axis Capital — Analyst

Understood. And correct my understanding, sir, I mean, we’ve been hearing that a lot of complex product approvals require pre-inspection, etc. So there was a participant also saying that the run rate of approvals have come down, especially the complex one. Is it related to that? Or you think that is not required, inspections are not required for complex products if the plant is approved?

P. V Ram Prasad Reddy — Non-Executive Director

It’s not like that the previous products, latest, we filed 180, 190, we have taken care. Previous products all are, at least 60, 70 products, are tentatively approved or patent issues and all these things. We are getting — it got stuck either in raw material because of Unit 11, Unit one and something. Now the new approvals all are coming. We hope it will come from next month onwards. It’s very fast. There is a less relation with the plant inspections. Just because of this type of API issues, we are changing the APIs. And those, it got stuck because now it has to approve last one year. This is because of the two years back filings. That is all stuck in the APIs. New one, it is a less headache, it is a less problem in that area. We are already changing the outside API.

Prakash Agarwal — Axis Capital — Analyst

Okay. Very helpful. And second question is just clarity. I mean the various participants who have asked. So are you saying that both from Q-on-Q U.S. pricing pressure decline that we have seen as well as input cost, there is one more quarter of pain and then we start growing? Or you are saying pain is behind us, and we will stabilize from Q4 onwards?

P. V Ram Prasad Reddy — Non-Executive Director

I strongly believe pain is behind us. It doesn’t mean that it will — overnight it will come down; in the next one or two quarters, it will start going down. I am not expecting any big price increase either input material or services or in the price point. That’s what we expect.

Prakash Agarwal — Axis Capital — Analyst

So Q4 is stabilized or it is still under pressure?

P. V Ram Prasad Reddy — Non-Executive Director

May not, definitely. That’s what I feel.

Prakash Agarwal — Axis Capital — Analyst

May not decline further?

P. V Ram Prasad Reddy — Non-Executive Director

No.

Prakash Agarwal — Axis Capital — Analyst

Okay. Got it. Got it. And sir, last one, if I may. So we have a long list of complex products across different segments, complex segments. In the past, we have said ’23 is the year where we will start monetizing the complex injectable, peptide, penems etc., in a big way. So is it more on the second half side? Or it is moving to fiscal ’24, given the delays that you’ve talked about across the industry?

P. V Ram Prasad Reddy — Non-Executive Director

Yugandhar? You’re talking about injectables?

Prakash Agarwal — Axis Capital — Analyst

Yes, complex injectables, sir. Not the plain vanilla small ones. Bigger ones like 10, 20…

P. V Ram Prasad Reddy — Non-Executive Director

[Indecipherable] some various…

Puvvala Yugandhar — Chief Executive Officer of Eugia Pharma Specialties Limited

Yes. Some of these things, obviously, like whatever we said, it is fiscal ’23. I think we are still confident that like we will get some of the complex injectables in fiscal ’23. Let’s see, like how it goes. But due to COVID, there are some development delays because some of the injectables are getting developed in the U.S., then we have to take batches in India because of the travel restrictions and all some of the validation batches and all, there is a quarter or two delays. But we expect that this, we will start doing the filings in FY ’23 and expect some approvals to come from FY ’24 onwards. But it will be a continuous journey with a quarter or two delay.

Prakash Agarwal — Axis Capital — Analyst

Okay, perfect. Great, thank you and all the vessels

Operator

Thank you. Next question is from Mr. Venkat. Rrequesting you to please introduce your full name before asking the question. Yes. Mr Venkat. You can unmute yourself please ask your question. Okay. We’ll go to the next one. Next question is from Mr. Anubhav Aggarwal.

Anubhav Aggarwal — Credit Suisse — Analyst

Yes. First question is on the PLI. Just wanted to confirm. So when do we start this PLI production? Earlier time line was April ’23. Will it be April ’24 now?

P. V Ram Prasad Reddy — Non-Executive Director

Nithyan?

K. Nityananda Reddy — Vice Chairman and Managing Director

Yes, Anubhav, that is up to ’24 end we are going to start the production.

Anubhav Aggarwal — Credit Suisse — Analyst

So you are talking FY ’24 end, is it, okay, which is April ’24. I understand.

P. V Ram Prasad Reddy — Non-Executive Director

’24 March.

K. Nityananda Reddy — Vice Chairman and Managing Director

’24 is the cut-off date we need to start [Indecipherable].

Anubhav Aggarwal — Credit Suisse — Analyst

Understood. And the capex is still at INR2,200 crores? Or is this change in capex?

K. Nityananda Reddy — Vice Chairman and Managing Director

Yes. The capex is INR1,850 crores, one of the two projects we dropped was 7-ACA and the TIOC. So we restricted to our — only for Penicillin G, we are going ahead with that project.

P. V Ram Prasad Reddy — Non-Executive Director

Penicillin G alone has INR200 crores, INR300 crores. capex are increased because of the heavy steel prices where they underestimated the equipment. Otherwise, the land we bought for the future requirements, 400 acres we are using for Penicillin only, 120, 130 acres. So like that, there is here and there some INR200 crores, INR300 crores that capex, only for Pen G.

Anubhav Aggarwal — Credit Suisse — Analyst

What is the number you mentioned? INR1,850 crores, is it?

P. V Ram Prasad Reddy — Non-Executive Director

Around that. Nithyan?

K. Nityananda Reddy — Vice Chairman and Managing Director

Yes, around that.

Anubhav Aggarwal — Credit Suisse — Analyst

And out of this, how much is, let’s say, really, let’s say, on which incentives are applicable from the regulator, right? So one is — I remember you guys were going for higher capacity.

P. V Ram Prasad Reddy — Non-Executive Director

[Indecipherable] it is around INR1,400 crores.

Anubhav Aggarwal — Credit Suisse — Analyst

INR1,400 crore incentive. Any particular reason we dropped other product?

P. V Ram Prasad Reddy — Non-Executive Director

No. We have some — we asked the Ministry that regulates 7-ACA and D-7-ACA [Indecipherable] because that is half and half the demand. Somewhat did the government, because they are — they have to go back to the Prime Minister level or something that’s — or whatever it may be. So they felt why can’t we do that. They re-bidded last week.

Satakarni Makkapati — Chief Executive Officer of Aurobindo’s biosimilars, vaccines and peptides businesses

The scheme is only for 7-ACA. In domestic requirement is 50% 7-ACA and almost 50%, 55%, D-7-ACA. Without D-7-ACA, only 7-ACA is not feasible. We thought that when we talked the project.

Anubhav Aggarwal — Credit Suisse — Analyst

Understood. Understood. And sir, you talked about it, but just asking again, I’m not still clear. The sharp decline that we’ve seen in the U.S. from quarter two to quarter three, when price erosion was not much, what explains this 402 going down to 366 in one quarter?

P. V Ram Prasad Reddy — Non-Executive Director

Subbu?

Santhanam Subramanian — Chief Financial Officer

It’s a combination of that because one is the overall reduction is not only attributable to the world, it is a combination of everything. Plus also, there is a significant drop in the direct dispatches from India, where the third-party level guys used to pick it up from India, which they are not picked up. That is one thing. And within the distribution within the U.S. also, there is a — it’s not a very drop in one segment. It is a small, small drops and about $10 million drop in orals like that everywhere it is scattered.

P. V Ram Prasad Reddy — Non-Executive Director

It is only $30 million some time here and there will — in one segment more so it will happen in this difficult time someday.

Santhanam Subramanian — Chief Financial Officer

See, at a business level, we are also looking — overall, we have been trying today. I mean we know there is going to be a drop in U.S. because of various reasons, and we are focused more on the API, so that we are ensuring that we are meeting the top line [Indecipherable]. We are aspiring, we have been trying to meet it like that.

Anubhav Aggarwal — Credit Suisse — Analyst

Sure. And what about the inventory levels for us in the U.S. for our products like, for example?

P. V Ram Prasad Reddy — Non-Executive Director

Anubhav, it is good now, and we are working for another $100 million reduction overall in our working capital to increase the cash balance. So already, my people have done a wonderful job and we have still room for reduction for — especially in Europe and some areas. And $100 million, $150 million, we have the room for reduction and increase the cash.

Anubhav Aggarwal — Credit Suisse — Analyst

No, actually, my question was a little different, sir. My question was that, let’s say, the problem that you guys mentioned earlier, the industry is facing that a lot of inventory was accumulated because of erratic supply last year due to COVID and those products are getting expired.

P. V Ram Prasad Reddy — Non-Executive Director

I think now the accumulation either they must have destructed or they must have sold. I think it must have already come because already 1.5 year is over. There is no use of [Indecipherable].

Anubhav Aggarwal — Credit Suisse — Analyst

But how about the stock for Aurobindo, are you having stock which is near expiry now?

P. V Ram Prasad Reddy — Non-Executive Director

Yes, whatever is there, we — whatever is there, some products like Azithromycin, some products, we already put provisions. So whatever is there, we sold it in some products, we requested the distributors, even six months, also recently some products. They already bought it. Some products we already [Indecipherable] is not there my colleague. He knows better. Some we already put provision, whatever it was, whatever [Indecipherable]. Now it is coming almost one more quarter is there may be this issue. Afterwards, there won’t be excess [Indecipherable].

Anubhav Aggarwal — Credit Suisse — Analyst

Thank you.

Operator

Thank you. Next question is from Cyndrella.

Cyndrella Carvalho — Centrum Broking — Analyst

Thanks for the opportunity. I just wanted to understand our strategy on European market. For some — quite some time the market has been subdued for us. So how do we see? Plus on the injectable side also, we had planned on our plant for European and ROW market. What is the status on that? And when do we see this growth? Is it because of lower approvals? Or what is the cause on the European side? Can you please help us understand?

Puvvala Yugandhar — Chief Executive Officer of Eugia Pharma Specialties Limited

On the injectable side first. I think after that, Ram Prasad Reddy can give the overall view. In terms of the injectables, as you rightly said, we have decided to construct one plant in Vizag and it’s almost complete, and we’ll be starting firings from middle of FY ’23. And we expect to start commercializing in FY ’24. So I expect it’ll be a steady and muted growth in Europe for FY ’23. But from FY ’24 onwards, it should pick up.

Cyndrella Carvalho — Centrum Broking — Analyst

And overall market?

Puvvala Yugandhar — Chief Executive Officer of Eugia Pharma Specialties Limited

[Indecipherable] yes.

P. V Ram Prasad Reddy — Non-Executive Director

The overall market, in various injectables, they are going to — oral divisions are going to have a distribute for Eugia, and that is the one area. And overall, we also — honestly, we also really struggling and we already filed around 70 products, new products from — new products means what we developed and another 180 in development at various stage. And definitely, we are also very deeply studying with the outside consultants also and how to break to the next level. It goes from 900 million to 2,300 to 2,500. We have also the job last two quarters [Indecipherable].

Cyndrella Carvalho — Centrum Broking — Analyst

Okay. And on the U.S. side, we said that there was almost $10-odd million shelf stock adjustment. Was that taken in this quarter or it is for the nine-month number? Can I have that?

P. V Ram Prasad Reddy — Non-Executive Director

No, nine months number, madam.

Cyndrella Carvalho — Centrum Broking — Analyst

Okay, thank you so much.

Operator

Thank you. Next question is from Praveen Kumar. Mr Praveen please unmute yourself.

Praveen Kumar — — Analyst

Okay. Yeah, can you hear?

P. V Ram Prasad Reddy — Non-Executive Director

Yes.

Praveen Kumar — — Analyst

That’s great. Yes, sir. The ex-MD talked about the buyback of shares, the Board will [Indecipherable] the buyback shares. Whether it will be — we can export in the upcoming quarter, sir?

P. V Ram Prasad Reddy — Non-Executive Director

Can you please repeat?

Praveen Kumar — — Analyst

The ex-MD had said that Board will review about the buyback of shares in the upcoming quarter. Whether the proposal is still pending?

P. V Ram Prasad Reddy — Non-Executive Director

Subbu, what is that? Can you please tell?

Santhanam Subramanian — Chief Financial Officer

Yes. There is no proposal before the Board, Mr. Praveen. As and when any decision taken, it will be communicated to the stock exchange, but we don’t see it now.

Praveen Kumar — — Analyst

Okay. Thank you, sir.

Operator

Thank you. As there are no further questions, I would like to hand the conference over to Mr. Arvind Bothra for the closing comments.

Arvind Bothra — Investor Relations Department

Possibly we have another three, four minutes. We can take one or two more questions. Let’s take the question.

Operator

Okay. Next question is from Mr. Surya Patra.

Surya Patra — PhillipCapital (India) — Analyst

Yes, thank you for taking my question. Sir, just on the injectable business front. So when we have given almost kind of doubling growth guidance for, let’s say, over next two-year period, what share of that would be coming from the U.S.? And currently, what is the mix in terms of U.S. and other major markets, if you can throw some light on that?

Santhanam Subramanian — Chief Financial Officer

So it is going to be a significant portion is going to be U.S. Even today, it is 75-25. And I expect in the next two years as well, it will continue to be 75-25, 75 being U.S.

Surya Patra — PhillipCapital (India) — Analyst

Okay. Second question is on the European business. So in fact, it was always considered that Europe, the profitable progress in Europe should practically support the overall profitability for Aurobindo. But on the revenue itself, we are stagnating in some time, quarterly run rate wise. So you have just now guided that, okay, ’24 would be the key growth trend that we’ll be witnessing. But in terms of the profitable growth trend, so when do you think that, okay, the margin profile for the European business will improve and that will start contributing towards the overall improvement of the margin of the Aurobindo as a whole?

Santhanam Subramanian — Chief Financial Officer

As Ram Prasad Reddy said like in the previous question, I think we are still doing how or what exactly are the growth drivers, both for top line as well as bottom line. And we are to come out with clear answers for the Europe business. I think as you rightly said, we have come to a stage where we feel like we need to think differently to drive this business, and that work is in progress, and we will let you know in next two quarters.

Surya Patra — PhillipCapital (India) — Analyst

Sure, sir. And just last question, if I can. On the foray into the domestic business, what it is in [Indecipherable]. So here, the thought process would be to replicate all the portfolio that we have created so far for the global market, that would be implemented here as well. And how quickly that India foray can happen, sir? Although you are in discussion mode, but whether this is like current financial year, any time line on that front, if you can.

P. V Ram Prasad Reddy — Non-Executive Director

Subbu, can you — have you followed? I lost control. I’m very sorry, sir.

Santhanam Subramanian — Chief Financial Officer

Surya, this is regarding the domestic formulation, that’s what you are saying. So we have clearly given what is our thought process and where we are — it is — the process, the new business strategy is under evaluation. Probably we will be able to come out very clearly in the next quarter. In the meantime, what we have seen — the aspiration for us is in the third year, we should be achieving a turnover of INR1,000 crores and whether it can be organic or inorganic. and we are also as surplus capacity, etc. And we will be able to come out with a very clear strategy. But having said that, we’ll not wait for the strategy work to complete so that we will start the work out of that. We will do the things [Indecipherable] in such a manner. We will be able to meet our aspirational goal.

Surya Patra — PhillipCapital (India) — Analyst

Okay. Okay. Just one clarification. So sir, in the last call, you had mentioned about Revlimid, that you have already settled that and you are also likely to be launching the product before — or in the first wave itself. So could you throw some light there, sir?

Puvvala Yugandhar — Chief Executive Officer of Eugia Pharma Specialties Limited

I’m not sure like whether we said it is first wave. We do have a settlement, and we are expected to launch the product in FY ’24. And beyond that, because it is confidential settlement matters, we cannot say more than that. But yes, we will be launching in FY ’24.

Surya Patra — PhillipCapital (India) — Analyst

Sure. Okay. Thank you, sir. Thank you for taking my question.

Operator

The last question is am Naga Sridhar.

Naga Sridhar — Hindu BusinessLine, Hyderabad — Analyst

Yeah, good morning. I’m Naga Sridhar from Hindu BusinessLine, Hyderabad. Am I audible?

P. V Ram Prasad Reddy — Non-Executive Director

Yes, perfect.

Naga Sridhar — Hindu BusinessLine, Hyderabad — Analyst

Yes, sir. I just would like to know the raw material import scenario from China in terms of fast wise and quantity wise.

P. V Ram Prasad Reddy — Non-Executive Director

Yes. Chairman also will tell, I also will just take this became over intelligent in recent past. Nithyananda Reddy, can you tell?

Naga Sridhar — Hindu BusinessLine, Hyderabad — Analyst

Sir, I was just asking about the raw material import issue from China, sir.

P. V Ram Prasad Reddy — Non-Executive Director

There is not much issue in the raw material import, but only thing is because of the telling the input price increase just like that they are increasing the prices. And also, there is internal some issues out there because of the Winter Olympics, controls on the manufacturing. Because of that, also shortages are there. So let us see the — let this Olympics are over, then we’ll see what happens.

Naga Sridhar — Hindu BusinessLine, Hyderabad — Analyst

Okay, sir. Thank you very much.

Operator

Thank you. I would now like to hand the conference over to Mr. Arvind Bothra for the closing comments.

Arvind Bothra — Investor Relations Department

Thank you all for joining us on the call today. If you have any of your questions unanswered, please feel free to keep in touch with the Investor Relations team. The transcript of this call will be uploaded on our website, www.aurobindo.com, in due course. Thank you, and have a great day.

P. V Ram Prasad Reddy — Non-Executive Director

Thank you.

Operator

[Operator Closing Remarks]