FDC Ltd (FDC) Q2 FY23 Earnings Concall Transcript

FDC Ltd (NSE:FDC) Q2 FY23 Earnings Concall dated Nov. 15, 2022

Corporate Participants:

Varsharani Katre — Company Secretary and Compliance Officer

Sanjay Jain — Chief Financial Officer

Unidentified Speaker —

Mayank Tikkha — Associate Vice President Business Development and Commercial Excellence

Ameya A. Chandavarkar — Chief Executive Officer International Business & Executive Director

Analysts:

Ajay Sharma — Maybank — Analyst

Neelam Punjabi — Perpetuity — Analyst

Uttam Purohit — Perfect Research — Analyst

Yagna Pathak — Centrum Broking — Analyst

Prakash Agarwal — Axis Capital — Analyst

Amit Doshi — Care PMS — Analyst

Samarth Singh — TPF Capital — Analyst

Jayant Mamania — Care PMS — Analyst

Rajat Setiya — ithought PMS — Analyst

Sajal Kapoor — Independent Investor — Analyst

Saket Kapoor — Kapoor and Company — Analyst

Mohammed Patel — Care Portfolio Managers — Analyst

Presentation:

Operator

Ladies and gentlemen good day and welcome to FDC Limited Earnings Conference Call for the Quarter and Half Year Ended September 30th 2022. As a reminder all participant lines will be in a listen-only mode. And there will be an opportunity for you to ask questions after the brief highlights on the financials from the management. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Ms. Varsharani Katre, company’s Secretary and Compliance Officer of FDC Limited. Thank you, and over to you ma’am.

Varsharani Katre — Company Secretary and Compliance Officer

Thank you. Good afternoon everyone and welcome to all of you. Glad to connect with you all for this quarter and half year ended earnings call. We have already disseminated the financial results for the quarter and half year ended September 30, 2022 and the investor presentation as well.

Now I would like to introduce the FDC team present in this earnings call. We have with us Mr. Nandan Chandavarkar, Joint Managing Director; Mr. Ameya Chandavarkar, CEO International Business and Executive Director; Mr. Sanjay Jain, Chief Financial Officer; Mr. Mayank Tikkha, AVP Business Development and Commercial Excellence; Mr. Harshal Jain, Manager, Corporate Strategy.

We will begin the earnings call with the highlights on financial result of the company by Mr. Sanjay Jain, CFO, followed by an interactive Q&A session. There might be certain forward-looking statements. These statements are subject to certain risks and uncertainty since they are based on certain assumptions and expectation of future events. I would request all the speaker participants to restrict their queries to five minutes only and avoid repetitive queries to save up on the time.

With this, I shall now hand over to Mr. Sanjay Jain, CFO. Sanjay over to you.

Sanjay Jain — Chief Financial Officer

Thank you Varsha. Good afternoon all. This is Sanjay Jain. I will briefly take you through the financial results on a quarterly and on half yearly basis September ’22.

To begin with on the revenue side, the revenue growth on a Y-o-Y basis is at 12% for September ’22 quarter and 11% on a half yearly basis. This growth has been contributed by all the business vertical for the quarter as well as half year. Coming to the domestic formulation business, it has continued its growth trajectory and it has given the growth of 6% in spite of the higher base of the last year when we have achieved the growth of 45% over its last year on a half yearly basis.

And also to be noted that in the last year, means in the year ’21-’22 the sales include a certain product which are related to the COVID therapy. So, which are not there in the current year. So if we want to have a like-to-like comparison on a growth basis, this growth would have been somewhere around 11% to 12%. The growth in the current financial year has largely been driven by our major brands like Electral, Enerzal, Zocon, Simyl MCT Oil. They all grew by double digit growth rate. We are also happy to inform you that our brand Electral has become the first FDC brand to cross INR350 crore mark on MAT September ’22 basis.

Coming to the export business, on a revenue which is up by 68% on a Y-o-Y for formulation business and 31% for the API business on a quarterly basis. And on the half yearly basis it’s up by 48% for the formulation business and 28% for the API business. The increase in the formulation business is largely on account of the increased supplies to our US customers, which are four times higher than the last year six month. This growth is also supported by the other geographies as well.

On the other income, on a half yearly basis it has reduced on account of the overall reduction in the treasury side as compared to last year. As this year we have paid out a buyback amount and as well as some of the capex expenditure, which are going on at our plants and our corporate office.

Coming to the gross margin, which have been impacted in this current quarter by 2% on account of the elevated price of raw and packing material, which has an impact of INR23 crore in absolute terms for the quarter. However with the inflation is getting stabilized and supply chain getting normalized, we may see some kind of a respite in the elevated COGS level going forward, which can be seen in the current gross margin improvement from the current Q2 versus the immediate quarter one. This COGS level can be further eased with the increase in our SG sales price as we have taken the price rise on our scheduled formulation at around 12% — 10% to 11%, which will have a positive impact on our margin going forward.

On the employee cost, which is maintained at 20% of our revenue and which is marginally lower than the compared to the last year same period owing to the increased revenue base. However in absolute term it has increased on account of newly launched division in our domestic formulation business and as well as also on account of the annual appraisal cycle.

On the operating expenses, which has gone up or increased, which are mainly on account of increase in the sales and marketing expenses as well as in the manufacturing and the logistics cost. So these costs have increased with the increase in the overall revenue base of the company. With this, the overall EBITDA margin now stands at 18% as against the last year 26%.

I will now hand over this to Varsha to take the proceedings further. Thank you.

Varsharani Katre — Company Secretary and Compliance Officer

Thank you Sanjay. So now I request moderator to initiate with the Q&A session.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] First question is from the line of Ajay Sharma from Maybank. Please go ahead.

Ajay Sharma — Maybank — Analyst

Yeah, hi, thanks for the update. I just wanted to check on your comment regarding the price increase on your scheduled products 10% to 12%. Wasn’t the price increase supposed to be effective from April and then the benefit was supposed to flow through in Q2, but we haven’t seen really the gross margin improve so much. So what are you seeing, is the benefit going to come in Q3 onwards or you saw part benefit in Q2 and the balance will come in Q3. If you could clarify?

Unidentified Speaker —

Yes, so from the regulation perspective, the scheduled formulation can be made effective the price increase from the first April. But with the practical implementation of increase in the price that can go up to end April or the first or second week of May. As regard to the non-scheduled formulation, these are eligible to increase 10% on a moving average basis on a 12-months period. And we — as you said there are pressure on the margin, so if you look at our margin as compared to Q1, there is a improvement in the margin. However, since the increase in the raw and packing material prices are more than the increase in the sale price increase, that’s why there is a pressure on the gross margin. But having said that, going forward since the prices are now getting stabilized and the full price benefit, which will be available in the coming quarters, so there will be some kind of a stabilization in the gross margin.

Ajay Sharma — Maybank — Analyst

So yeah, my question was on this full-price benefit. So hasn’t the price increase for the scheduled products already fully available in Q2 and then for non-scheduled also?

Unidentified Speaker —

So for scheduled, yes. And for non-scheduled, it’s like a moving average, every month there are certain products to get eligible for the price increase.

Ajay Sharma — Maybank — Analyst

So when you’re saying full price benefit, you are talking about benefits from the non-scheduled products price increase, is it?

Unidentified Speaker —

Full price benefit from the schedule formulation, because that is —.

Ajay Sharma — Maybank — Analyst

But scheduled should have come through in Q2 itself, right, because if the price increase happened by April-May, shouldn’t you have got the benefit in Q2 itself?

Unidentified Speaker —

Yes.

Ajay Sharma — Maybank — Analyst

So scheduled all the benefit has come in Q2. That is my question basically.

Unidentified Speaker —

Yes, yes.

Ajay Sharma — Maybank — Analyst

Or do you expect further benefit in Q3?

Unidentified Speaker —

So that benefit will continue in the Q3 and Q4 as well.

Ajay Sharma — Maybank — Analyst

And then how much was export incentive, which you’ve recorded in the first half? The profit gain?

Unidentified Speaker —

Profit?

Ajay Sharma — Maybank — Analyst

Profit share.

Unidentified Speaker —

So the first half, we recorded INR32 crores.

Unidentified Speaker —

No, that is not profit share, that is just the sales from the US, right. So he is asking a specific question on profit share.

Unidentified Speaker —

That’s INR32 crore first half.

Ajay Sharma — Maybank — Analyst

Okay. And then lastly, you talked about the domestic business and new divisions. Can you expand on that what division is that and also on I think you had — what’s the status on new ophthalmology launches in US?

Mayank Tikkha — Associate Vice President Business Development and Commercial Excellence

So, hi this is Mayank Tikkha. I’ll explain you the domestic front of new division. So what Sanjay mentioned earlier, we have launched this financial year a division called Zocon, which mainly caters to our dermatological range of products. Now Zocon is a flagship brand in our kitty for last 15 years to 20 years. So we have carved out a separate division to create this niche within the FDC family. So the expansion size of this new division was approximately 500 odd people, which we undertook in this financial year.

Unidentified Speaker —

And what was your question on the US side?

Ajay Sharma — Maybank — Analyst

New launch on the [Speech Overlap] I think you were [Speech Overlap]

Unidentified Speaker —

Yeah. We have not — we have not scheduled any right now. Or you are saying the remaining this financial year, right?

Ajay Sharma — Maybank — Analyst

Yes.

Unidentified Speaker —

Yeah, so nothing scheduled. It’s going to be the existing products that we’ll keep selling.

Ajay Sharma — Maybank — Analyst

Because you had some filing, right. So you haven’t got any more approvals on the ophthalmology products is it?

Unidentified Speaker —

There is one product, which we are waiting to launch. But we haven’t scheduled it yet.

Ajay Sharma — Maybank — Analyst

Okay. Thank you so much.

Operator

Thank you. The next question is from the line of Neelam Punjabi from Perpetuity. Please go ahead.

Neelam Punjabi — Perpetuity — Analyst

Hi, thank you for taking my question. So my question is on the domestic business. We have seen that our secondary sales have grown at 13.5% Y-o-Y during Q2 FY ’23. And — but the reported revenues have only grown at 6.4% Y-o-Y. So what is the thesis behind this slower growth on the reported side?

Unidentified Speaker —

So there will be always a gap between our primary sale and a secondary sale. The reason could be between the supply that has happened from our side and the supply that has happened from the secondary side.

Neelam Punjabi — Perpetuity — Analyst

Yeah, but directionally, you know, the growth should be on similar lines, right? So I still didn’t understand why is the difference?

Unidentified Speaker —

So you are talking about the financial number and the market numbers?

Neelam Punjabi — Perpetuity — Analyst

Yeah, the IQVIA number growth that you have [Speech Overlap]

Unidentified Speaker —

Yes, IQVIA numbers will never reflect the kind of growth and the kind of volumes what the financials do show because there is a huge inventory out there in the market, which is worth almost for one month sale or sometimes it becomes 1.5 times also. Now if I take you back to last year because of COVID, the upsurge in the market was very, very high side. The demand levels have gone very high. And that is why the stock inventories in those times at the market front was huge, which was not normal as compared to the traditional pharma business. So this is leading to the gap in the IQVIA reported numbers and our internal reported numbers, which is also true for other companies also, if you look at some other companies also, this gaps are there across.

Neelam Punjabi — Perpetuity — Analyst

Got it, okay. Secondly, so I was referring to your investor presentation and there you all have shown growth on the prescription side. And for first half, you’ll have for overall FDC you all have shown a 51% growth. I was not being able to understand if you please explain this slide to me?

Unidentified Speaker —

Yeah, so before I explain 51% for FDC, you look at the IPM growth also. The IPM growth is 47%. Now why this is coming, I’ll tell you, because last year the sales were very high, the secondary sales, but because of the restrictions due to COVID, the prescription sale has gone down. So this year, it is a normal scenario and that is why not only FDC, even the IPM is showing a very high robust growth in terms of prescriptions. So I would say this slide has to be read in that fashion, that IPM is growing by 47%, FDC is ahead and growing by 51%.

Neelam Punjabi — Perpetuity — Analyst

Got it. Understood. This is very helpful. Could you provide a break-up of your growth during the quarter between volume, price and new product introductions?

Unidentified Speaker —

Yes. So, I can share with you the math — you have the second quarter? If you want I can share right now on a MAT reflection, not for the quarter. MAT, our volume growth is 5.9 [Phonetic], price growth is 5.3 [Phonetic] and new product is 1.4 [Phonetic]. The total reflected growth is 12.6 [Phonetic].

Neelam Punjabi — Perpetuity — Analyst

Okay. Next my question is on the PCPM, [Indecipherable] productivity we are — for the quarter standing at about 3.5 lakhs per MR per month, which is largely flat on a Y-o-Y basis. And at the same time our fixed cost including staff costs has gone up significantly. So also the industry is running at an average of about 6 lakhs, 6.5 lakhs of PCPM. So are we intending to — what efforts are we taking to take this up and do we intend to get to the near industry level PCPM?

Unidentified Speaker —

So as I explained in my previous reply, the PCPM is always reflecting of the expansions. Now if you look at the last two, three years trajectory FDC has moved in terms of [Indecipherable]. If I remember correctly last year first half PCPM [Phonetic] was almost 3.75 to 3.8. But yes, as I’ve said we expanded in the month of January last year almost by 550 people were inducted into the system. Now why this has been done? This is just to diversify our portfolio and to work on our strength areas.

In my last call also probably we explained that we are not only now focusing on antibiotic ORS, but also on dermatologicals, nutraceuticals and cardio-diabeto basket. For this, there was a definite need for us to expand because the current divisions are saturated and cannot handle more products. So again, there was an elective choice that we made just to work on our top lines because our last year bases were quite swelled up because of our antibiotics and ORS sales going up. So we took a conscious call of inducting one more division into the field. Having said this, we are very confident that we are moving in terms of PCPM over a period of time. And this year we will try to match what we reflected last year during the upsurge of the COVID itself.

Neelam Punjabi — Perpetuity — Analyst

That is helpful. But in the near term do we have a target to get to where the industry is? Or you [Speech Overlap]

Unidentified Speaker —

Yeah, so again there is a gap in the industry. I do agree what you are saying. Many of the companies are — higher peer groups are operating at a higher, but what we are concentrating right now is journey towards that PCPM. Now if you look at our trajectory in the last three, four years, yes, we have shown great improvement over there. But it is the work on the go, which continues as we move forward.

Neelam Punjabi — Perpetuity — Analyst

Okay. thanks. I’ll get back to the question queue.

Operator

Thanks. The next question is from the line of Uttam Purohit from Perfect Research. [Operator Instructions] Thank you.

Uttam Purohit — Perfect Research — Analyst

Yes, hello?

Operator

Yes, Uttam. Please go ahead.

Uttam Purohit — Perfect Research — Analyst

Yeah, my question was regarding the MRs, medical representatives. Like how has the growth of MRs been from the last couple of years. And when do we expect their contribution start adding to the top line?

Unidentified Speaker —

So you’re talking about the new division?

Uttam Purohit — Perfect Research — Analyst

Overall.

Unidentified Speaker —

So as I said we inducted almost 550 additional people last year. And yes, the contributions are there because again it was not only a new division we have diversified our portfolio into various segments. As of now, most of the divisions are contributing, yes, one of the divisions that is Lumina, which had Azithromycin is the only division, which is slightly on a non-performance mode. This is mainly attributed to the Azithromycin upsurge last year what happened.

Uttam Purohit — Perfect Research — Analyst

Okay. That’s all from my side. Thank you.

Operator

Thank you. Next question is from the line of Yagna Pathak [Phonetic] from Centrum Broking. Please go ahead.

Yagna Pathak — Centrum Broking — Analyst

Yeah, thank you. So basically I wanted you to — if you can repeat the absolute impact of the raw material. This — so what was the figure that you were stating of elevated raw material?

Unidentified Speaker —

Yeah, quantification of the impact of the increase.

Yagna Pathak — Centrum Broking — Analyst

Yeah.

Unidentified Speaker —

INR23 crores.

Yagna Pathak — Centrum Broking — Analyst

INR23 crores. Okay, that’s it. Thank you.

Operator

Thank you. The next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead.

Prakash Agarwal — Axis Capital — Analyst

Yeah, hi, thanks for the opportunity, good afternoon. Just wanted to check if there was a comment made on the price hike. So, you mentioned the price hikes have been fully taken for scheduled and non-scheduled drugs or is yet to be taken?

Unidentified Speaker —

Yes, we have taken.

Prakash Agarwal — Axis Capital — Analyst

Sir, why is the gross margin not reflecting? I understand costs have increased, but since majority of the business more than 50% is India, there should have been a gross margin positive impact, but we couldn’t see that. So what is missing here?

Unidentified Speaker —

Okay. So what I explained in the initial conversation that, see the increase in the raw material and packing material price are higher than the increase in the sale price. So that’s why the overall gross margin looks on the lower side as compared to last year. But at the same time if you look at the gross margin of Q2 and you compare with the immediate previous quarter, means the Q1, we will see some kind of about a 1% improvement in the gross margin, because from the Q2 we have started taking the full benefit of price rise.

Prakash Agarwal — Axis Capital — Analyst

Okay. And how do you think this will pan out in Q3, Q4 given that the volumes etc. will also increase. And prices might be moderating, is there any color there?

Unidentified Speaker —

Yeah, so with the prices getting stabilized and the sale price which had the full impact on the overall margin, we’ll have a more stable margin going forward rather than the increasing trend, which we saw in the first two quarters.

Prakash Agarwal — Axis Capital — Analyst

So you are saying it will stabilize, not increase gross margin, is what I want to ask.

Unidentified Speaker —

So unless we see a drop or the correction in the raw material and the packing material prices.

Prakash Agarwal — Axis Capital — Analyst

Okay, which currently you are saying is stable, but not corrected to some extent.

Unidentified Speaker —

Yes.

Prakash Agarwal — Axis Capital — Analyst

Okay. Okay. And if you could just also help us with some of the key launches that you’re planning for this year?

Unidentified Speaker —

So we have not planned major launches this year. It is only a line extension. Yes, one launch has been done very recently in our cardio-diabeto portfolio that is the sitagliptin once it came off patent. Couple of line extensions from Enerzal has been planned already. Enerzal Zero has already been launched in the PET bottle. The powder formulation is on the way. So yes, couple of line extensions are there. If everything goes as per our plan we might come up with one more liquid formulation, quite similar to what is there in Enerzal, Electral kind of a category, which we are planning to launch somewhere around January or February.

Prakash Agarwal — Axis Capital — Analyst

Okay, fair enough. And lastly just wanted to understand the deviation versus AICD data point, which was showing you know mid teen kind of growth versus what you’ve reported. So why such a big divergence?

Unidentified Speaker —

So I explained in my previous reply, this is majorly because of a high inventory front in the marketplace which happened during the COVID period. Since the demand levels were very high, the off takes were very high at the secondary and tertiary level. So obviously the stock inventories went very high during those COVID times, which are now getting stabilized. So obviously the market reflected growths across the board, across the companies are on a higher side as compared to what the internal numbers do reflect. But these are going to stabilize as we move forward, because last year COVID was on the dropping side as we moved into October, November, kind of a scenario. So maybe in the third quarter probably these numbers would come very close to each other.

Operator

Is your question answered? Hello, Amit?

Amit Doshi — Care PMS — Analyst

Hello?

Operator

Yes Amit, just wanted to check, is your question answered?

Amit Doshi — Care PMS — Analyst

No, no.

Operator

I’m sorry. So you will be the next caller Amit. We have the next caller from the line of Amit Doshi from Care PMS. Please go ahead.

Amit Doshi — Care PMS — Analyst

Yeah, hi. Our export numbers have again now started coming back. So is the exports should contribute to a better margin profile or its otherwise? Can you clarify. Hello?

Unidentified Speaker —

On our export business these largely contributed by the US market. And you all know the margin in US are quite high as compared to any other market. So if the export is more related to the US, obviously there will be an improvement in the margin.

Amit Doshi — Care PMS — Analyst

Okay. So our sales to — I mean our export bifurcation doesn’t include US significantly.

Unidentified Speaker —

It is, it is.

Amit Doshi — Care PMS — Analyst

Okay. So then margins why it is again only the raw material cost is the reason, I mean –.

Unidentified Speaker —

Yes. So, as of now the [Speech Overlap]

Amit Doshi — Care PMS — Analyst

Historically if you see our margins have been 20%, 22% type of a range. Now post COVID the fall which has come we are — when are we likely to see those levels back?

Unidentified Speaker —

So, as of now the — since the prices of all the raw and packing materials are on the higher side. So unless those gets corrected to some extent, till then we have to sustain at the current gross margin level only.

Amit Doshi — Care PMS — Analyst

Okay. Okay. Fine. Fine. Okay, thank you.

Operator

Thank you. We have the next question from the line of Samarth Singh from TPF Capital. Please go ahead.

Samarth Singh — TPF Capital — Analyst

Yes, good afternoon. Thank you for the opportunity. On a half year basis as the part of 350 bps increase in our operating expenses. Can you just tell the line items that are causing the [Speech Overlap]

Unidentified Speaker —

Sorry, we can’t hear you.

Samarth Singh — TPF Capital — Analyst

Am I audible now?

Operator

Yes.

Unidentified Speaker —

Speak a little louder please.

Samarth Singh — TPF Capital — Analyst

So on a half-year basis, our operating expenses to sales have gone up by about 350 basis points. Could you just walk us through that, the line items that are affecting that?

Unidentified Speaker —

Yeah, so mainly it is because of the sales and marketing expenses, which just now we discussed that we have launched recently, our new division called Zocon where we added close to 550 odd people, so because of that there is an increase in the overall sales and marketing expense along with their traveling allowances, which is one of the main reason for the increase in the other operating expenses for the first half.

Samarth Singh — TPF Capital — Analyst

Okay. So, freight is no longer having an effect on the operating expenses?

Unidentified Speaker —

Yeah, so there is also an increase on the freight cost both on the domestic as well as international. But the impact is not as high as on the sales and marketing expenses.

Samarth Singh — TPF Capital — Analyst

Okay. And in Q1, we had two one-offs. One was the INR15 crore mark-to-market on our financial instruments, and the other one was some sort of accounting for promotional expense that comes depending on the receipt of the material. So have those two sort of both been nullified on a half year basis?

Unidentified Speaker —

Yes, yes so the first one, what we said that INR15 crore mark-to-market that completely got reversed in the Q2. And secondly, what you said on the receipt basis, the same reason why these sales and marketing costs has gone up because there are some advanced procurement as compared to the same period last year by about INR10 odd crore.

Samarth Singh — TPF Capital — Analyst

Okay. See, I mean advanced procurements are going to continue for the rest of the year. Does it just increase sales and marketing expense for the new division, correct?

Unidentified Speaker —

No, this advanced procurement going forward into Q3 and Q4 will get rationalized. So that it will be more comparable to the previous financial year.

Samarth Singh — TPF Capital — Analyst

And you said it was INR10 crores for the half year. Right?

Unidentified Speaker —

Yes. For the first half versus the last year first half.

Samarth Singh — TPF Capital — Analyst

Okay. That’s it from my side. Thank you so much.

Operator

Thank you. Next question is from the line of Jayant Mamania from Care PMS. Please go ahead.

Jayant Mamania — Care PMS — Analyst

Yeah, good evening. Sir, as previous speaker, Amit Doshi said, during last 10 years, the margins were around 23% operating margins. During last six months it has come down to 13% from 17% in March ’22. Just wanted to understand that, in case of Enerzal, Electral and Zifi we are category [Indecipherable] so is it that to protect our [Indecipherable] we are not increasing the price or there is a regulation, which is not allowing us to raise the price?

Unidentified Speaker —

So Electral and Zifi both are under the price control and whatever the upper limit is allowable under the scheduled drugs, we are taking that effect into our sales price. Enerzal of course is not under the price control. And as far as the margin contribution which we saw in the previous years, so at that time the prices of the raw material and packing material was not that high as compared to in the last year or so. So, which has impact of on the overall gross margin close to 4% to 5% in the last one year period.

Jayant Mamania — Care PMS — Analyst

So if the raw material prices subsides, so will there be rise in our operating margins? Say in the next four quarters.

Unidentified Speaker —

If it is. Yeah.

Jayant Mamania — Care PMS — Analyst

Okay. Okay. Okay. So can you tell us how is the competition in case of Electral?

Unidentified Speaker —

Sorry?

Jayant Mamania — Care PMS — Analyst

Who are our competitor in case of Electral?

Unidentified Speaker —

So Electral, we’ve already shared in our presentation we enjoy a 74% market share. But our direct competitors apart from our own brand are Walyte, Prolyte, these are couple of brands, which are majorly there. Walyte holds approximately 13% of market share.

Jayant Mamania — Care PMS — Analyst

Okay. Okay. Okay, thank you. Thank you. Thank you and all the best.

Operator

Thank you. The next question is from the line of Rajat Setiya from ithought PMS. Please go ahead.

Rajat Setiya — ithought PMS — Analyst

Hi. Thanks for the opportunity. So sir basically as per one of our slides, we can see that we are number one in almost six pocket of 10 products that we are selling. So — and we enjoy a very high market share of up to even 75%, so, which is quite commendable and speaks volumes about the execution capabilities of the management team. And congratulations for that. Sir, my question is, for these six products, the end category of these six products end market, at what rate is that growing?

Unidentified Speaker —

So again these six were of a very diverse, but to answer your question, yes, we are trying to expand the market itself. As you said, we are in a leadership position over here. But if I can share the growth numbers for these couple of brands, for H1 — for H1 Electral has shown a growth of 30.5% [Phonetic], Zifi has shown a growth of 11.1% [Phonetic], Enerzal has grown by 37.9% [Phonetic], Vitcofol has grown by 14.6% [Phonetic], Zifi CV has shown a growth of 15.7% [Phonetic], and Zifi O has shown a growth of — Zifi O has not shown a growth, it is stagnated. So out of six, five are in high double-digit growths. And this probably is driving our way forward in the marketplace.

Rajat Setiya — ithought PMS — Analyst

Sure. And in terms of — so are we gaining market share for where — wherever we are below 50%. Are we still gaining market share or do you think [Speech Overlap]

Unidentified Speaker —

Yeah, so we have shared in our presentation, in Electral, we are maintaining our market share because I hope you will understand, we enjoy a 74% market share in Electral. For Zifi, we have definitely grown up, if you look at in September ’20 on a MAT basis, we were 23.9% [Phonetic], which now has moved to 24.7% [Phonetic] on a MAT basis. Here also, we are more or less maintaining our market share on a high percentage, where it’s very, very close to 25%. If you look at Enerzal also, we are maintaining our market share of almost 42% plus. As far as other products are concerned, yes, in Zifi CV we have increased the market share and Zifi O also we have increased the market share.

Rajat Setiya — ithought PMS — Analyst

Sure, sure.

Unidentified Speaker —

If you want the details, Zifi CV, our market share now stands at 49.3% and Zifi O our market share stands at 14.6%.

Rajat Setiya — ithought PMS — Analyst

Thanks, thanks for this. And sir, of the overall domestic portfolio, how much of our sales is actually under the price control list and [Indecipherable] list.

Unidentified Speaker —

So, it’s around 46%.

Rajat Setiya — ithought PMS — Analyst

Okay, all right. The other question is about the decline in margin that we have seen over the last probably five, six quarters. So is it all this decline has been all because of rising raw material costs and other operating costs or there has been some pressure on the realizations also?

Unidentified Speaker —

No, mainly on account of the increased prices only.

Rajat Setiya — ithought PMS — Analyst

Okay, mainly on increased price. Okay. And sir finally we have D2C products also, so what is the contribution from there at the moment?

Unidentified Speaker —

Yeah, so that’s very insignificant as compared to our overall revenue.

Rajat Setiya — ithought PMS — Analyst

And is that an area of focus?

Unidentified Speaker —

Not exactly. We are working on this with couple of brands only, that is Enerzal and Electral. But from a marketing standpoint, we are still dependent on our prescription business for these products.

Rajat Setiya — ithought PMS — Analyst

Okay, all right sir. Thank you so much, wish you all the best.

Operator

Thank you. [Operator Instructions] Next question is from the line of Sajal Kapoor, as an Independent Investor. Please go ahead.

Sajal Kapoor — Independent Investor — Analyst

Yeah, hi, thanks for taking my question. Sir any details you can share around our proposed expansion into nutraceuticals/functional foods?

Unidentified Speaker —

Yeah, so two years back, we have come up with our separate vertical, which is Nutrica. As you know that we had our food basket where the leader brand was Simyl MCT, which was marketed by couple of divisions across the board. So we did consolidate our nutraceutical products in that one vertical. So that was a new division, which we launched two years back. I’m glad to tell you that there were couple of brands, which were having a lot of potential in the marketplace, but we couldn’t do justice in the past. Last two years this division definitely has moved up from roughly a volume estimate of INR32 crores two years back. This year we would be touching somewhere around INR68 crores to INR70 crores from this portfolio itself.

Just to mention couple of brands, as I said Simyl MCT was our flagship brand. MumMum was one brand, which we had from a long period of time has been doing really well. This is an infant formula and also our flagship brand Zefrich which is in protein market is also doing very well. So yes, we are focusing directly through this division on the nutraceutical products. Apart from this couple of brands have also been launched into functional foods and into various other divisions catering to the respective specialties covered by those divisions.

Sajal Kapoor — Independent Investor — Analyst

Excellent. So I mean there is humungous growth runway ahead in these areas. Yeah, glad to hear all that update. Secondly, the annual report mentions about CE Mark ophthalmic medical devices in Australia and other markets, to me that’s definitely a sign of confidence, but don’t you think we are a rather late entrant in this space? Any colur around the CE Mark ophthalmic medical devices please?

Ameya A. Chandavarkar — Chief Executive Officer International Business & Executive Director

Sure. Sajal, this is Ameya Chandavarkar. We have these — we have these products. I think you’re referring to hypromellose and some of the products that we intend to launch the product. So we already have these products. And so, it’s just a matter of finding these products in certain markets where the incremental cost is only a filing cost and a registration cost and then we can continue manufacturing and supplying these products. So you’re right that maybe it’s not going to change our P&L or balance sheet, but it will add to our basket of products that we sell in international markets.

Sajal Kapoor — Independent Investor — Analyst

Definitely, definitely Ameya. And if I could ask you one quick question on this Latin America and the Middle East, which are relatively newer markets for us, but we are growing very well, if our annual report — the latest annual report is anything to go by. So it will be helpful if you could share some direction over there and maybe if you can share medium term say, three year to five year kind of vision in terms of sales and operating margins where you want to be, aspirationally.

Ameya A. Chandavarkar — Chief Executive Officer International Business & Executive Director

So you mentioned Latin America and Middle East, in both these regions, currently sales are — the base is quite low. So we can grow much faster, there is a lot for us to do in general in exports and international business. Specifically in these two regions we are currently registering more products, we have a decent business in Peru, we’re doing business in Chile. So it’s a matter of time where I think from this year, we’ll probably end at about 200 crore, 220 crore of international business formulation. We are targeting by end of FY ’25 to be with our two subsidiaries in the range of about INR450 crores to INR500 crores. So — and with heavy margins.

Sajal Kapoor — Independent Investor — Analyst

Right. And in terms of the consolidated vision, let’s say a five year vision, where as an organization would you like to be in terms of sales and margins?

Ameya A. Chandavarkar — Chief Executive Officer International Business & Executive Director

So now you talking about overall as a company?

Sajal Kapoor — Independent Investor — Analyst

Overall, yes, at the company level overall including the domestic and the international.

Ameya A. Chandavarkar — Chief Executive Officer International Business & Executive Director

So if you look at in a large [Speech Overlap]

Sajal Kapoor — Independent Investor — Analyst

Any broad brush — any broad brush guidance would be helpful.

Ameya A. Chandavarkar — Chief Executive Officer International Business & Executive Director

Yeah. So if you look at the last two years to three years, if you can maybe to an extent discount for the pandemic, so we’ve been in the high double-digit range, right, of growth. So 15% to about 20%, and that’s really what we want to continue to deliver. And get back to the earlier margins. There had been a few questions on margins. So the goal will of course be to revert to margins that we enjoyed maybe a few years ago. And then also grow the top line. So overall, we will work on productivity, we are looking at CAGR for the next three years to five years of at least 15% to 18%.

Sajal Kapoor — Independent Investor — Analyst

That’s very helpful, detailed inputs and good to hear your thought process around that. And wish the entire team the very best. Thank you.

Ameya A. Chandavarkar — Chief Executive Officer International Business & Executive Director

Thank you.

Operator

Thank you. The next question is from the line of Saket Kapoor from Kapoor and Company. Please go ahead.

Saket Kapoor — Kapoor and Company — Analyst

And thank you for the opportunity. Sir, firstly if you could give us the impact of seasonality in our sales number, when we look at our revenue profile, what shall one factor into the seasonality aspect sir, barring that last year COVID factor has been articulated, taking that also aside, our June sales were INR493 crores, whereas for September it is down to INR446 crores.

Unidentified Speaker —

So yes, the seasonality is there because broadly we operate with ORS, energy drink and antibiotics. So ORS, energy drink definitely our products, which out performed during the summer season and the heat around. And antibiotic peaks are also during the second quarter typically. So what we have seen up till now, if you look at our trajectory in the last couple of years back, we were dominated by our antibiotic sales where traditionally we were peaking during the second half — second quarter itself. And because of our Electral business, which was predominantly a push element created by us from January onwards, we did see high quantums coming in the fourth quarter. But moving forward or during the COVID period as the demand went up and we also changed our strategy over a period of time, typically the first quarter and the second quarter are the peak quarters for us. Third quarter becomes a lean season because neither of our ORS, energy drink or antibiotic has the seasonal trend over there. And fourth quarter again gets supported by the Electral push element. So our endeavor over a period of time is to mitigate this seasonality part of it by diversifying our portfolio and create newer avenues for our existing brand in the off-season scenario also. So what we have done is successfully in the last two years that two quarters we have mitigated the seasonality only the third quarter you will see that there is a fall in overall volumes as we move forward.

Saket Kapoor — Kapoor and Company — Analyst

Okay. So taking my next question sir, so the H2 will look linear than what H1 has been. So that is the business set up for the organization?

Unidentified Speaker —

Yes, yes. H1 is always on a higher side. H2 would be lower. And this is majorly is because of the antibiotic sales, which goes down across the board.

Saket Kapoor — Kapoor and Company — Analyst

Okay, sir. And sir other aspect was about this packaging material part of the story. I think INR23 crore is the figure you mentioned for the second quarter. So for the first half what was the total impact just on account of increased packaging costs?

Unidentified Speaker —

So first of all this INR23 crore is taking into account the raw material and the packing material both, not only the packing, but it is both.

Saket Kapoor — Kapoor and Company — Analyst

Okay. So by raw material it is related to our products — what we produce directly. And that is not a pass on or a pass on with a lag effect?

Unidentified Speaker —

So we are into the regulated price — we have a regulation on the pricing side. So on a schedule formulation, we can increase to the extent of 10% only on the last year WTA [Phonetic] basis.

Saket Kapoor — Kapoor and Company — Analyst

Correct sir. That’s all from my side. So. Okay, sir. I got the point that H1 would be heavier always and now we are taking steps so that this seasonality aspect can be narrowed down going ahead. So by when can sir we expect this to be narrowing down in terms of revenue and definitely on the bottom line?

Unidentified Speaker —

So as I said, this process is already on if you look at the comparative numbers for last two years, we have tried to narrow it down. But again, beyond the point, it would not be possible as I’ve said, the market of the antibiotic is such that the third quarter always will be lean. So if you would technically grow on all aspects on a quarter-on-quarter basis, that percentage of deviation might remain constant. I hope you understand I was doing INR100 sale, that percentage would remain the same because you tried to grow in each quarter equally, looking at the opportunity, which is available.

So that percentage might not change, but yes we are trying to get some significance out of each quarter and each month for some of our product. And that is the whole endeavor what we have taken in the last two years. And as I said, our new divisions, which have been carved out are not catering to only antibiotic and ORS or energy drinks, these are diverse portfolios. As I mentioned nutraceuticals, cardio-diabeto and Zocon which we did discuss, this in the derma field. So now these product ranges do not have a seasonality.

Saket Kapoor — Kapoor and Company — Analyst

Correct sir. And what is the amount of capex we have done for H1 and what is lined up for H2?

Unidentified Speaker —

So as of now up to H1, the one is our corporate office at [Indecipherable] that is going on. Second, we had the fourth line for the opthalmic at Waluj. And the third major one is at a Sinner plant. So these three are the main capex program that is going on. And for the balance of the same capex will continue.

Saket Kapoor — Kapoor and Company — Analyst

How much have we spent sir as of now for H1 and what is left to be spent for H2?

Unidentified Speaker —

So in terms of — for the office, in terms of absolute value close to INR70 odd crore we already spent including the government premium and all. And on the operational capex side another INR40 crore to INR50 crore we already spent.

Saket Kapoor — Kapoor and Company — Analyst

Sir didn’t get you sir. Total spending is INR70 crore for H1.

Unidentified Speaker —

That is for the office building. And another INR40 crore to INR50 crore for the operational capex budget for the Waluj and the Sinner.

Saket Kapoor — Kapoor and Company — Analyst

Okay. INR120 crore [Phonetic] in totality.

Unidentified Speaker —

Yeah, around that. Yes.

Saket Kapoor — Kapoor and Company — Analyst

And INR122 crore will spent for the total year as a whole, you are giving the whole year guidance?

Unidentified Speaker —

No. So there are few budgets for all the capex, so the capex will be spent over a period of time, which will not be restricted to this financial year. It can spill over to the next financial year as well.

Saket Kapoor — Kapoor and Company — Analyst

Okay. And sir INR70 crore is on the corporate office or any other facility that we are building?

Unidentified Speaker —

No, it’s for the corporate office.

Unidentified Speaker —

Corporate office and R&D.

Unidentified Speaker —

Corporate office, including R&D.

Saket Kapoor — Kapoor and Company — Analyst

Okay. And where it will be housed sir.

Unidentified Speaker —

It’s in Mumbai only.

Unidentified Speaker —

Andheri.

Unidentified Speaker —

Andheri west.

Saket Kapoor — Kapoor and Company — Analyst

Okay. And the date of commercialization?

Unidentified Speaker —

Around close to two years.

Saket Kapoor — Kapoor and Company — Analyst

Okay. Thank you, sir. And all the best.

Operator

Thank you. The next question is from the line of Mohammed Patel from Care Portfolio Managers. Please go ahead.

Mohammed Patel — Care Portfolio Managers — Analyst

Yeah, hi. Can you please break up the revenue growth for Q2 into price growth, volume growth and new products?

Unidentified Speaker —

Yeah, so I did mention the volume growth is 5.9%, the price growth is 5.3% and the new product is 1.4%.

Mohammed Patel — Care Portfolio Managers — Analyst

This is for the MAT basis, right?

Unidentified Speaker —

Yes.

Mohammed Patel — Care Portfolio Managers — Analyst

I want Q2 if you can give, Q2 FY ’23.

Unidentified Speaker —

Q2 are not handy with me. We will share with you.

Mohammed Patel — Care Portfolio Managers — Analyst

Okay. And my second question is, you said the CAGR of 15% to 18% for the long-term vision. So is this sales CAGR or profit CAGR. Just wanted to confirm?

Unidentified Speaker —

Sure. So we will target top line as well as bottom line to be in that range.

Mohammed Patel — Care Portfolio Managers — Analyst

Okay. That’s it from my side. Thank you.

Operator

Thank you. The next question is from the line of Neelam Punjabi from Perpetuity. Please go ahead.

Neelam Punjabi — Perpetuity — Analyst

Yeah, thank you so much for the follow up. Sir long-term our target of 15% to 18% you said just mentioned top line as well as bottom line. Given over the last couple of years our fixed costs have increased at a faster pace than the top line and we understand that you’re investing in your marketing and as well as field force to grow, but can we expect the incremental growth going forward to translate into better profitability growth and margin expansion?

Unidentified Speaker —

So, that will definitely be the goal. Eventually we will have to focus on productivity, we will have to focus on margins too. So, yes.

Neelam Punjabi — Perpetuity — Analyst

Got it.

Unidentified Speaker —

That’s definitely our goal.

Neelam Punjabi — Perpetuity — Analyst

Perfect, thank you. And so in our domestic business, so we have seen that the WPI is at 11% to 12% during the 10 months of calendar year 2022. So are we planning to take another level of price hike in our scheduled formulations from in FY ’24 itself?

Unidentified Speaker —

Yes, so if that is available as per the reports, we are working on it, quite similar to what we did this time, couple of major brands are there like Electral, Zifi we will definitely like to go ahead with that.

Neelam Punjabi — Perpetuity — Analyst

Perfect. Next sir, on the exports business, so we have seen a very healthy growth during first half and Q2 we have hit the INR75 crores in terms of overall exports top line. Was there any one-offs during the quarter or is this the sustainable base going forward?

Unidentified Speaker —

No one-offs, and should be sustainable.

Neelam Punjabi — Perpetuity — Analyst

Perfect. And sir how is our Electral launch in the international market UAE and Myanmar that you had highlighted in the previous calls? How is it progressing?

Unidentified Speaker —

So again nothing extraordinary to share, it’s status quo, so growing slow and steady.

Neelam Punjabi — Perpetuity — Analyst

Okay, perfect. Sir, on the working capital side, so working capital days have increased from 59 days in FY ’22 to about 67 days if I take the trailing 12 months revenue. So what are the reasons behind the same?

Unidentified Speaker —

So as we just discussed that the prices of the raw material, packing material has increased to a significant level. So obviously the overall funds that get locked up in the inventory will be substantially higher than the normal inventory. So that’s the reason one. Plus in the last of the trailing 12 months or the first half of the current financial year, the component of the exports is significantly higher than the last year. And since the credit period in the exports are higher than the domestic, so to some extent that will also contribute to increase in the working capital.

Neelam Punjabi — Perpetuity — Analyst

Sir are we planning to sustain at these current levels or would we see further increase?

Unidentified Speaker —

So it’s very close to peak. I don’t think so there will be any further increase on our working capital cycle.

Neelam Punjabi — Perpetuity — Analyst

Okay. And lastly on the Waluj plant, so [Indecipherable] that we are putting up, this was supposed to completed in November of 2022. So have we seen any delays there?

Unidentified Speaker —

From where have you got this date, Neelam. November 2022, you got a dates that we’re going to complete the project.

Neelam Punjabi — Perpetuity — Analyst

Yeah, as in a couple of years back you’ll had put up a press release that this would be completed in 24 months. So that’s how I just calculated.

Unidentified Speaker —

Yeah, there is a significant delay there. So it will take another two years for it to — as of now that’s what we believe, it will take about two years for it to start manufacturing for commercial reasons. So I’d like Harshal — Harshal is also here I’d him to add.

Unidentified Speaker —

So Neelam we have mentioned that we will be completing the project by November ’22. And what sir mentioned is that we’ll commercialize the facility for US business in — we are planning in next two years, that way. And the project is a bit delayed and we’ll be completing it in the next quarter as well.

Unidentified Speaker —

So I think the date, you probably have is date of installation, not commercial production.

Unidentified Speaker —

Date of commissioning. By the time you have approvals for the US, it will be — yeah, it will take 18 months at least, that’s the minimum.

Neelam Punjabi — Perpetuity — Analyst

Understood.

Unidentified Speaker —

So there is a slight nuance there. Yes.

Neelam Punjabi — Perpetuity — Analyst

Got it. Sir last [Speech Overlap]

Unidentified Speaker —

Yeah, the equipment is already ready. We just finished with the factory acceptance. And it will be shifted I think some time on the second of Jan. We expect a month from there by the time its in the plant. And from there, by the time we do the qualification and get approvals from the US, we are looking at around 18 months.

Neelam Punjabi — Perpetuity — Analyst

Got it. Okay, understood. Very clear. Lastly on the medical representatives show about 3,600. And you said that 550 people we’ve put up for the derma division. Could you provide a split for the other divisions as well cardio-diabeto, nutra, ORS, what’s the MR count in each of these divisions and others?

Unidentified Speaker —

So we would not like to share this, this is too minute to share with the market.

Neelam Punjabi — Perpetuity — Analyst

Okay. No worries. Perfect, thank you so much.

Operator

Thank you. [Operator Instructions] We have follow-up question from the line of Ajay Sharma from Maybank. Please go ahead.

Ajay Sharma — Maybank — Analyst

Yeah, I just wanted to check on the maths for the price increase, right, for the scheduled product. If I look at your first half revenues for domestic, right, last year it was like INR700 plus crore, out of which 46% is under price control just like about INR300 crore, INR350 crore. So if I take 10% price increase on that, it’s like almost INR35 crore, which should flow through to your top line as well as EBITDA and you have offset of INR23 crores on the cost. So I’m just wondering then why is the price increase not able to offset the raw material and packing cost increase?

Unidentified Speaker —

Because in terms of percentage we increasing the raw material prices much higher than the price increase, which is there of the sales price.

Ajay Sharma — Maybank — Analyst

No, but then let’s talk about the price increase. What’s the benefit in part of the price increase on the scheduled products. Isn’t it around INR35 crore for the first half?

Unidentified Speaker —

No, the total — you mean to say the first six months the price benefit.

Ajay Sharma — Maybank — Analyst

Yeah, yeah.

Unidentified Speaker —

Yeah, it could be around INR40 crore to INR45 crore because it is not available for the entire six months, it’s available somewhere around the May period onwards.

Ajay Sharma — Maybank — Analyst

So let’s say what’s the net — net benefit will still be closer to INR30 crore right for the first half?

Unidentified Speaker —

Yes.

Ajay Sharma — Maybank — Analyst

But you said you had the cost increase was INR23 crore from the raw material and packing. Was that Q2 or that was first half?

Unidentified Speaker —

It’s for Q2.

Ajay Sharma — Maybank — Analyst

Okay. So, Q1 would have been similar right?

Unidentified Speaker —

Yeah, by and large.

Ajay Sharma — Maybank — Analyst

So, basically you are saying about INR40 crore, INR45 crore additional costs whereas the price increase is INR30 crore is that the maths?

Unidentified Speaker —

So I will explain you in terms of the quantum margin. So if you look at our Q2 current year versus Q2 last year there is an incremental margin of about INR21 crore. And out of INR21 crores incremental margin, INR30 odd crore has come from the price increase, which you are seeing from the scheduled as well as the non-scheduled products. This INR30 odd crore has been offsetted by close to that INR23 odd crore on account of the raw material, packing material prices. But at the same time, there has been a positive contribution on the export formulation side also by INR15 crore. So if you net it out all these three items, it will be INR21 crore positive.

Ajay Sharma — Maybank — Analyst

Okay. This is the absolute increase in the gross profit. Okay. And [Speech Overlap]

Unidentified Speaker —

There is a drag on the overall margin by close to 2%. If you do the mathematics on that side also, the reason for — will be more or less similar lines.

Ajay Sharma — Maybank — Analyst

Okay, understood. And just a broad top level question, so basically right now your company is probably one of the only domestic pharma company, which is seeing this kind of margin pressure. And if you look at the MNCs or even other domestic companies, they are not seeing this kind of margin pressure. And partly it’s because you have a higher price control range I think. But what is the management — basically where did the management missed the trick like over the last so many years, I think you — or you have not really grown your portfolio, I think you continued to rely on your antibiotics and Zifi and Enerzal and Electral and not really expanded the portfolio and basically that’s what is causing this kind of situation.

So I’m just trying to understand where was the management failure on that count. And also what is the guarantee that what are the investments you are making will really contribute to the top line and improvement in margin because we — as shareholders we don’t want to see a situation where you continue to invest, but the margins continue to remain depressed. And it just keeps remaining a future story instead of seeing the current results. If you can give some perspective on that. Thank you.

Unidentified Speaker —

Yes, so I don’t know from where the data you are referring to was saying the margin pressure is not there on the other companies. Data which we are looking at for the Q2 this year versus the Q2 last year there has been a substantial increase in the overall material consumption levels. So I’m not saying in terms of the absolute, I’m saying in terms of the percentage as well. I would not like to name the companies, but there are seven to eight companies out of 10 where there is a margin pressure on that side.

Ajay Sharma — Maybank — Analyst

Well, not the magnitude, I think if you see the profit decline for FDC is quite steep actually compared to — you can look at the Sanofis or the Abbotts or you look at Eris, all these companies which are, I would say the top domestic companies in terms of — domestic-focused companies, don’t have export component really. But I guess besides that, my question was more in terms of how do you ensure that whatever investments you are making translate into better top line and what’s the kind of time-frame management is looking at to continue to invest before they see the results?

Unidentified Speaker —

Yeah, so to the second part what you said, you are partially right that historically we were dependent on control price molecules like Zifi and Electral. But if you have tracked our progress in the last couple of years, we have deliberately moved ahead from there. And as I said, couple of launches, new divisions what we have carved out are in a different category. So as I said in our last couple of calls also that now apart from antibiotics, we are focusing on Nutraceutical, cardio-diabeto basket and [Indecipherable]. So these are couple of new categories, which we were already present, but we are now trying to make ourselves emphatic. And I hope you will appreciate on that front that Zocon and Nutrica division, which we did talk about are significant progress in this direction. Now obviously it would take some time for us to make ourselves impactful. As I shared in my last reply to one of the questions, when we carved out the nutraceutical vertical, the overall portfolio volumes were around INR30 crores to INR32 crores, and we are confident this year we will be closing somewhere around INR68 crores to INR70 crores. So this is a significant movement in that direction.

We expect this to continue in the future and probably if I can say so as of now, though it is very early to comment, we are looking at a INR100 crore basket from the nutraceutical portfolio itself. Apart from this, when we did our restructuring during the launch of Zocon, we did talked about the carving out of Vista division, which now independently focuses on the cardio-diabeto market. So what I mean to say is that there is a deliberate attempt to move away from or the dependents on antibiotic and ORS. Having said this, these two verticals are our strengths. So apart from Zifi and Electral and Enerzal we have also built a significant market for our own products like Zifi CV and Zifi O, which I did share where we are enjoying high percentage of market share and the market size of the Zifi CV today on the IQVIA data front is touching almost INR75 crores. So when you say the management failed, I would say the management did realize this. But yes, during COVID times, some of our plans did or rather were not able to execute well in 2020 especially. But if you look into the last financial year and the current financial year, we have definitely progressed far ahead on these plans.

Ajay Sharma — Maybank — Analyst

Okay, that’s great. Just hope that these can translate into better profitability going forward. Thank you so much.

Unidentified Speaker —

Thank you very much.

Operator

Thank you. Ladies and gentlemen that would be our last question for today. I now hand the conference over to Ms. Varsharani Katre, Company Secretary for closing comments. Thank you, and over to you ma’am.

Varsharani Katre — Company Secretary and Compliance Officer

Thank you everyone for joining this earnings call of FDC and expressing your views. In case if you have any concerns please reach out to us on investors@fdcindia.com. Thank you again. Over to you, moderator.

Operator

[Operator Closing Remarks]

Operator

Ladies and gentlemen good day and welcome to FDC Limited Earnings Conference Call for the Quarter and Half Year Ended September 30th 2022. As a reminder all participant lines will be in a listen-only mode. And there will be an opportunity for you to ask questions after the brief highlights on the financials from the management. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Ms. Varsharani Katre, company’s Secretary and Compliance Officer of FDC Limited. Thank you, and over to you ma’am.

Varsharani Katre — Company Secretary and Compliance Officer

Thank you. Good afternoon everyone and welcome to all of you. Glad to connect with you all for this quarter and half year ended earnings call. We have already disseminated the financial results for the quarter and half year ended September 30, 2022 and the investor presentation as well.

Now I would like to introduce the FDC team present in this earnings call. We have with us Mr. Nandan Chandavarkar, Joint Managing Director; Mr. Ameya Chandavarkar, CEO International Business and Executive Director; Mr. Sanjay Jain, Chief Financial Officer; Mr. Mayank Tikkha, AVP Business Development and Commercial Excellence; Mr. Harshal Jain, Manager, Corporate Strategy.

We will begin the earnings call with the highlights on financial result of the company by Mr. Sanjay Jain, CFO, followed by an interactive Q&A session. There might be certain forward-looking statements. These statements are subject to certain risks and uncertainty since they are based on certain assumptions and expectation of future events. I would request all the speaker participants to restrict their queries to five minutes only and avoid repetitive queries to save up on the time.

With this, I shall now hand over to Mr. Sanjay Jain, CFO. Sanjay over to you.

Sanjay Jain — Chief Financial Officer

Thank you Varsha. Good afternoon all. This is Sanjay Jain. I will briefly take you through the financial results on a quarterly and on half yearly basis September ’22.

To begin with on the revenue side, the revenue growth on a Y-o-Y basis is at 12% for September ’22 quarter and 11% on a half yearly basis. This growth has been contributed by all the business vertical for the quarter as well as half year. Coming to the domestic formulation business, it has continued its growth trajectory and it has given the growth of 6% in spite of the higher base of the last year when we have achieved the growth of 45% over its last year on a half yearly basis.

And also to be noted that in the last year, means in the year ’21-’22 the sales include a certain product which are related to the COVID therapy. So, which are not there in the current year. So if we want to have a like-to-like comparison on a growth basis, this growth would have been somewhere around 11% to 12%. The growth in the current financial year has largely been driven by our major brands like Electral, Enerzal, Zocon, Simyl MCT Oil. They all grew by double digit growth rate. We are also happy to inform you that our brand Electral has become the first FDC brand to cross INR350 crore mark on MAT September ’22 basis.

Coming to the export business, on a revenue which is up by 68% on a Y-o-Y for formulation business and 31% for the API business on a quarterly basis. And on the half yearly basis it’s up by 48% for the formulation business and 28% for the API business. The increase in the formulation business is largely on account of the increased supplies to our US customers, which are four times higher than the last year six month. This growth is also supported by the other geographies as well.

On the other income, on a half yearly basis it has reduced on account of the overall reduction in the treasury side as compared to last year. As this year we have paid out a buyback amount and as well as some of the capex expenditure, which are going on at our plants and our corporate office.

Coming to the gross margin, which have been impacted in this current quarter by 2% on account of the elevated price of raw and packing material, which has an impact of INR23 crore in absolute terms for the quarter. However with the inflation is getting stabilized and supply chain getting normalized, we may see some kind of a respite in the elevated COGS level going forward, which can be seen in the current gross margin improvement from the current Q2 versus the immediate quarter one. This COGS level can be further eased with the increase in our SG sales price as we have taken the price rise on our scheduled formulation at around 12% — 10% to 11%, which will have a positive impact on our margin going forward.

On the employee cost, which is maintained at 20% of our revenue and which is marginally lower than the compared to the last year same period owing to the increased revenue base. However in absolute term it has increased on account of newly launched division in our domestic formulation business and as well as also on account of the annual appraisal cycle.

On the operating expenses, which has gone up or increased, which are mainly on account of increase in the sales and marketing expenses as well as in the manufacturing and the logistics cost. So these costs have increased with the increase in the overall revenue base of the company. With this, the overall EBITDA margin now stands at 18% as against the last year 26%.

I will now hand over this to Varsha to take the proceedings further. Thank you.

Varsharani Katre — Company Secretary and Compliance Officer

Thank you Sanjay. So now I request moderator to initiate with the Q&A session.

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] First question is from the line of Ajay Sharma from Maybank. Please go ahead.

Ajay Sharma — Maybank — Analyst

Yeah, hi, thanks for the update. I just wanted to check on your comment regarding the price increase on your scheduled products 10% to 12%. Wasn’t the price increase supposed to be effective from April and then the benefit was supposed to flow through in Q2, but we haven’t seen really the gross margin improve so much. So what are you seeing, is the benefit going to come in Q3 onwards or you saw part benefit in Q2 and the balance will come in Q3. If you could clarify?

Unidentified Speaker —

Yes, so from the regulation perspective, the scheduled formulation can be made effective the price increase from the first April. But with the practical implementation of increase in the price that can go up to end April or the first or second week of May. As regard to the non-scheduled formulation, these are eligible to increase 10% on a moving average basis on a 12-months period. And we — as you said there are pressure on the margin, so if you look at our margin as compared to Q1, there is a improvement in the margin. However, since the increase in the raw and packing material prices are more than the increase in the sale price increase, that’s why there is a pressure on the gross margin. But having said that, going forward since the prices are now getting stabilized and the full price benefit, which will be available in the coming quarters, so there will be some kind of a stabilization in the gross margin.

Ajay Sharma — Maybank — Analyst

So yeah, my question was on this full-price benefit. So hasn’t the price increase for the scheduled products already fully available in Q2 and then for non-scheduled also?

Unidentified Speaker —

So for scheduled, yes. And for non-scheduled, it’s like a moving average, every month there are certain products to get eligible for the price increase.

Ajay Sharma — Maybank — Analyst

So when you’re saying full price benefit, you are talking about benefits from the non-scheduled products price increase, is it?

Unidentified Speaker —

Full price benefit from the schedule formulation, because that is —.

Ajay Sharma — Maybank — Analyst

But scheduled should have come through in Q2 itself, right, because if the price increase happened by April-May, shouldn’t you have got the benefit in Q2 itself?

Unidentified Speaker —

Yes.

Ajay Sharma — Maybank — Analyst

So scheduled all the benefit has come in Q2. That is my question basically.

Unidentified Speaker —

Yes, yes.

Ajay Sharma — Maybank — Analyst

Or do you expect further benefit in Q3?

Unidentified Speaker —

So that benefit will continue in the Q3 and Q4 as well.

Ajay Sharma — Maybank — Analyst

And then how much was export incentive, which you’ve recorded in the first half? The profit gain?

Unidentified Speaker —

Profit?

Ajay Sharma — Maybank — Analyst

Profit share.

Unidentified Speaker —

So the first half, we recorded INR32 crores.

Unidentified Speaker —

No, that is not profit share, that is just the sales from the US, right. So he is asking a specific question on profit share.

Unidentified Speaker —

That’s INR32 crore first half.

Ajay Sharma — Maybank — Analyst

Okay. And then lastly, you talked about the domestic business and new divisions. Can you expand on that what division is that and also on I think you had — what’s the status on new ophthalmology launches in US?

Mayank Tikkha — Associate Vice President Business Development and Commercial Excellence

So, hi this is Mayank Tikkha. I’ll explain you the domestic front of new division. So what Sanjay mentioned earlier, we have launched this financial year a division called Zocon, which mainly caters to our dermatological range of products. Now Zocon is a flagship brand in our kitty for last 15 years to 20 years. So we have carved out a separate division to create this niche within the FDC family. So the expansion size of this new division was approximately 500 odd people, which we undertook in this financial year.

Unidentified Speaker —

And what was your question on the US side?

Ajay Sharma — Maybank — Analyst

New launch on the [Speech Overlap] I think you were [Speech Overlap]

Unidentified Speaker —

Yeah. We have not — we have not scheduled any right now. Or you are saying the remaining this financial year, right?

Ajay Sharma — Maybank — Analyst

Yes.

Unidentified Speaker —

Yeah, so nothing scheduled. It’s going to be the existing products that we’ll keep selling.

Ajay Sharma — Maybank — Analyst

Because you had some filing, right. So you haven’t got any more approvals on the ophthalmology products is it?

Unidentified Speaker —

There is one product, which we are waiting to launch. But we haven’t scheduled it yet.

Ajay Sharma — Maybank — Analyst

Okay. Thank you so much.

Operator

Thank you. The next question is from the line of Neelam Punjabi from Perpetuity. Please go ahead.

Neelam Punjabi — Perpetuity — Analyst

Hi, thank you for taking my question. So my question is on the domestic business. We have seen that our secondary sales have grown at 13.5% Y-o-Y during Q2 FY ’23. And — but the reported revenues have only grown at 6.4% Y-o-Y. So what is the thesis behind this slower growth on the reported side?

Unidentified Speaker —

So there will be always a gap between our primary sale and a secondary sale. The reason could be between the supply that has happened from our side and the supply that has happened from the secondary side.

Neelam Punjabi — Perpetuity — Analyst

Yeah, but directionally, you know, the growth should be on similar lines, right? So I still didn’t understand why is the difference?

Unidentified Speaker —

So you are talking about the financial number and the market numbers?

Neelam Punjabi — Perpetuity — Analyst

Yeah, the IQVIA number growth that you have [Speech Overlap]

Unidentified Speaker —

Yes, IQVIA numbers will never reflect the kind of growth and the kind of volumes what the financials do show because there is a huge inventory out there in the market, which is worth almost for one month sale or sometimes it becomes 1.5 times also. Now if I take you back to last year because of COVID, the upsurge in the market was very, very high side. The demand levels have gone very high. And that is why the stock inventories in those times at the market front was huge, which was not normal as compared to the traditional pharma business. So this is leading to the gap in the IQVIA reported numbers and our internal reported numbers, which is also true for other companies also, if you look at some other companies also, this gaps are there across.

Neelam Punjabi — Perpetuity — Analyst

Got it, okay. Secondly, so I was referring to your investor presentation and there you all have shown growth on the prescription side. And for first half, you’ll have for overall FDC you all have shown a 51% growth. I was not being able to understand if you please explain this slide to me?

Unidentified Speaker —

Yeah, so before I explain 51% for FDC, you look at the IPM growth also. The IPM growth is 47%. Now why this is coming, I’ll tell you, because last year the sales were very high, the secondary sales, but because of the restrictions due to COVID, the prescription sale has gone down. So this year, it is a normal scenario and that is why not only FDC, even the IPM is showing a very high robust growth in terms of prescriptions. So I would say this slide has to be read in that fashion, that IPM is growing by 47%, FDC is ahead and growing by 51%.

Neelam Punjabi — Perpetuity — Analyst

Got it. Understood. This is very helpful. Could you provide a break-up of your growth during the quarter between volume, price and new product introductions?

Unidentified Speaker —

Yes. So, I can share with you the math — you have the second quarter? If you want I can share right now on a MAT reflection, not for the quarter. MAT, our volume growth is 5.9 [Phonetic], price growth is 5.3 [Phonetic] and new product is 1.4 [Phonetic]. The total reflected growth is 12.6 [Phonetic].

Neelam Punjabi — Perpetuity — Analyst

Okay. Next my question is on the PCPM, [Indecipherable] productivity we are — for the quarter standing at about 3.5 lakhs per MR per month, which is largely flat on a Y-o-Y basis. And at the same time our fixed cost including staff costs has gone up significantly. So also the industry is running at an average of about 6 lakhs, 6.5 lakhs of PCPM. So are we intending to — what efforts are we taking to take this up and do we intend to get to the near industry level PCPM?

Unidentified Speaker —

So as I explained in my previous reply, the PCPM is always reflecting of the expansions. Now if you look at the last two, three years trajectory FDC has moved in terms of [Indecipherable]. If I remember correctly last year first half PCPM [Phonetic] was almost 3.75 to 3.8. But yes, as I’ve said we expanded in the month of January last year almost by 550 people were inducted into the system. Now why this has been done? This is just to diversify our portfolio and to work on our strength areas.

In my last call also probably we explained that we are not only now focusing on antibiotic ORS, but also on dermatologicals, nutraceuticals and cardio-diabeto basket. For this, there was a definite need for us to expand because the current divisions are saturated and cannot handle more products. So again, there was an elective choice that we made just to work on our top lines because our last year bases were quite swelled up because of our antibiotics and ORS sales going up. So we took a conscious call of inducting one more division into the field. Having said this, we are very confident that we are moving in terms of PCPM over a period of time. And this year we will try to match what we reflected last year during the upsurge of the COVID itself.

Neelam Punjabi — Perpetuity — Analyst

That is helpful. But in the near term do we have a target to get to where the industry is? Or you [Speech Overlap]

Unidentified Speaker —

Yeah, so again there is a gap in the industry. I do agree what you are saying. Many of the companies are — higher peer groups are operating at a higher, but what we are concentrating right now is journey towards that PCPM. Now if you look at our trajectory in the last three, four years, yes, we have shown great improvement over there. But it is the work on the go, which continues as we move forward.

Neelam Punjabi — Perpetuity — Analyst

Okay. thanks. I’ll get back to the question queue.

Operator

Thanks. The next question is from the line of Uttam Purohit from Perfect Research. [Operator Instructions] Thank you.

Uttam Purohit — Perfect Research — Analyst

Yes, hello?

Operator

Yes, Uttam. Please go ahead.

Uttam Purohit — Perfect Research — Analyst

Yeah, my question was regarding the MRs, medical representatives. Like how has the growth of MRs been from the last couple of years. And when do we expect their contribution start adding to the top line?

Unidentified Speaker —

So you’re talking about the new division?

Uttam Purohit — Perfect Research — Analyst

Overall.

Unidentified Speaker —

So as I said we inducted almost 550 additional people last year. And yes, the contributions are there because again it was not only a new division we have diversified our portfolio into various segments. As of now, most of the divisions are contributing, yes, one of the divisions that is Lumina, which had Azithromycin is the only division, which is slightly on a non-performance mode. This is mainly attributed to the Azithromycin upsurge last year what happened.

Uttam Purohit — Perfect Research — Analyst

Okay. That’s all from my side. Thank you.

Operator

Thank you. Next question is from the line of Yagna Pathak [Phonetic] from Centrum Broking. Please go ahead.

Yagna Pathak — Centrum Broking — Analyst

Yeah, thank you. So basically I wanted you to — if you can repeat the absolute impact of the raw material. This — so what was the figure that you were stating of elevated raw material?

Unidentified Speaker —

Yeah, quantification of the impact of the increase.

Yagna Pathak — Centrum Broking — Analyst

Yeah.

Unidentified Speaker —

INR23 crores.

Yagna Pathak — Centrum Broking — Analyst

INR23 crores. Okay, that’s it. Thank you.

Operator

Thank you. The next question is from the line of Prakash Agarwal from Axis Capital. Please go ahead.

Prakash Agarwal — Axis Capital — Analyst

Yeah, hi, thanks for the opportunity, good afternoon. Just wanted to check if there was a comment made on the price hike. So, you mentioned the price hikes have been fully taken for scheduled and non-scheduled drugs or is yet to be taken?

Unidentified Speaker —

Yes, we have taken.

Prakash Agarwal — Axis Capital — Analyst

Sir, why is the gross margin not reflecting? I understand costs have increased, but since majority of the business more than 50% is India, there should have been a gross margin positive impact, but we couldn’t see that. So what is missing here?

Unidentified Speaker —

Okay. So what I explained in the initial conversation that, see the increase in the raw material and packing material price are higher than the increase in the sale price. So that’s why the overall gross margin looks on the lower side as compared to last year. But at the same time if you look at the gross margin of Q2 and you compare with the immediate previous quarter, means the Q1, we will see some kind of about a 1% improvement in the gross margin, because from the Q2 we have started taking the full benefit of price rise.

Prakash Agarwal — Axis Capital — Analyst

Okay. And how do you think this will pan out in Q3, Q4 given that the volumes etc. will also increase. And prices might be moderating, is there any color there?

Unidentified Speaker —

Yeah, so with the prices getting stabilized and the sale price which had the full impact on the overall margin, we’ll have a more stable margin going forward rather than the increasing trend, which we saw in the first two quarters.

Prakash Agarwal — Axis Capital — Analyst

So you are saying it will stabilize, not increase gross margin, is what I want to ask.

Unidentified Speaker —

So unless we see a drop or the correction in the raw material and the packing material prices.

Prakash Agarwal — Axis Capital — Analyst

Okay, which currently you are saying is stable, but not corrected to some extent.

Unidentified Speaker —

Yes.

Prakash Agarwal — Axis Capital — Analyst

Okay. Okay. And if you could just also help us with some of the key launches that you’re planning for this year?

Unidentified Speaker —

So we have not planned major launches this year. It is only a line extension. Yes, one launch has been done very recently in our cardio-diabeto portfolio that is the sitagliptin once it came off patent. Couple of line extensions from Enerzal has been planned already. Enerzal Zero has already been launched in the PET bottle. The powder formulation is on the way. So yes, couple of line extensions are there. If everything goes as per our plan we might come up with one more liquid formulation, quite similar to what is there in Enerzal, Electral kind of a category, which we are planning to launch somewhere around January or February.

Prakash Agarwal — Axis Capital — Analyst

Okay, fair enough. And lastly just wanted to understand the deviation versus AICD data point, which was showing you know mid teen kind of growth versus what you’ve reported. So why such a big divergence?

Unidentified Speaker —

So I explained in my previous reply, this is majorly because of a high inventory front in the marketplace which happened during the COVID period. Since the demand levels were very high, the off takes were very high at the secondary and tertiary level. So obviously the stock inventories went very high during those COVID times, which are now getting stabilized. So obviously the market reflected growths across the board, across the companies are on a higher side as compared to what the internal numbers do reflect. But these are going to stabilize as we move forward, because last year COVID was on the dropping side as we moved into October, November, kind of a scenario. So maybe in the third quarter probably these numbers would come very close to each other.

Operator

Is your question answered? Hello, Amit?

Amit Doshi — Care PMS — Analyst

Hello?

Operator

Yes Amit, just wanted to check, is your question answered?

Amit Doshi — Care PMS — Analyst

No, no.

Operator

I’m sorry. So you will be the next caller Amit. We have the next caller from the line of Amit Doshi from Care PMS. Please go ahead.

Amit Doshi — Care PMS — Analyst

Yeah, hi. Our export numbers have again now started coming back. So is the exports should contribute to a better margin profile or its otherwise? Can you clarify. Hello?

Unidentified Speaker —

On our export business these largely contributed by the US market. And you all know the margin in US are quite high as compared to any other market. So if the export is more related to the US, obviously there will be an improvement in the margin.

Amit Doshi — Care PMS — Analyst

Okay. So our sales to — I mean our export bifurcation doesn’t include US significantly.

Unidentified Speaker —

It is, it is.

Amit Doshi — Care PMS — Analyst

Okay. So then margins why it is again only the raw material cost is the reason, I mean –.

Unidentified Speaker —

Yes. So, as of now the [Speech Overlap]

Amit Doshi — Care PMS — Analyst

Historically if you see our margins have been 20%, 22% type of a range. Now post COVID the fall which has come we are — when are we likely to see those levels back?

Unidentified Speaker —

So, as of now the — since the prices of all the raw and packing materials are on the higher side. So unless those gets corrected to some extent, till then we have to sustain at the current gross margin level only.

Amit Doshi — Care PMS — Analyst

Okay. Okay. Fine. Fine. Okay, thank you.

Operator

Thank you. We have the next question from the line of Samarth Singh from TPF Capital. Please go ahead.

Samarth Singh — TPF Capital — Analyst

Yes, good afternoon. Thank you for the opportunity. On a half year basis as the part of 350 bps increase in our operating expenses. Can you just tell the line items that are causing the [Speech Overlap]

Unidentified Speaker —

Sorry, we can’t hear you.

Samarth Singh — TPF Capital — Analyst

Am I audible now?

Operator

Yes.

Unidentified Speaker —

Speak a little louder please.

Samarth Singh — TPF Capital — Analyst

So on a half-year basis, our operating expenses to sales have gone up by about 350 basis points. Could you just walk us through that, the line items that are affecting that?

Unidentified Speaker —

Yeah, so mainly it is because of the sales and marketing expenses, which just now we discussed that we have launched recently, our new division called Zocon where we added close to 550 odd people, so because of that there is an increase in the overall sales and marketing expense along with their traveling allowances, which is one of the main reason for the increase in the other operating expenses for the first half.

Samarth Singh — TPF Capital — Analyst

Okay. So, freight is no longer having an effect on the operating expenses?

Unidentified Speaker —

Yeah, so there is also an increase on the freight cost both on the domestic as well as international. But the impact is not as high as on the sales and marketing expenses.

Samarth Singh — TPF Capital — Analyst

Okay. And in Q1, we had two one-offs. One was the INR15 crore mark-to-market on our financial instruments, and the other one was some sort of accounting for promotional expense that comes depending on the receipt of the material. So have those two sort of both been nullified on a half year basis?

Unidentified Speaker —

Yes, yes so the first one, what we said that INR15 crore mark-to-market that completely got reversed in the Q2. And secondly, what you said on the receipt basis, the same reason why these sales and marketing costs has gone up because there are some advanced procurement as compared to the same period last year by about INR10 odd crore.

Samarth Singh — TPF Capital — Analyst

Okay. See, I mean advanced procurements are going to continue for the rest of the year. Does it just increase sales and marketing expense for the new division, correct?

Unidentified Speaker —

No, this advanced procurement going forward into Q3 and Q4 will get rationalized. So that it will be more comparable to the previous financial year.

Samarth Singh — TPF Capital — Analyst

And you said it was INR10 crores for the half year. Right?

Unidentified Speaker —

Yes. For the first half versus the last year first half.

Samarth Singh — TPF Capital — Analyst

Okay. That’s it from my side. Thank you so much.

Operator

Thank you. Next question is from the line of Jayant Mamania from Care PMS. Please go ahead.

Jayant Mamania — Care PMS — Analyst

Yeah, good evening. Sir, as previous speaker, Amit Doshi said, during last 10 years, the margins were around 23% operating margins. During last six months it has come down to 13% from 17% in March ’22. Just wanted to understand that, in case of Enerzal, Electral and Zifi we are category [Indecipherable] so is it that to protect our [Indecipherable] we are not increasing the price or there is a regulation, which is not allowing us to raise the price?

Unidentified Speaker —

So Electral and Zifi both are under the price control and whatever the upper limit is allowable under the scheduled drugs, we are taking that effect into our sales price. Enerzal of course is not under the price control. And as far as the margin contribution which we saw in the previous years, so at that time the prices of the raw material and packing material was not that high as compared to in the last year or so. So, which has impact of on the overall gross margin close to 4% to 5% in the last one year period.

Jayant Mamania — Care PMS — Analyst

So if the raw material prices subsides, so will there be rise in our operating margins? Say in the next four quarters.

Unidentified Speaker —

If it is. Yeah.

Jayant Mamania — Care PMS — Analyst

Okay. Okay. Okay. So can you tell us how is the competition in case of Electral?

Unidentified Speaker —

Sorry?

Jayant Mamania — Care PMS — Analyst

Who are our competitor in case of Electral?

Unidentified Speaker —

So Electral, we’ve already shared in our presentation we enjoy a 74% market share. But our direct competitors apart from our own brand are Walyte, Prolyte, these are couple of brands, which are majorly there. Walyte holds approximately 13% of market share.

Jayant Mamania — Care PMS — Analyst

Okay. Okay. Okay, thank you. Thank you. Thank you and all the best.

Operator

Thank you. The next question is from the line of Rajat Setiya from ithought PMS. Please go ahead.

Rajat Setiya — ithought PMS — Analyst

Hi. Thanks for the opportunity. So sir basically as per one of our slides, we can see that we are number one in almost six pocket of 10 products that we are selling. So — and we enjoy a very high market share of up to even 75%, so, which is quite commendable and speaks volumes about the execution capabilities of the management team. And congratulations for that. Sir, my question is, for these six products, the end category of these six products end market, at what rate is that growing?

Unidentified Speaker —

So again these six were of a very diverse, but to answer your question, yes, we are trying to expand the market itself. As you said, we are in a leadership position over here. But if I can share the growth numbers for these couple of brands, for H1 — for H1 Electral has shown a growth of 30.5% [Phonetic], Zifi has shown a growth of 11.1% [Phonetic], Enerzal has grown by 37.9% [Phonetic], Vitcofol has grown by 14.6% [Phonetic], Zifi CV has shown a growth of 15.7% [Phonetic], and Zifi O has shown a growth of — Zifi O has not shown a growth, it is stagnated. So out of six, five are in high double-digit growths. And this probably is driving our way forward in the marketplace.

Rajat Setiya — ithought PMS — Analyst

Sure. And in terms of — so are we gaining market share for where — wherever we are below 50%. Are we still gaining market share or do you think [Speech Overlap]

Unidentified Speaker —

Yeah, so we have shared in our presentation, in Electral, we are maintaining our market share because I hope you will understand, we enjoy a 74% market share in Electral. For Zifi, we have definitely grown up, if you look at in September ’20 on a MAT basis, we were 23.9% [Phonetic], which now has moved to 24.7% [Phonetic] on a MAT basis. Here also, we are more or less maintaining our market share on a high percentage, where it’s very, very close to 25%. If you look at Enerzal also, we are maintaining our market share of almost 42% plus. As far as other products are concerned, yes, in Zifi CV we have increased the market share and Zifi O also we have increased the market share.

Rajat Setiya — ithought PMS — Analyst

Sure, sure.

Unidentified Speaker —

If you want the details, Zifi CV, our market share now stands at 49.3% and Zifi O our market share stands at 14.6%.

Rajat Setiya — ithought PMS — Analyst

Thanks, thanks for this. And sir, of the overall domestic portfolio, how much of our sales is actually under the price control list and [Indecipherable] list.

Unidentified Speaker —

So, it’s around 46%.

Rajat Setiya — ithought PMS — Analyst

Okay, all right. The other question is about the decline in margin that we have seen over the last probably five, six quarters. So is it all this decline has been all because of rising raw material costs and other operating costs or there has been some pressure on the realizations also?

Unidentified Speaker —

No, mainly on account of the increased prices only.

Rajat Setiya — ithought PMS — Analyst

Okay, mainly on increased price. Okay. And sir finally we have D2C products also, so what is the contribution from there at the moment?

Unidentified Speaker —

Yeah, so that’s very insignificant as compared to our overall revenue.

Rajat Setiya — ithought PMS — Analyst

And is that an area of focus?

Unidentified Speaker —

Not exactly. We are working on this with couple of brands only, that is Enerzal and Electral. But from a marketing standpoint, we are still dependent on our prescription business for these products.

Rajat Setiya — ithought PMS — Analyst

Okay, all right sir. Thank you so much, wish you all the best.

Operator

Thank you. [Operator Instructions] Next question is from the line of Sajal Kapoor, as an Independent Investor. Please go ahead.

Sajal Kapoor — Independent Investor — Analyst

Yeah, hi, thanks for taking my question. Sir any details you can share around our proposed expansion into nutraceuticals/functional foods?

Unidentified Speaker —

Yeah, so two years back, we have come up with our separate vertical, which is Nutrica. As you know that we had our food basket where the leader brand was Simyl MCT, which was marketed by couple of divisions across the board. So we did consolidate our nutraceutical products in that one vertical. So that was a new division, which we launched two years back. I’m glad to tell you that there were couple of brands, which were having a lot of potential in the marketplace, but we couldn’t do justice in the past. Last two years this division definitely has moved up from roughly a volume estimate of INR32 crores two years back. This year we would be touching somewhere around INR68 crores to INR70 crores from this portfolio itself.

Just to mention couple of brands, as I said Simyl MCT was our flagship brand. MumMum was one brand, which we had from a long period of time has been doing really well. This is an infant formula and also our flagship brand Zefrich which is in protein market is also doing very well. So yes, we are focusing directly through this division on the nutraceutical products. Apart from this couple of brands have also been launched into functional foods and into various other divisions catering to the respective specialties covered by those divisions.

Sajal Kapoor — Independent Investor — Analyst

Excellent. So I mean there is humungous growth runway ahead in these areas. Yeah, glad to hear all that update. Secondly, the annual report mentions about CE Mark ophthalmic medical devices in Australia and other markets, to me that’s definitely a sign of confidence, but don’t you think we are a rather late entrant in this space? Any colur around the CE Mark ophthalmic medical devices please?

Ameya A. Chandavarkar — Chief Executive Officer International Business & Executive Director

Sure. Sajal, this is Ameya Chandavarkar. We have these — we have these products. I think you’re referring to hypromellose and some of the products that we intend to launch the product. So we already have these products. And so, it’s just a matter of finding these products in certain markets where the incremental cost is only a filing cost and a registration cost and then we can continue manufacturing and supplying these products. So you’re right that maybe it’s not going to change our P&L or balance sheet, but it will add to our basket of products that we sell in international markets.

Sajal Kapoor — Independent Investor — Analyst

Definitely, definitely Ameya. And if I could ask you one quick question on this Latin America and the Middle East, which are relatively newer markets for us, but we are growing very well, if our annual report — the latest annual report is anything to go by. So it will be helpful if you could share some direction over there and maybe if you can share medium term say, three year to five year kind of vision in terms of sales and operating margins where you want to be, aspirationally.

Ameya A. Chandavarkar — Chief Executive Officer International Business & Executive Director

So you mentioned Latin America and Middle East, in both these regions, currently sales are — the base is quite low. So we can grow much faster, there is a lot for us to do in general in exports and international business. Specifically in these two regions we are currently registering more products, we have a decent business in Peru, we’re doing business in Chile. So it’s a matter of time where I think from this year, we’ll probably end at about 200 crore, 220 crore of international business formulation. We are targeting by end of FY ’25 to be with our two subsidiaries in the range of about INR450 crores to INR500 crores. So — and with heavy margins.

Sajal Kapoor — Independent Investor — Analyst

Right. And in terms of the consolidated vision, let’s say a five year vision, where as an organization would you like to be in terms of sales and margins?

Ameya A. Chandavarkar — Chief Executive Officer International Business & Executive Director

So now you talking about overall as a company?

Sajal Kapoor — Independent Investor — Analyst

Overall, yes, at the company level overall including the domestic and the international.

Ameya A. Chandavarkar — Chief Executive Officer International Business & Executive Director

So if you look at in a large [Speech Overlap]

Sajal Kapoor — Independent Investor — Analyst

Any broad brush — any broad brush guidance would be helpful.

Ameya A. Chandavarkar — Chief Executive Officer International Business & Executive Director

Yeah. So if you look at the last two years to three years, if you can maybe to an extent discount for the pandemic, so we’ve been in the high double-digit range, right, of growth. So 15% to about 20%, and that’s really what we want to continue to deliver. And get back to the earlier margins. There had been a few questions on margins. So the goal will of course be to revert to margins that we enjoyed maybe a few years ago. And then also grow the top line. So overall, we will work on productivity, we are looking at CAGR for the next three years to five years of at least 15% to 18%.

Sajal Kapoor — Independent Investor — Analyst

That’s very helpful, detailed inputs and good to hear your thought process around that. And wish the entire team the very best. Thank you.

Ameya A. Chandavarkar — Chief Executive Officer International Business & Executive Director

Thank you.

Operator

Thank you. The next question is from the line of Saket Kapoor from Kapoor and Company. Please go ahead.

Saket Kapoor — Kapoor and Company — Analyst

And thank you for the opportunity. Sir, firstly if you could give us the impact of seasonality in our sales number, when we look at our revenue profile, what shall one factor into the seasonality aspect sir, barring that last year COVID factor has been articulated, taking that also aside, our June sales were INR493 crores, whereas for September it is down to INR446 crores.

Unidentified Speaker —

So yes, the seasonality is there because broadly we operate with ORS, energy drink and antibiotics. So ORS, energy drink definitely our products, which out performed during the summer season and the heat around. And antibiotic peaks are also during the second quarter typically. So what we have seen up till now, if you look at our trajectory in the last couple of years back, we were dominated by our antibiotic sales where traditionally we were peaking during the second half — second quarter itself. And because of our Electral business, which was predominantly a push element created by us from January onwards, we did see high quantums coming in the fourth quarter. But moving forward or during the COVID period as the demand went up and we also changed our strategy over a period of time, typically the first quarter and the second quarter are the peak quarters for us. Third quarter becomes a lean season because neither of our ORS, energy drink or antibiotic has the seasonal trend over there. And fourth quarter again gets supported by the Electral push element. So our endeavor over a period of time is to mitigate this seasonality part of it by diversifying our portfolio and create newer avenues for our existing brand in the off-season scenario also. So what we have done is successfully in the last two years that two quarters we have mitigated the seasonality only the third quarter you will see that there is a fall in overall volumes as we move forward.

Saket Kapoor — Kapoor and Company — Analyst

Okay. So taking my next question sir, so the H2 will look linear than what H1 has been. So that is the business set up for the organization?

Unidentified Speaker —

Yes, yes. H1 is always on a higher side. H2 would be lower. And this is majorly is because of the antibiotic sales, which goes down across the board.

Saket Kapoor — Kapoor and Company — Analyst

Okay, sir. And sir other aspect was about this packaging material part of the story. I think INR23 crore is the figure you mentioned for the second quarter. So for the first half what was the total impact just on account of increased packaging costs?

Unidentified Speaker —

So first of all this INR23 crore is taking into account the raw material and the packing material both, not only the packing, but it is both.

Saket Kapoor — Kapoor and Company — Analyst

Okay. So by raw material it is related to our products — what we produce directly. And that is not a pass on or a pass on with a lag effect?

Unidentified Speaker —

So we are into the regulated price — we have a regulation on the pricing side. So on a schedule formulation, we can increase to the extent of 10% only on the last year WTA [Phonetic] basis.

Saket Kapoor — Kapoor and Company — Analyst

Correct sir. That’s all from my side. So. Okay, sir. I got the point that H1 would be heavier always and now we are taking steps so that this seasonality aspect can be narrowed down going ahead. So by when can sir we expect this to be narrowing down in terms of revenue and definitely on the bottom line?

Unidentified Speaker —

So as I said, this process is already on if you look at the comparative numbers for last two years, we have tried to narrow it down. But again, beyond the point, it would not be possible as I’ve said, the market of the antibiotic is such that the third quarter always will be lean. So if you would technically grow on all aspects on a quarter-on-quarter basis, that percentage of deviation might remain constant. I hope you understand I was doing INR100 sale, that percentage would remain the same because you tried to grow in each quarter equally, looking at the opportunity, which is available.

So that percentage might not change, but yes we are trying to get some significance out of each quarter and each month for some of our product. And that is the whole endeavor what we have taken in the last two years. And as I said, our new divisions, which have been carved out are not catering to only antibiotic and ORS or energy drinks, these are diverse portfolios. As I mentioned nutraceuticals, cardio-diabeto and Zocon which we did discuss, this in the derma field. So now these product ranges do not have a seasonality.

Saket Kapoor — Kapoor and Company — Analyst

Correct sir. And what is the amount of capex we have done for H1 and what is lined up for H2?

Unidentified Speaker —

So as of now up to H1, the one is our corporate office at [Indecipherable] that is going on. Second, we had the fourth line for the opthalmic at Waluj. And the third major one is at a Sinner plant. So these three are the main capex program that is going on. And for the balance of the same capex will continue.

Saket Kapoor — Kapoor and Company — Analyst

How much have we spent sir as of now for H1 and what is left to be spent for H2?

Unidentified Speaker —

So in terms of — for the office, in terms of absolute value close to INR70 odd crore we already spent including the government premium and all. And on the operational capex side another INR40 crore to INR50 crore we already spent.

Saket Kapoor — Kapoor and Company — Analyst

Sir didn’t get you sir. Total spending is INR70 crore for H1.

Unidentified Speaker —

That is for the office building. And another INR40 crore to INR50 crore for the operational capex budget for the Waluj and the Sinner.

Saket Kapoor — Kapoor and Company — Analyst

Okay. INR120 crore [Phonetic] in totality.

Unidentified Speaker —

Yeah, around that. Yes.

Saket Kapoor — Kapoor and Company — Analyst

And INR122 crore will spent for the total year as a whole, you are giving the whole year guidance?

Unidentified Speaker —

No. So there are few budgets for all the capex, so the capex will be spent over a period of time, which will not be restricted to this financial year. It can spill over to the next financial year as well.

Saket Kapoor — Kapoor and Company — Analyst

Okay. And sir INR70 crore is on the corporate office or any other facility that we are building?

Unidentified Speaker —

No, it’s for the corporate office.

Unidentified Speaker —

Corporate office and R&D.

Unidentified Speaker —

Corporate office, including R&D.

Saket Kapoor — Kapoor and Company — Analyst

Okay. And where it will be housed sir.

Unidentified Speaker —

It’s in Mumbai only.

Unidentified Speaker —

Andheri.

Unidentified Speaker —

Andheri west.

Saket Kapoor — Kapoor and Company — Analyst

Okay. And the date of commercialization?

Unidentified Speaker —

Around close to two years.

Saket Kapoor — Kapoor and Company — Analyst

Okay. Thank you, sir. And all the best.

Operator

Thank you. The next question is from the line of Mohammed Patel from Care Portfolio Managers. Please go ahead.

Mohammed Patel — Care Portfolio Managers — Analyst

Yeah, hi. Can you please break up the revenue growth for Q2 into price growth, volume growth and new products?

Unidentified Speaker —

Yeah, so I did mention the volume growth is 5.9%, the price growth is 5.3% and the new product is 1.4%.

Mohammed Patel — Care Portfolio Managers — Analyst

This is for the MAT basis, right?

Unidentified Speaker —

Yes.

Mohammed Patel — Care Portfolio Managers — Analyst

I want Q2 if you can give, Q2 FY ’23.

Unidentified Speaker —

Q2 are not handy with me. We will share with you.

Mohammed Patel — Care Portfolio Managers — Analyst

Okay. And my second question is, you said the CAGR of 15% to 18% for the long-term vision. So is this sales CAGR or profit CAGR. Just wanted to confirm?

Unidentified Speaker —

Sure. So we will target top line as well as bottom line to be in that range.

Mohammed Patel — Care Portfolio Managers — Analyst

Okay. That’s it from my side. Thank you.

Operator

Thank you. The next question is from the line of Neelam Punjabi from Perpetuity. Please go ahead.

Neelam Punjabi — Perpetuity — Analyst

Yeah, thank you so much for the follow up. Sir long-term our target of 15% to 18% you said just mentioned top line as well as bottom line. Given over the last couple of years our fixed costs have increased at a faster pace than the top line and we understand that you’re investing in your marketing and as well as field force to grow, but can we expect the incremental growth going forward to translate into better profitability growth and margin expansion?

Unidentified Speaker —

So, that will definitely be the goal. Eventually we will have to focus on productivity, we will have to focus on margins too. So, yes.

Neelam Punjabi — Perpetuity — Analyst

Got it.

Unidentified Speaker —

That’s definitely our goal.

Neelam Punjabi — Perpetuity — Analyst

Perfect, thank you. And so in our domestic business, so we have seen that the WPI is at 11% to 12% during the 10 months of calendar year 2022. So are we planning to take another level of price hike in our scheduled formulations from in FY ’24 itself?

Unidentified Speaker —

Yes, so if that is available as per the reports, we are working on it, quite similar to what we did this time, couple of major brands are there like Electral, Zifi we will definitely like to go ahead with that.

Neelam Punjabi — Perpetuity — Analyst

Perfect. Next sir, on the exports business, so we have seen a very healthy growth during first half and Q2 we have hit the INR75 crores in terms of overall exports top line. Was there any one-offs during the quarter or is this the sustainable base going forward?

Unidentified Speaker —

No one-offs, and should be sustainable.

Neelam Punjabi — Perpetuity — Analyst

Perfect. And sir how is our Electral launch in the international market UAE and Myanmar that you had highlighted in the previous calls? How is it progressing?

Unidentified Speaker —

So again nothing extraordinary to share, it’s status quo, so growing slow and steady.

Neelam Punjabi — Perpetuity — Analyst

Okay, perfect. Sir, on the working capital side, so working capital days have increased from 59 days in FY ’22 to about 67 days if I take the trailing 12 months revenue. So what are the reasons behind the same?

Unidentified Speaker —

So as we just discussed that the prices of the raw material, packing material has increased to a significant level. So obviously the overall funds that get locked up in the inventory will be substantially higher than the normal inventory. So that’s the reason one. Plus in the last of the trailing 12 months or the first half of the current financial year, the component of the exports is significantly higher than the last year. And since the credit period in the exports are higher than the domestic, so to some extent that will also contribute to increase in the working capital.

Neelam Punjabi — Perpetuity — Analyst

Sir are we planning to sustain at these current levels or would we see further increase?

Unidentified Speaker —

So it’s very close to peak. I don’t think so there will be any further increase on our working capital cycle.

Neelam Punjabi — Perpetuity — Analyst

Okay. And lastly on the Waluj plant, so [Indecipherable] that we are putting up, this was supposed to completed in November of 2022. So have we seen any delays there?

Unidentified Speaker —

From where have you got this date, Neelam. November 2022, you got a dates that we’re going to complete the project.

Neelam Punjabi — Perpetuity — Analyst

Yeah, as in a couple of years back you’ll had put up a press release that this would be completed in 24 months. So that’s how I just calculated.

Unidentified Speaker —

Yeah, there is a significant delay there. So it will take another two years for it to — as of now that’s what we believe, it will take about two years for it to start manufacturing for commercial reasons. So I’d like Harshal — Harshal is also here I’d him to add.

Unidentified Speaker —

So Neelam we have mentioned that we will be completing the project by November ’22. And what sir mentioned is that we’ll commercialize the facility for US business in — we are planning in next two years, that way. And the project is a bit delayed and we’ll be completing it in the next quarter as well.

Unidentified Speaker —

So I think the date, you probably have is date of installation, not commercial production.

Unidentified Speaker —

Date of commissioning. By the time you have approvals for the US, it will be — yeah, it will take 18 months at least, that’s the minimum.

Neelam Punjabi — Perpetuity — Analyst

Understood.

Unidentified Speaker —

So there is a slight nuance there. Yes.

Neelam Punjabi — Perpetuity — Analyst

Got it. Sir last [Speech Overlap]

Unidentified Speaker —

Yeah, the equipment is already ready. We just finished with the factory acceptance. And it will be shifted I think some time on the second of Jan. We expect a month from there by the time its in the plant. And from there, by the time we do the qualification and get approvals from the US, we are looking at around 18 months.

Neelam Punjabi — Perpetuity — Analyst

Got it. Okay, understood. Very clear. Lastly on the medical representatives show about 3,600. And you said that 550 people we’ve put up for the derma division. Could you provide a split for the other divisions as well cardio-diabeto, nutra, ORS, what’s the MR count in each of these divisions and others?

Unidentified Speaker —

So we would not like to share this, this is too minute to share with the market.

Neelam Punjabi — Perpetuity — Analyst

Okay. No worries. Perfect, thank you so much.

Operator

Thank you. [Operator Instructions] We have follow-up question from the line of Ajay Sharma from Maybank. Please go ahead.

Ajay Sharma — Maybank — Analyst

Yeah, I just wanted to check on the maths for the price increase, right, for the scheduled product. If I look at your first half revenues for domestic, right, last year it was like INR700 plus crore, out of which 46% is under price control just like about INR300 crore, INR350 crore. So if I take 10% price increase on that, it’s like almost INR35 crore, which should flow through to your top line as well as EBITDA and you have offset of INR23 crores on the cost. So I’m just wondering then why is the price increase not able to offset the raw material and packing cost increase?

Unidentified Speaker —

Because in terms of percentage we increasing the raw material prices much higher than the price increase, which is there of the sales price.

Ajay Sharma — Maybank — Analyst

No, but then let’s talk about the price increase. What’s the benefit in part of the price increase on the scheduled products. Isn’t it around INR35 crore for the first half?

Unidentified Speaker —

No, the total — you mean to say the first six months the price benefit.

Ajay Sharma — Maybank — Analyst

Yeah, yeah.

Unidentified Speaker —

Yeah, it could be around INR40 crore to INR45 crore because it is not available for the entire six months, it’s available somewhere around the May period onwards.

Ajay Sharma — Maybank — Analyst

So let’s say what’s the net — net benefit will still be closer to INR30 crore right for the first half?

Unidentified Speaker —

Yes.

Ajay Sharma — Maybank — Analyst

But you said you had the cost increase was INR23 crore from the raw material and packing. Was that Q2 or that was first half?

Unidentified Speaker —

It’s for Q2.

Ajay Sharma — Maybank — Analyst

Okay. So, Q1 would have been similar right?

Unidentified Speaker —

Yeah, by and large.

Ajay Sharma — Maybank — Analyst

So, basically you are saying about INR40 crore, INR45 crore additional costs whereas the price increase is INR30 crore is that the maths?

Unidentified Speaker —

So I will explain you in terms of the quantum margin. So if you look at our Q2 current year versus Q2 last year there is an incremental margin of about INR21 crore. And out of INR21 crores incremental margin, INR30 odd crore has come from the price increase, which you are seeing from the scheduled as well as the non-scheduled products. This INR30 odd crore has been offsetted by close to that INR23 odd crore on account of the raw material, packing material prices. But at the same time, there has been a positive contribution on the export formulation side also by INR15 crore. So if you net it out all these three items, it will be INR21 crore positive.

Ajay Sharma — Maybank — Analyst

Okay. This is the absolute increase in the gross profit. Okay. And [Speech Overlap]

Unidentified Speaker —

There is a drag on the overall margin by close to 2%. If you do the mathematics on that side also, the reason for — will be more or less similar lines.

Ajay Sharma — Maybank — Analyst

Okay, understood. And just a broad top level question, so basically right now your company is probably one of the only domestic pharma company, which is seeing this kind of margin pressure. And if you look at the MNCs or even other domestic companies, they are not seeing this kind of margin pressure. And partly it’s because you have a higher price control range I think. But what is the management — basically where did the management missed the trick like over the last so many years, I think you — or you have not really grown your portfolio, I think you continued to rely on your antibiotics and Zifi and Enerzal and Electral and not really expanded the portfolio and basically that’s what is causing this kind of situation.

So I’m just trying to understand where was the management failure on that count. And also what is the guarantee that what are the investments you are making will really contribute to the top line and improvement in margin because we — as shareholders we don’t want to see a situation where you continue to invest, but the margins continue to remain depressed. And it just keeps remaining a future story instead of seeing the current results. If you can give some perspective on that. Thank you.

Unidentified Speaker —

Yes, so I don’t know from where the data you are referring to was saying the margin pressure is not there on the other companies. Data which we are looking at for the Q2 this year versus the Q2 last year there has been a substantial increase in the overall material consumption levels. So I’m not saying in terms of the absolute, I’m saying in terms of the percentage as well. I would not like to name the companies, but there are seven to eight companies out of 10 where there is a margin pressure on that side.

Ajay Sharma — Maybank — Analyst

Well, not the magnitude, I think if you see the profit decline for FDC is quite steep actually compared to — you can look at the Sanofis or the Abbotts or you look at Eris, all these companies which are, I would say the top domestic companies in terms of — domestic-focused companies, don’t have export component really. But I guess besides that, my question was more in terms of how do you ensure that whatever investments you are making translate into better top line and what’s the kind of time-frame management is looking at to continue to invest before they see the results?

Unidentified Speaker —

Yeah, so to the second part what you said, you are partially right that historically we were dependent on control price molecules like Zifi and Electral. But if you have tracked our progress in the last couple of years, we have deliberately moved ahead from there. And as I said, couple of launches, new divisions what we have carved out are in a different category. So as I said in our last couple of calls also that now apart from antibiotics, we are focusing on Nutraceutical, cardio-diabeto basket and [Indecipherable]. So these are couple of new categories, which we were already present, but we are now trying to make ourselves emphatic. And I hope you will appreciate on that front that Zocon and Nutrica division, which we did talk about are significant progress in this direction. Now obviously it would take some time for us to make ourselves impactful. As I shared in my last reply to one of the questions, when we carved out the nutraceutical vertical, the overall portfolio volumes were around INR30 crores to INR32 crores, and we are confident this year we will be closing somewhere around INR68 crores to INR70 crores. So this is a significant movement in that direction.

We expect this to continue in the future and probably if I can say so as of now, though it is very early to comment, we are looking at a INR100 crore basket from the nutraceutical portfolio itself. Apart from this, when we did our restructuring during the launch of Zocon, we did talked about the carving out of Vista division, which now independently focuses on the cardio-diabeto market. So what I mean to say is that there is a deliberate attempt to move away from or the dependents on antibiotic and ORS. Having said this, these two verticals are our strengths. So apart from Zifi and Electral and Enerzal we have also built a significant market for our own products like Zifi CV and Zifi O, which I did share where we are enjoying high percentage of market share and the market size of the Zifi CV today on the IQVIA data front is touching almost INR75 crores. So when you say the management failed, I would say the management did realize this. But yes, during COVID times, some of our plans did or rather were not able to execute well in 2020 especially. But if you look into the last financial year and the current financial year, we have definitely progressed far ahead on these plans.

Ajay Sharma — Maybank — Analyst

Okay, that’s great. Just hope that these can translate into better profitability going forward. Thank you so much.

Unidentified Speaker —

Thank you very much.

Operator

Thank you. Ladies and gentlemen that would be our last question for today. I now hand the conference over to Ms. Varsharani Katre, Company Secretary for closing comments. Thank you, and over to you ma’am.

Varsharani Katre — Company Secretary and Compliance Officer

Thank you everyone for joining this earnings call of FDC and expressing your views. In case if you have any concerns please reach out to us on investors@fdcindia.com. Thank you again. Over to you, moderator.

Operator

[Operator Closing Remarks]