Gufic Biosciences Limited (GUFICBIO) Q3 FY23 Earnings Concall Transcript

Gufic Biosciences Limited (NSE:GUFICBIO) Q3 FY23 Earnings Concall dated Feb. 20, 2023.

Corporate Participants:

Ami Shah — Company Secretary

Avik Das — Investor Relations

D.B.Roonghta — Chief Financial Officer

Pranav J. Choksi — Chief Executive Officer

Analysts:

Gunit Singh — CCIPL — Analyst

Yash Tanna — iThought PMS — Analyst

Ajinkya Jadhav — KamayaKya Wealth Management — Analyst

Chetan Phalke — Alpha Invesco — Analyst

Aman Vij — Astute Investment Management — Analyst

Runjhun Jain — HGIPL — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Q3 FY 2022-23 earnings conference call of Gufic Biosciences Limited. As a reminder, all participant lines will be in the listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. [operator Instructions] I now hand the conference over Ms. Ami Shah, Company Secretary. Thank you and over to you ma’am.

Ami Shah — Company Secretary

Thank you. Good evening, and a warm welcome to Gufic Biosciences Limited Earning Conference Call for the third quarter of financial year 22-23. I have with me Mr. Pranav Choksi, Chief Executive Officer and whole time director; Mr. Devakinandan Roonghta, Chief Financial Officer; and Avik Das from Investor Relations team to give the highlights of the business performance of the company and to clarify all the queries of the investors during the call.

We will begin the call with the business highlights and overview by Mr. Avik followed by financial overview by Mr. Roonghta. After the opening remarks, the operator will open the bridge for Q&A session. But before we proceed with the call, please note that some of the statements made in today’s discussion may be forward-looking and are based on management’s current expectation and this may be viewed in conjunction with risk and uncertainties involved in the business. The Company assumes no responsibility to publish or update or amend modify or revise any forward-looking statement based on any subsequent development, new information in future or except as required by the applicable laws in force. This call is being recorded and a playback of the call will be made available on the website of the company, shortly after the call. The transcript of this call will also be submitted to the Stock Exchange within the stipulated timeframe. I’ll now hand over the call to Mr. Avik for his opening remarks. Thank you. Over to you, Avik.

Avik Das — Investor Relations

Thank you Ami for your opening comments and welcome everyone to our call. I’ll start with giving you all an update on the Indore project, and subsequently follow it up with some of our key developments in each of our business verticals. So with respect to Indore as you all are aware, our focus — we focused all our energies in ensuring that we are on track with commercializing our Indore facility. I think it’s about time that we give you all a deep and detailed insider as to the progress of the facility.

So with respect to our civil work, we are very happy to inform that plant[phonetic], our utility block and our R&D block nearly completed 90% of the civil work. With respect to the main plants, we’ve about to commence the work on the pre-engineered building, which is the last floor of the facility. Now coming to the equipments. With respect to our imported equipments which are primarily lipolyzers. We’ve received both our consignment, albeit, there was a bit of a delay given the lockdowns in China. However, we’ve been able to get both our consignments and the installation is underway.

Now with respect to our indigenous equipment in cases like HVAC systems, transformers and our manufacturing tank and vessels we have received the materials on our side, the installation is under progress and we do not foresee any challenges in terms of sourcing in any of these equipment and we hopefully should be on-schedule to complete the installation. There may be some delays and we’ll keep you all informed with respect to that. Now coming to the various divisions. We had informed of the launch Sparsh as a division, we are very happy to inform that we’ve completed our primary and secondary research on the field which involves reaching out to nearly 5000 hospitals where we map the potential for around 100 and 150 molecules.

These are specifically molecules of interest to us. Some of them were already present, and some will be new molecules that will enter as per our initial assessment we foresee the annual market is somewhere around INR500 to INR600 crores and we have now geared up to gain around 20% to 25% market-share within the next year. So this involves creating a supply chain to source these molecules to manufacture these molecules and also a very innovative method to each of these molecules to the various hospitals. We’ve already — we’ve hired a team dedicated field force in this particular division, and we’ve started reaching out to these hospitals and we should start seeing the division, give us commercial results very soon.

Now coming to a [indecipherable] is now fully operational and our friends and well wishers were there in Mumbai, we request you all can come down and visit and take a feel of the clinic yourselves. And we’ve also started the knowledge sharing initiatives this year and as a process as one of our initiatives we started training gynecologists over there and we have every 15 days, we are hosting various speakers from around the world. Now, in Amsterdam, we’ve started the process for registering dermal fillers. We are very hopeful of launching these fillers also very soon. With respect to the dual-chamber bag we are awaiting approval from NPPA and we’ve kept the commercial launch on hold and we’ll keep you all updated as soon as we receive the approvals on the international business side, we received three-product approvals, one each from Colombia, Kenya and Philippines. That’s about from my side. I’ll hand over the call to Mr. Roonghta for updates on the financials.

D.B.Roonghta — Chief Financial Officer

Thank you, Avik. I will just give financial highlights for Q3 of the financial year ’22-23 versus the Q3 of financial year ’21-22. The total revenue for the current quarter is INR178 crores against the previous year, two to three quarters INR175 crores. EBITDA for the current financial year. Current quarter is INR34.1 crores, previous Q3 was INR34.5[phonetic] crores. EBITDA margin for current Q3 is 19.1% in Q3 of 2022 or INR19.7%. Profit before-tax for current Q3 is INR27.2[phonetic] crores and last year it was INR28.7 crores[phonetic]. Profit-after-tax was INR20.3 crores for Q3 financial year 2023, last year it was INR21 crores.

The PAT margin for the current Q3 is 11.4%, Q3 of last year was 10.1%. Thank you.

Ami Shah — Company Secretary

We can start the Q&A session.

Questions and Answers:

Operator

Sure. Thank you very much. [Operator Instructions] The first question is from the line of Gunit Singh from CCIPL. Please go-ahead.

Gunit Singh — CCIPL — Analyst

So for financial year 2022, we saw a top-line of about INR780 crores. But right now, for the trailing three-month we are doing around INR680[phonetic] crores. So do we see [indecipherable] passenger revenues that we did in financial year ’22. And also what is the reason for revenues to be lower for the trailing 12 months as compared to FY 22, that is my first question.

Pranav J. Choksi — Chief Executive Officer

So thank you for your question, Gunit. Pranav here. So just to give you a little bit of a background about the revenue as such, if you see the revenue in ’22, ’23 was — sorry, the revenue, which is going to be in ’20 to ’23 on a run rate is around 170 per quarter. But last year, when you saw 780, that also had an impact of the COVID also coming in. So there was almost — like we have mentioned in the previous calls also, almost to the level of INR175 crores to INR180 crores of revenue was a onetime revenue, which we have recorded last year due to the COVID. And if you compare the revenue before that, then it was 487 national on an annual level.

So from EUR487 million, we had gone to EUR780 million, where we had clarified that there was a onetime revenue capture of COVID and COVID-related drugs, either due to COVID or due to black funders and core micros — and that has — was a onetime thing. On the contrary, this year, we have taken more than INR20 crores — INR22 crores of stock back, which was built assuming that the Wave 3 and Wave 4 would have come, but that has already been adjusting the net revenue this year. So that’s the reason you are seeing goes 487 to 780, whereas in this quarter, you are seeing an average of a quarter revenue of 170. So that’s the reason. So overall, as a company, we are still growing by minimum 15% to 20% if you factor out the onetime COVID revenue.

Gunit Singh — CCIPL — Analyst

All right. And I have two more questions. I’ll just take them out right now. So the first question is that we historically have seen our operating margins to be around, say, 10% to 13%, 14%. But currently for ’22 as well as right now for nine months, we are seeing our margins to be around 19% to 20%. So I would like to understand how — I mean, the reason for the jump in margins and whether this will sustain in the future and what would be a steady-state operating margin? And the second question is that you mentioned that despite project that we have launched, we expect to gain about a 25% market share in that. So I would expect to understand by when can we expect this to reflect in our revenue figures. So given that the market price is about INR56 million year, can we expect that in financial year 2024? Can we expect about INR100 crores to INR125 crores from Tepe? This is my second question.

Pranav J. Choksi — Chief Executive Officer

So I think in terms of your margin, I will request Roonghta to answer that point after I finish my reply to the spurs question. So I will take the first question first. So first, just to clarify what Avik said. The total molecules which we have planned to take is around close to 300 odd molecules, which represent a total of INR9,500 crore market capture out of the total INR90,000 crore Indian pharmaceutical market. So out of the total market of INR1,000 crores is the total Indian pharmaceutical market these 300-odd molecules in Phase I and Phase II comprises of around INR9,500 crores. Out of or are they comprise of about close to INR9,500 market representation. Out of that, we have launched around 130 molecules in Phase 1. The total 130 molecules in Phase I comprise of at least INR7,500 crore market representation. Out of that, we have selected that down the line in the next five to seven years, we should be catering to — we should be capturing a INR500 crores to INR600 crores market input in terms of Gufic as a company.

So from that, we feel in the first two years, we should be capturing a 20% market share, and you rightly said. So we are looking at the launch has happened in December. This quarter will be — so for the first two months of the launch rather than starting the sales, we have spent a complete energy and effort. First, to just snap out the market because once the team gets busy in operational matter, we don’t spend time in market intelligence. So we have actually not only for the period of — from starting from December one week, all the way until actually not even January and February 10, we have asked them to just go around and capture the market where we have keyed in and mapped out the primary secondary and tertiary, I would say, hospitals and sing homes in the area of operation in the current geography. So geography is around five states, just to clarify, and that is where the numbers are coming on a more, I would say, a titrated manner. And then we will be gradually if it works out in the five states we will go to the other states also.

Coming back to this market. So this market intelligence will help us in two regards. The products which have been selected in sparse will be different from what is there in the critical care division. So once we get more insight about the market, this list of primary, secondary and tertiary, I would say, health care centers will also be used in terms of market penetration by the critical care division, where we already had more than 200 people also. So we are looking to expand our current market share and our penetration in Indian market, getting more data on a real-time basis in terms of cost counter rather than geography right now. So when we go for hostile counter, the business becomes more predictive.

At the same time, we can also learn in terms of — we’re also using some specific, I would say, these data tools or we’re looking at some data analysis points by which we can come to a little bit more of a predictive business down the line and keeping in mind also the consumer ever selection. So depending on the geography, depending on the area, depending on also the PIN code, we can come to know what sort of prescription, guideline or drug usage guideline is being followed in different parts of India, which helps us to also come up with a better basket which is catering to very unique markets rather than having a common strategy for the rest of the rest of India.

So this is just I’m clarifying for this, we’ll start capturing revenue from February end. So this quarter, you will see approximately two months of revenue capture from Sparsh. And going forward, yes, we hope, and that is our target that we are looking at close to INR100 crores run rate from next — I think, at least not in 2023, ’24, but definitely for ’24, ’25, we should look between INR100 crores to INR125 crores going forward.

This is answering your second question coming back to the margins, I’ll hand it over to Roonghta to please answer.

D.B.Roonghta — Chief Financial Officer

So, regarding your EBITDA margin, if you see the EBITDA margin from the financial year ’16 ’17 till ’19, ’20, it was in the range of around 13% to 15% when our turnover was in the raise of around INR300 crores to INR400 crores. Now from now from ’20 onwards, till ’23, the margin has been improved from 18% to 20%. And the turnover has also been increased from around INR600 crores to INR700 crores. Whenever there will be increasing the turnover to fixed cost not going to increase in that ratio. For example, our selling costs in ’16, ’17 was around 15% to 16%. Now it has come down to around 12%. So whenever there is increase in ore the same ratio, that is not including the big cost. That was the reason that our EBITDA has been increased. And whenever the future also is the top line will be going to increase, EBITDA margin will go into further increases. Thank you.

Gunit Singh — CCIPL — Analyst

All right, thank you very much.

Operator

Thanks you. [Operator Instructions] The next question is from the line of Yash Tanna from iThought PMS. Please go-ahead.

Yash Tanna — iThought PMS — Analyst

Hi, good evening and thank you for the opportunity. My question is, we have given a guidance of 15% to 20% on an export basis last year. And I think now maybe to meet the lower end of the guidance, we’ll have to do about INR200 crores quarterly run rate. So do we still maintain the guidance of 15% to 20%? And over the medium term, that is next three to five years, what are our growth aspirations.

Pranav J. Choksi — Chief Executive Officer

So thank you, Yash, for the question. And yes, I think just to tell you, there are a lot of growth levers, which we are working on five Alana being discussing. Of course, Indore being there would definitely add as a indents, new manufacturing facility, which is coming up in Indore, which will be commissioned by June or maximum by 1st week of July 2023.

We’ll definitely add in that number which we see because the capacity in encore would be at least 2.5x to what we have currently — sorry, the capacity in Indore would be around 1.5x. So the current total capacity of BofI will become almost 2.5x more than we are currently. So that would definitely help the number. Of course, Indore will take time because we are looking at a regulated market category along with the man domestic market growth. So initially, when we look at the capital utilization of around 15% to 30% to 60% in year one, year three, automatically, the numbers would start streaming.

We also are looking at our domestic business presence in all these six, seven divisions, now eight divisions that you consider Acted and arise also. So there, we are looking at organic growth coming in from there also. We have got some, I would say, reduction in the growth percentage in terms of the contract manufacturing would not increase that much, but the international business kicking in and more and more country registration coming in, we foresee that averaging — even though the base of international market is low, we still feel the higher growth percentage there, followed by the organic growth in the domestic market, plus Indore kicking in would help us to ensure the 15%, 20% growth year-over-year.

Of course, there are other business avenues in terms of research. As we have mentioned, the biological rise is happening much thing. And that’s one of the reasons you have seen the other expenses in this year go up because a lot of our, I would say, basic research into biologicals apart from even toxin new drug delay systems and also some new peptide is still continuing. So all these are being worked out in the background to ensure in year two, year three, or four, year five also, along with Indore, we maintain a minimum run rate of 15% to 20%.

Avik Das — Investor Relations

And just to add what Mr.Choksi said, last year, we did our top line at about INR170 crores of COVID revenues. So if you exclude that, we would be doing a growth of about 15%, 20% this year.

Yash Tanna — iThought PMS — Analyst

We consider a base of INR660 crores, right?

Avik Das — Investor Relations

Right.

Yash Tanna — iThought PMS — Analyst

And in terms of our newly launched products, I’m referring to the last investor PPT, products like tigecycline, Dydrogesterone. So how have these been performing? And I believe out of these Dydrogesterone would be a significant molecule. And one of our smart peers have also been about 3% market share. So how has that been for us, new product performance do?

Pranav J. Choksi — Chief Executive Officer

Yes. correctly said, just to clarify that, as we mentioned in the last call also sectoring avibactam was something where the R&D had happened in Q3, and you were looking at the launch in Q4. So on January end, we have launched the molecule in India. So the sector we avibactam revenue would start kicking in from the Jan to March quarter.

That is number one. Number two, dydrogesterone tablets, yes. Since we have launched in around two different divisions, and now we have a third SKU also being launched for a specific market, we foresee that this brand should be very close to come close to a INR10 crore brand in the period of less than two years ago, less than 1.5 years. So that is something which is — which has further increased in the third quarter, and we foresee a traction happening in the fourth quarter and so on. The dual-chamber bag specifically biokinetic what we got the permission plus we have the permission for meropenem and citizen a loan also.

But since we had applied for NPPA, NPPA has given us only a 15%, 20% MRP allowance beyond the current limit, which was not feasible. So we have re-represent our case to them once again in the month of December and once again in the month of January, then we were told that European an MRP would be under reconsideration. And hence, we were asked to wait till the actual MRP of meropenem is established by them for a normal conventional dosage. So now just, I think, a couple of weeks ago or three weeks ago, the draft of the MRP of meropenem has been out. They will be now finalized hopefully in the next one or two weeks because they give the industry 10 to 15 days to come up with their feedback.

So once the MRP of meropenem is established, then we will be able to apply for a new MRP of meropenem. So having in a nutshell dual chamber back, even though we are ready, we have more than unbotoget even the market is very gung about it till we get the NPPA formation to launch the product, we will not be in a position to launch the product. So I foresee that even normally, we do not launch any major products in the last quarter. So I’m looking at now assuming that the proceeds should be done in Q1 to launch the product in Q1. So the revenue of the dual chamber back should start capturing from Q1 2024. So that is about the three time lines of the three different products, which are being launched.

Operator

Sorry to interrupt, sir. We request you to please rejoin the queue for further questions.

Yash Tanna — iThought PMS — Analyst

Sure sir, thank you.

Operator

The next question is from the line of Ajinkya Jadhav from KamayaKya Wealth Management. Please go-ahead. Thanks for the opportunity. I would like to — how is the traction in and out of Tanox?

D.B.Roonghta — Chief Financial Officer

So Tanox is, I think, doing reasonably well. I think as we had mentioned last time also, the growth percentage month-over-month is still being maintained and it’s going on, but we hope to close very close to I believe almost 4x sales over last year, hopefully, by the end of the year, keeping a standoff. Zarbot, unfortunately, we initially thought of getting the claims from our digital division, where we had 200-plus people while having a special team done. However, then we realized very soon that critical care caters to a very different — I mean to — even though it’s part of the [Indecipherable] intensive risk and anti-infective is the specialty and we needed much more catering to neurological in terms of their tickle and core competency also.

So from November onwards, we were in the process of recruiting a separate team. which would be catering to the neuro, I would say, Neuro care division. And we also have recruited some specific, I would say, experts who have already handled the toxin in the past with your previous companies. So we feel that even though Zarbot has launched and it has reached a basic growth, it’s not growing as fast as turnoff.

So with the new team coming in who is much more, I think, well linked and I would say, much more technically adept in handling the toxin with the right target audience, we would feel that it should start kicking in from March or April. The team had — was recruited all the way from September, they start joining in from November and the recruitment should be over by February end. And from March, you’ll have a full team who is dedicated to just telling a what it is in the Indian market space. So this is the current scenario.

Ajinkya Jadhav — KamayaKya Wealth Management — Analyst

Okay. And from Alicia, how many batches of the doctors have been passed? And what is the size of the…

D.B.Roonghta — Chief Financial Officer

Yes, Alicia is more of a training thing, not that there’s any — I would say feel — so right now, there have been more than, I would say, five batches which have gone through, but it’s more of a collaboration where we discussed more about the new, I would say, new strategy or the new technical, I would say, practices which are happening in cosmetics as well as gyna cosmetics as well as we have tied up with Dr. Namit Megan, who is from Elante who worked on Vaginal rejuvenation and vaginal tightening all the way from, I was a body and face countering also. A lot of, I would say, information base, which gets done and almost, I would say, five batches have gone through. Apart from two batches dedicated to, I would say, the cost of the gynecology remaining up all body and face combined. So from December when the Alicia was initiated until February now around five batches have gone through.

Ajinkya Jadhav — KamayaKya Wealth Management — Analyst

The last question is like…

Operator

Sir, we request you to please return to the queue if you have further questions.

Ajinkya Jadhav — KamayaKya Wealth Management — Analyst

Yeah, thank you.

Operator

The next question is from the line of Chetan Phalke from Alpha Invesco. Please go ahead. Yes, thank you for the opportunity, so where do we expect you certificate for our Indore plant? Is it in place?

D.B.Roonghta — Chief Financial Officer

No, sir, as Avik said that the plant will be commissioned by around June 2023, then there will be three batches, valuation taken for the target molecules and then you’ll have to wait for a 6-month stability. So looking at — we are looking at the calendar year 2024 for all equitation, should start kicking in, you or the other countries? And eventually, if we find a suitable partner, then it would be the other regulated markets of America also. So the timing will be 2024.

Chetan Phalke — Alpha Invesco — Analyst

Okay. So do we intend to fill our capacity with CMO contracts till the time we had agreed?

D.B.Roonghta — Chief Financial Officer

Yes. So already we have in touch with, I would say, clients who are country specific. At the same time, we have some specific molecules, which we will be marketing in India for Sparsh. So as you know, we believe in global — one single global quality. So having there a lot of new products, which we will be right now launching in Sparsh, which would be manufactured in boutique in Indore. It would be outsourced from a third-party vendor, but they will be eventually made in Indore.

So Indore would help us for the economics of scale and the right pricing and the right quality to make this product started. So the initial capacities would be with Sparsh plus CMO plus then there would be some domestic market also, I would say, new products which we are working on, which we’ll be launching. And eventually, then you would have international business peeking in.

Chetan Phalke — Alpha Invesco — Analyst

Got it. So for CMO business, how does the margin profile replace because we have been seeing that over the last couple of quarters, there is a comparison in CMO margins across the pharma as we can. And a lot of CMO plants have come up in the last two years. So are we seeing any pricing pressure? And do we intend to reduce our prices, especially in CMO in order to maintain or maintain our market sir, whatever is your outlook on the pricing?

D.B.Roonghta — Chief Financial Officer

So again, I would say that the CMO margins are actually not what is eroding in the last two years, very frankly. I would say the reason that the margins we are seeing is being, I would say, compressed, saying purely in the critical cash paper injection space would be the increase in inventory. So if you see post COVID, not only in India, but around the world, out of inventory had been kicked in.

And because of the inventory being kicked in, assuming that you have a wave X, wave Y, wave V would come, a lot of people were stuck in that and that had led to some sort of a slowdown in the CMO business overall. Having said that, since the — what you call, most of the products which are manufactured in April to September 2021 would be getting either expert or would be sold out in the next six months, we feel that CMO would still be in the, I would say, impact. Keeping in mind the competition, there are very unique products which we are working on rather than — of course, at the same time, we’re working on certain need to basket products also which we keep on happening. But economic of scale always help us to maintain the same margins.

To answer in a nutshell, when we do a proton from inhibitor, yes, we understand that the margin would be 25% on a very high volume. But then there are certain impactive and infected an export market start kicking in when the margins grew as high as 45% to 50% also. We also have to make — we have to be very clear that these are the gross margins. And in such CMO practices, there might be only the factory overhead, which needs to be amortized and not any other employee costs or other expenses also.

So we still feel that CMO would be an important factor going on, especially when we have new markets kicking in. As we have mentioned in quarter 2, our tenant block also has started, so the tenant block was started in Q2. We started the validation done and we have started filing users for the Pennant block in this Q3 and Q4. So we hope that even the Q3, Q4 Ken outlook also will start helping us from the next two years. So again, I say it’s not about the margin shrinkage. It’s all about just the question of being in that time reference, which should automatically ease out end of this year.

Chetan Phalke — Alpha Invesco — Analyst

Okay. So for the next 12 months, we don’t see any significant pricing pressure or pricing cuts per…

D.B.Roonghta — Chief Financial Officer

Not due to CMO. I think the only thing pricing pressure would come with the NPPA pricing is there and the Chinese API prices or any other API prices go for a nutshell, keeping in mind environmental conditions of fuel and war, et cetera. So those are the only reasons we’ll get into pricing pressure? Or like I said, most of the products which are — which were coming to a near expiry or would be expired people have just — the last two quarters, three quarters just reduce the price and just load them in the market to ensure there’s no loss of inventory. So that’s the thing which we will not see in the coming future, except for environmental conditions.

Chetan Phalke — Alpha Invesco — Analyst

And sir, my second question is on the receivables and the debt. So in point quarters, I think our receivables have grown up significant INR280 crores. And how are they looking now? And is this — do you see this cycle reversing because I think the receivable days have gone up to stretched payment cycle-wise by most of the CMO partners. So what is your take on this that how do we intend to fund the receivables? Because as you move with our CMO business will become even bigger from a current base in those facilities. So it will require a huge working capital constrain in the current contract. Just trying to understand how the working capital cycle will look like? Will it remain around the current level? And how do we plan to packet given that our debt is already a crores. So just kind of define for the overall situation.

Pranav J. Choksi — Chief Executive Officer

Sure. So I’ll answer that question in the form of a business point of view, then I also requestRoonghta to answer it in form of the balance sheet point of view in terms of the big numbers. But we have to understand one thing that post COVID, one thing has been very clear and even after COVID the last six, eight months, have you have seen the entire, I would say, a credit line in India, especially has been losing from — I’m talking about the CMO businesses and I’ll come with the normal trade and so on and so forth.

So the CMO business, which at one time was around 30 to 45 days to 50 days or 6o, even big become name them, but even the top 10 companies of India now moved on to a 75 days, 90 days normal credit period, keeping in mind the inventory that we want to keep going forward. This might be one of the reasons that a lot of inventory must have been piled up, and that’s why they must have pushed for that. I don’t think the — I don’t think that they will change this payment terms going forward because it’s something which is apparent, not only for injectable, it’s also all through for oral topicals and so on and so forth.

Exports, as we are getting into more and more markets. So initially, the exports was mostly, I would say, advanced or in 30 days. Now since the channel partners are also increasing and we’re helping them to invest and we are helping expand their basket also, we also have invested or investing in much more by keeping some sort of inventory for new products also. So the export market also would normally go between around 45 days to 60 days, which was around 30 days. So that another 15, 20 to 15, 30 days, things would go up.

The domestic market is something which we have still maintained because normally, the average payment cycle in the domestic market was around — ideally, it was, of course, 21 days and 30 days, but we always Gufic maintained a 45-day cycle and that 45-day cycle still continues to hold through. So that the domestic market on an average, if I take the averaging out of it, then it’s a 45-day cycle which we look forward. So again, if you see in terms of number of days, we see the working cycle to be around the average base for these very different businesses.

Again, API is a very small part of our business, but still API itself also has normally domestically 60 days and internationally around LC 60 days to pay, which now we get paid. So on average, we always see payments between 60 to 90 days, and that’s why we always have a revenue, I would say, outstanding of around 75 days plus or minus on an hour 60 to 70 plus or minus on a debt point of view. This is — these are my comments as a business point of view.

I’ll ask Roonghta sir to add if I missed anything.

D.B.Roonghta — Chief Financial Officer

Thank you, sir. Basically, you see the balance sheet of the face for last September quarter as well as the March 22. Average our debtors is around between 40, 70 to 92 days and affording to 829 between 82. And if we convert into amount, it will come from is other for the quarter is around INR175. The basis would be INR175 crores, plus 12% GST average, it will go to INR200 crores. That is above our receivable. In case of our stock, working as to the stock, we are owning around 1.5 months stock of raw material, around one month to around 35 stock of business around seven to eight days to in project. So there is around four months top-up Ramadan Prinsen that also all around working capital as of about INR135 crore to INR150 crore between INR125 crores to INR150 crores of this. That is the total working capital requirement of the company.

Chetan Phalke — Alpha Invesco — Analyst

Thank you. Okay, so…

Operator

Sorry to interrupt, sir, we request you to please return to the question queue for further questions. We have the next question from the line of Aman Vij from Astute Investment Management. Please go ahead.

Aman Vij — Astute Investment Management — Analyst

Yeah, good afternoon. Just one request first and then question. So any reason we have not uploaded any presentation this time or any remarks on the number of products which we keep launching and the update on that?

Pranav J. Choksi — Chief Executive Officer

Good question. Actually, this input came last time from the last question since we are giving the presentation and then we are repeating the same in the introductory call, you said liasonly one avenue. So this time, we thought we’ll just have the introductory call and give only the highlights which are important, and then we come with the Q&A. But not only you, but I have got some two, three people also say that, at least, let’s keep the presentation intact for that remains as a reference point, and then we can directly start the Q&A.

So we thought that — and one more reason we were planning to have from next time, only update in every six months just to keep that information being more valid. So we were looking at a view. So no other reason is just that based on the feedback, we took a call that it’s much better than — in order to have avoid redundancy, just keep a single channel of communication and information being out no other reason.

Aman Vij — Astute Investment Management — Analyst

Sure, sir. Finally, there are two questions. The first question is on the Indore site. So you talked about what utilization levels we are targeting, and it will be a mix of domestic and CMO at least for first one or two years before we get the approval and move towards export. So for the first year and second year, maybe even third year, if you can talk about what will be the likely mix of CMO versus domestic?

Pranav J. Choksi — Chief Executive Officer

Very frankly, I think I would never say no to any CMO business, but — so I don’t know how the CMO business comes. But as per the efforts and ask for the structural approach to CMO, which is going in case, we would still look at like a 50%, 50% model going forward? Because like I said, Parish and our own brands would be there, we foresee that the Navsari infrastructure, keeping in mind the current registration which we have would be completely utilized and will be completely chockablock by December or Jan 2023.

So we will need to have all spillover business coming from Indore. More importantly, the current unit 1, which we have in Nasar, which was currently also catering to serving WHO and Pixar country. those also will be transitioning to Unit 2, which is the EU for the facility. So we are planning to convert by — once the Indore facility starts the entire unit one will be converted into a dedicated, I would say, hormone injectable block to spearhead our in — particular business [Phonetic] also.

So Navsari would the tenant would be [Indecipherable] would be the EU GMP factory for general products and then that will be complemented by Indore. So I still feel — I’m telling you right now 50-50. There might be an instance that it might be 70, 30 or 60, 40 year here and there, but this is a ratio what we foresee would start off with because we see still lower business from domestic business coming in and being taken care of, not only by critical care or in — but also by Sparsh from Indore.

Aman Vij — Astute Investment Management — Analyst

Just one clarification on this. So Navsari you said will be converted to a fully hormone plus injectable [Speech Overlap]

Pranav J. Choksi — Chief Executive Officer

I’m just — I’m just repeating again. So there is no ambiguity and no confusion. In Navsari, we have three blocks apart from the API block. The three blocks are including the legacy factory of booking, which is Unit 1 and Unit 2 is the EU approved facility, which is approved and of course, where the business of Germany and what you call Portugal and U.K. and Canada and South Africa and all other Regen India businesses there. And the third block is also the Kenyan block, which was commissioned in Q2 2023. So I am right now talking about this unit 1, which is a legacy block, which has been in part from a long time because when Indore will start coming in, we will have excess capacity for the general lifi liquid and Putin [Phonetic].

So then that gives us enough foray to convert the unit 1 into a dedicated — I would not say it’s a dedicated block for input products like HCB, HMD and FSS because a part of that block will be converted into the recombinant product also which will be dedicated to recommend FSH, which is again for infertility. So that entire unit 1, which is a legacy factory will be converted into infertility products manufacturing site.

Aman Vij — Astute Investment Management — Analyst

And what can be the peak sales we can get from that unit 1 after the conversion?

Pranav J. Choksi — Chief Executive Officer

I’ll have to check on that exactly and get back to you, but I will keep a note and hopefully, I think we’ll get the details and we share it with you in the future.

Aman Vij — Astute Investment Management — Analyst

Sure. Second question and final question is on the — so for nine months, if you look at ex-COVID, if you remove the COVID portion, if you can talk about growth in our various divisions like critical care, fertility care, international business and API, the growth number if we remove the COVID portion so that it is like-to-like comparison.

Pranav J. Choksi — Chief Executive Officer

So again, I would say critical care will be flat. The reason would be very simple because we have taken a majority of the return, like I mentioned, we are taking more than INR22 crores of written off last year and this year also. Most of the return would be going to the critical care and offers to some accessory divisions, which we could not sell last year, which were kept in the channel because the channel was keeping it equated for the Wave X and wave Y, which never came. So if I consider the net of that return, then it would be a flat revenue, but I foresee that with Selvax and avibactam coming up, and if I compare then on a 12-month basis, like there would be definitely some 3% to 4% growth in the Critical Care division.

Again, on the net sales this year versus the last year sales of — I mean, removing the COVID products, and that would be the number. in fertility and health care are two divisions, which have taken the major growth this year. So even though our contract manufacturing has reduced, the three divisions which are doing considerably well are health care, followed by health care, followed by Ferticare and then followed by exports, which are growing in more than double digits, and they are riding the wave and taking it forward.

So health care has done 100% achievement. They are till they’re in 100% Semana almost on an 18% growth. Fertility is it even on a higher growth, but that would be also because of some new products like dydrogesterone, we have added up, that would be close to around 23% to 25%. I’m saying on a year-on-year basis. Again, you have to factor in mind that last year in Puregraf also during code, we sold some Enoxaparin, which were part of Infertility something which was due to the COVID. If I remove that, then it will be more than 35% to 40%. If I remove it a comparing this year with last year, removing the COVID products.

Third, exports is something which is growing much more, but the base is so small that even though it’s growing by double digits, that field is not being there. And then, of course, I forgot to mention Stunnox is the fourth one. Stunnox is something which is also growing much faster, much higher. But again, the base is too small product to have a relevance on the total revenue of the company. So these are the four things which are driving the growth this year.

Aman Vij — Astute Investment Management — Analyst

I have more questions, but I’ll get back-in the queue. Thanks guys.

Pranav J. Choksi — Chief Executive Officer

The next question is from the line of Runjhun Jain from HGIPL [Phonetic]. Please go ahead.

Runjhun Jain — HGIPL — Analyst

Hello. My question is regarding the geographical split. Currently, the major business as in India, what is in the medium term would be that the company planned to take the international market for, sir?

Pranav J. Choksi — Chief Executive Officer

So if I understood your question right, you would like us to talk about the geographical breakup of our revenue. Is that it?

Runjhun Jain — HGIPL — Analyst

Geographical split, yeah. Current and what could be in the future.

Pranav J. Choksi — Chief Executive Officer

Okay. So firstly, we divide the business into India and export. Exports in further the country, which is leading the growth for us would be Germany, followed by Colombia followed by Sri Lanka. I mean I can go into individual countries, but I mean I’m dealing in a nutshell, these are three there. Going forward, we are getting more aggressive into EU and we just got approval of U.K. in, I think, I believe, in the third quarter, and then we have filing some tenders there. So we should see markets like U.K. and Portugal because already our existing market for us also start catering much more.

This year, we will be — finally because of the COVID, we’ve got enough time to work on certain models here, which we have worked on this year, and we will be filing those years in around four more European countries, namely Spain, France, Italy and Netherlands. And those would be catering going forward much more. Southeast Asia as a whole also is now coming at position three. Europe is first and then followed by South America and then followed by Southeast Asia. In Southeast Asia, we also include countries like Sri Lanka and Myanmar and Philippines and whatever because they also — even though they’re part of South Asia, we consider as part of the Southeast Asia strategic business unit.

So these markets also now are expanding in terms of our growth going forward. India will still, of course, cater to a majority wearily would be around, I believe, a 70% plus 75% plus revenue in terms of formulations. Going forward also, we foresee, as I’ve already mentioned all these years, India would be a strategic market for us going forward in terms of our growth. So India, followed by these other countries coming in, we would maintain the ratio. Even now with Indore coming in, I foresee the ratio to fall to 65, 35 or maybe 60-40, not below that. India will still be one of the growth stories going forward.

Runjhun Jain — HGIPL — Analyst

Okay, thank you so much.

Operator

Ladies and gentlemen, due to time constraints, that was the last question. I now hand the conference over to Ms. Ami Shah for closing comments. Over to you, Ms. Shah.

Ami Shah — Company Secretary

Thank you. Thank you, everybody, for joining this call. I hope all your questions and very are satisfy answered by us. And in case if there are any further questions that has been present unanswered, you can reach out to as Mr. Davin Buaron, SCA and Investor Relations partners. Thank you once again. Hope to reconnect in the next investor call.

Operator

[Operator Closing Remarks]