Indoco Remedies Limited (NSE: INDOCO) Q4 2025 Earnings Call dated May. 22, 2025
Corporate Participants:
Sundeep V. Bambolkar — Joint Managing Director
Aditi Kare Panandikar — Managing Director
Pramod Ghorpade — Chief Financial Officer
Analysts:
Rashmi Shetty — Analyst
Vivek Patel — Analyst
Niteen — Analyst
Sudarshan Padmanabhan — Analyst
Maulik — Analyst
Kenil Mehta — Analyst
Ankit Gupta — Analyst
Raja Kumar — Analyst
Vishal — Analyst
Mok Shankar — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Indoco Remedies Limited Q4 and FY ’25 Earnings Conference Call hosted by Dolat Capital. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Ms Sheti from Dolat Capital. Thank you and over to you, ma’am.
Rashmi Shetty — Analyst
Thank you, Mana, and good afternoon, everyone. I, Rashmi Shetti on behalf of Dolat Capital. Welcome you to the Q4 FY ’25 earnings call of Indoco Remedies. We thank the Indoco Remedies management for giving us this opportunity to host the call. Today, we have with us the senior management of the company represented by Ms Adidi Karay Panandikar, Managing Director;, Joint Managing Director; and Pramod, CFO. I will now hand over the call to the management for the opening remarks. Over to you, sir.
Sundeep V. Bambolkar — Joint Managing Director
Thank you, Rasmi. Good afternoon, everyone. Thank you all for joining this call today. Let me draw your attention to the fact that on this call, our discussion will include certain forward-looking statements, which are projections or estimates about our future events. These estimates reflect the management’s current expectations of the future performance of the company. Please note that these estimates involve several risks and uncertainties that could cause our actual results to differ materially from what is expressed or implied. Indocore does not take — does not undertake any obligation to publicly update any forward-looking statement, whether as a result of new confirmation, future events or otherwise. Now, I’ll request our Managing Director, Ms Adity Panandikar, for her comments. Thank you.
Aditi Kare Panandikar — Managing Director
Good afternoon, everybody, and thank you for joining us on this call today. Many of you have been partners with us through our many quarters of success and I thank you to being patient with us through this quarter, which no doubt has been quite painful and for this entire year, which has been one of a kind for Indoco. Let me start by talking about the key factors that are responsible and have impacted the business of the company this year. As you know, earlier in the beginning of the year, we formed a 100% subsidiary Warren Remedies Private Limited with an intention to take products over-the-counter.
As you know, Indoco has a long history of ethical products and in order to service the OTC segments properly as well as to manufacture cosmetic licensed products, we have invested in people, infrastructure as well as the supply-chain. The first year of OTC has given us limited success by way of sales and the Nielsen numbers indicate a good growth at the tertiary demand stage. The investments in the infrastructure and the cost of running the facility as well as the costs associated with advertising on television, radio as well as digital media have taken that toll and we had expected this kind of a negative impact in WRPL for the first two years. Secondly, there has been a great impact on the company’s performance because of the master manufacturing plan, which we have put in-place across all our solid oral sites. As you all know, globally, pharmaceutical products are witnessing pricing pressure either due to patent or government intervention to provide medicines at affordable prices.
This has called for supplying quality products at much cheaper and competitive prices. While cost of goods and material costs are consistently going up. The only way to stay competitive is to increase efficiency in manufacturing. Meanwhile, mostly for our markets, business which we got into more than 20 years ago, we have steadily built good market-share across many geographies for large-volume solid products. For example, Paris, we have with our partners Perrigo and several other players of over 60% of the market in UK for paracetomol. When it comes to formulations, we have over 80% of the market in Germany, 35% of the market in US and several other geographies. Having acquired this market-share, we felt it proper to invest in our manufacturing sites to make them more compliant going-forward in order to enable us to run better technology, reduce manpower used in manufacturing, packing, processing and supply as well as increased back sizes to get better returns.
We had therefore planned this kind of improvement across all our four manufacturing sites of solid orals. However, several times during this year, particularly in the second-half, many of these sites had to be — had to take a plant shutdown for this at the same time. This has impacted supply of product to Europe and US and this has shown in our results. Point number three was the most unplanned and unexpected event, which is the warning letter on our sterile plant in Goa. As you know, we were inspected first by US-FDA in February 2023, after which we were classified OAI. Thereafter, there was a surprise audit in June 2024, which has resulted in the morning letter.
On my earlier calls, I have explained that while we were to be prepared with our remediation actions by November ’24, FDA’s early audit in June meant that several of our updates were yet pending with the FDA and therefore we ended-up getting a warning letter. Warning letter on the sterile plant meant that several of the products we were supplying to US market could no longer be supplied and many of them were manufactured and packed under aseptic conditions and our updates were yet spending. Therefore Warrant Medy Private Limited, its impact on our consolidated numbers, the master manufacturing plan and the subsequent impact of lack of having sufficient product to sell-in Europe and US of solid orals. And last but not the least, the impact of the warning letter on the US business has had — has taken its own toll on the company’s performance for this year.
There has been — there have been a few positives in this entire year though and the most — the biggest and largest positive is the sales of our star product. Happy to share that the product added INR25 crore incrementally in one year alone. And today at as per IQVIA, we are clocking a turnover of INR178 crores at PTR rates. Apart from that, across the organization, various initiatives to increase digitization, digitalization, to reduce other operating costs to control capex going further are in-full swing. I’m very confident going-forward, we will see lot of positives from this. While we are at it, there is one good positive message
I would like to share about the Plant 2 in Goa. Plant 2 in Goa, facility, which is under warning letter, was earlier inspected by EMA of the European Medicine Agency and the audit has gone very successfully. We have no critical, no majors and a few miners. My team at Plant 2 is extremely enthused with this audit and it shows that we are on the right track towards providing remediation even to US. Another good news to be shared is as recently as about 24 hours ago, we have also received some positive communication from US-FDA, which allows us to restack a couple of our lines in Plant 2. I’m confident that both these events will help us gain returns in sales that we have been missing on the international business, which has largely impacted the overall performance of the company.
Now for greater details on the financial performance of quarter-four and the full-year, I hand over to Mr Sandeep.
Sundeep V. Bambolkar — Joint Managing Director
Thank you, Adity. Good afternoon, everyone. Let me first begin with the business highlights. The standalone net revenues of the company for the 4th-quarter FY ’24, ’25 are at INR3,411 million compared to INR4,351 million for the same quarter last year. For the year, standalone revenues are at INR14,948 million as against INR17,620 million. Consolidated net revenues for the company for the 4th-quarter ’24-’25 are at INR38,839 million compared to INR4,391 million for the same quarter last year. For the year, consolidated revenues are at INR16,413 million as against INR17,882 million. Standalone EBITDA to net sales for the quarter is 1% at INR35 million compared to 13.2% at INR574 million. Standalone EBITDA to net sales for the year is 8.6% at INR1,280 million compared to 14.6% at INR2,580 million. Consolidated EBITDA to net sales for the quarter is minus 0.2% at minus INR0.8 million compared to 11.1% at INR489 million for the same quarter last year.
Consolidated EBITDA to net sales for the year is 6% at INR993 million compared to 13.7% at INR2,443 million. Domestic formulation business, revenues from domestic formulation business for the quarter are at INR1,851 million as compared to INR1,911 million. Major therapeutic segments like vitamins, minerals, nutrients, and urology performed well during the quarter as compared to the same quarter last year. On the international business front, revenues from International formulations business are at INR1,104 million compared to INR2,140 million. Revenues from regulated markets for the quarter are at INR786 million as against INR1,458 million. Revenues from US business for the quarter are at INR308 million as against INR675 million. Those for Europe for the quarter are at INR466 million as against INR765 million and for South Africa, Australia and New Zealand, they are INR12 million against INR18 million.
Revenues from emerging markets for the quarter are INR318 million as against INR682 million and revenues from API business for the quarter INR409 million as against INR217 million. Revenues from services, and Indoco Analytical Solutions are at INR47 million as against INR83 million. That’s all about the business highlights for the 4th-quarter.
And I now request the participants to put forth your questions. Thank you.
Questions and Answers:
Operator
Thank you very much, sir. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on your touchstone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen we will wait for a moment while the question queue assembles thank you. A reminder to all participants, if you wish to ask any questions, you may press star and 1. We have a first question from the line of Vivek Patel from Ficom Family Office. Please go-ahead.
Vivek Patel
Very good afternoon, everyone. Thanks for the opportunity. I just had a quick question on a few molecules. How is and molecules performed over the last, say, one year? And how would you based on your assessment, expect them to perform over the, say, coming one to two years? And which geography is driving the growth of these molecules or this therapy as a whole of?
Aditi Kare Panandikar
Thank you. Yeah. Thank you for your question. So as I mentioned in my opening remarks, our manufacturing site for ophthamic products at Goa, which is Plant 2, has been under warning letter since June this year and for the greater part of this year, we have not — we have been handicapped and have not been able to manufacture products which have been made in aseptic conditions. So dorzolamide as well as brinzolamide as well as home and other ophthalmic products, which are largely with aseptic filling. We have not been able to supply. And therefore, as of this year, if you see, there is hardly any sales coming from these products. Possibly a very little amount might have been sold-in the first-quarter, which is quite minimal. You also asked about what is the potential of these products in the US. I’ll let Mr Sandeep talk about that.
Sundeep V. Bambolkar
The market right now is about $65 million. There are about three players in the market, so that is about. Has many players and the market has shrunk considerably.
Aditi Kare Panandikar
However, we are integrated on both dorzolamide and brinzolamide with our API and we’ll make every effort to get our market-share.
Vivek Patel
Thanks a lot, ma’am. All the very best. Thank you.
Sundeep V. Bambolkar
Thank you.
Operator
Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. We have our next question from the line of Nitin from Aurum Capital. Please go-ahead.
Niteen
Yeah, thank you for the opportunity. Am I audible?. Yeah. So my first question is, when are we expecting US-FDA inspection? Are there any efforts from our side? You mentioned that EMA Europe inspection got cleared and we also got a letter — positive letter from the USA, this to help a couple of lines to start. So can you please elaborate the impact on our revenue and profits from these two developments?
Aditi Kare Panandikar
Yeah. So thank you for your question. As I said, the US-FDA update is very, very recent. We are now looking at what this allows us to do. As I said, couple of lines, they have allowed us to restart. We are looking at the products which were approved from those lines, so we can start commercial manufacturing and supply. As such for this year, I think it would be safe to say that any incremental effective sales from this plant would only begin in the second-quarter this year. I would be very hesitant to put any numbers on this, but I think it is safe for you to assume that there are several approved products as well as several filings from this site. And your question on the — when are they likely to audit and a thing, we are continuously trying to get — get them to come down earlier. Our last updates, most of the updates on the remediation would be completed by July or August this year. So I think as a site, we have to be ready anytime after that.
Niteen
Got it. My next question is, so how much should we have spent on this ongoing refurbishment of manufacturing plants in this? Can you elaborate that
Aditi Kare Panandikar
So we spent close to INR4 crore per quarter on remediation expenses. And all four quarters this year.
Niteen
Okay. And what is the total investment in warrant remedies in terms of debt, equity and corporate guarantees we have we have given so-far?
Sundeep V. Bambolkar
So in, there are two-parts. One is about our toothpass business KKF, which Madam explained. And second is our investment into intermediates and API and manufacturing. So both put together, till now we have invested close to about INR280 crores for both the plants and certain activities on remarketing setup and distribution network.
Niteen
And if you can give a breakup
Sundeep V. Bambolkar
Sorry, not this debt. Yes. So a large component of this is financial debt.
Niteen
Got it. So what is the total outstanding debt now that we have and what was the peak consolidated debt on the books and what is — what will the repayment plan for be?
Sundeep V. Bambolkar
Yeah. So total short-term loan, which is there is 20 and long-term loan is 330 overall. While in Indoco, we have close to about INR400 as a long-term debt and about INR2111 million as a short-term debt. So all put together, close to about debt level is about INR960%.
Niteen
Will that be the peak one or will there be any further debt also we’ll be picking?
Sundeep V. Bambolkar
We estimate that this is like in a peak.
Niteen
Okay, got it. Okay. Thank you so much. In case I have any additional question, I’ll come back-in the queue.
Sundeep V. Bambolkar
Sure.
Operator
Thank you. We have our next question from the line of Sudarshan Parnanawan from Investors. Please go-ahead.
Sudarshan Padmanabhan
Thank you for taking my question. Ma’am, I would like to understand a little bit more on the cost structure. I mean, if I look at our other costs and the employee costs below the gross margin. You know, the spend has consistently been increasing over the last few years and I see that proportionately the top-line is not expanding. As you did talk about expenditure towards the OTCs and what bringing the capacity? Are we manufacturing to better standards? So how do we see this cost say in the next few quarters and next few years? Because it looks like it has consistently been spending without seeing visible benefits there at least in the last few quarters.
Aditi Kare Panandikar
Yeah. Thank you for that question. So like I mentioned earlier, this has been a year of several setbacks when we’ve had, you know, we have not been able to optimally utilize our manufacturing plants because of planned and other shutdowns. Also, with the warning letter and the remediation costs, there have been several additional costs at the sterile site as well. If you look at this year, therefore and you study the performance of — for revenues, the international business has — is actually at 48% compared to the previous year. Whereas all the manufacturing sites that are engaged in activity, the fixed costs at those sites have been going. So typically, this is a mismatch between the revenues and the cost structure that we are holding and that is largely responsible. Coming to other expenses and the increase, in fact, the master manufacturing plan is our attempt to be able to control a lot of the other expenses and bring them in harness. As part of the master manufacturing plan, we have aligned manufacturing of several large molecules at various locations. We have increased bat sizes. We have — we intend to bring down the manpower employed at various sites. And all-in all, we expect this year-on a much higher expected manufacturing base to actually manufacture 25% less batches. So all of this should help us control these costs which are going out of hand. Some of the largest heads that have been increasing under other expenses, one is stores and spares and the second is lab expenditure. So stores and spares, a lot of it has got to do with the remediation and therefore, some of the work that we’ve had to do on products. Also, with regard to — as we have tried to synchronize products across various sites, we had to also go for spares and spares at various sites for manufacturing those products. So I don’t expect this kind of a base to stay on a long-term basis. As of now, I think we are doing close to 140 CR on other expenses, but I am hopeful in another quarter to be able to arrest it at INR120 crores.
Sudarshan Padmanabhan
And with respect to the utilization and advance anything in the capex, if at all you require, because as you mentioned, because of various issues, we are not able to it elasticity. So I mean, what would be — I mean, I’m not asking for a precise number, but what could be on a blended basis the utilization across capacity? And also with us completing the remediation. So probably should that cost — we talked about the INR4 crores, if I’m correct, that cost will more or less be behind us.
Aditi Kare Panandikar
Well, I wouldn’t say all cost of remediation for US is behind us. Like I said, updates will go on till December. So we have to factor that in. I think your first question was more about — what was the first part of your question? It was about
Sudarshan Padmanabhan
Utilization after the plant given.
Aditi Kare Panandikar
Yes, yes, yes, yes. So as — because of this restructuring of products across sites, what we have achieved really is bringing down the complexity of the product mix at each unit in-turn increasing capacity because then that means fewer changeovers, you know, better efficiency in testing and several other things. So quite frankly, I think your question was about how much revenues can we get from this kind of a turnover. So even of a steady year like the earlier year when we did not have manufacturing problems, we were very confident on multiplying by at least 2.5 times our top-line from this business. So I think last year other than India business was at close to INR800 crore, if I’m not mistaken. And we can easily look at up to INR2,000 crores with this revenue. With this capacity.
Sudarshan Padmanabhan
Sure. So I don’t think we would be requiring major capacity from maintenance capacity, right?
Aditi Kare Panandikar
Yeah. No, no.
Sudarshan Padmanabhan
Yeah. And then with respect to normalization in the international business, I mean, how do we see both the US and European business in a gathering momentum? And in order towards in the light of things, while margins have been a little difficult for us to — or anybody to kind of put a precise number, how do we see the margins expanding saying in?
Aditi Kare Panandikar
So the last part of your question.
Sudarshan Padmanabhan
Is a margin expansion from these.
Operator
Ladies and gentlemen, please stay connected. We have the management line disconnected ladies and gentlemen, thank you for patiently waiting. We have the management back with us. Over to you, ma’am.
Aditi Kare Panandikar
Yeah. Hi, sorry about that. I think the line got disconnected. I was in the middle of answering the resumption of supplies and sales to Europe and US. So let me start again. I hope you got everything before that.
Sudarshan Padmanabhan
Yes, yes, yes. Yeah.
Aditi Kare Panandikar
Great. So coming to US business, US last year total revenues for US market in ’23-’24 were INR286 crore, of which there were a substantial amount coming from sterile. Close to INR200 crore was revenue from the sterile plant alone, which this year is only INR42 crores. Whereas oral solids which were only INR52 crore last year are at INR81 crore now. So solid oral contribution has really gone up and as we get into ’26, ’27, ’28, where more solid orals will go off-patent for which we already have tentative approvals, I expect solar oral business to ramp-up. This business is coming from Plant one incidentally, which has also been revamped as part of the master manufacturing plan. Coming to sterile, as I said, with this latest positive stoke coming from USFDA, we expect resumption of supplies in the second-quarter this year and gradually you will see a pickup till the last quarter. Coming to Europe, our normal base for Europe used to be around INR300 crore and this year it got impacted because of inability to supply, etc of solid orals and I expect it to go back to the INR300 crore levels in the coming years. I hope that answers your question.
Sudarshan Padmanabhan
So in US, I mean, we would basically see layer of step-up from the second-half of this year. So it will be more of an FY ’27 rather than an FY ’26 kind of.
Aditi Kare Panandikar
Yes, this is a year of us coming back to our normalized values of the prior year.
Sudarshan Padmanabhan
Okay. Sure. And my — you have given some color on the costs coming down by the INR20 crores a quarter. And what is the kind of margins that one should expect because the margins have come up quite sharply from where it was some color on that in the next long-term.
Aditi Kare Panandikar
So like I said, when you have to run eight manufacturing sites, all having fixed costs, but you’re able to efficiently supply only out of two, I think you can do your own math and that is what has really put the pressure on margins. Therefore, I would like to wait for another quarter for numbers to talk for themselves because it’s a dynamic between both. It is not sufficient for us to complete our restructuring of manufacturing, we also should be able to supply from those sites very effectively. As of now, we have sufficient orders in-hand and feel confident that we’ll be able to do that. But I would like — maybe Q2 will be the right quarter for you to show this upside. And then from there, I will be more confident telling you about improvement after that.
Sudarshan Padmanabhan
So on the domestic business. I mean, we have taken a lot of initiatives in the past, I mean we are investing the. Where do we see or when do we start seeing the benefits of that because we still continue to lag the IPM cost?
Aditi Kare Panandikar
So let me just quickly correct you on that because when you compare with IPM, we might be lagging, but vis-a-vis our covered market, we are doing very well. So as you know, we are one of the companies which has got a very-high stake in acute and sub-chronic. And just to give you some numbers, you know, we have — for the 4th-quarter, our stromatologicals, it has grown by 2.5% as per IQVIA, whereas the — as per the market is minus 1.4%. Our — another category where we are very — we have a large stake, which is respiratory, you know where the market has grown slower than us and so is anti-infective. So if you look at our performance in India within our within the zone where we operate and are present, we have done pretty well. Regards the impact seen on our numbers, that is largely because couple of our which now are sold by Warren Remedies as OTC. And I’ve explained this earlier, we have changed the supply-chain and it has taken us almost a year to catch-up and come back to normal levels. So the last month, I think month of April is the first time we are seeing again growth of in the sales of the two which have gone OTC in IQVIA. So what is suffering really is the projection. If you look at the consolidated picture of India business performance, you will see that we have grown at more than 8.5%, which is at far or even better than the industry growth.
Sudarshan Padmanabhan
Sure. Thanks a lot, man. I’m Jan. Thank you.
Operator
Thank you. We have our next question from the line of Malek from B&K Securities. Please go-ahead.
Maulik
Yeah. Hi, ma’am. Thank you for the opportunity. One question which I had is that in the opening comments, we mentioned that warrant remedies operational costs have been impacting our margin. So would you be able to quantify or give some idea on how much that impact is? You answered it partially to the previous participants, but a little bit of a more understanding on that.
Aditi Kare Panandikar
Yeah. No, I think by and large, I can just give you the way you could look at it is IRL is a standalone and we also give consolidated results. So in consolidation, we have two entities. One is one in Remedies Private Limited, which manufactures and sells OTC toothpaste of cosmetic license and it also manufactures certain API static materials for us. So there has been good investment in that. The second entity is SPP, which is a company we acquired in US to create our front-end. So both these entities have impacted our margin. But at this stage, I’m not — we are not really given out those numbers, but safe to say that the impact coming from both these entities on the consolidated numbers is expected to go down this year. But is the main entity where we had major constraints because of product availability and the USFDA warning letter. If that gets corrected, this impact is not going to really hurt our numbers too much.
Maulik
Understood, understood. And two clarifications. You mentioned the remediation cost, which we have been incurring please repeat it.
Aditi Kare Panandikar
So we have been incurring close to INR4 crore every quarter on remediation, which includes costs of the remediation partners, certain improvements to be done at the site, etc, et-cetera.
Maulik
Okay, okay. And is my understanding correct that by July, August, the site would be ready and anytime inspection could be due after that?
Aditi Kare Panandikar
Okay. We would hope — we have to wait-and-see. The site will be ready after August.
Maulik
Okay, and thank you so much. Thank you.
Operator
Thank you. We have our next question from the line of Kenal Mehta from Homkar Capital. Please go-ahead
Kenil Mehta
Hello is just our gross profit margins over last few quarters, so 68%.
Aditi Kare Panandikar
We can’t hear you. Sorry
Kenil Mehta
Hello, is my voice coming up our gross profit margin over last $27.
Operator
We can’t understand what you are saying. Hello
Kenil Mehta
We lost him you.
Operator
We’ll move on to the next question from the line of Ankit Gupta from Bamboo Capital. Please go-ahead.
Ankit Gupta
Thanks for the opportunity. Ma’am, as you had rightly guided in last quarter that Q4 will be like Q4 will be even worse than Q3. So do you think like we have bottomed-out in terms of losses or now Q1 or Q2 we will continue to see some — like we’ll continue to see losses as well, like anything that you would like to say or how things are?
Aditi Kare Panandikar
Yeah, yeah. So I — and thank you for reminding me, I had kind of painted a picture of Q4. And as you have seen, it has not been a great quarter on margins at all. And yes, I believe we are at the rock-bottom of the losses. And from here on, I don’t expect any further deterioration.
Ankit Gupta
But losses will continue at least for a quarter.
Aditi Kare Panandikar
As like I said, losses — continuing losses or coming out into profit is a function of both revenue and arresting of costs. And most out-of-the three factors which have impacted us, the master manufacturing plan related impact has now almost gone, 99% it’s over. Regarding warning letter, to the extent of 50%, I think we would be on our feedback. And regarding warrant remedies, as I explained, when you go OTC and you start pumping into ad expenditure, investment, people, you know the kind of infra we put up. We were anyway planning to have couple of years of muted. So I don’t expect the losses from warrant empties to further increase. So net-net, I think you will only see improvement from here.
Ankit Gupta
Perfect. And on the European side, you have indicated that you know, post our master manufacturing plan, we’ll start seeing growth even from FY ’24 numbers. FY ’25, again, we have seen de-growth in numbers. But in FY ’26, we start seeing growth from FY ’24 new numbers. So — and like what kind of growth are we expecting in the European market for next financial year?
Aditi Kare Panandikar
So like I said, at this point, we should look at doing numbers equivalent to or better than the previous year.
Ankit Gupta
Okay. So FY ’24 should be considered as the base and we should be flat or should grow somewhat.
Aditi Kare Panandikar
We will grow, we will grow. But having — you must understand coming out of such a period, it’s not easy for us to talk of growth. Like I said, let the numbers talk for themselves.
Ankit Gupta
Sure, sir. And on the India growth side India business growth. So except for if you remove the warrant edities and our base business, if you consider, you know what kind of growth should we expect for next financial year? And what are your plans for land on new products and you know, how do you see the scale-up in those new products?
Aditi Kare Panandikar
Yeah. So three questions. Let me start with warrant remedies because you said keep warrant remedies aside. But just to quote as per Nielsen, which is a report we now look at to study the health of our food base. We have got good volume and value growth in the market in the excess of double-digits. So I expect this to create good demand. And from here on, I expect Warren base sales to also grow in a good fashion, at least in double-digits. Coming to Indocore Medies Limited, today, at IRL, our contribution of new products to total growth is in excess of 4.5%, which is way higher than the industry average of 2.5%. So most of our new launches are doing very well. This quarter, for example, we have launched a product and its brand extension among several others. And on new products, certain products like, we continue to be market leaders. With, we stay number two, but most of our new products have done very well. Coming to IRS standalone, without Twaren, without new products, if you look at our legacy products without new products, then most of our legacy products other than Fabrics plus, which has got impacted from market. Market of Fabrics plus is I think down minus 4%, we are flat. So — and, which is our brand ATM, market is also down and we are equivalently at the same level. So other than these two brands, almost all other products of Indopo have shown very healthy double-digit growth., as I said, has grown by 25%. If you look at a product like also, it is growing in double-digit for the year.
Ankit Gupta
And on the Indian business, can we expect including the new products and the higher sales of new products that we have launched in FY ’24 and ’25, can we expect 10% 15% of growth in the logistic market?
Aditi Kare Panandikar
We will attempt to do much better than the market. Sure. Okay.
Ankit Gupta
Yeah. Okay. And on-warrant, do you think we can breakeven next year or FY ’27 is the only year we can breakeven there.
Aditi Kare Panandikar
I think stay to say 27. Okay.
Ankit Gupta
Okay. Thank you and wish all the sir.
Operator
Thank you. A reminder to all participants, if you wish to ask any questions, you may press and one. We have our next question from the line of Raja Kumar, an Individual Investor. Please go-ahead.
Raja Kumar
Yeah, good evening, ma’am. Thanks for the opportunity. Can you hear me?
Aditi Kare Panandikar
Yes, yes.
Raja Kumar
Yeah. Ma’am, just couple of questions. First is on the capex. I think about you INR76 crores of capex is waiting to be capitalized. So just want to know what is the capex budget for the current year and also this INR276 crores is more to do with the remediation that we are carrying out or is it that does it going to augment our existing capacity?
Aditi Kare Panandikar
So there are two-parts to it. Some of it very little is towards remediation because most of the capex on remediation was done in the earlier year also. So most of the capex spent this year has been for putting the master plan in-place and expanding capacity. For the numbers, I will hand over to, if you’d like to be.
Pramod Ghorpade
Sure. So with regards to capex, as Madam also mentioned about our investment during last couple of years and particularly last year when we invested heavily, so overall capex investment was close to about INR200 plus crore, plus what we have invested in Warren. So both put together more than INR300 crores. While your question about the plan for this particular financial year, ’25, ’26, we don’t intend to spend much on capex. We have controlled CapEx and most of the capex work is almost at finishing stage in all sites. So we don’t anticipate much capex except the routine, you know, maintenance capex.
Raja Kumar
Okay. And what would be the charge that we will be taking on account of this increased capex once? I think we will capitalize this in FY ’25, ’26. That is also going to kind of hit your —
Aditi Kare Panandikar
We can’t hear you very clearly. Can you repeat that last part?
Raja Kumar
No, my question is with two scientific scores once capitalized, you’ll be taking a hit on the deposition for FY ’25, ’26? Yeah, yeah. So that’s going to put — yeah, that will put pressure on your existing — already the bottom-line is line is. So just wondering what would be the additional hit be taken?
Pramod Ghorpade
Yeah. So currently, if you see a depreciation is in the range of about INR100 crores, close to INR100 crore. So in addition to this, the assets which will be capitalized, out of that some assets are which are long-term in nature. So about INR9 crores to INR10 crore the additional depreciation on the new assets.
Raja Kumar
Right. This is per quarter
Pramod Ghorpade
Per annum, for. Okay.
Raja Kumar
Okay. Yeah. And the next question is, I see that the rating agency is currently kind of downgraded or not for credit rating. So I mean, what is the plan — do you have a plan to get your rating up or but this is something not going to happen in the short-to-medium term.
Sundeep V. Bambolkar
Yeah, this is Sandeep. See, when we went through a similar patch in 2016, you know USFDA and UK-MHRA plant issues, we had similar problems and the rating agency had downgraded us that time also. But immediately when we had a good performance ever since 2018, right up to 24 now. We have always been A1 plus in the short-term and AA minus on the long-term, which is the topmost rating company of our size can have. And subsequently, we have been having excellent borrowing rates. So this is a limited period phenomenon, which we have to face. And as soon as we are out of it, they will come down and upgrade us once again.
Raja Kumar
Okay. And sir, just continuing on the same question, given that you have a significant borrowing cost, is there a plan to organically only reduce this or you have any other monetization plans you to reduce the day?
Sundeep V. Bambolkar
No, it will be organic only. From our cash accruals, we will repay the loans. And you will be surprised that even today our loans are in the range of 8.5% to 8.75%. I agree for a company of Indocos quality, they are slightly on the higher side, but we have borrowed as low as 4.75% to 5.5% when our performance was good and the rates were under control. So let’s see, it’s a function of global rates, rates by RBI and our performance, three-in-one. I hope you got it.
Raja Kumar
Yeah, yeah, I got it, but my worry is you’ve got too many things to take care. So the path to profitability is going to be a long. So what are you thinking?
Aditi Kare Panandikar
Yeah, that is true. But like I said, since we understand that much of our problems this year are on account of a cause effect that we are in control of, as the product supply begins from the sites and we are able to bring in efficiency and control costs. We feel pretty confident that we’ll be able to come out of it. But thank you for your concern.
Raja Kumar
Yeah. Thanks a lot, man. Thanks for answering all my questions and all the very best for the future. Thank you
Operator
Thank you. A reminder to all participants, if you wish to ask any questions, you may press star and one. We have our next question from the line of Vishal from Systematix. Please go-ahead.
Vishal
Hi, good evening and thanks for the opportunity. On your OTC business, would you be able to share what — how much are we spending on building these OTC brands annually in terms of advertisement, promotion, channel spend,
Aditi Kare Panandikar
No sufficient to say that it is quite high compared to the ethical business. And the — our immediate competitor spends close to 35% of their revenues on it. That’s what I know. So because Sensodyne is our biggest competitor and the largest player in the OTC segment for sensitivity toothpace and their budgets are in that range. For us, partly it won’t be a bit high. In the first year, I think we have spent close to 40% but it will slowly come down as the sales go up. Hello?
Operator
Vishal, are you there? Hello, hello. Hello.
Vishal
Hello. Sorry, I got disconnected.
Aditi Kare Panandikar
Yeah, I said in the first couple of years, we were not expecting to breakeven because costs associated with advertising in this industry and product promotion are pretty high. We have to remember we are going from 25,000 dentists as customers to lacks and lacks of end-users, supply-chain, you know, wholesalers, grocers, retailers and who Jin Bank. So it’s going to be a little bit high initially. But going-forward, as the sales go up as a percentage, it should come under control. But this is a business which requires in the initial three to two to three years in heavy investment on brands.
Vishal
Some sense like you spend about INR16 crores on remediation. So would this spend be even larger than what you spend on remediation thus spend on your OTC brands?
Aditi Kare Panandikar
Yeah, yeah. I mean large. It is a larger number. Yeah, larger number, certainly.
Vishal
And this has all come up because of the strategy to do it OTC. Had you not probably thought of hitting it OTC, you would have not spent this money at all.
Aditi Kare Panandikar
Yeah, but our pace would have been limited to the scope of what they could in the sensitivity market, which is very limited in the ethical space.
Vishal
Like any sense on how these — what are the numbers are we getting to see on a monthly basis for these OTC brands.
Aditi Kare Panandikar
So as per Nielsen, yeah, yeah. As per Nielsen at tertiary levels, our brand is growing at 18%, 19% in value, but there are many other parameters to be looked at when you’re taking your product OTC. I mean there are some terms which are also new to meet, but I’m getting familiar with them, things like numer awaited distribution, numerical distribution. So it’s about creating reach and from fundamentally from all these numbers, it’s looking good. It’s not as if the pace have not grown. They have shown a 10% growth, but we were expecting to do much better. And today we get 90% of 99% of our sales coming from through the chemists channel, whereas Sensor Dyne gets more than 35% coming from grocers where our presence is negligible. So it is one channel which we have to bring in and that will open the market for us. The sensitivity market otherwise is INR500 crore INR600 crore market. And the moment you go look at the toothpaste market in Nielsen, it is an INR1,100 crore market. So it’s a no-brainer that we had to go for this.
Vishal
Okay. And you still continue to promote these as a prescription brand.
Aditi Kare Panandikar
Other variants of those? Not the same product.
Vishal
So, but earlier you used to get your sales as a prescription brand before kind of going OTC.
Aditi Kare Panandikar
Yeah, but the prescriptions continue because we realized that when we were purely ethical also, if a patient approaches a doctor and says that they are using an XYZ brand, the doctor does not stop them. So — and incidentally, these. If you look at the amount of prescriptions they were dependent on, it is very small compared to any other category. So this is a category which depends less on prescriptions and more on repeat purchase and end-customer kind of thing. I hope that answers your question. So our two ethical divisions in dental, they continue to carry variants of K and KF, but not these two products. So K, Fast relief and KF cavity protection is now purely under OTC.
Vishal
And your price point is similar to the larger brands in the category GSK brands basically?
Aditi Kare Panandikar
Yes, yes.
Vishal
It is at the same price point.
Aditi Kare Panandikar
Similar, yeah yeah.
Vishal
Okay. And you are not promoting this as a trade generic. You are promoting this as a direct.
Aditi Kare Panandikar
No trade generics for us. Not here. No. This is proper OTC. The setback we got this year has largely got to do with the channel change. Earlier in the ethical business, we were — we had the system where a carry and forward agents would carry our product and the primary sale happened directly to the stockist. Here we have super distributors who then sell-out, you know. So they are our business partners. And with this shift where they have to sell more-and-more to wholesalers and distributors who are non-pharma or they have to sell to pharma distributors who ask from them different terms. This phase has been little bit tricky for us, but now it has all settled. So I feel confident going-forward, we will see higher-growth.
Vishal
Would you also put this on these modern retail stores or you would rest it to
Aditi Kare Panandikar
We would have to because 30% of market is coming from modern trade.
Vishal
So you will get to see your products on modern trade channels.
Aditi Kare Panandikar
Yes, yes, gradually. We already made small initiations. I believe we are on Amazon now and it will come on others as well. But for us, because of predominantly the history with the ethical side, it will still stay very large in chemists and then we’ll be adding grocers and then modern trade. It will go in that fashion.
Vishal
All right. And just one final one, if I can. So the need kind of — the need to put so much of capex in the last few years, were we really kind of facing capacity constraints or this is more about a long more about the future that you are looking at?
Aditi Kare Panandikar
A bit of both, more for the future.
Vishal
Right. So just because I’m asking this because we have kind of stretched our balance sheet in doing this
Aditi Kare Panandikar
And yeah. So you’re asking me if we could have postponed anything?
Vishal
Yes, that’s what I meant.
Aditi Kare Panandikar
No, I think opportunities like that, that you cannot really postpone. Like I explained to you, people generally try to get market share after they have capacity. Ours is the other way around, we have market shares. Now we have to use the capacity optimally.
Vishal
Right, got it ma’am. Thank you very much. Thank you.
Operator
Thank you. We have our next question from the line of Mok Shankar from Aurum Capital. Please go ahead.
Mok Shankar
I want to know what — going forward, how much R&D as a percentage of the sales, are we going to increase it from our current 5% to 6%? Or are we planning to decrease it?
Aditi Kare Panandikar
No, we are not planning to increase or decrease, but we are maintaining it at 5%. Even on a lower top line this year, in absolute terms, it has come down because we are now being a little bit more picky about the products we take up. How many because we have enough in our pipeline waiting to be filed. So considering the company is going through these times, we have decided to be very choosy about how much we invest in R&D for the next couple of years. But it will still stay at around 5% of top line. I don’t think it will come below that.
Operator
Thank you. Ladies and gentlemen, that would be the last question for today. And I now hand the conference over to the management for closing comments.
Aditi Kare Panandikar
Thank you all on behalf of Sundeep, Pramod and me. Thank you for joining us on this call. And as I said right at the beginning, thank you for your patience as we pull the organization out of this situation. I look forward to meeting you under better circumstances. Thank you very much.
Sundeep V. Bambolkar
Thank you.
Pramod Ghorpade
Thank you.
Operator
Thank you. On behalf of Dolat Capital, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.