Key highlights from Marksans Pharma Limited (MARKSANS) Q4 FY22 Earnings Concall
Q&A Highlights:
Vijay Nahar – Individual Investor – Analyst
- Challenges affecting cost and what costs were passed on to the consumers?
Mark Saldanha – Managing Director
- The challenge was China lockdown.
- Had cascading impact on all input cost of RM.
- Oil prices getting impacted by war.
- Freight cost got impacted tremendously.
- MARKSANS working on passing whatever cost it can with the price increase to the customers.
Rajiv Rupani – Individual Investor – Analyst
- When does MARKSANS propose to pay the full amount and convert the warrants, issued to OrbiMed and the company, to shares?
Mark Saldanha – Managing Director
- At the time of warrant issuance, 25% money was received upfront.
- Warrant is convertible any time in next 18 month time.
- In terms of timelines, expects the conversion to happen in FY23 and the balance money will come in.
- Even if the share price is below the conversion rate, the warrants will be converted.
Rajiv Rupani – Individual Investor – Analyst
- The INR2,000 crore revenue target will be achieved in what timeframe?
Mark Saldanha – Managing Director
- Within the next 3 years.
- The company is pretty much on target.
Rajiv Rupani – Individual Investor – Analyst
- EBITDA margin for FY23?
Jitendra Sharma – Chief Financial Officer
- Expects EBITDA margin pressure to continue.
- Margins are under pressure.
- Not seeing any immediate reduction in freight cost.
- Expects EBITDA in the range of 17-20% for FY23.
Rajiv Rupani – Individual Investor – Analyst
- Will the company be debt free for the next 3-4 years?
Jitendra Sharma – Chief Financial Officer
- Don’t plan to raise debt in the short term.
- Longer term, may have some debt in the book.
Piyush Oswal – Piyush Oswal and Associates – Analyst
- Reason for trade receivables constantly increasing?
Jitendra Sharma – Chief Financial Officer
- Receivable increase during the year is in line with increase in sales.
- Overall avg. receivable levels are around 90 days.
- MARKSANS doesn’t expect trade receivables to increase further.
Shakir Rao – Individual Investor – Analyst
- Plans with Access Healthcare acquisition?
Mark Saldanha – Managing Director
- A virtual company marketing formulation in UAE.
- Looking at Dubai as port of entry into Middle East.
- Plans to expand to few geographies from this base.
- Dubai is a platform for distribution in the Middle East for MARKSANS.
Yogesh – Arihant Capital Markets – Analyst
- D&A increase of more than 100% at INR21 crore would be run rate going forward quarterly?
Jitendra Sharma – Chief Financial Officer
- Company has adopted Ind AS 116 while consolidating the US and UK balance sheet into the Indian parent company balance sheet.
- Has taken warehouses in these geographies, providing for lease liability and corresponding write-of-use assets.
- In 4Q, provided the depreciation for the whole year on these assets, which had an increase of INR12 crore in depreciation.
- In the current year, it will come as a quarterly charge of INR3 crore every year.
Yogesh – Arihant Capital Markets – Analyst
- Reason for inventory debtor days jumping in FY22?
Jitendra Sharma – Chief Financial Officer
- It’s on account of increase in sales and increase in credit period to few customers in US and UK.
- Don’t expect it to go up further.
- Will remain at around 90 days in coming quarters.
Yogesh – Arihant Capital Markets – Analyst
- Gross margin for FY23?
Jitendra Sharma – Chief Financial Officer
- Expecting in the range of 50-52%.