Poly Medicure Limited (NSE:POLYMED) Q4 FY23 Earnings Concall dated May. 11, 2023.
Corporate Participants:
Himanshu Baid — Managing Director
Naresh Vijayvergiya — Chief Financial Officer
Analysts:
Rohan John — ICICI Securities — Analyst
Jaiveer Shekhawat — Ambit Capital — Analyst
Rashmi Sancheti — Dolat Capital — Analyst
Nitin Gosar — Bank of India Mutual Fund — Analyst
Pankit Shah — Dinero Wealth — Analyst
Vishal Manchanda — Systematix — Analyst
Sapna Jhawar — Kotak life — Analyst
Achal Phade — ICICI Prudential Life Insurance — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Q4 FY ’23 Earnings Conference Call of Poly Medicure Limited, hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Rohan John from ICICI Securities. Thank you and over to you, sir.
Rohan John — ICICI Securities — Analyst
Thank you, Jacob. On behalf of ICICI Securities, I welcome you all to the fourth quarter and full year FY ’23 Earnings Conference Call of Poly Medicure Limited. Today, we have the senior management of the company with us represented by Mr. Himanshu Baid, Managing Director; Mr. Naresh Vijayvergiya, CFO; and Mr. Avinash Chandra, Company Secretary. I thank the management for giving ICICI Securities the opportunity to host this call.
With this, I hand over the call to the management for opening of remarks. Over to you, sir.
Himanshu Baid — Managing Director
Thanks, Rohan. First of all, I’ll apologize to everyone that I was little late due to some medical emergency. Now everything is fine. Really appreciate your time today. I will take you through the first Q4 earnings. So in Q4, the revenue of the company was INR306 crores and the standalone revenue was INR292 crores and consolidated revenue was INR306 crores. And if you look at the quarter performance, March quarter versus last year’s March quarter, the revenue has increased sharply by around INR56 crores and also the margins have improved. As I had informed in the last call that as the raw material prices have started cooling, we will see a margin improvement and I think that has already started to show in the results.
Also, EBITDA margins are improving now and if you see in quarter four of March, our EBITDA have gone over 25%. It’s now close to around 27%. Again there’s a improvement from December quarter of around 250 pps plus and from last year’s March quarter, there is a significant improvement. Also, the PAT has increased sharply as we compare from March ’22 to March ’23 from INR36 crores to INR58.81 crores and there’s also a margin improvement in terms of PAT margin from 14% to 19%, which was in March ’22 versus March ’23. If you compare with December quarter, it is a improvement of around 1.5%.
So if you look at the revenue, the export revenue was around 68% and domestic revenue was around 32% and domestic sales last year grew by around 15% and export revenue has grown by around 23%, 24%. So overall, the guidance which was given for FY ’23 was for around 20% plus growth. So I think we have done an overall growth of around 20% plus, it goes to around 21% and we maintain a similar guidance for FY ’24 for a 20% plus growth in the full financial year.
There are few important highlights. The first important one is the company caused a revenue of INR1,000 crores. So this was a big milestone for the company that in its 25 year of operation, we have closed a milestone of INR1,000 crores. And second very important news I want to share with all, we want to call that company has now received the two FDA approvals which were pending. Approvals have just come in last few weeks and now hopefully, in quarter two, we should be able to start selling products in the U.S. market. That’s our expectation right now. So this is a big — again a big milestone for the company of getting the USFDA approvals and starting something in the U.S. So this will now accelerate our growth in the U.S. market, which is a very important milestone for the company.
Also, we are seeing some important thing is that three, four new plants which we had mentioned in the last call, so first plant has gone live already this month and the other two plants — other three plants will go in live [Phonetic] in quarter three. So that will add up extra manufacturing capacity in the company. So we hope that whatever capacity we have now as of today, the capacity will almost double, let’s say, and when we go live fully with all these plants and this plant go fully operational, in three years, we should have almost double the capacity of what we have today. And this is again important for us to scale up manufacturing for India market, for European market and for the U.S. market, three important geographies, which are very important for the company going forward for next three years.
The next big update is on the new medical device policy which was recently announced by the Government of India. So this was a long awaited decision which had to be taken by Government of India. And the important highlights of this policy are there’s a new Export Promotion Council being formed for medical device export promotion, which is a very important milestone for the industry. And the second important thing is that the regulation will long for under single window because earlier the regulations were done in that multiple places. It was at state level, at zonal level and as well as at the central level. Now there’ll be a single window clearances for all new applications and this is a big ease of doing business for the medtech industry.
For Polymed, it’s very significant because we were one of the architects of this policy. We have suggested a lot of things to the government to implement and most of these things have been implemented. Also, there will be a policy for incentivizing R&D in medtech space. So that is also another card. Though the fine print this policy is still not available, it will be formally launch by the Honorable Minister, Mr. Mandaviya on 26 may, but the initial contours are very clear that it is going to support manufacturing in the country. It will also support reduction of imports, which currently stands at around 70% in the medical device industry. So overall, whatever decisions are taken by the government through this policy should benefit the company in long run to accelerate manufacturing.
Also, there is a push towards Make In India where through a preferential purchase plan, companies which are manufactured in India and have more than 50% local content, they will be treated as a Class 1 supplier and they’ll be given preference in government purchasing programs. So all in all, it’s positive for the company and positive for the industry. Another area I would like to touch is the dialysis business. So last year, as a whole, the dialysis businesses has grown by around 40% where it was linked to PLI, though we did not qualify PLI incentives. But nevertheless, there were some headwinds because of cheap China’s imports coming in, regulatory framework not being there for these kind of products.
Only from 1 October ’23, the regulations have started for most of these dialysis products. So maybe during the year, we will see some support from the government in terms of bringing some quality control orders to restrict Chinese imports and also we see certain policy interventions with national dialysis policy coming in, which government is going to start soon and there is also a One Nation, One Dialysis policy on the cards, which the industry recommend to the government that we should similar outcomes. So we want to prohibit reuse of these kind of products because currently there’s a reuse between six to eight times and that is our major cause of infection in patients.
So we are also proposing the government to stop reuse of these kind of products so that patients can have a better life because currently in India, the life of patients under dialysis is between two to three years, whereas in the Western world and developed countries between eight to 10 years. So I think if we can control the reuse through this new dialysis policy that will help us to maybe sell more products. So that is what we are recommending to the government. And our machine installation base continues to increase. And this year, we plan to install close to 200 machines as the plan and most of those machines will be indigenously manufactured.
We have already had very good reports of our indigenously manufactured machine. Four machines are currently under operation with various hospitals. We have got — we have done close to 500 cycles already and we have a excellent report. We were able to match the machines with the top machine which are being currently sold in the markets and top manufacturers. So this is also very good news I wanted to share with all our shareholders. So currently, the business — this year, our focus will be to go and develop strongly the U.S. market after receiving the FDA approval. A strong growth is forecasted for India. Our penetration in corporate hospital continues to increase. So we will focus more deeply in the chain hospitals.
We expect that we should increase especially in the corporate chain hospitals at least by 30% to 40% this year. We also will focus more on Europe because we see also some traction coming from Europe. Last year, the European revenues grew by around 25% in the export basket. So I think we are continuing to see the same momentum this year also on the export front. On the domestic front, renal business probably should go between 30% to 40% also this year though the base is small, but we hope that again we will have the same momentum of 30% to 40% in spite of all the headwinds we have seen. And rest of the business will grow between — close to between 15% to 18%. So that’s the plan for the whole year with new plants coming into operation.
We will have enough capacity and capability to handle new businesses, which we are currently targeting. We have also launched a new division which is our critical care division. So currently, our products are mostly sold in operational theaters and surgical rooms and wards. But now through critical care division, we will target ICUs, intensive care units, where we see more high end products being used and a lot of new products which we have developed today can we used in ICUs and that is what we are targeting now. That will also help to up scale the business and compete with large multinational, which are operating in the segment.
So these are some of the highlights I wanted to share. And if there are any questions, I’m happy to take them. Thank you again for patiently listening to me and again apologize for being late. Thank you.
Questions and Answers:
Operator
[Operator Instructions] The first question is from the line of Jaiveer Shekhawat from Ambit Capital. Please go ahead, sir.
Jaiveer Shekhawat — Ambit Capital — Analyst
Sure. Thanks a lot and good evening, Mr. Baid. Firstly, sir, on your PLI scheme, you mentioned that you could not qualify under the PLI scheme this year. So could you just specify the amount of revenue that you have done under both the schemes separately for this year and the amount of investments that you’ve already done in terms of capex? And also, what would be your aspirations over the next four years? Is there tenure of the scheme? That’s my question number one.
Himanshu Baid — Managing Director
Yeah. So can I answer that first?
Jaiveer Shekhawat — Ambit Capital — Analyst
Yes, yes. Please go ahead.
Himanshu Baid — Managing Director
Yeah. So for the PLI scheme, the first scheme our renal revenues stood close to INR75 crores. So we were short of target by around INR30 crores this year, around INR25 crores to 30 crores. I don’t exactly remember the number, but that was what we have envisaged. And for the second scheme which is for diagnostic products, we have already qualified for that scheme and we will receive incentive during the year. Under both the schemes, the investment is close to around INR45 crores.
Jaiveer Shekhawat — Ambit Capital — Analyst
Okay. That’s the amount of investment that you’ve done currently, but I believe the minimum investment should be around INR100 crores, if I’m not mistaken.
Himanshu Baid — Managing Director
Yeah. That is correct, absolutely correct. So we will continue to invest because as we increase our capacities in both the — so this is the only last year or the first year for the scheme. And so we continue to invest and there are threshold we have to meet. Anyways, last year, our capex was above INR200 crores and this year also we are doing a capex of between INR175 crores to INR200 crores. So already there a large capex is planned. And out of that capex, some capex will be allocated for PLI scheme also, which is close to INR15 crores to INR20 crores.
Jaiveer Shekhawat — Ambit Capital — Analyst
Understood, sir. Anything you can highlight on your aspirations over the next four years?
Himanshu Baid — Managing Director
Aspirations have — we want to reach the target of INR300 crores, which was laid out in the PLI scheme for renal business. But again, if the business is not profitable and we still see headwinds, then we will definitely scale it down a little bit. But so far, let’s see how government reacts to the new medical device policy. So we have lot of expectations on this policy.
Jaiveer Shekhawat — Ambit Capital — Analyst
Understood, sir. And just a follow-up, would you also be looking to export these renal care products given these can also be met…
Himanshu Baid — Managing Director
Correct, absolutely correct. So we are already now — we have met most of the regulatory challenges, which were there. And we are in process of registering our products in some of the markets. And hopefully, within this year itself, we will start exporting some of the products.
Jaiveer Shekhawat — Ambit Capital — Analyst
Understood. And sir, moving on, you also highlighted that the Europe region has done very well for you. So is there a pent-up element to it given that there was a pile up of preventable surgical procedures during COVID?
Himanshu Baid — Managing Director
No. I think that’s not the case because I think in Europe, I think one important thing which we can see is high energy costs and lot of manufacturing is kind of stalled in Europe right now. And because of that, we are seeing that many customers are leaning to India and also China Plus One is also one of the factors that many companies now want to diversify their vendor base. And also, we are able to win more customers also in Europe. So I think that’s also very important thing.
Jaiveer Shekhawat — Ambit Capital — Analyst
Sir, by customers, do you mean, are you adding more distributors there?
Himanshu Baid — Managing Director
Yeah. Of course, distributors and again distributors are selling to hospitals. So we also engage our distributors who — we train them so that they can go to hospitals and present our products there.
Jaiveer Shekhawat — Ambit Capital — Analyst
Understood. And sir, on your capex, you mentioned that probably this year also, it might be capex intensive about INR150 crores INR175 crores and in FY ’23, you have already done about INR240 crores odd of capex. So what would this INR150 crores and INR170 crores of capex this year would be for?
Himanshu Baid — Managing Director
So the four new plants we are setting up, so the infrastructure is ready. Now it’s mainly on the machinery side and adding up capacity. We are adding critical care products. So we are getting into some new technologies. So all that is — will be part of the whole capex and also includes maintenance capex and other operational capex also.
Jaiveer Shekhawat — Ambit Capital — Analyst
Understood. And sir, lastly on the margins outlook as well, given that most of the benefit of RM moderation has already played out this quarter, I mean, do you expect further room? And also you mentioned that renal care business may not be as profitable. So could you just help us in terms of the margin differential?
Himanshu Baid — Managing Director
[Speech Overlap] Behavior is factored in, the renal, whatever is there, still factored in the current P&L. So there’s nothing extra which is going to happen. So we see the yearly mark — this year whole year as a margin. So in fact, if you remember in the Q3 call, I have mentioned that once the price has softened, then we will see a margin improvement. So we are now back to, let’s say, 25% plus margin and I think that margin should continue unless until there is something more happening globally.
Jaiveer Shekhawat — Ambit Capital — Analyst
Understood. Thanks a lot for answering my questions. All the best.
Operator
[Operator Instructions] The next question is from the line of Rashmi Sancheti from Dolat Capital. Please go ahead.
Rashmi Sancheti — Dolat Capital — Analyst
Yeah. Thanks for the opportunity. Sir, can you just clarify the sales breakup? You said 68% is export and 32% is domestic business for the quarter. And is the 68% of the standalone sales or consolidated sales?
Himanshu Baid — Managing Director
No. So 68% is for annualized. So 68% of the business comes from infusion and vascular access business.
Rashmi Sancheti — Dolat Capital — Analyst
That is your export business which you mentioned.
Himanshu Baid — Managing Director
Yeah, this is for the whole year, ma’am.
Rashmi Sancheti — Dolat Capital — Analyst
Okay. And that 68%, when I just — if I just want to put the break up, it is 68% of your standalone annual sales that is done 1…
Himanshu Baid — Managing Director
INR1,068 crores.
Rashmi Sancheti — Dolat Capital — Analyst
INR1,068 crores, understood, sir. And out of this export, infusion therapy was what contribution?
Himanshu Baid — Managing Director
So infusion therapy has maximum composition around 80% to 85%.
Rashmi Sancheti — Dolat Capital — Analyst
And in domestic infusion therapy composition was sum of?
Himanshu Baid — Managing Director
It would be around close to 45% to 50%.
Rashmi Sancheti — Dolat Capital — Analyst
45% to 50%. And related to the renal segment, I just didn’t understand one thing. You mentioned that we are planning to install 200 used machines or we are going to ramp-up for 200 machines by this year?
Himanshu Baid — Managing Director
So last year, we have installed around 140 machines. And this year, we target close 200 plus machines to be installed.
Rashmi Sancheti — Dolat Capital — Analyst
Okay. And we are aiming 500 machines in say next two, three years?
Himanshu Baid — Managing Director
Yeah, that’s correct. That’s how we want to ramp it up.
Rashmi Sancheti — Dolat Capital — Analyst
Okay. But one remark which you mentioned that four machines are under operation. So what would that mean?
Himanshu Baid — Managing Director
So these are fully indigenously developed machines. Last year, we had installed them and earlier, we were using CKD. Now we are doing fully locally made machine and that time the import content was around 70%. Now the import content is reduced to less than 50%.
Rashmi Sancheti — Dolat Capital — Analyst
Okay. So whatever technology and everything which is used to manufacture this particular machine is all basically outsourced locally?
Himanshu Baid — Managing Director
No, no, it’s all — not outsourced, local and all, it is all made in-house. So components and parts are all outsourced. I’d say the PCB as it is green, these are outsourced. Earlier we were getting it from suppliers in Taiwan and Korea. But now we are able to find PCB supplies in Bengaluru and also some other component, which were available outside are now available in India.
Rashmi Sancheti — Dolat Capital — Analyst
And whatever machines which we had installed, is this like if you Pan India or currently we have more…
Himanshu Baid — Managing Director
It’s Pan India, ma’am. It’s Pan India, team Pan India.
Rashmi Sancheti — Dolat Capital — Analyst
Okay. And sir, can you just talk a bit the pricing? Where we are pricing these products and what is the kind of operating leverage, whether it’s because more than the company level currently or it is currently lower than the company level.
Himanshu Baid — Managing Director
See, currently, as this business is just — it’s just three or four years-old business for us. And as I mentioned last time also and this time also, so we have certain headwinds for this business because of cheap Chinese imports coming in, but we are waiting for the new medical device policy what the government is going to do and they are pretty concerned about what is happening today in the import front. So if there are certain policy initiatives like bringing a quality control order for imported products and benchmarking their quality with BIS standards and all that, so that should be a game changer. So we are just waiting for that. So I don’t have a definitive answer for this.
Rashmi Sancheti — Dolat Capital — Analyst
Okay. And sir, when you say that we will be –you are planning to register products from the renal segment for the export market, which other markets are targeting? And…
Himanshu Baid — Managing Director
[Speech Overlap] disclose this, please. This is confidential.
Rashmi Sancheti — Dolat Capital — Analyst
Understood. And sir, the product which you are targeting that includes machines also or it is more of a dialyzer and renal customers?
Himanshu Baid — Managing Director
No, no. It is more of consumables, dialyzers and other products. Machines will be later on because machines also need a service setup, because not only we have to install a machine, we also would service people on the jaw and because the machines can’t be under breakdown for any reason. So we don’t have a team outside India right now. So we don’t want to do that. So we’ll focus on — because India itself is a 4,000 machine market.
Rashmi Sancheti — Dolat Capital — Analyst
Understood. And sir, the…
Himanshu Baid — Managing Director
We have enough headroom in India to grow this business in long run.
Rashmi Sancheti — Dolat Capital — Analyst
Okay. And sir, the team how many people just for the service we have hired for this machine?
Himanshu Baid — Managing Director
Including technicians and service team, we have close to around 25 to 30 people.
Rashmi Sancheti — Dolat Capital — Analyst
25 to30…
Himanshu Baid — Managing Director
Yeah.
Rashmi Sancheti — Dolat Capital — Analyst
And my last question is on gross margins, you said that because of the softening of input costs this quarter we have done almost 56% gross margins, the exit run rate. So this 56% is something that we should think that it is sustainable for the full year in FY ’24 or you believe that probably whatever 53%, 54% which we have the full year that is something the right number to modeling for the next year?
Himanshu Baid — Managing Director
It could be a year. Again, there is a pressure on raw material pricing and we started — also there were supply chain constrains, huge delay in materials coming in and the freight costs are also increased considerably. So now everything has softened. So if this trend continues, then we should probably be in that 65%, 66% range, the current trend we see in the raw materials from January, February. But as that trend changes, we don’t know because again depends on the global supply chain, oil pricing, everything. But so far, the trend says it should be in that range.
Rashmi Sancheti — Dolat Capital — Analyst
So in the optimistic scenario, we are able to sustain the quarter four…
Himanshu Baid — Managing Director
I mean to say this is a realistic scenario, not even optimistic. It will further change, but this is a realistic scenario right now.
Rashmi Sancheti — Dolat Capital — Analyst
Okay. Thank you, sir. That’s it from my side.
Himanshu Baid — Managing Director
Thank you so much.
Operator
Thank you. The next question is from the line of Nitin Gosar from Bank of India Mutual Fund. Please go ahead.
Nitin Gosar — Bank of India Mutual Fund — Analyst
Yeah, hi. Two questions. How big is the corporate chain hospital for us in India?
Himanshu Baid — Managing Director
See currently, corporate chain business should be between INR80 crores to INR100 crores.
Nitin Gosar — Bank of India Mutual Fund — Analyst
Okay. And we are expecting this to scale-up?
Himanshu Baid — Managing Director
We are expecting, yeah. There is a huge potential because as in every hospital we may have 25% to 30% — maybe 20%, 25%, 30% of say coverage. So we can increase this coverage and we can maybe increase about 30%, 40% easily with new product addition. And once you have a relationship, it’s easier to get into new products always.
Nitin Gosar — Bank of India Mutual Fund — Analyst
Okay. So you are saying the product bouquet which we are right now present with can be further expanded?
Himanshu Baid — Managing Director
Absolutely, absolutely. That few hospitals we have only three, four products. So we can — Polymed is around 150 products in the product range. So we can get more products in the same hospital basically with the same relationship.
Nitin Gosar — Bank of India Mutual Fund — Analyst
Got it. And dialyzer business if one way to understand when you’re talking about the national policy on dialysis, then effectively we are also talking about government trying to subsidize this…
Himanshu Baid — Managing Director
Yeah. So Ayushman Bharat, there is already a reimbursement under dialysis, which was started last year, which is close to INR1,500 to having INR1,700, which was not there before. But again, the centers which are doing there is very limited. We still need more centers to register under Ayushman Bharat to do this. Lot of state governments are also providing dialysis under PPP mode. So we are going to the service providers like [Indecipherable] or DCDC Healthcare or some other Apex, kidney or dialysis center to — these are service providers. So we normally will touch base with service providers to sell our products and they provide the full service to operation, including dialysis and everything.
Nitin Gosar — Bank of India Mutual Fund — Analyst
Got it. And how does the pricing change if we were to supply to a service provider who is supplying to…
Himanshu Baid — Managing Director
No, our pricing remains the same. There is no pricing differential because the product is the same.
Nitin Gosar — Bank of India Mutual Fund — Analyst
Okay. So the pricing, it doesn’t change.
Himanshu Baid — Managing Director
Yeah, yeah.
Nitin Gosar — Bank of India Mutual Fund — Analyst
Got it. And from raw material perspective, just trying to reiterate you’re saying it’s linked to crude oil, right?
Himanshu Baid — Managing Director
It is linked to crude oil. Definitely all plastics — because we lot of plastics. So all plastics or their derivatives or chemicals are linked to crude oil.
Nitin Gosar — Bank of India Mutual Fund — Analyst
Right. And if the dialyzer sales goes up, does it pull any kind of pressure on margin?
Himanshu Baid — Managing Director
No, there’ll be no pressure on margin because it’s all uniform, this is all spread out. And that business is very — renal business is only INR75 crores with a total INR1,100 crores business.
Nitin Gosar — Bank of India Mutual Fund — Analyst
Yeah. I was just trying to imagine if the policy framework were to turn out positive.
Himanshu Baid — Managing Director
I hope there is a positive thing because we still are waiting for the fine print. India government announces policies, but the fine print comes only… [Speech Overlap]. The minister himself is going to launch the policy in 26 May that’s what you heard.
Nitin Gosar — Bank of India Mutual Fund — Analyst
Got it. And last one on critical care. I think we don’t have a material present out here. Does it require different kind of skill set? And…
Himanshu Baid — Managing Director
Yeah. So you’re right, absolutely. So for critical care business, we need more clinical specialists because these are the people who will go and talk to doctors and nurses directly and to get the products approved. So we are — that’s the reason we are building this whole critical care team and that’s the reason we have launched a new division because I think that we are in the hospitals. So — but the ICUs work differently than the wards or the OT theaters. So that’s what you want to do and go more directly and connect with the doctors and nurses.
Nitin Gosar — Bank of India Mutual Fund — Analyst
Got it. And, sir, one final question, are you disclosing the two products approvals that you received in U.S.?
Himanshu Baid — Managing Director
Not yet.
Nitin Gosar — Bank of India Mutual Fund — Analyst
Yeah, okay.
Himanshu Baid — Managing Director
Yeah, but we have received the two approvals which were pending.
Nitin Gosar — Bank of India Mutual Fund — Analyst
Okay. Got it. Thank you.
Operator
Thank you. The next question is from the line of Pankit Shah from Dinero Wealth. Please go ahead.
Pankit Shah — Dinero Wealth — Analyst
Hi, sir. Good afternoon.
Himanshu Baid — Managing Director
Yeah, good afternoon.
Pankit Shah — Dinero Wealth — Analyst
Yeah. So on the U.S. business, the opportunity what you had mentioned earlier of $15 million to $20 million over two three years. [Indecipherable] changed or something?
Himanshu Baid — Managing Director
So nothing has changed. We were just waiting for the FDA approvals and once — now they have come already, so which is a big milestone for the company. And I think this will — now we go with more stronger on asset portfolio. And once you get few products and then it’s very easy to get more products inside because now we knew the route, how it has to be done, the clinical data, the technical specs, the biocompatible study. So all that we have already gone through that grind. So once the customer approves few products, then they also start looking at other products. And then we — now the chain has started. So maybe next two, three years, we’ll have maybe five or 10 more products.
Pankit Shah — Dinero Wealth — Analyst
Right, right. So this is basically approval for two specific products?
Himanshu Baid — Managing Director
Yeah, product categories. These are two product categories.
Pankit Shah — Dinero Wealth — Analyst
Right. And we’ll be applying for more product categories.
Himanshu Baid — Managing Director
I hope so, sir.
Pankit Shah — Dinero Wealth — Analyst
Right. And you just mentioned about the cheap Chinese imports which are happening…
Himanshu Baid — Managing Director
India is 70%, 80% import dependent anyways, you must be reading all the data and…
Pankit Shah — Dinero Wealth — Analyst
Right, right Of course. So specifically if I look at a dialysis, so how competitive are we? What could be the price difference?
Himanshu Baid — Managing Director
See the price difference between us and Chinese would be around 15% or so. But the problem what is happening is it’s a very low duty product in India, number one. The duty is only 7.5% and the second problem is most of the Chinese are using the FTAs. So they are taking the product to Malaysia or Thailand, relabeling and sending to India zero duty. So that is what is hurting the Indian industry today. I think in every sector, this is happening because our ASEAN FTAs was sent long ago and it’s all duty free import. It doesn’t give India access market to those countries, but it gives access to those countries into Indian market, which is a kind of structural issue problem.
Pankit Shah — Dinero Wealth — Analyst
Right. But then we are dependent on the government only now till the time…
Himanshu Baid — Managing Director
So Polymed is not dependent on government policy. For example, in — some — that’s on the PLI front, we didn’t get incentive last year, but it doesn’t matter. It has not impacted our P&L, not impacted our guidance.
Pankit Shah — Dinero Wealth — Analyst
Right, right. I’m talking specific to this example dialysis segment where we’ll be more competitive only when — if this government made regulations kick in…
Himanshu Baid — Managing Director
It depends. See, time will tell I think because now foreign currency is also an issue, let’s say, the dollar continues to, let’s say, increase against the rupee, let’s say, in coming that’s a few months or years. So then definitely important will get more and more expensive. So it’s a waiting the story. So it’s a business — there’s a new business. We have started it, but we’ll see how it goes. We are pushing 100% of our side. But once you have headwinds, you have headwinds, can’t do much.
Pankit Shah — Dinero Wealth — Analyst
Yeah. And sir, coming to margins, when the times was difficult, the raw material pricing pressure was there. You tried and passed on majority of the OTs, right? So right now, how does it work? Do we have to now pass on the benefits of lower raw material costs?
Himanshu Baid — Managing Director
No. I don’t think so. So most of the contracts we did not in fact increase the pricing. Mostly economies of scale were achieved through internal process improvements and we refrain from — so we increased prices may be around maybe 25%, 30% customers. And the rest of the customers still had the same pricing. So basically we don’t see any crawl back or claw back.
Pankit Shah — Dinero Wealth — Analyst
So you are saying there is no demand from customers also to probably reduce the cost.
Himanshu Baid — Managing Director
Because we have products which are already established, already in the system. It’s not — every day, we are not getting a new business or new orders. It’s all through a fixed arrangement and we have very long-term arrangement with our customers.
Pankit Shah — Dinero Wealth — Analyst
Right. Got it. Okay. And sir, the last point is that we’ve been seeing lot of push from the government, right, for lowering the imports and also focusing on the exports and all?
Himanshu Baid — Managing Director
Correct.
Pankit Shah — Dinero Wealth — Analyst
So how is it now impacting our thought process because this aggression has been coming in since last one, one and half year or so?
Himanshu Baid — Managing Director
So our aggression is also very clear we are trying our best to create our infrastructure. So what we have done is what we creative last in 25 years of our operation, we are creating the same infrastructure in 2.5 years. So one year has already gone by and next — and within this year, four new manufacturing facilities which almost double our capacity. And in three years, we’ll have double capacity. When they start running full steam, it will double our capacity. So that is what we — so we are already emphasizing that what can happen in next three to five years. And based on that, we have planned our investment.
Pankit Shah — Dinero Wealth — Analyst
Also when you need to buckle up our investment into R&D for newer products…
Himanshu Baid — Managing Director
No. We have already — the process is simultaneous and so creating infrastructure, developing new price. As we said, we are getting into critical care products and you’ll hear more during next few quarters what new products we are going to launch. So that process is continuous.
Pankit Shah — Dinero Wealth — Analyst
Yeah, sure. Great, sir. Thank you so much. All the best.
Himanshu Baid — Managing Director
Thank you very much.
Operator
Thank you. The next question is from the line of Vishal Manchanda from Systematix. Please go ahead.
Vishal Manchanda — Systematix — Analyst
Good evening, sir.
Himanshu Baid — Managing Director
Hi, Vishal.
Vishal Manchanda — Systematix — Analyst
Thank you for the opportunity. Hi. Sir, with respect to just dialysis machine installation, this will come around which other customers? So are these private dialysis service tenders government and any other category?
Himanshu Baid — Managing Director
No. So we are only catering private centers. We don’t cater to government centers. It’s all private centers where we cater to and India has quite a large — let’s say, India is around close to of installation base around 35,000 to 40,000 machines today. And every year, we are adding 3,500 to 4,000 machines because some machines get obsolete, the older ones. So these are mostly coming in private PPP mode. Government is also putting its own PPP mode or if it is coming in private, mostly is coming in chain or private centers. For example, [Indecipherable] would be buying, DCDC would be buying or Apex would be buying or all lot of private centers are buying, lot of trusts are buying dialysis machine. The trust provide dialysis service at a very subsidized costs. So it’s a standard structure of sale.
Vishal Manchanda — Systematix — Analyst
Yeah. Are these players initially not reluctant to kind of…
Himanshu Baid — Managing Director
So that chase is over. We have already installed more than 200 plus machines, 200 plus machines already installed.
Vishal Manchanda — Systematix — Analyst
That’s actually a very large number to look at…
Himanshu Baid — Managing Director
[Speech Overlap] Yeah, exactly. So at least now we have machines running from last two years in different centers. So there is already a installed base and there’s already a reference.
Vishal Manchanda — Systematix — Analyst
And sir, you look to install another 200 machines this year, increasing…
Himanshu Baid — Managing Director
Yeah, exactly. That is what our plan, maybe more than 200 machines.
Vishal Manchanda — Systematix — Analyst
And sir, the challenge we are facing is on the consumable part of the…
Himanshu Baid — Managing Director
[Speech Overlap] is on consumable parts, especially on the dialyzer and blood line part.
Vishal Manchanda — Systematix — Analyst
Is this market dominated by the MNC players and also the Chinese imports or it is only the MNC players who dominate the dialyzer?
Himanshu Baid — Managing Director
No. MNCs are losing market share to Chinese players now, big time, last two, three years because this product was not regulated. So there is a free import and that was duty-free also for very long time. Only last year in March ’22 duty was put in on the product, 7.5%. And there was still no regulation. Regulation will be effective from 1 October ’22. Whereas any Indian company making the India has to qualify for the regulation. So get our approvals from CDSE or DCCI’s office, whereas all imports were without any regulation. Only now the regulation has come in. So hopefully, in next maybe six months to a year, lot of things will clear up with new policy coming in, more push on local manufacturing, local procurement. So things will change a little bit.
Vishal Manchanda — Systematix — Analyst
Understood, yeah. And sir, with respect to the capex, the four new lines that will be coming up this year. So would this be largely the infrastructure would be ready and the machine we would install based on…
Himanshu Baid — Managing Director
[Speech Overlap]. No, infrastructure is almost ready on all the four plants and we are building. So the first plant is already ready in quarter one, which is already live now in [Indecipherable]. And the three other plants in Faridabad are going live between quarter two and quarter three. We were just pending, waiting for some final finishing and final regulatory approvals. So once they come in, then we will — because every plant has a separate regulatory approval.
Vishal Manchanda — Systematix — Analyst
Okay.
Himanshu Baid — Managing Director
So once these are done, I think then we will just scale-up manufacturing, that’s what we want to do. So one is already done.
Vishal Manchanda — Systematix — Analyst
Great. That’s gone live now?
Himanshu Baid — Managing Director
Yeah, exactly. That’s gone live in Jaipur.
Vishal Manchanda — Systematix — Analyst
Okay. Got it, sir. Thank you very much.
Himanshu Baid — Managing Director
Thanks.
Operator
Thank you. The next question is from the line of Sapna Jhawar from Kotak life. Please go ahead.
Sapna Jhawar — Kotak life — Analyst
Yeah, hi, sir. Hello?
Himanshu Baid — Managing Director
Yeah, I can hear, but there’s some background noise.
Sapna Jhawar — Kotak life — Analyst
So before I go on mute, I’ll just quickly ask that, sir the two approvals, the product category that we [Indecipherable] in the U.S. market, how are you contracting it? Will it be via our distributor or will we directly — are we directly negotiating with the clients there?
Himanshu Baid — Managing Director
No. We don’t sell directly anything to hospitals or something. We don’t sell anything anywhere directly to hospitals. All supply chain is managed by distributors. So we’ll be negotiating with the distributors and they will be further placing the product to hospitals.
Sapna Jhawar — Kotak life — Analyst
So this will be the same — the consortium…
Himanshu Baid — Managing Director
So the model we have for Europe or India or anywhere else, the same model.
Sapna Jhawar — Kotak life — Analyst
Sure. And are these is approvals in line with the — how the contract of $15 million, $20 million…
Himanshu Baid — Managing Director
Yes, we hope so, yes.
Sapna Jhawar — Kotak life — Analyst
And this is a spread over what term period, sir?
Himanshu Baid — Managing Director
No, no. We are not disclosing any contracts. There’s nothing about any contract. This is about the business we are going to develop and the guidance we have given is $15 million to $20 million over next three to four years.
Sapna Jhawar — Kotak life — Analyst
Got it. And you did mention about doubling the capacity over the next three years once we get all the facilities up and running at optimum utilization. So what asset turns are you expecting from these facilities? Will it be similar in line to what we have been doing in the past?
Himanshu Baid — Managing Director
See, industry look at in general asset turn of 1.3 to 1.5 is a good asset turn. I think that is what we’re looking at. And we have one of the best asset turn in the industry today.
Sapna Jhawar — Kotak life — Analyst
[Indecipherable]. You did mention about growing very strongly in India and India has also been one of the focus markets [Indecipherable]. Even it’s not dilute, our margins which is mainly Indian markets with…
Himanshu Baid — Managing Director
I mean, that’s not the case though we don’t disclose margins separately for India on export business. But overall, I think when India business grows and with the same team, we are able to perform better. And when we go more in critical care business, the margin will definitely get better only in India. And India business will still stay at, let’s say, one third versus two-thirds exports. So if you see last three, four, five year trajectory, we are maintaining a very similar trajectory. India business goes from 30% to 35% and export goes from 60% to 65%, plus, minus 2%, 3% here and there.
Sapna Jhawar — Kotak life — Analyst
Finally, one question, I just wanted to understand the working capital cycle. And if the last two years has been seeing which was normal in terms of stretching of the working or if you could just share your vision there.
Naresh Vijayvergiya — Chief Financial Officer
Sorry, your voice is not clear. Can you please repeat your question…
Himanshu Baid — Managing Director
No, no. She is talking about working capital cycle. Do you see any stress in working capital cycle over last couple of years. That’s what is the question. Am I correct, Sapna?
Sapna Jhawar — Kotak life — Analyst
Yes, sir.
Naresh Vijayvergiya — Chief Financial Officer
Working capital requirement is moving in line with the turnover. So there is no additional impact on working capital. We have slightly increased our working capital facilities because we are increasing our revenue. So it is in correlation with the revenue.
Sapna Jhawar — Kotak life — Analyst
And do we have a target that this is the limit that we are comfortable with?
Naresh Vijayvergiya — Chief Financial Officer
Sorry, your voice is…
Himanshu Baid — Managing Director
So do we have any target for working capital. That’s what he is asking, any targets to…
Naresh Vijayvergiya — Chief Financial Officer
No. We continue at the same level, today level. It will be plus, minus 5%, 10%. This is the increase in revenue, but no major shift in the working capital side.
Sapna Jhawar — Kotak life — Analyst
Thank you so much.
Operator
Thank you. The last question is from the line of Achal Phade from ICICI Prudential Life Insurance. Please go ahead with your question.
Achal Phade — ICICI Prudential Life Insurance — Analyst
Yeah. Hi. Thank you. My first question was on the U.S. market. So if you can give us some color on what is the structure of the U.S. market currently as in who are the present dominant players within the consumable space there? Are Chinese players present there as well? And would your clients be GPOs or are these distributors who will then deal with the GPOs? I wanted to understand that.
Himanshu Baid — Managing Director
So I’ll tell you the U.S. market is currently dominated by large GPOs and large medtech companies like BD, Vibron [Phonetic], then Smiths Medical who are in our consumable business basically, Cardinal Health. And then large GPOs like McKesson, PSS, Henry Schein, they dominate the market. So we are focusing both the streams. We also targeting distributors and both because distributors have some different reach. GPOs have a different reach, right. And each has a different model. So some GPOs go directly to larger hospitals, some GPOs only go to smaller hospitals which as I said day surgery centers. So we’ll have to look at different models in the U.S. market. It cannot be one size fitting all.
Achal Phade — ICICI Prudential Life Insurance — Analyst
So — and what would be the role of Chinese player in the current market? So are they present at all?
Himanshu Baid — Managing Director
100% sourcing comes from China, that’s the role of Chinese players.
Achal Phade — ICICI Prudential Life Insurance — Analyst
So the MNC…
Himanshu Baid — Managing Director
Every manufacturing which is outsourced out of the U.S. either happens in Mexico or China. So Mexico has a labor shortage. Mexico has a cost issue. China again everybody is looking at diversifying from China as a base. And today that’s the reason you see a lot of companies trying to bring manufacturing into India. And I think that advantage once we have a — which we have a ready infrastructure that will give us the advantage to scale-up manufacturing in India. So past the base number to anywhere up there.
Achal Phade — ICICI Prudential Life Insurance — Analyst
So if I understand this, Baxter and you selling in U.S. would be manufacturing themselves in China and procuring…
Himanshu Baid — Managing Director
Or Mexico or they can a have plant anywhere. So we don’t know that.
Achal Phade — ICICI Prudential Life Insurance — Analyst
We are not targeting to make Baxter as a client, we are trying to sell on our own.
Himanshu Baid — Managing Director
Yeah. We will try to sell. We are trying to sell our own manufactured product, our own designed product. So we are not getting into contract manufacturing today. So we are going with our own design, own manufactured product. Contract manufacturing means somebody will give you raw material also, somebody will give you the costing also, because this is my costing, give me at that costing. We don’t want to get into this kind of — and Polymed doesn’t have any contract manufacturing business today. It’s not our model.
Achal Phade — ICICI Prudential Life Insurance — Analyst
Yeah, yeah. And my second question was, sir, policy that we spoke of, the coming 26 May, would it really have anything to do with import duties or custom rates because shouldn’t there be other separate representation to the government for that and a different committee will setup the anti-duty?
Himanshu Baid — Managing Director
See, the policy is still at 30,000 feet level because we don’t know the real fine print. This is only going to be available on 26 May when the government unveils all policies announcement, the cabinet has cleared it as we all heard a week ago. So what we see as a — what we understand so far from the government is there is a push towards Make in India, more stronger push. So — and to do that, they will probably take certain steps and measures. But because at least there is a policy now on the card and we are now recognized as a separate sector, which was never there before. We were still under drugs and cosmetics. We were still under the pharmacy. All that is still — was very hazy.
Achal Phade — ICICI Prudential Life Insurance — Analyst
Right, right. And lastly on margins, if I’m to look at it on a long-term basis, so margin structurally seem to have gone up from 20%, 21% what you used to do probably seven, eight years back to now we are doing 27%. We are talking if things remain the same 25%, 27% would be the range. What has changed in this — for this margin expansion. So is it…
Himanshu Baid — Managing Director
So one is the product mix because as you go more into, let’s say — because see, our exports have increased in Europe. So that gives us a better margin at the end of the day. That’s number one. Number two, last year — last couple of years, the raw material price was still very high and the whole disruption in supply-chain. So that was also kind of a little subdued,m though in FY ’21, we had a spike because of lot of products which were respiratory linked products. And those products have gone now away because — and also the costing came down because expenses came down drastically and that happened for every company. We were not the only one.
Achal Phade — ICICI Prudential Life Insurance — Analyst
So if I’m to ask you 10 years back in FY ’13, what would have been your export versus domestic mix?
Himanshu Baid — Managing Director
Same mix, it was always similar, but the contribution from Europe has increased dramatically. Now one third revenue comes from Europe, yeah, which was not there 10 years ago if that is exactly the answer to your question.
Achal Phade — ICICI Prudential Life Insurance — Analyst
Right. And if time permits, can you please give us an like an opportunity size or the market size for the dialysis market in India in terms of consumables per se. So what would be the market share?
Himanshu Baid — Managing Director
Total market is around — consumable market would be around INR800 crores to INR900 crores in India. And then we also sell close to 3, 500 to 4,000 machines. Every machine is between INR5 lakhs to INR6 lakhs. So there’s another INR200 crores, INR250 crores market for machines. So total market size will be INR1,000 to INR1,100 crores. That’s our estimation.
Achal Phade — ICICI Prudential Life Insurance — Analyst
Right. So when we talk about…
Himanshu Baid — Managing Director
So we already have 6% to 7% market share in India today after starting two, three years ago, which is not bad. We are looking at the curve. But again, we think that with some more support for local manufacturing and some curtailing in Chinese, because Chinese they want to destroy the market in every market they enter.
Achal Phade — ICICI Prudential Life Insurance — Analyst
Okay. And a very mature question, I would say, but if machines are being dominated by some other company, dialyzers how easy or difficult is to penetrate…
Himanshu Baid — Managing Director
We’re actually selling more dialyzers than machines. These are universal products. We adapt to any machine. It’s not necessarily that we have to sell the machine to sell the dialyzers.
Achal Phade — ICICI Prudential Life Insurance — Analyst
Sure sir. Thank you. Thanks for your time.
Himanshu Baid — Managing Director
Thank you.
Operator
Thank you. As there are no further questions, I would now like to hand the conference over to the management for closing remarks.
Himanshu Baid — Managing Director
So I’d like to turn everybody for their time today and really the questions were very useful to us and thank you again for guiding us all the time and look forward to stay in connect and would also invite some of the people who want to visit our plant. They are most welcome to come and see how we manufacture products and how our plans are made as per global standards. So thank you again once again and look forward to stay in connect.
Operator
[Operator Closing Remarks]