Supriya Lifescience Ltd (SUPRIYA) Q4 FY23 Earnings Concall Transcript

Supriya Lifescience Ltd (NSE:SUPRIYA) Q4 FY23 Earnings Concall dated May. 29, 2023.

Corporate Participants:

Irfan Raeen — Investor Relations

Satish Wagh — Chairman and Managing Director

Krishna Raghunathan — Chief Financial Officer

Saloni Wagh — Director

Analysts:

Siddharth Purohit — InvesQ Investment Advisors Private Limited — Analyst

Naresh — Sameeksha Capital — Analyst

Tushar Bohra — MK Ventures — Analyst

Abhijit — Pi Asset Management — Analyst

Hemant — — Analyst

Yogesh — Arihant Capital Markets Ltd. — Analyst

Presentation:

Operator

Ladies and gentleman, good day and welcome to Supriya Lifescience, Ltd., Q4 FY23 Earnings Conference Call. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Irfan Raeen from Orient capital. Thank you and over to you, Mr. Irfan.

Irfan Raeen — Investor Relations

Thank you and welcome to Q4 and FY23 earnings con-call of Supriya Lifescience Limited. Today on this call, we have Dr. Satish Wagh, Chairman and Managing Director of Supriya Lifescience Limited, along with senior management team.

This call may contain forward-looking statements about the company, which are based on beliefs, opinions, and expectations as of today. Actual results may differ materially. This statements are not the guarantees of future performance and involve unforeseen risks and uncertainties that are difficult to predict. A detailed Safe-Harbor statement is given on page number two of the investor presentation of the Company, which has been uploaded on stock exchanges and Company’s website as well.

With this, I hand over the call to Dr. Satish Wagh sir, for his opening remarks. Over to you sir. Thank you.

Satish Wagh — Chairman and Managing Director

Good morning, and warm welcome to all participants. Thank you for joining us today to discuss the Q4 and Financial Year 2023 results of Supriya Lifescience Limited. To take us through the results and the answer to your questions, we have with us the top management from Supriya Lifescience represented by Dr. Saloni Wagh, Director; Mr. Krishna Raghunathan, Chief Financial Officer; and our Investor Relations department, Orient Capital.

I hope everyone got the opportunity to go through the financial results and investor presentation, which have been uploaded on the stock exchanges, as well as Company website. Despite the headwinds and market volatility faced by pharma industry globally, wWe have delivered a decent quarter.

I am pleased to announce that our company has achieved significant growth in financial performance over the sequent quarter. Our revenue in Q4 ’23 stood at INR142.2 crores as against INr105.1 crores of Q3 financial year ’23. Growth of 292% EBITDA margins in Q4, 2023, stood at 38.3% as against 13.4% in Q3 financial year ’23. EBITDA surged by the impressive 25.3%. Our PAT in Q4 financial year ’23 to at INR38.2 crores as compared to INR9.5 crores in Q3 financial year ’23 with a growth of 302%. PAT margins in Q4 financial year ’23 stood at 266.9% as against 9.1% in Q3 financial year ’23, which has gone up to by 17.8%. We are glad that we are in a better position and we anticipate even better performance in the future.

While our recent quarters have shown higher EBITDA margin due to the specific product and revenue mix, we will maintain our conservative estimate of achieving 28% to 30% EBITDA margin for the full-year. We are confident in sustained growth –good growth and maintaining favorable margins overall.

As we’ve previously discussed in our calls, our key strength therapy end-market China continues to be impacted. And we are actively working on strategies to mitigate the impact and regain momentum. We acknowledge that it will take some time for the situation to normalize and for our operations to return to their normal levels. However, we remain committed to this market and are actively working on strategies to mitigate the impact and regain momentum. On the other — our regulated markets like Europe. North-America, Latin-America have performed well. We have also seen improved traction in like therapies like anesthetics, antiasthmatic and antiallergic.

We are pleased to announce the appointment of Dr. Bhirud as the President of Business Development Strategy and Research and Development. Dr. Bhirud brings with him exceptional expertise and extensive experience in the pharmaceutical industry. We firmly believe that these leadership will be instrumental in strengthening our manufacturing excellence and driving strategic aligns. With his remarkable background in the pharma sector and hands-on approach, we are confident that Dr. Shekhar Bhirud is the perfect leader of our organization.

Also, I would like to inform you, The Board of Directors have recommended a final dividend of INR0.60 per equity share of best-value of INR2 each, subject to approval of the shareholders. With this. I will now hand over the call to our CFO, Krishna Raghunathan.

Over to you, Krishna.

Krishna Raghunathan — Chief Financial Officer

Thank you sir. Hello, everyone, and good morning. I will now operational performance for the financial year FY’23, which is under review, following which we will open the floor for question financers. FY23, Company reported revenue from operations of INR460.9 crores in FY’23 as against INR530 crores in FY’22. EBITDA in FY23 stood at INR128.9 crores as against INR213.9 crores in FY22. And EBITDA margin stood at 28% in FY23 as against 40% in the same-period last year. And profit before-tax was at INR123.4 crores for FY23 as against INR207.2 crores in FY22.

PAT stood at INR89.8 crores in FY23 as against INR151.8 crores in FY22. PAT margin stood at 19.5%.

Now, coming for the quarter ended Q4 FY23, Company reported revenue from operations of INR142.2 crores in Q4 FY23 as against INR181.2 crores in Q4 FY22. EBITDA in Q4 FY23 stood at INR55 crores as against INR75.2 crores in Q4 FY22 and EBITDA margin stood at 38.7% in Q4 FY23 as against 41.5% in the same-period last year.

And profit before-tax was at INR53.2 crores for Q4 FY23 as against INR75.4 crores in Q4 FY22. PAT stood at INR38.2 crores for Q4 FY23 as against INR46.2 crores in Q4 FY22. PAT margin stood at 26.9%.

China story remains the same as Dr. Wagh mentioned. Our main therapy end-market, China is continued to be affected this quarter also. While we cannot provide an exact timeline for the recovery of the sales at this moment, we have taken decisive action to gain a better understanding of the situation. Our team will be visiting CPHI China to gather critical insights and engage in productive discussions. This visit will provide us with invaluable information that will help us determine the path forward and devise a comprehensive strategy for recovery.

Now we can open the floor for questions-and-answers. Thanks to all of you.

Questions and Answers:

Operator

Thank you. [Operator Instructions]. The first question is from Mr. Yogesh from Arihant Capital Markets Ltd.

Yogesh — Arihant Capital Markets Ltd. — Analyst

Yeah, good morning, sir. Am I audible?

Saloni Wagh — Director

Yes, you’re audible.

Krishna Raghunathan — Chief Financial Officer

Hi, Yogesh, go ahead.

Yogesh — Arihant Capital Markets Ltd. — Analyst

So first of all, congratulations. It’s a very good set of numbers for the quarter, congratulations, everyone. My first question is basically, there has been a sharp jump in gross margins like about 56% from about 51%, 52% last quarter and even last year.

Krishna Raghunathan — Chief Financial Officer

Yogesh. we are getting a lot of background noise. Can you please, would you call — speak on the direct mouthpiece. I think it will be easier. We are not able to hear you properly.

Yogesh — Arihant Capital Markets Ltd. — Analyst

Am I okay now or should I?

Satish Wagh — Chairman and Managing Director

Yeah, yeah, it’s better.

Yogesh — Arihant Capital Markets Ltd. — Analyst

Yeah, first of all, congratulations. The numbers were very strong for the quarter, so, congratulation for it. My first question is on the sharp increase in gross margins to about 66% approximately in this quarter from about 51% last time. So if you can share some thoughts on the jump in gross margins — which products were driving this.

Saloni Wagh — Director

So, Yogesh, like our Chairman mentioned in his opening speech, the sharp margin increase is only driven by good traction and good sales of a certain product mix in certain regulated market. So that’s one of the main reasons why the margins have shot up significantly. In terms of the therapies that have really performed well in this quarter, antiasthmatic, anesthetic, antiallergic, these are some of the key therapies, which have really done well in some of the regulated markets like Europe, Latin-America and North-America, and that’s one of the main reasons why the margins have gone up.

Yogesh — Arihant Capital Markets Ltd. — Analyst

Sure and like in the last quarter, we had some orders pending for Europe, which we expected to deliver in Q4. So, was that seen in Q4 also, getting the jump in Europe?

Saloni Wagh — Director

Yes, because you know, we have mentioned in the past as well that Q3 are usually because of the Worldwide holidays in the month of December — because we operate in the export market significantly and in most of the export markets, December is a very slow month. Most of the countries are closed for holidays. So some of the sales from that quarter’s has commercialized in this quarter.

Yogesh — Arihant Capital Markets Ltd. — Analyst

Thanks. My second question is on the North American market. So we see that ramping up every quarter. So if you could share some highlights, how do we see growth in North-America. Any quantitative number, we can get in that market? And any seasonality for North America? How do you see.

Saloni Wagh — Director

Please continue. Sorry. Please continue.

Yogesh — Arihant Capital Markets Ltd. — Analyst

So basically, how do we see growth in North-America in quantitative terms going-forward. And any seasonality in that market?

Saloni Wagh — Director

So definitely, we anticipate the North American markets to grow for us significantly in the next couple of years. This is mainly because some of the products in the basket, which are anti-allergics, decongestants, we expect to see good traction because we’ve recently filed for the US DMFs for this particular market. Maybe not in the immediate one or two-quarter, you can see a significant jump in the revenue, but yes, definitely in the next three to four quarters, there would be a better traction seen in these markets. Once we start getting the US DMFs and registrations through for some of these newer products.

Yogesh — Arihant Capital Markets Ltd. — Analyst

So if we take a one year horizon, like can we see about 20%, 25% growth in the North American market going-forward?

Saloni Wagh — Director

No, because this is a highly regulated market and once we get the registrations also, there is time period in which we have to reach out to the customers, do the development validation process. So, definitely not in the next one year. We definitely anticipate growth, but it would not be in that 20%, 25% range what you are indicating.

Yogesh — Arihant Capital Markets Ltd. — Analyst

And madam, on the China market, there were some comments wherein we are looking to meet the [Indecipherable], If you can explain that in detail what actually we are looking at in terms of the China market, if can share some more details on it.

Saloni Wagh — Director

No, China market situation remains the same what we had mentioned, for the last quarter, still a lot of volatility and instability in the market. The demand is still not increased as much as we would have wanted it to. And there is a lot of price pressure as well. So, we remain in the similar situation what we were in the last quarter. We will have to wait and watch at least a couple of quarters more of the situation to sort of streamline. We are hoping that, with our next visit to China, which is happening in CPHI China in June of this year, we should be able to get more market insight and understand the market reality, what is happening there. But so-far, situation seems exactly what it was in the last quarter and we don’t expect it to stabilize for another couple of quarters as well. But to somehow mitigate the impact of China, we are now really focusing aggressively on fast-tracking some of the new product development that we have in our basket currently. And like we have seen in the fourth-quarter, some of the other therapies like antiasthmatics, anesthetics, they have performed really well in some of the regulated markets. So, increased focus on these markets and how we can further get better traction for these products.

Yogesh — Arihant Capital Markets Ltd. — Analyst

And finally, how many products are we looking to introduce in FY24 and how many will commercialize?

Saloni Wagh — Director

So we are looking to introduce three new products into our basket this year. Somewhere around quarter three, we anticipate that these three products would be through R&D and we should be able to launch them for at least the validation volumes and everything. The commercial impact of these products would only be seen in probably quarter one of the next financial year. But at least in quarter three, we should be able to launch them and we should be able to start offering them to the customers for validation purposes. Hello.

Operator

Hello. Yes, this is the operator.

Saloni Wagh — Director

I think we got disconnected in between.

Operator

Yes. Our next question comes from Mr. Siddharth Purohit from Invesque Q Investment Advisors Private Limited.

Siddharth Purohit — InvesQ Investment Advisors Private Limited — Analyst

Yeah, hi, am I audible clearly?

Saloni Wagh — Director

Yes, we are able to hear you.

Siddharth Purohit — InvesQ Investment Advisors Private Limited — Analyst

I mean this, [Technical Issues] seems to be now on [Technical Issues] based on gross for that [Technical Issues] on the balance sheet. So are we really preparing for like an uptick in this like now from the new plant because right now, we really have a sizable capacity but accordingly are we doing some sort of extra marketing efforts that we’re putting out for the core geography that we already had and for new geography. This China, USA, still not very sure how far that will recover. So which all areas have been really recovered? Which has [Technical Issues] recovering in the next one two years?

Saloni Wagh — Director

Okay, so in our current product portfolio, we have about 32 APIs and these come from 10 to 12 different therapeutic categories. Other than the top three products for the company, there is a basket of about 8, 10 molecules, which come from different therapies like antiallergic, decongestant, antihypertensive, Vitamins. Then again, pain management. So all these products, we have been selling for the last five-six years in semi-regulated markets. We have already started the registration for some of these products — about two years back, we started the registration for these products. In fact, for some of the products, we have recently received the CEPs and the US DMS and the China registrations also. So this basket of 8, 10 molecules, we would now want to scale up in the more regulated market and that’s where some of the impact of China would definitely be mitigated.

Now, once these products — you know, they move into the more regulated market space, their average selling price also would definitely appreciate. And in terms of volume also, we see a very good volume scale up for these existing molecules. So whatever capacity we are building at site, one would be to take care of the volume scale up of these existing molecules. Second, we do have a lot of active CDMO discussions which are there, also some of the APIs, advance intermediates from these opportunities would also fil -up some of the capacity. So these are the two main areas for which we are actually building the capacity.

Siddharth Purohit — InvesQ Investment Advisors Private Limited — Analyst

Okay, so based on the current scenario and your understanding, there is no core target that your have internally set for FY24? Like, you know, margin, you said that you will have something around 28 to 50, you are indicating. But on the top-line front, do you see at least like you know, double-digit growth, how you’re planning for this, because fixed-cost will probably look higher in the coming year because you must have gone through all the capex. So how that will get absorbed. Even if gross margin improves, how that [Technical Issues].

Saloni Wagh — Director

Okay. So in the past also, if you see historically, we have shown over 20% growth year-on-year. This year specifically was a one off year for us because of you’re all aware that our key markets — key therapy got impacted. However, going-forward also, we are committed to maintaining the same kind of growth what we have shown in the previous historical years. So it would be in trend with that. And as far as the capacity is concerned, see, some of this capacity what we are putting in our module, it would only be available for production in quarter four of this financial year. So to see the impact coming from that particular, you know, module will take some time. So it would not be as immediate at this financial year.

However, in terms of going-forward growth, it would be similar to what we have done in the past.

Siddharth Purohit — InvesQ Investment Advisors Private Limited — Analyst

Can we expect something around 20% plus growth for the current year based on your interaction with various customer or any number you would like to put in?

Saloni Wagh — Director

Yes, we anticipate around that range.

Siddharth Purohit — InvesQ Investment Advisors Private Limited — Analyst

Okay, I want more clarity on like [Technical Issues] the initial cost of launching any products or molecules will be probably on the higher side, but since you are targeting like [Technical Issues] now, what kind of [Technical Issues] cost initially will be probably we have to bear?

Krishna Raghunathan — Chief Financial Officer

We’re not able to hear your question, see, if I hear you, right, are you checking about the per molecules R&D cost. Is that your question, sir?

Siddharth Purohit — InvesQ Investment Advisors Private Limited — Analyst

R&D cost, as well as the cost of like you know launching the [Technical Issues] market, the regulated market, probably filing cost and everything will be less [Technical Issues] on a higher side for the regulated market. So any specific, like you know, thing that we are setting up for that or what is the cost that we are budgeting for that, for venturing into the more regulated market?

Saloni Wagh — Director

Sir, nothing like that. Whatever expenses we are incurring in the last couple of financial years, it is similar to what we would be incurring going forward as well. It’s not a very significantly high expense where in we have to set aside some funds for doing these kind of registration. They are a part and parcel of the portfolio and would be in line with the last couple of years what we have done.

Krishna Raghunathan — Chief Financial Officer

Having said that, we will also have, as and when the products increase, yeah, we might have a couple of new filings, which will have some impact on the R&D line. I don’t think that is highly significant, which will have to be separately budgeted. No, this is always part and parcel of Supriya’s budget.

Operator

Hello. [Operator Instructions]. Our next question comes from Naresh from Sameeksha Capital.

Naresh — Sameeksha Capital — Analyst

Yeah, am I audible?

Saloni Wagh — Director

Yes.

Naresh — Sameeksha Capital — Analyst

Yeah, my first question is on the other credit assets. So it has increased from INR55 crores to almost INR100 crores in the last one year. So can you throw some light on this, what does this pertain to and how should this number move going ahead?

Krishna Raghunathan — Chief Financial Officer

Basically, the major impact on this line is, we had paid advance for a land in [Technical Issues] base here in nearer to Patalganga, okay. And we were not not able to register this because Maharashtra, the authorities have yet to take the environmental clearance for it, okay, I think, which is expected in another three to four months. That is what is my Corporate Affairs team is saying. Today morning, I just checked with them specifically on this. I was expecting this question. So, I think post the rainy season, most probably we should be getting the clearance and then the registration would be done. And then this would be moving into [Technical Issues], sir.

Naresh — Sameeksha Capital — Analyst

So most of — and the majority of the increase of INR45 crores is on account of land advances? Is that corrrect?

Krishna Raghunathan — Chief Financial Officer

Yeah, yes, yes, yes.

Naresh — Sameeksha Capital — Analyst

Sir, what is the cost of the land?

Krishna Raghunathan — Chief Financial Officer

I think it’s somewhere around INR55 crores and I think there will also be some registration cost attached to it. I think those things are yet to happen, sir.

Naresh — Sameeksha Capital — Analyst

Okay. And my next question is on Salbutamol. So, have we started supplying this product in the European markets and if you can throw — on a quarter-on-quarter basis, like from Q3 to Q4, have we seen a good ramp up in this product in Europe?

Saloni Wagh — Director

So, yes, we have started supplying some volumes in the European market, because we got the CEP. However, it is just, you know, it’s a small volumes for validation and all. Specifically, for you Europe, I’ll not be able to indicate any percentage of growth, but if you look at the historical, this yearly — this particular therapy has really grown for us from almost 8% to 12% in this year and we anticipate similar kind of growth. in fact faster growth for Europe, as well as North American market for this product in the coming few quarters.

Naresh — Sameeksha Capital — Analyst

We already have the CEP DMF for this product, right?

Saloni Wagh — Director

Yes, yes. We have both and we are in active discussion with a lot of customers in Europe and U.S. for this.

Naresh — Sameeksha Capital — Analyst

Okay and on another two products, Dextromethorphan and Cetirizine, if you can talk about — how are we seeing the traction in these two products in FY24, especially in the regulated markets?

Saloni Wagh — Director

So again, both products, we are still under registration process. For dextromethorphan, we do have the US DMF available, but CEP is under registration. And for Cetirizine, both US DMF, as well as CEP is under registration. We expect to do both filings in June of this year. So probably in another nine to 12 months, we should have the US DMF and CEP in our hand. For both these products, Europe and U.S. are very large markets. Also, we are expecting very good growth from quarter three of this year — next year, in fact, we will see the significant contribution from these two products. Both the products are really good. They’re growing product. Year-on-year, their volume has grown in the market. So they could be potentially large products for us going-forward.

Naresh — Sameeksha Capital — Analyst

And Dexro, sine you said that we have DMFs, so in FY24, how much do we expect out of this product. I mean, qualitatively, if you can give some color on that because. I think this was one of our key products for FY24. So if you can help us understand how much this would likely contribute in ’24?

Saloni Wagh — Director

So you know — specific information on how much it can contribute, while we are not in a position to share, but I can say that we have already started seeing good traction for this product in OTC market and a lot of active customer discussions are ongoing. So definitely, for this year itself, the volume from our U.S. OTC market would be large for the Company.

Naresh — Sameeksha Capital — Analyst

Okay, one last question. So, I hope the 8 to 10 products which you mentioned, which in the next two, three years, you expect [Indecipherable] diversify our product base, specifically for FY24, any product out of those which you expect to contribute meaningfully in revenues?

Saloni Wagh — Director

So while we can’t talk very product specific, but definitely I can discuss about the therapies, which we anticipate would contribute significantly. So therapies like antihypertensive, Vitamins, anti-allergic, then some scale up in antiasthmatic products as well. These are decongestants. So these are the four, five therapies where we anticipate a large-volume scale up in the next couple of years.

Naresh — Sameeksha Capital — Analyst

Okay and one last on the revenue front, do you stick to abiding — so doubling our revenues by ’26 on FY22 base?

Saloni Wagh — Director

So, yes, we are still maintaining that for the financial year FY’26, ’27. We are still confident that we would be able to achieve the guidance what we have given in terms of revenue.

Naresh — Sameeksha Capital — Analyst

Sure, okay. Thank you.

Saloni Wagh — Director

Thank you. Thank you. Next question comes from Mr. Tushar Bohra from MK Ventures.

Tushar Bohra — MK Ventures — Analyst

Yeah, hi, thanks for the opportunity. Congratulations to the management for a much better show at this time. First, just I think few days before the results, we had this announcement on one of the CMO contracts. Maybe if you can share more details around it and also more qualitative details specifically around your overall CMO pipeline?

Saloni Wagh — Director

Okay, so yes, we have recently-announced a CMO tie-up with one of the leading European companies. This would be an exclusive contract with this company where he would be exclusive API suppliers. This is one of their existing products which we are planning to phase-out of the European facility. So the complete volume would be transported to Supriya in the next few years. As we speak, we are in the preparatory phase where we are doing the filings for the CEP for the US DMF and for the Japan DMF. We expect that all these three regulatory — all the registration should come through probably in the next nine to 12 months.

During this time, we would start catering to them some volume for their validation batches and for their trial batches for their customers globally. But once all the registrations come through, we anticipate that the volume should really start picking-up. In FY26-’27, we anticipate it should give us a revenue of about INR40 crores, the U.S. And there is definitely potential in this contract to get a higher volume, as well as a higher turnover. But this is something that we are fairly confident that we should be able to achieve in the financial year FY26-’27. So, this is in terms of the current CMO opportunities, which we have already sort of announced.

Similar to this, we are also working on another similar scale opportunity, which hopefully we should also be in a position to announce very soon as we are in the final stage of agreements signing. Other than these two large opportunities, we are working on six, seven smaller opportunities, which are more, you know, API and advanced intermediates. All these smaller opportunities also we are expecting by FY26, should contribute, you know, in a good way to our revenue. But all these are, you know, in very initial stage of discussion where we’ve just supplied some senses. In certain cases, some R&D work is ongoing. In the next two years, I think we should have a fairly good basket of CMO projects commercialized in our hand.

Tushar Bohra — MK Ventures — Analyst

When we say CMO, possible that some of these may actually be CDMO where we maybe working with innovators or you know specific chemistry buildouts.

Saloni Wagh — Director

Yes, there are one, I mean, there is one particular opportunity where we are working with the innovator. So yes, that is also in place.

Tushar Bohra — MK Ventures — Analyst

And mam, just to clarify on the the contract that you mentioned, the European CMO, if we are going to start supplying some batches and some supplies this year, and you said that nine to 12 months, you expect the approvals to start coming in to start coming in. Is it possible that we may actually start getting meaningful revenue from maybe FY24 or FY25 itself, rather than looking out at this FY27 and beyond opportunity? Should we budget for reasonable growth from this project sooner, maybe by FY25?

Saloni Wagh — Director

So we can — I mean, we will start getting some volume traction from FY’24 itself, but the value impact would not be as significant as it would be once it reaches its full completion in FY’26-’27. That’s when would have had all the regulatory approvals, see because this particular company operates in highly regulated market — the markets which I mentioned which is the European market, the Japanese market and the U.S. market, all these are highly-regulated markets and all their customers are pharma customers. So it takes a little bit of time for the pharma customers also to sort of evaluate our products, do the validation and redo their formulations with our [Technical Issues]. So that’s one of the reasons why, although the volumes would start kicking in from FY24, the significant impact on the revenue, as well as margin would only start coming in from financial year FY26-27.

Tushar Bohra — MK Ventures — Analyst

Sure, ma’am, also on the — in the overall CMO pipeline/CDMO pipeline that we have, is this all only pharmaceutical products? You mentioned Intermediates also. But are there any non-pharma products also in this? Is the company looking to actively reach out for other chemistries and other projects that are non-pharma in nature.

Saloni Wagh — Director

So there is one project, which is non-pharma where we are working on more Nutraceutical kind of an application. Hopefully, we should be in a position to announce this project also very soon. We are in the final stage of this particular project as well and the scale is similar to the one that we have currently announced. But other than this one project, most of the other projects are API and advanced intermediate related in the pharmaceutical space. And this would be margin profile similar or better than your current margin. So there would be similar to the margin guidance, what we have given on an annual annualized range, the 28% to 30% margin. What we have indicated, these all would be in this line of margin.

Tushar Bohra — MK Ventures — Analyst

Ma’am just one clarification on the guidance and the overall commentary. You mentioned 20% minimum growth and 28% to 30% margin. So first, is the growth, since we had a blip in FY23, negative year over Fy22, should we assume this 20% from FY23 is a base? Would it be higher, because of the blip — would this year actually be better than 20% for us. And secondly, the margin profile, should — while it is good to be conservative, should we budget for a decline in subsequent quarter or is it just that this is the minimum we can hope for performance similar to what you’ve done in Q4?

Krishna Raghunathan — Chief Financial Officer

Hi, Krishna here, see general 20% guidance for all the regular years. This year, since the base is lower, the increase would be looking on a higher side. So this this is only for this current year, this would be holding good. See, the 28% to 30% whatever we are looking at is an average of all the quarters put together, because see, as you have seen in the current quarter itself, depending on the product mix, there is always going to be some sort of, either it is going to spike up or it is going to go down depending on the product mix. So whatever we are giving is the, what do you call that average number, which we think that we might be able to achieve. And if the product mix is going to be highly favorable, then yeah, there could be a couple of percentage points here and there, there could be some possibilities, but that is something which we don’t want to, what do you call, give it as a general guidance to anybody. So, we still stick to 28% to 30%.

Tushar Bohra — MK Ventures — Analyst

So this is — sir, essentially this is the minimum we hope and assume that we should be able to achieve for the year and hopefully better than this. Is that how?

Krishna Raghunathan — Chief Financial Officer

Yes, yes, yes, Tushar, you are right.

Tushar Bohra — MK Ventures — Analyst

Thank you sir. I’ll join back in queue for other questions.

Krishna Raghunathan — Chief Financial Officer

Thank you, Tushar.

Operator

Thank you. [Operator Instructions]. Our next question comes from Mr. Abhijit from Pi Asset Management.

Abhijit — Pi Asset Management — Analyst

Thanks for the opportunity. Am I audible?

Saloni Wagh — Director

Yes, you’re audible.

Abhijit — Pi Asset Management — Analyst

Okay, so my question is again regarding the margins. In Q4, we did around 39% EBITDA margin and you have guided for 28% to 30%. So what are the reasons do you think that Q4 margins are not sustainable?

Saloni Wagh — Director

So we have indicated and we’ve explained this a couple of times before as well. The initial margins what we were getting were also — because the product concentration in our portfolio is high. There are three products, which are mature products for the Company, which have already matured into the regulated market. Unfortunately, this year, you know, one of our key therapies in key markets got hit and we don’t anticipate that this market would recover in the near-future. So that’s one of the main reasons why the previous margins are not sustainable. And particularly for this quarter, as I mentioned before also, the high margins are due to a certain product mix seeing a good traction in certain regulated markets. But this also has a certain seasonality impact and some of the sales from quarter three also have gone into this year. So that’s one of the reasons why the margins are extremely high for this quarter.

However, going-forward, based on the product portfolio that we currently have and still anticipating the impact of the China market and the key therapy, we anticipate that 28% to 30% margin is something that would be a normalized margin for us. That’s one of the main reasons.

Abhijit — Pi Asset Management — Analyst

Okay, and in the last quarter, we saw promoters adding from the open market. Can we expect further addition in the coming days, months, quarters? Any idea?

Krishna Raghunathan — Chief Financial Officer

This is something which is very speculative here. He might add, he might not add. I think this is something I don’t think we can talk to about some futuristic events. if he finds value. I think he might buy. I don’t think that this can be what do you call stuff for guidance.

Abhijit — Pi Asset Management — Analyst

No, that’s fine, that’s fine. Thank you. These are my questions. Thank you.

Operator

Thank you. Ladies and gentlemen. Our next caller is Mr. Hemant, an Individual Investor. Mr. Ashish [Phonetic], please go-ahead.

Hemant — — Analyst

Hello.

Saloni Wagh — Director

Yes.

Hemant — — Analyst

Yeah. I just wanted to understand on the working capital side, how should we read [Technical Issues] pretty high for us and [Technical Issues]. Given the supply-chain disruptions, we had said that we were a bit conservative on ensuring supplies and stuff. So now what is the situation and where do we see it is going?

Krishna Raghunathan — Chief Financial Officer

See, we do agree that the inventory was something which was pretty, pretty high. In fact, even now, I think it is somewhere around 200 plus days of inventory, because last year, since it was — China was totally disrupted. A couple of raw materials, which you dependent on China, some specific materials, we had to stock up in excess. The management is aware that the inventory cycle is on a higher side and of course, we are taking corrective actions for the same. I think now that every of the countries are opened up, I don’t think we need to maintain so much of inventory. You would see gradual reduction over the next few quarters.

Hemant — — Analyst

Okay, yes, so any guidance on how this number would shape up on the inventory side.

Krishna Raghunathan — Chief Financial Officer

At this point of time, we don’t want to give any guidance on working capital, at least. See, you should also be cognizant of the fact that our working capital loans are hardly around INR15 crores to INR16 crores and we are cash sufficient. In that sort of a scenario, I don’t think we should be worrying too much with respect to the working capital at this stage. But having said that, we do understand that inventories are on the higher side. That is something which the management is very-very cognizant about. And in fact, I have a meeting with the management in the afternoon, specifically on this.

Hemant — — Analyst

Okay, and on the other current assets, you mentioned that — it should come down, [Technical Issues] correct?.

Krishna Raghunathan — Chief Financial Officer

See, once the land is capitalized or getting into SEWIP [Phonetic], once it is a registered, it will get into [Phonetic], of course. So, I think that is going to come down. It is just a temporary stuff, not to be worried too much into it.

Hemant — — Analyst

Okay. It will come down to around INR50 odd crores.

Krishna Raghunathan — Chief Financial Officer

Yeah, that is going to come down pretty much. In fact, to be honest, certain of long pending export receivables or the DEPB receivables and brought up receivables, we had received in April and May. You would see a significant amount of production even in the first-quarter itself.

Hemant — — Analyst

Sir, on the business side, I would like to understand how is the overall scenario shaping up, because, I mean, typically, we have seen a lot of volatility last two years in the most of the APA market, the companies in this sector and stuff. And you also, FY23 has been quite [Technical Issues] year in terms of ups and downs. So should we say that for us, the worst kind of is over and maybe moving back to our [Technical Issues] continuous growth with good margins and ROCE. So should we expect that or should — is the situation still kind of not to call-out that everything is normalized kind of.

Saloni Wagh — Director

So definitely. I think, and in the last financial year was one-off for us. If you look at the historicals of the Company, we have consistently grown. This is mainly because of, you know, getting good traction for our existing product basket in more regulated space. And that’s one of the company’s main strategy to focus on getting traction in more regulated markets. So with the same view, in fact, we are working on derisking the existing product basket. We plan on adding newer products from newer therapies. So any particular therapy dependence or any particular geography dependence of the Company is significantly reduced.

For us, way forward definitely would be good growth. What we have indicated in this call also today, you know. the 20% growth is what we are anticipating going-forward and the margins at a conservative level between 28% to 30% is what we are confident of achieving in the near future.

Hemant — — Analyst

Okay. Thank you so much.

Operator

Thank you. Our next call is from Mr. Tushar Bohra from MK Ventures.

Tushar Bohra — MK Ventures — Analyst

Yeah, thanks for the follow-up. Ma’am, just if you can highlight the new products that we — you mentioned few of them like Dextromethorphan and Cetirizine. But, just how many DMFs-CEPs are active? Where we are expecting some movement so this year and next year in terms of new plant addition, more executed market business and which are the ones we have filed or are in the process of filing, which also should become opportunity for FY24 and beyond.

Saloni Wagh — Director

So, currently we have already filed three US DMFs and three CEPs are also, I mean, we already filed three CEPs. These are mainly decongestants, antigout, anti-allergic. There three therapeutic areas where we have already filed for the registration. So probably in another nine to 12 months, once we have these registrations in place, we can immediately start seeing good volume scale up because we’ve already done the validation and the trial volumes for these products with some of the customers. Active discussions are ongoing. And in the future, antihypertensive, anesthetic, then antiasthmatic and vitamins are some of the key therapies where we would want to apply for the CEPs and the US DMFs. Currently, most of the documents are under compilation for these products and in fact, even China registration for that matter. So probably in Q3, we would be in a good position to have all the documents in place and start the registration for these products as well. So overall, the eight to 10 basket of products what we said, where we will be seeing a good volume scale-up would be from these therapeutic categories.

Tushar Bohra — MK Ventures — Analyst

And you already have some China restrictions in place or some of the existing portfolio, outside the one that is currently in the market?

Saloni Wagh — Director

We do have some antihistamine product already registered with China. But these volumes — I mean, the volume of these products are very small. This is a very stable business, which we have been doing for last couple of years. And there CE registrations, which we’re currently doing in China also. One is an anti-allergic product. One is, again, antihistamine range and one is antigout. So these threee products we are currently registering as we speak. So, hopefully by beginning of next year, we should have all the registrations in place.

Tushar Bohra — MK Ventures — Analyst

Ma’am, one of our products, Tramadol, which was [Technical Issues] narcotic recently, we were applying or had applied for US DMFs and CEP for Tramadol as well. Any updates on that? And then.

Saloni Wagh — Director

So, we have just applied for the CEP and U.S. DMF. It takes usually around nine to 12 months to get the CEP and the same — and a little longer in fact for the US DMF. So somewhere again, goes back to the same timeline that somewhere around end of this year, quarter three or quarter-four of this financial year is when we anticipate we should have the CEP and US DMF for this product as well. The volume scale-up expected from this product is also quite larger. You know, this product itself is very large across Europe and U.S. So definitely once we have these registrations in place, the volume scale-up would be good.

Tushar Bohra — MK Ventures — Analyst

Okay sure. Thank you so much.

Saloni Wagh — Director

Thank you.

Operator

Ladies and gentlemen, in the interest of time, that was the last question on today’s call. I would now like to hand the conference over to Dr. Saloni Wagh for closing comments.

Saloni Wagh — Director

Thank you. I would like to thank everyone for joining the call. I hope we have been able to respond to your queries adequately. If you have any further queries, you may reach out to our Investor Relations partner, Oriented Capital. Thank you very much for joining us today. Have a great day. Thank you.

Operator

[Operator Closing Remarks]