Zim Laboratories Ltd (NSE: ZIMLAB) Q2 2025 Earnings Call dated Nov. 11, 2024
Corporate Participants:
Anwar S. Daud — Chairman and Managing Director
Shyam Mohan Patro — Chief Financial Officer
Zulfiquar Kamal — Director Finance
Zain Daud — Investor Relations
Analysts:
Deepika Sharma — Analyst
Aryan Oswal — Analyst
Rohit Balakrishnan — Analyst
Shyam Garg — Analyst
Analyst
Aman Jain — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to ZIM Laboratories Limited Q2 and H1 FY ’25 Earnings Conference Call hosted by Go India Advisors. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Ms. Deepika Sharma from Go India Advisors. Thank you, and over to you, Ms. Sharma.
Deepika Sharma — Analyst
Thank you, Nirav. Good afternoon, everyone, and welcome to the Q2 and H1 FY ’25 earnings call of ZIM Laboratories Limited. We have on the call Dr. Anwar S. Daud, Chairman and Managing Director; Mr. Zulfiquar Kamal, Director of Finance; Mr. Shyam Mohan Patro, Chief Financial Officer; and Mr. Zain Daud Investor Relations.
We must remind you that the discussion on today’s call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that company may faces. May I now request the management to take us through the financials and the business outlook, subsequent to which we will open the floor for Q&A.
Thank you and over to you, sir.
Anwar S. Daud — Chairman and Managing Director
Thank Deepika. This is Anwar Daud speaking and a warm welcome to everyone joining us for ZIM Limited’s Q2 and H1 FY ’25 earnings conference call. I trust you have the chance to review the financial results and earnings presentation available on the exchange. Our performance in the first half of financial year ’25 reflects our focus on executing our core strategy and our progress towards achieving our financial and filing goals.
In Q2 FY ’25, we achieved a total operating income of INR922 million, reflecting a 7.4 year-on-year growth. Our EBITDA and PAT margin stood at 11.8% and 2.6% respectively. For the first half of ’25, we recorded total revenue of INR1,740 million with EBITDA and PAT margins at INR11.4 million and 1.9 respectively. The pharmaceuticals business remained our primary revenue driver contributing 59% of total revenue.
This was complemented by the division, which contributed 31% in H1 financial year ’25. Export continued to be a significant growth driver, contributing 84% of our total revenue in H1 of FY ’25 amounting to INR1467 million compared to 79.4% in the same period last year. LIP revenues reached INR271 million in H1 financial year ’25 with INR119 million in Q2 FY ’25. Notably, the OTF segment its revenue-share reaching 4.9% in Q2 FY ’25 and contributing INR45 million.
Total OTM revenue for H1 FY ’25 stood at INR71 million. Our NIP and OTF segments including licensing fees collectively contributed 21.6% of total revenue in H1 FY ’25, which is up from 14% in H1 FY ’24. On the R&D front, we invested 9.7% of revenue in H1 FY ’25, up from 8.7% in the previous period. We are targeting the completion of our initial line of 10 NIC, including by equivalent study and registrations for multiple developed markets.
We also continue to invest in our OTF products and in upgrading our dossiers for entry into new markets. In the first half of FY ’25, we completed seven NIP filings in the EU and one NIP filing in Australia aligning with our product filing strategy. Additionally, we completed one OTF filing in Australia and one in the EU. We also received our first EU marketing authorization for our oral suspension under the NIP category, and we have commenced our commercialization efforts.
I now hand over the call over to our CFO, Mr. Shyam Mohan Patro, who will provide a detailed overview of our financial performance. Mr. Patro, over to you.
Shyam Mohan Patro — Chief Financial Officer
Thank you, Dr. Daud, and good afternoon to all. To begin with, let me walk-through our financial results for Q2 and H1 FY ’25. For Q2 FY ’25, we reported a total operating income of INR922 million, reflecting a 12.7% growth on a quarter-to-quarter basis and 7.4% growth on a year-to-year basis. EBITDA for the quarter reached at INR109 million, representing a 21.1% increase from the previous quarter with a margin of 11.8% PAT for Q2 FY ’25 was at INR24 million with a margin up to 2.6%, showing a strong quarter-on-quarter growth for the first half of the FY ’25, our total operating income was INR1,740 million.
Our EBITDA for H1 FY ’25 reached at INR199 million, resulting a margin of 11.4%. The PAT margin for H1 FY ’25 decreased to 1.9% going to increased depreciation in finance cost. Our balance sheet — on-balance sheet front, our borrowings stood at INR974 million as of H1 ’25 with a gearing ratio of 40%. Our capital expenditure for FY ’25 remains in-line with our strategy, focusing on the completing — completing the key projects like the NIP urology suite and capacity expansion for key Neurocetical and OTC product.
That concludes my update. We can now open the floor for queries. Thank you.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] The first question is from the line of Aryan Oswal from Finterest Capital. Please go ahead.
Aryan Oswal
Hello. Yes, sir. Am I audible?
Anwar S. Daud
Yeah, yes.
Operator
Yes, you are.
Aryan Oswal
Yes, good afternoon, sir. Thank you for taking my question. Sir, can you provide insights into the working capital cycle and cash conversion cycle for H1 FY ’25 and are there any plans to optimize working capital to improve cash-flow?
Anwar S. Daud
The cycle is healthy at the moment. For H1, we have quite improved from FY ’24 and the healthy trend will continue.
Aryan Oswal
Okay. And sir, with increased investments in product development and market expansion, how do you plan to manage liquidity? And are there any considerations for raising additional capital?
Zulfiquar Kamal
No, sir, this is Zulfiquar Kamal. So as we have mentioned in the earlier calls, the expansion has been completed by taking additional borrowings and we have sufficient as mentioned in our report, we stood at around 40% of the gaining ratio. So there is no — any plans for further liquidation — infusion of equity capital or any liquidation of product share.
Aryan Oswal
Okay. Thank you, sir. And sir, one last question from my side. Could you provide more details on your licensing agreements and whether there are plans to expand these alliances to drive non-linear revenue growth?
Zulfiquar Kamal
Non.
Aryan Oswal
Non-linear revenue growth.
Zulfiquar Kamal
Yeah. So as mentioned by Dr. Daud, we have already registering our NIP product and registration across Europe and other developing countries. We are completing our NIB product 10 NIP product these equivalent and dossier completion will be completed by this year end. So after completion, by next year, we will be able to get the results of the ship for increase in revenue will start from around next year onwards.
Aryan Oswal
Okay. Thank you so much, sir.
Operator
Thank you. [Operator Instructions] Next question is from the line of Rohit from iThought PMS. Please go ahead.
Rohit Balakrishnan
Good afternoon, everybody. So sir, my first question is of the INR92 crores that we’ve done in this quarter, what is the revenue from regulated markets
Anwar S. Daud
Very specific question. But as we have mentioned, we are the regulated market revenues on the growth. We are giving the total percentage of NIP and OTF towards the total sales, which is as mentioned by Dr. Daud it’s on the growing effect.
To be more specific, see, the actual revenue from the regulated market business is less because there are limited MS as of this moment and they were looking in the last two years. So there are a few more submissions which are on the last stages and once we have a portfolio of products in MAL after the six or seven months of receiving the MA, that is when the business starts.
So as the guidance which we have given earlier also is for ’25-’26 when you will start seeing the nonlinear growth or any other technical terms you might like to use, that’s when the results of all these NIP products filing in the regulated markets will start coming.
Although in the emerging markets, we do have registrations and we have started, that’s what we are reporting that for these same NIP products in the emerging markets, there has been a substantial traction and we continue to see growth in our NIP and ODS products.
Rohit Balakrishnan
Right, sir. Right. So sir, in terms of — so I mean for this year, FY ’25, any sense on what kind of growth you’re looking over FY ’24 in terms of revenues?.
Shyam Mohan Patro
So we are around looking at around 10% growth over the last year-on the March ’25.
Rohit Balakrishnan
Got it, sir. So just on the last part of your explanation that you said that ’26 you will start seeing a better growth. So from a profitability standpoint, sir, that should also — I mean that would also be the — I mean, relevant for profitability as well in terms of numbers?
Shyam Mohan Patro
Definitely, we are looking and it will definitely impact on the profitability because the European sales and the NIP and will have a higher-margin and we are already — we are giving a guidance of around 14% to 15% growth in EBITDA plus slight increase in the margins over the last year.
Rohit Balakrishnan
So this — you are saying for FY ’25?
Shyam Mohan Patro
FY ’25 and going forward.
Rohit Balakrishnan
You’re saying margins will grow faster than revenue and next year revenue will also grow faster and margins will also expand, right?
Shyam Mohan Patro
That is the plan and we are trying.
Rohit Balakrishnan
Okay. So sir, today, in terms of our NIP registrations, how many of them as of Q2 FY ’25, how many of them are in EU?
Zain Daud
Yeah, hi, Rohit, it is Zain. So what we have done is we started with an initial line of about 10 NIP, which were under development and towards which costs are going. So out of those, we have developed about six and these have all been filed now. So the latest filing that we did, so EU has been, let’s say, about 67 products filed. These — the number of filings are more because each product is filed in multiple country or different strengths.
So there are multiple filings on this, but the core products are six to seven and we are also extending these to other regulated markets like Australia, etc. So today, let’s say about six products going-forward, the other four products also we are planning to complete and the investment is towards that. Once they are also complete, we’ll target the filings either in Q4 or Q1. Next year. Yeah, next year, Q1 FY ’26 or Q4 we complete the filing of our initial NIB product, which we had started development.
Rohit Balakrishnan
So then just one clarification. So in the presentation, you mentioned the 514 NIB filing filings in H1 FY ’25 and I remember I mean I have it in my notes that we have about in FY ’24, we had five NIP registration in EU and in Q1 it was two. So we have total — so you still — so in Q2, we have not additionally signed any new NIP in EU. Is that understanding correct?
Zain Daud
No. So in Q2, we have signed one, the gastrointestinal NIP through DCP filing. So basically what we tried to do is in the presentation, kind of keep investors updated on the initial 10. So last year’s presentation, the five number is the count of products which had been developed and filed, in Q1 this year, we did one more and Q2 won more. So about seven today, let’s say an NIP 5, seven products.
Now the number of filings like you said the 14 NIP, that is mix of EU and pharmerging markets also in there. If you just look at EU, the number is like I told you say the number of products are two and filings are seven because each product is filed in multiple countries. So each product in our country is considered as one filing. So let’s say, if I file the same product in four countries, that’s four filings.
So in EU, we have done two products and I think seven filings in total. The remaining filings are for the pharmerging and ROW markets. So these are also being done simultaneously and the kind of revenue you’re seeing in NIP right now without regulated market is coming as an effect of the filing, which I’ve been doing.
Rohit Balakrishnan
Got it. Got it. And sir, just last question before I join back-in the queue. So if you look at last probably the last 12 quarters, I mean, H1 is slower. I mean Q1 is usually slow and then Q2 slightly picks up and then H2 is better in terms of revenue contribution. So just wanted to understand is there some kind of seasonality in the business? Usually pharma companies don’t necessarily have that. So just wanted to understand that part. So if you can just explain.
Anwar S. Daud
Yeah, that’s been the traditional trajectory for win with the kind of business it has, as we go into the regulated markets, probably that could change a little bit. But we have traditionally had the H2 numbers are about 55% to 60% of the H1 numbers. So it’s an effect on the kind of business and product mix that we have. We have a domestic business, which is an institutional business largely. That’s also is kind of now getting mixed up with the domestic out-licensing business that we have.
So slowly that kind of smoothening out. And then there are the pharmerging and ROW businesses where import permissions by our customers are from January onwards. So it’s the planning of growth in the last two quarters by the clients, which might have affected with our base. Over a period of time we would actually be expecting evening out of business in all the four quarters because the company’s product mix and its nature of business is also changing.
Rohit Balakrishnan
Got it, sir. I’ll join back in the queue. I have few more question but I will join back. Thank you.
Operator
Thank you. [Operator Instructions] Next question is from the line of Shyam Garg from Ladderup Family Office. Please go ahead.
Shyam Garg
Thanks for the opportunity. Sir, my first question is what is the first — my first question is what are the your sales projection for the recently authorized suspension in the EU over the next fiscal year?
Anwar S. Daud
We are not at liberty to disclose because we signed the agreement with are — the agreement that we were allowed to put on in public domain have already been put there. The ones that have will just sign those projections and once we have clear specific projections from our clients. We will be very happy to actually put it in the only domain on our website and perhaps that will be the right time to ask that.
Shyam Garg
Okay. And sir, we are looking out for MA [Indecipherable] for Azithromycin oral suspensions?
Anwar S. Daud
Sorry.
Shyam Garg
Are we looking on for any MAs for oral suspension — Azithromycin oral suspension in EU?
Anwar S. Daud
Yes, we will be doing multiple is there NIP product because it’s an old, it’s an NIP product because it stay smart. Yes. We are filing — making multiple filing.
Shyam Garg
And sir, what is the capacity utilization for Q2?
Anwar S. Daud
It would remain at sub-40 level, but the reason being in any pharma, the optimum or maximum is up to 60 and we will be at up to 40.
Shyam Garg
Okay, okay. And how do you — how do you anticipate the revenue trajectory of your OTF segment, especially with the recent increase in contribution to 4.9% in Q2?
Anwar S. Daud
See, historically, our H1 to H2 is 45 or 42, 55, 60. So the trend will be followed. So he is asking about the OTF. OTF business is seeing an interesting and we would like to reserve our remarks for the time being and this quarter because we have some interesting agreements and agreements — interesting orders to execute, we will be able to give you a much further view in the end-of-the next quarter.
Shyam Garg
Okay, okay, sir. And sir, what are the competitive advantage of your OTF portfolio in the developed market and how are you positioning this product against competitors
Zain Daud
Shyam, I’ll just take this. I think when it comes to the technology, the advantage comes from the fact that there are very few players already, plus when you add the filter of an EU facility, the company is filter out more. So there are only a handful of companies in the world who are doing it at EU scale. So I think for us, we are looking at the regulatory aspect of it with a proper dose.
Operator
[Operator Instructions].
Zain Daud
Sorry. I think it dropped automatically. No. So what I was saying is the — with the OTF, I think the advantage that we have is on the regulatory aspect that having a proper EU dossier ready to be registered is a big advantage for us. So I think in that sense, what we are aiming at is for having our product-line be completely ready for EU with a proper dossier.
And if we can do that, I think we’ll have an advantage. Or when you talk about technology, there are some advantages to it, it, but these kind of advantages are often kind of what we’ve already spoke about like having a film that is non-curving or having taste marking technology on the film, so being able to have a better taste of the film. These are the kind of advantages we get from having the patient in technology and process.
Anwar S. Daud
So, as an interesting aside, we have already share the news of a submission of a oral so and we are awaiting the death in the final stages. So besides the oral dispensable we — the technology is also versatile enough to make sublim will which are where the product gets absorbed under the directly into the blood speed.
So perhaps that’s a kind of a rare space and that would open, that would actually show the company’s the strength in the company’s technology and open the doors to other products which can use this kind of versatility which can you show this kind of application. So — and so once this kind of — once this product is in the market after the MA, which we hopefully expect to receive soon. So perhaps would open many doors for ZIM Laboratories and the different products that it has under sublingual absorption stage.
Shyam Garg
Okay, sir. So sir, after the filing of this dossier and approval, you would be the sole seller of this formulations or OTF products or there will be other competitor as well who can participate in?
Anwar S. Daud
I didn’t get your question.
Shyam Garg
After filing of this OTS portfolio approvals, we have received approvals for this OTF portfolio. We will be the sole seller of these products or there will be other participants as well.
Anwar S. Daud
Yeah, I think also this product that we are specifically talking about, in Europe, currently there is only the innovator. There is no generic, but maybe for other products, yes, there may be one or two players more who are there, let’s say about, etc, but for this — OTF product, currently there is no other generic as of as much as we know, there is no generic.
Shyam Garg
Okay, okay. Thank you for answering my question. I’ll join back in queue.
Anwar S. Daud
Sure.
Operator
Thank you very much. [Operator Instructions] Next question is from the line of Deepesh Sancheti from Mania Financial [Phonetic]. Please go ahead.
Analyst
Yeah, hi, am I audible?
Operator
Yes, you are.
Analyst
Okay. Based on the current visibility what is your revenue and EBITDA guidance for H2 ’25?
Zulfiquar Kamal
Yeah. As I mentioned earlier, we are looking at a top-line revenue of 10%. We are giving guidance. Overall similar margins and EBITDA margin and all that we are looking at around 14% across.
Analyst
14%. And what are going to be the key catalysts that would drive the growth over the next three to five years, particularly in terms of product pipeline, market expansion and operational efficiencies?
Anwar S. Daud
Yeah, today, in fact, if you see the EBITDA comes after the expenses have been factored and the expenses are being made-for regulatory filing, expenses are being made-for expansion and people have been recruited to actually cater to the kind of the growth which we expect from these businesses to come in. All those agreements have been signed as yet. So once the business grows, the expenses are already there inside the balance sheet.
So once the business grows, we will see the better margins and everything else will improve because expenses are actually being done. Today, people are being trained from the market where we wish to enter, where we are filing, where we are — from where we expect to obtain our MAs and our partner effect to their MS, once these MS start tickling in, the story will be a little different in terms of the overall business growth, the overall margins that the product have, that’s all, that’s what we’ve been talking about. That’s the story.
Analyst
I just want to know in the next three to five years, will our ROE be about double-digit? Will our sales growth be double-digit and will our margins be increasing to more than 15%? Is that what we should expect?
Anwar S. Daud
Well, the double-digit part is like we as a company, we don’t believe in giving a specific number, but the second part of your expectation is right and all these and all these metrics, all these metrics are going to gradually improve and in three to five years, see the improvement in all areas, including EBITDA, PAT, overall growth, NIP business and there is a whole other plan and there are the plan.
Analyst
Okay. And what are the major regulatory challenges you foresee when you increase your filings and commercialization in EU and how are you mitigating these potential compliances?
Anwar S. Daud
Well we are presently we are mitigating them through the right choice of the right partner whoever we sign agreements with, we also have our own — we have kept reserve the business for us as well. Most of these agreements are not. In fact, almost all the agreements are not exclusive. There is a scope for them also to play in the same market. And that’s number-one. Number two, the partners with whom these agreements are being signed are partners who are number-one active in these therapy areas.
Also, they are large-enough and they don’t find through the due-diligence of the in which they are buying and without understanding that these deals are high-level and remain obtainable. So that’s an way of overcoming the potential regulatory challenges, having strong partners with you who will believe in the product and year and who will if there are some liability or legal issues that can always come up. But these are partners who would be able to actually address those issues as well. So we are — it’s a mix of prudence as well as going-in the right partner.
Analyst
So are there any ongoing discussions of strategic partnerships, particularly in the developed markets to accelerate product commercialization?
Anwar S. Daud
Yes, yes. All the partners were strategic, none of them is opportunistic. For each product, we have chosen a partner who is strong in that therapy area and who is strong in his own market, who understand the market well. And these partners have — because if you see for them and for most people in the regulated market, most clients in the regulated market, ZIM is a new entrant. So, there has been a rigorous due diligence on all the dossier, the facilities, the kind of skills and competence that ZIM brings into the whole business, there are people who are behind these products.
So there has been a rigorous due diligence of all these issues and area which you guide as financial analyst want to ask us why these partners and that’s how the agreements have been signed and the out-licensing fees are being received in line and in tune with the agreements that have been signed. So, there are people who are putting their money in about it in a way. I hope that answers
Analyst
And are you experiencing any input pressures due to macroeconomic factors? What are the measures which you are taking for the hedging against any cost fluctuations or supply-chain disruptions?
Anwar S. Daud
I don’t think we have — we have spoken about some of our market where we are operating. There are one or two products and within the cost the price changes have been there, one or two, not many, but as we are in that happy position of being able to pass-on our costs and most of our agreements talk about that being able to pass on the raw-material increase cost to our clients.
I don’t foresee a problem due to this reason. Certainly, there are problems due to the currency-related problems which are easing and which haven’t to the extent that we thought they would give you because of the geopolitical situation, unfortunately, existing now.
Analyst
Okay. And how do you see the debt situation improving in the next five years? I mean, three to five years what are we doing about it? Any particular plans
Shyam Mohan Patro
Whatever debt you have taken that is towards specific to the capex. Once the capex is in operation, we will get revenue from that and debt question will remain healthy.
Analyst
So we are planning to repair it by our internal approvals and we are not planning any fundraising or anything to actually reduce the debt dependence.
Anwar S. Daud
See not at the moment, there are different triggers for all fundraising. As you know, maybe enter a totally new highly regulated territory, for example or some sudden influx of business where we see that in the interest of the company and its shareholders. That is the time as of the near-future, we don’t have any.
Analyst
What is the cost of debt, if I may ask?
Anwar S. Daud
It depends on the bank-to-bank what we can evaluate.
Analyst
What is the average cost of debt?
Anwar S. Daud
Around 10% to 10.25% to 10.25%. The reason I’m asking is that we are generating an ROE below 10% and if the cost of debt is high, I mean, I hope we won’t fall into a debt track. That’s the only concern which I have. And no, as of now, we don’t foresee anything. We are sufficiently there is a good coverage. As we mentioned earlier, the gaining and recognize around 40%, we are only taking the debt of the total network. So — and our total debt is not exceeding around 2 times of the EBITDA. So we are planning that it will be — we don’t enter into any. The risk committee and all are have proper monitoring is of that.
Analyst
So how much of that debt is term-loan and working capital? If you can just bifurcate that for me.
Anwar S. Daud
Yeah, around our total debt of around INR90 crore, around 60% is on the working capital and around 30% is off that utilization.
Analyst
Okay. And the utilization of working capital has 100%?
Anwar S. Daud
Yeah, it is very less. As of now, the utilization is around — it’s around 60% to 70% of the.
Analyst
Okay, great. Thank you so much.
Operator
Thank you very much. [Operator Instructions] Next question is from the line of Aman Jain from Arihant Capital. Please go ahead. Aman, may I request you to unmute your line and go ahead with your question, please?
Aman Jain
Yeah. Hello?
Operator
Yes, you’re audible. You are now audible.
Aman Jain
Yeah, thank you, sir for the opportunity. Sir, just wanted to understand if you could discuss the key markets that are driving the export contribution, which has increased from about 79% to 84% in this H1 FY ’25. So what are the key markets that are driving this growth? And if you could also give us the strategy that we are — that we have planned to penetrate the entire.
Anwar S. Daud
So the registrations in the ROW and emerging markets of new products have been coming in. This is a — this strategy is about three or four years-old because now all the filing that we had done previously, which we have reported from quarter-to-quarter.
So those registrations are coming in, they are helping us in changing the product mix with product with better margins are coming in, the sales of these products are taking place. I mean, those are all our expected lines. This was — that this is the kind of guidance we have been giving all-the-time from quarter-to-quarter and it’s in-line with what we had the commitments we have made.
Aman Jain
Okay, understood, sir. Understood. Sir, just a question on the R&D spend. So it has increased from about 8.7% to 9.7% in this half. So if you could tell us how much was it — how much — what is the allocation for NIPs, OTFs and other those upgrade?
Anwar S. Daud
I think I understand the question and the kind of data you need, but see, it’s very difficult to segregate it product-wise because what happens is a lot of common facilities being used, everything is in the same plant. What we can tell you is the cost of B that we’ve capitalized about INR65 million. In that majorly, the BE cost is towards the NIP. That’s what I can tell you.
Aman Jain
Okay. Okay, sir. And sir, just one last question. So what are the priority markets for the new NIP filings that we have planned and what is the expected timeline for the approvals? And if you could also give us what is the potential revenue contribution from them?
Anwar S. Daud
So I think the first part to answer the key markets we are focusing on is now the developed markets except US and Japan currently, because our plant is EU ready. We are also ready to go into Australia, Mexico, some other developed markets like South Africa. The timeline usually is about 18 months from filing for PMA because there are lot of queries that come from the ministries, there are delays on that end also.
So let’s say an approximate timeline of 18 to 24 months after filing is when we should expect the MA. And in terms of revenue projections, I think right now, it will be a bit too early for us to give that number. But what we are going to do is as soon as these MAs get commercialized, we’ll keep updating you that this MA has commercializes a particular region, so that will help you track.
Aman Jain
Understood. Thank you so much.
Operator
Thank you. Next question is from the line of Saket Kapoor [Phonetic] from Kapoor & Company. Please go ahead.
Analyst
Hello.
Operator
Go ahead, sir. You’re audible.
Analyst
Yeah. Sir, firstly, sir, if you could explain to us the capital work-in progress closing balance of INR33 crores, when is this going to get capitalized and what kind of increase in turnover or asset to turnover ratio we can expect.
Anwar S. Daud
Yeah. So the CWIP, what we have mentioned and the projects as we have already said earlier, the project will be completed by year end and we hope to capitalize most of the CWIP in the March ’25. And the asset turnover ratio definitely as we are already in the previous call, these are specialized suits for the NIP products.
So once the MA is received, these assets will be commercialized and assets will start generating revenue from this. But if you could give us some color, what kind of revenue will it be generating in future, sir? Yeah. So it all depends on the agreement which we are — which we have signed earlier on the NIP product and we are awaiting the MA registration from the same.
So these MAs will totally — the revenue will depend on our marketing partner and normally, we expect the revenue to start as we mentioned in the first-quarter of ’25. And we have projected us quite a good amount from the product we are — our expectation is pretty good. And we have already given some guidance on the overall agreement of which we have done the MA product. So definitely the capex is two times we are expecting.
I think just to on the call, when you have a capex in a pharmaceutical company, it takes about 1.5 years to two years for the capex to complete and the facility to be qualified. And because we are signing these agreements and we have committed — we have guaranteed projections in most of our agreements.
We are building capacities to be able to take care of 100% of whatever has been committed by us and for-sale, the quantities which we have committed to sell are applied to our partners and the partners are committed to take so it won’t be you know we won’t start — we won’t start getting the return on investment from day-one of having completed this facilities.
These facilities are likely to be in the next two, three years. However, these products are the NIP high-margin products and have generated a lot of traction and interest amongst different clients and partners. And in fact, in the next few quarters, one specific thing I can say is that these partners would also start hiring the. So if possible, we’ll try to bring that news also to the public domain as well as we can, so that can also be try.
Analyst
Right, sir. And sir, if we also look at the intangible assets under development that has a closing balance of INR25 crores and other intangible assets of INR3 crores. So can you explain the nature of these intangible assets which are under development and what should one read into this?
Anwar S. Daud
So as we have mentioned earlier in earlier calls, we are capitalizing our R&D expenditure of BEE studies and product registration. These are forming the part of the intangible asset. So all filings which have — for which the study is the product which has been developed and the products are being registered are being debited in — in this WIP of intangible assets.
Once the product registration is received, that is the MA received, then we capitalize it and after capitalization in three years, they are organized. So these INR33 crores represents the products which have been developed. These studies have been incurred on these various products of NIC and oral and the filing which has been done, the filing phase as mentioned in the earlier call, the DCP filing of all over Europe as well as a specific filing which are being done. These are capitalized under CWIC of Defiance
Analyst
Sir, currently the expenses relating to R&D are not going through the P&L.
Anwar S. Daud
No, the regular expenses of the R&D is going to the P&L. Only the two expenses which I mentioned earlier, the studies and the filing field are not going to yet. And just what’s — how much are we spending on the ethical marketing part of that for the drug for which we have fight that. So what are we spending on the marketing front? Marketing is yet to start. Once the MA is received, as Dr. Daud mentioned, then the marketing will start. On an average, we have got our marketing as of date, ROW and other emerging marketing team there. Other marketing,
I think the regulated market is being looked up by the regulatory marketing head as a big part of this business is in Europe and it’s a B2B play, we are not in the market on our own with our distributors as yet. So we use the normal marketing tool like meeting our clients at our level and regulatory discussions are being held. I don’t think it requires marketing budget because the directors are involved in the marketing and the negotiation and out-licensing of various products.
That’s number-one. We do have plans to strengthen our marketing for emerging markets and ROW market sure and some very interesting regulated market for which we have recruited some — we have strengthened the team, we are in the process and we have done some made some efforts this year. So where we intend to have our own brands in the market to — and appoint our own distributors and be there with our own products.
That’s why I said in the beginning, the strategy is to sign even in Europe, sign agreements where they are not exclusively the dossiers or the product is not being exclusively uploaded to any partner, we have retained the right to be in the market and related by ourselves as well.
Analyst
Yes, I will read yes what you said, did not read it completely. Sir, can you give us what is our current rating as of now and what are our current majority for this year? We have, I think so INR40 crore of debt long-term debt.
Anwar S. Daud
No, we are rated with care and equity. It is a BBB stable.
Analyst
And what is our current maturity for this year, how much — what part of the loan is repayable?
Anwar S. Daud
See, normally the INR15 crores to INR18 crores has been matured every year or the repay, the capital requirement is there?
Analyst
We have closing balance of INR40 crore under non-current liability. So as of 30th September, how much is for the second-half H2?
Anwar S. Daud
See, the term-loan part, we have taken some additional loans on that part has been disbursed. Another part will be yet to be disbursed. And apart from that, certain sections are in moratorium. See, but in a summary form — in a summary form, normally we pay to the banker, repay the — to the extent of INR15 crore to INR18 crores annually.
Analyst
Okay. And last question, sir, when we see or it is good that our revenues have grown year-on-year as well as quarter-on-quarter, but commensurate to that our other expenses, employee costs cost and the finance cost, everything has moved up, thereby our PBT has remained lower if we take the year-on-year number. So what explains this lower PBT for — for September ’23 and September ’24?
Zulfiquar Kamal
Yeah. So as mentioned earlier by our MD Dr. Daud, all our expenses related to product development, the capacity building, taking process validation batches in the facility and validation of the facility. All these expenditures are now being. So this is — and we have got everything ready. Our regulated team is in place for the European market and the regulated market. So these expenditures are already being done along with the capex and the filing. So all these three expenses go hand-in-hand.
Unless and until we complete the whole circle of filing, till that we have to spend all expenditures and we have completed all there — all of that. Similarly, interest cost has increased because of the term-loan and completion of the new facility, which is under-construction and will be completed by March-end. So all these has an impact on the overall equity increase in expenditure, but the good part is the overall operational expenses has remained constant, still very stabilized. But these increase of expenses which have — the revenue for which will come in — which will be realizing in the coming years, the expenditure already will incurred this year — till this year.
Analyst
And last point before I join the queue, sir, you mentioned that H2 will be bigger than H1 and the proportionate will be the first half is 40% and the second-half is 60%.
Anwar S. Daud
Yeah, just to correct you, we mentioned that traditionally the company has 55% or 60% of the business in the second-half. We’ve just given you something which is — I give you — yeah, it’s a guidance. This is what the company has normally done. I also said that as the company’s regulated market business and the different product that it is introducing actually start yielding a return, we expect that this kind of staggering would actually level out in the long-run or in the medium run.
Analyst
Correct. And for the profitability part, sir, are we confident we will be able to match or grow higher than last year reported number?
Anwar S. Daud
Yes, sir. I will do a lot of come again, sir. I missed your last point. If we were not confident, we wouldn’t have done it. We are confident that we have the products. Those are — there have been filing and our confidence has increased because we have several agreements now from very well-established players in Europe who have done due-diligence on the, the facilities, the people and the intellectual committee that we have on the basis of which they have signed agreements and given the initial or the second milestone out-licensing fees to us and that you can check if you see the out-licensing fees and the increase of those, the share of the out-licensing fee coming in inside the company so there is a indirect validation of our confidence as well.
Analyst
Okay. Thank you. Thank you, sir. If I have anything for follow-up, I will join the queue. Thank you all.
Operator
Thank you very much. [Operator Instructions] Next follow-up question is from the line of Rohit from iThought PMS. Please go ahead.
Rohit Balakrishnan
Thank you for giving me an opportunity again. Sir, sir, one clarification I wanted to you said this year 10% growth and EBITDA, you said 14%. This is the margin you’re saying or this is the growth on-top of last year. Just wanted to be clear.
Anwar S. Daud
So I think, Rohit, what we are thinking is last year EBITDA was about INR46 crores. So this year, if we do the 10% revenue guidance, let’s say around INR400 crores if we do, I think the EBITDA will increase about 10% to 15% over the last year also and then margin will also come around I think 14% or so, EBITDA margin would be 14% or so if we can do the revenue number, 10% revenue growth, right?
Rohit Balakrishnan
Which you are saying, saying including the other income or this is without the other income?
Anwar S. Daud
Without other income, this is only the total core revenue, total — total income. Total revenue with.
Rohit Balakrishnan
Yeah. This is the total income. So this was also to our other income, right?
Anwar S. Daud
Yeah, yeah. Include the other income
Rohit Balakrishnan
Okay. So that was one sir. And sir, Mr. Daud, you had mentioned that, sir that I mean, sir, we have introduced lot of — we have filed a lot of registrations, filings for our products in the markets as well as unregulated markets also. So sir, in the last maybe 12 months or maybe 12, 18 months, have you seen any change in your product mix, any newer products sort of contributing a lot? And if you can call out any anything on that part that will be really useful.
Anwar S. Daud
Yes, yes. So we have given you — I actually earlier talked about our NIP and OTF segment, including licensing fees, collectively contributing 21.6% of total revenue in H1 of financial year ’25, which is up from 14% in H1 ’24, right? So you can see the whole thing creeping upwards all-the-time. And if you see the last eight or nine quarters, you’ll see that effect as well. But as the registrations are coming in, there is a traction from this kind of business and it’s impacting the overall performance of the company as well.
Rohit Balakrishnan
Right. So in H1, what was our improvement from the semi-licensing?
Anwar S. Daud
Yeah, we had, let’s say in H1 combined, we had INR1.5 crores to INR2 crores of licensing income.
Rohit Balakrishnan
Okay.
Anwar S. Daud
So from NIP plus OTF, I think — or sorry, I’m mistaken, it’s about INR3 crores of licensing increase, OTF plus NIP combined. Second-half, we are expecting a little bit more to come in because some milestones are coming up.
Rohit Balakrishnan
So sorry. So you said INR3 crores in H1 and you are expecting it to increase in H2, right?
Anwar S. Daud
Yeah, increasing it to — expecting it to increase in H2.
Rohit Balakrishnan
I’m sorry, just one more question on this. So this income that we report or record, is it — when is it recorded? Is it in savings or is it in like our operating savings or is it part of other income?
Anwar S. Daud
Other operating income, So actually how we are reporting it, is we report a total operating income, that is the core revenue, which is basically revenue from operations that is the sale income and then other operating income. The other operating income is the licensing fees and some export incentives. Then there is the other income, which is effect of currency, etcetera, which is outside the core revenue and then that combines to become the total income.
So I think the number you will see in the financials, the financials that are uploaded, if you see there are two heads, which is revenue from operations and other income. So the revenue from operations has the licensing fees and sale both inside. Other income is effect of, I think currency, etc
Rohit Balakrishnan
Got it. Okay, understood. Okay. And sir, any comments on some of the promising NIPs that you had talked about in the last few con-calls, whether it is Pantry or?
Anwar S. Daud
The last stages of submission, we hopefully we are expecting some good results in the coming two quarters.
Rohit Balakrishnan
Sorry can you repeat that point, the name of the product? I didn’t hear that.
Anwar S. Daud
One LIP and one oral film are very interesting from the point-of-view of the large market size and you know expected contribution to revenue as well as profitability and we are in the final stages. So we are expecting some good news in the next two quarters because they are in the final stages of the submission.
Rohit Balakrishnan
Okay. And sir, just one question. In terms of this con-call, so we are following a cadence of half yearly or will you do it quarterly? Just wanted to understand that.
Anwar S. Daud
So I think, Rohit, this year, we — the first-quarter we decided to have a plant visit. We are targeting half yearly calls because I think at this point, we are still in the phase of getting the RMAs and it’s the waiting period as such. So we are thinking that right now half yearly would be well. I think from next year, if we think that there is more information to be given, then quarterly is what we will start again.
Rohit Balakrishnan
Sure. Sure. Thank you so much. All the very best for the coming years.
Operator
Thank you very much. As there are no further questions, I’ll now hand the conference over to the management for closing comments.
Anwar S. Daud
Thank you. We’ll try to address all your queries. Have any remaining questions, please feel free-to reach-out to our Investor Relations agent, Go India Advisor or our Investor Relations in charge. Zain Daud Both will be happy to assist you. And thank you once again and have a great year.
Operator
[Operator Closing Remarks]