Entero Healthcare Solutions Limited — Q4 FY26

Entero Healthcare Solutions Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=hWKhdwWCT9E Published: 3 weeks ago

0:00 Ladies and gentlemen, good day and welcome to the Q4 and FI26 earnings conference call of Entro Healthcare 0:08 8 seconds Solutions Limited hosted by DA Capital Advisor Limited. 0:13 13 seconds As a reminder, all participant lines will be in the listenon mode and there will be an opportunity for you to ask questions after the presentation concludes. 0:23 23 seconds Should you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. 0:33 33 seconds Please note that this conference call has been recorded. 0:37 37 seconds Before we proceed, this conference call may contain forward-looking statements about the company which are based on the 0:44 44 seconds belief, opinions and expectations of the company as on date of this call. 0:50 50 seconds These statements are not the guarantees of future performance and involve risk and uncertainties that are difficult to predict. 0:58 58 seconds I now hand the conference over to Mr. 1:00 1 minute Natanwal from DAM Capital Advisor. Thank you and over to you sir. 1:05 1 minute, 5 seconds Thank you. Hi, good morning everyone and a very warm welcome to Entro Healthcare Solutions Q4 F26 earnings call hosted by 1:12 1 minute, 12 seconds Dam Capital Advisor Limited. On the call today we have uh representing Interero Healthcare Solution uh Mr. Prabhat 1:19 1 minute, 19 seconds Agarwal managing director and CEO and Mr. Balakrishna Natisan Koshik our group CFO. I will hand over the call to the 1:27 1 minute, 27 seconds management team to make the opening comments and they'll open the floor for questions. Uh please go ahead sir. 1:36 1 minute, 36 seconds Good afternoon everyone and thank you for joining our earnings conference call to discuss the performance of quarter 4 financial year 26 and the full year. I'm joined by Mr. 1:49 1 minute, 49 seconds Balakrishn Koshik group CFO and SGA our investor relations advisers on the call. 1:57 1 minute, 57 seconds I hope everyone had an opportunity to go through the financial results and investor presentation which are uploaded 2:04 2 minutes, 4 seconds on the stock exchanges as well as on our company's website. 2:09 2 minutes, 9 seconds I'll start with the performance update of the full year followed by quarter update following which I will 2:17 2 minutes, 17 seconds cover guidance for financial year 2027 and provide updates on the strategic initiative and operational improvement efforts in the organization. 2:28 2 minutes, 28 seconds Let me begin by first reminding ourselves of the vision we have set for our company. We started this company 8 2:35 2 minutes, 35 seconds years ago with a vision to create a scalable, comprehensive and integrated healthcare distribution platform which 2:44 2 minutes, 44 seconds can add value to the entire healthcare ecosystem. 2:48 2 minutes, 48 seconds Currently, the healthcare supply chain industry sized over 33 billion US is extremely fragmented 2:56 2 minutes, 56 seconds which presents a massive opportunity for consolidating the space through use of technology and scale sorry technology 3:04 3 minutes, 4 seconds and scaleled benefits along with capitalizing on available M&A opportunities. 3:12 3 minutes, 12 seconds We have been on this journey for almost 8 years now and have made significant strides in creating a pan India 3:18 3 minutes, 18 seconds distribution platform which is today serving more than 100,000 retailies 3:25 3 minutes, 25 seconds that is almost one out out of every 10 pharmacy in India and 3,600 hospitals 3:32 3 minutes, 32 seconds spread over 523 districts of India who get access to one of the largest product portfolio of 97,500 00 SKUs. 3:43 3 minutes, 43 seconds The platform also serves over 3,300 healthcare manufacturers who get wide access market access. 3:52 3 minutes, 52 seconds This year we expanded our presence beyond pharmaceutical to include met especially in the diagnostic and medical device space which are synergistic and 4:01 4 minutes, 1 second broadens and strengthens our platform. 4:07 4 minutes, 7 seconds We believe we are in a unique position to create a very impactful and extremely scalable organization 4:14 4 minutes, 14 seconds that can proudly support the nation's objective of providing quality and reliable healthcare access to a billion plus population in India. 4:25 4 minutes, 25 seconds Now coming to the financial performance summary at the beginning of financial year we set out few financial targets for us and 4:34 4 minutes, 34 seconds I'm pleased to share that we have delivered on each of those parameters first one we guided for revenue growth 4:41 4 minutes, 41 seconds of 30% yearon year on like forlike basis that is growth adjusting for the base impact of revenue recognized on net 4:49 4 minutes, 49 seconds margin basis and dive investment of a subsidiary in line with the guidelines Our fullear 4:56 4 minutes, 56 seconds revenue on like forlike basis grew by 31.5%. 5:02 5 minutes, 2 seconds With topline at INR 6,591 crores we outperform IPM by 1.6 times 5:11 5 minutes, 11 seconds delivering an organic life for life growth of 15.6%. 5:15 5 minutes, 15 seconds The inorganic growth was 16% year on year during the year. Our second parameter for guidance was achieving a beta margin of 4% for the full year. 5:28 5 minutes, 28 seconds Again, I'm pleased to share that we delivered 4% AIA margin which is plus 67 basis points year on year with AIA at INR 266 crores. 5:40 5 minutes, 40 seconds This came on the back of gross margin expansion of 78 basis points yearon year to 10.3% driven by better product mix and production procurement efficiencies. 5:52 5 minutes, 52 seconds Gross profit came in at INR 680 crores up 40% yearon year. Fully year pack 5:59 5 minutes, 59 seconds stood at INR 146 cr with pack margin of 2.2%. 6:05 6 minutes, 5 seconds Pat grew by 36% yearon year. Our third parameter of guidance was operating cash 6:12 6 minutes, 12 seconds flow. We continued to optimize working capital and networking capital days continued to improve on a quarterly basis through the initiatives taken 6:21 6 minutes, 21 seconds during the year. Our optimization efforts especially on inventory and accounts receivable side along with improved AITA margin drove operating 6:30 6 minutes, 30 seconds cash flow of ILR 96.2 cr for the full year. 6:36 6 minutes, 36 seconds There's also a silly improvement in the return ratios. Return on capital employed improved to 14.6% in FY26 from 10.7% in FY25. 6:46 6 minutes, 46 seconds And return on equity increased to 12.5% from 7.7% in FY25. 6:55 6 minutes, 55 seconds Next, moving on to quarterly performance. In line with our full year results, we saw solid growth momentum in 7:01 7 minutes, 1 second quarter 4. Revenue grew 42.6% 6% yearonear with organic growth on like forlike basis at 17.1%. 7:11 7 minutes, 11 seconds And growth led by new acquisitions at 26%. 7:16 7 minutes, 16 seconds Gross margin expanded by 110 basis points to 10.9% during the quarter with gross profit growing by 59% 7:25 7 minutes, 25 seconds yearon year to INR 207 crores. Our AIA margin was at 4.5% 7:33 7 minutes, 33 seconds that is 85 basis points plus yearon year with EITA at INR 86 crores growing by 76%. 7:43 7 minutes, 43 seconds PAT margin was 2.4%. 7:46 7 minutes, 46 seconds PAT grew by 44% yearon year to 45.1 cri on a quarterly basis improved to 18.4% 7:55 7 minutes, 55 seconds from 14.8% in the last quarter. ROE was 16% versus 10.4% in the last quarter. We 8:03 8 minutes, 3 seconds achieved operating cash flow of INR 104.6 crores with net working capital days at 59 days versus 64 days in the previous quarter. 8:15 8 minutes, 15 seconds Now coming to acquisitions as you are aware we have closed seven acquisitions during the year including three in met segment which is an chemistics 8:24 8 minutes, 24 seconds cardopathy and bio technologies. With these acquisitions and existing presence that we had in this segment we have 8:31 8 minutes, 31 seconds built significant scale and presence in the met space. The segment now contributes more than thousand cr in 8:38 8 minutes, 38 seconds annualized revenue for us. We have added scale in the key sub segments of diagnostic reagents and equipments 8:45 8 minutes, 45 seconds cardiology and consumables through these acquisitions. 8:49 8 minutes, 49 seconds Apart from distribution services, we also play the value added commercial role for some of the manufacturers where 8:56 8 minutes, 56 seconds we market and promote the products using our sales and marketing team. 9:01 9 minutes, 1 second We are the we are further forging new partnerships with innovators and global players and expanding our sales and marketing infrastructure in these 9:10 9 minutes, 10 seconds segments. MET distribution is a large and synergistic opportunity and diversifies diversifies our revenue mix 9:18 9 minutes, 18 seconds and strengthens our position in the healthcare distribution platform with wider product offerings. 9:27 9 minutes, 27 seconds Finally, as we close FY26 and move on to next financial year, I reiterate that we have delivered on all parameters of our 9:35 9 minutes, 35 seconds guidance. With optimism and confidence for the next financial year, let me lay out our guidance for FY27. 9:43 9 minutes, 43 seconds We aim for consolidated revenue growth of 23% yearonear excluding any new acquisitions with 5% AITA margins. Our 9:53 9 minutes, 53 seconds focus would be on profitable revenue growth and operational efficiencies to drive margins. We aim to deliver a beta to operating cash flow conversion ratio 10:02 10 minutes, 2 seconds to be at least 50% to ensure sustainable growth path for future. 10:10 10 minutes, 10 seconds With this I close my opening remarks and invite people to ask questions. Thank you. 10:21 10 minutes, 21 seconds Thank you very much. We will now begin with the question and answer session. 10:26 10 minutes, 26 seconds Anyone who wishes to ask a question may press star and one on the touchstone telephone. If you wish to remove 10:34 10 minutes, 34 seconds yourself from the question queue, you may press star and two. Participants, you are requested to use handsets while asking a question. 10:43 10 minutes, 43 seconds Ladies and gentlemen, we will wait for a moment for the question to assemble. 11:07 11 minutes, 7 seconds We will take the first question from the line of Govind Rajan Chalapa from CSIM. Please go ahead. 11:14 11 minutes, 14 seconds Yeah. Hi. Um uh thanks for taking my question. My first question is on the minority interest uh during the fourth quarter. Uh there's been a significant 11:23 11 minutes, 23 seconds jump uh from the third quarter to fourth quarter. uh and you know considering that most of your acquisitions you have 11:30 11 minutes, 30 seconds uh 70 to 80% stake uh the incremental uh minority interest is more than half of the incremental aid during the quarter 11:38 11 minutes, 38 seconds so that somehow doesn't add up could you just explain that yeah sure thank you uh go in in the last 11:48 11 minutes, 48 seconds quarter of uh financial year 26 we had you know an abnormal contribution from one of our subsidiaries you know which 11:56 11 minutes, 56 seconds uh where we have partial stake not full stake and that's the reason you know the the minority interest contribution for 12:02 12 minutes, 2 seconds quarter 4 was you know abnormally high right but over next year it's going to normalize uh the minority interest is 12:10 12 minutes, 10 seconds not likely to be as high as it was there in quarter 4 yeah I mean uh thanks thanks for giving a specific guidance for FI27 12:20 12 minutes, 20 seconds but honestly without knowing what the minority's contribution is going to be it's very hard for us to make sense sense of uh the overall numbers. 12:29 12 minutes, 29 seconds So, so what we can say you know for next year you know you can take around 25 to 27% 12:36 12 minutes, 36 seconds of PAT before minority interest to be contribution from minority interest. 12:41 12 minutes, 41 seconds This quarter the minority interest was almost 38% of our PAT that's going to reduce by 10 to 12% in the next year. So 12:49 12 minutes, 49 seconds you think 25 about 25% being minority interest. Yeah. Okay. 13:00 13 minutes Thank you. We will take the next question from the line of Chintan Shait from Girk Capital. Please go ahead. 13:07 13 minutes, 7 seconds Uh thank you for the opportunity. Am I audible? Hello. Yes. Yes, we can hear you. 13:14 13 minutes, 14 seconds Yeah. Yeah. Hi Praba. Thank you. Thank you for the opportunity and great set of uh numbers. uh just to clarify on the 13:21 13 minutes, 21 seconds growth um you mentioned or openic uh kind of X acquisitions we'll be reporting almost uh 23% to Y growth in 13:30 13 minutes, 30 seconds FI27 uh does that include uh two component one is uh the calendarization of uh of 13:37 13 minutes, 37 seconds the uh acquisitions which which we did this year so basically the thousand cr uh you know perform revenue which we 13:45 13 minutes, 45 seconds acquired this year uh I think we booked around 500 550 50 odd crur. So remaining 13:51 13 minutes, 51 seconds revenue will is included in the 23% growth guidance. Uh is it correct? Understanding right? Yes. Yes. Your time. 14:00 14 minutes Yeah. Okay. And second is uh uh does this uh high growth of organic growth which which we are planning uh which we 14:07 14 minutes, 7 seconds are expecting also includes the expectations of the GLP uh one drug uh you know for the fullear impact of the 14:16 14 minutes, 16 seconds generics u uh and if if you can give some provide some insight into what kind of uh obviously the role you you are 14:25 14 minutes, 25 seconds playing for the other part but any any specific you want to point out on uh how are you looking and uh ensuring that we 14:33 14 minutes, 33 seconds don't lose out on the GLP1 uh in the coming year if you can provide some insight into how you are approaching 14:39 14 minutes, 39 seconds GLP1 as a as a category given it's it's a kind of a big big growth uh driver for for the overall IPM you know uh for 14:48 14 minutes, 48 seconds expectation for the next year right so I you know uh you know our product portfolio is very very wide you 14:56 14 minutes, 56 seconds know GLP forms a small portion of our product portfolio as GLP forms a small portion of overall IPM industry, right? 15:04 15 minutes, 4 seconds But our market share in GLP is higher than our overall market share on uh in India because you know GLP distribution 15:12 15 minutes, 12 seconds is not as widespread as lot of other products are right lot of general medicines are right. So given the fact 15:19 15 minutes, 19 seconds that we have the cold chain facility in uh in all of our all of our warehouses and there are few specific companies doing GLP1 so we would get a 15:28 15 minutes, 28 seconds disproportionate share of uh GLP1 distribution for sure it's built into our you know u inroad guidance. 15:37 15 minutes, 37 seconds Got it. Got it. And um on the uh minority uh you you clarified that but 15:44 15 minutes, 44 seconds um typically uh we take 2 three years right uh to fully consolidate and acquire the remaining stake. uh that 15:52 15 minutes, 52 seconds that uh that level of uh uh you know uh buying out the business will be uh will 15:59 15 minutes, 59 seconds be considered or uh you you you like to continue the structure with uh majority 16:06 16 minutes, 6 seconds ownership but partial minority with the with trial owners. How how should one think about it? 16:14 16 minutes, 14 seconds Right. So you know for every transaction we do or every you know acquisition that we do whether in pharma space or met 16:22 16 minutes, 22 seconds space you know we always have the call option on the remaining of the stake because we clearly lay out the path how we will take full ownership of the 16:30 16 minutes, 30 seconds company. Okay and the timelines valuation multiples everything is predetermined in the first contract itself. So we have a timeline 16:39 16 minutes, 39 seconds to you know we have an option to buy rest of the stake at predetermined valuations and uh on a defined timeline. 16:49 16 minutes, 49 seconds So that option we always have and that timeline is basically 2 three years uh post the acquisition or uh more 16:56 16 minutes, 56 seconds than that uh just just to kind of develop. 17:01 17 minutes, 1 second Yeah. So in in some of the cases it's a threeear period in some cases it could be five years. 17:08 17 minutes, 8 seconds Got it. Got it. And last a bit on my side and I'll jump back in queue quickly. Uh if I look at your uh u pre u 17:16 17 minutes, 16 seconds minority net worth uh you know equity we we uh despite the very strong uh profitability the absolute number seems 17:24 17 minutes, 24 seconds to be flattish or slight dip uh on the network side. Uh if you can elaborate what what went into it uh which resulted 17:32 17 minutes, 32 seconds into flattish network for the year. Uh that that will be the last and I'll jump back. Thank you for more. 17:39 17 minutes, 39 seconds Uh I I'll take that call. Bala here. I'll take that question. 17:44 17 minutes, 44 seconds Uh so basically since uh this year we have entities where we are not 100% shareholders. 17:51 17 minutes, 51 seconds Uh and and the number of entities where we are not 100% has increased. This is basically the impact of the first time 17:57 17 minutes, 57 seconds recognition of put option liability. So typically the uh that that's that's the main reason why you're seeing the net 18:05 18 minutes, 5 seconds worth flattish. The profit moves into my net worth but the impact of the put option liability is bringing it down to 18:13 18 minutes, 13 seconds make it flattish because this is required under India. So this is more an accounting uh thing rather than a pure pure uh uh movement of net worth. 18:24 18 minutes, 24 seconds Okay. Okay. So okay I I'll jump back into Yeah. Thank you. 18:32 18 minutes, 32 seconds Thank you. Before we take the next question, ladies and gentlemen, in order to ensure that the management will be 18:39 18 minutes, 39 seconds able to address all the questions from the participants in the question queue, we request that you kindly limit your questions to two per participants. If 18:48 18 minutes, 48 seconds you have a follow-up question, please rejoin the queue. Again, we will take the next question from the line of Akshhat Ma from Seven Rivers Holding. 18:56 18 minutes, 56 seconds Please go ahead. 18:57 18 minutes, 57 seconds Hello, sir. Thank you for the opportunity. My first question was that if you can help us break up the crazy revenue growth in five to different markets, what will be the key driver? 19:07 19 minutes, 7 seconds How will you kind of achieve that? Can help us with that? And secondly, on the same note, the crazy% revenue growth 19:14 19 minutes, 14 seconds seems to be a bit low given that you know 1,000 crores of revenue is just going to come from the tech that we've done as a full year. So how should we 19:22 19 minutes, 22 seconds kind of look at that right? 19:27 19 minutes, 27 seconds So you know 23% revenue guidance basically builds on two three things. 19:32 19 minutes, 32 seconds One is of course the calendarization impact of the acquisitions done during the last year right and the second is the organic growth right. Uh while 19:41 19 minutes, 41 seconds calculating the organic growth we have also taken down some business on uh you know on a net revenue margin basis also. 19:48 19 minutes, 48 seconds You know there are certain businesses that we have added where we are only recognizing the net revenue. Okay. So that has an impact on overall revenue 19:57 19 minutes, 57 seconds growth for next year. And also there are certain low margin business that we are giving up you know and we are using the working capital to invest in a more 20:05 20 minutes, 5 seconds profitable or more higher uh return on invest in return on in investment generating assets. So we have we have 20:13 20 minutes, 13 seconds factored all this in while giving the revenue growth guidance of 23%. 20:19 20 minutes, 19 seconds And sir on the margin side margin side also you know we have given 5% uh a beta margins for next year you 20:27 20 minutes, 27 seconds know that factors in you know the contribution from metad that factors in the you know operating leverage that 20:34 20 minutes, 34 seconds factors in certain businesses where we are low margin businesses that we are giving up. So this is the net margin 20:42 20 minutes, 42 seconds guidance for next year after considering all these impacts. 20:46 20 minutes, 46 seconds Okay. Uh my next question is about the working capital cycle. So you've seen some dips in the working capital cycle but again I on on the face of it seems 20:55 20 minutes, 55 seconds like that majorly being driven by the payable cycle actually going up rather than inventory or the payables coming out. I mean how should we look at this in FI27? 21:06 21 minutes, 6 seconds Uh and how sustainable is this number uh at the end of FI? 21:12 21 minutes, 12 seconds So you know the payables increase is mainly contributed by higher met contribution you know MET the payment cycle is not like 7 and 21 days as in 21:21 21 minutes, 21 seconds pharma you know there the you know the credit provided by all these companies are much higher as compared to I would 21:28 21 minutes, 28 seconds say pharma side right so that's the reason why you are seeing a higher payable days right going forward for 21:36 21 minutes, 36 seconds next year the guidance that I have given is you know that whatever AITA we generate at least 50% % will get converted to cash flow or operating cash 21:45 21 minutes, 45 seconds flow. So that includes both the margin impact and also working capital rationalization. 21:51 21 minutes, 51 seconds So my my exact question was that will we see kind of a working capital you know draw down because you know we we haven't 21:58 21 minutes, 58 seconds yet seen the full year impact of the acquisitions that full year revenue impact of acquisition that you've done and uh our plan is not to have you know 22:06 22 minutes, 6 seconds too many acquisitions in FI 27. So will that have an impact on the overall working capital cycle in FI27? 22:13 22 minutes, 13 seconds So if you if you look at you know my this year quarter revenue itself is more than 1,900 crores and if you annualize 22:20 22 minutes, 20 seconds for next year you know uh the annualized number itself is close to 8,000 crores right? Yeah. 22:28 22 minutes, 28 seconds So I have already built in most of the working capital in this quarter itself. 22:33 22 minutes, 33 seconds So new unless I our growth rates are much higher than 23% that uh we are guiding for right uh your incremental 22:42 22 minutes, 42 seconds working corporate is not going to be huge because lot of the working capital is already in place uh at end of this year. 22:49 22 minutes, 49 seconds Okay. 22:52 22 minutes, 52 seconds And uh one last question sir what can we expect the tax rate to be in F7? 22:59 22 minutes, 59 seconds So uh we expect it to be in the range of about 22 23% uh for FI27. 23:07 23 minutes, 7 seconds Thank you sir. Welcome back. 23:11 23 minutes, 11 seconds Thank you. We will take the next question from the line of Sudashan Padmaaban from Ask MDPMS. Please go ahead. 23:21 23 minutes, 21 seconds Yeah, thank you for taking my question. 23:23 23 minutes, 23 seconds So my question is on in between uh Sudashan I would request you to please use your handset mode and speak. 23:32 23 minutes, 32 seconds Am I audible now? Yes, you're audible. Please proceed. 23:36 23 minutes, 36 seconds Yeah. Yeah. Uh yeah. So my question is uh you know on your strategy especially you know given that you know we are going to generate good operating cash 23:44 23 minutes, 44 seconds flows going forward. So we have seen a spate of acquisitions in the last three to four or five years. I mean and we are 23:51 23 minutes, 51 seconds at a certain scale at this point of time going forward. One if you can give some color on the magnitude of cash flows 23:58 23 minutes, 58 seconds especially uh magnitude of acquisitions especially given that our minority has insted up to 25% of the you know PBT or you know PAT uh pre-minority. 24:10 24 minutes, 10 seconds The second is uh you know with respect to the quality of acquisitions because we've seen that met is something that we have focused on incrementally what are 24:18 24 minutes, 18 seconds we going to focus differently as compared to what we used to focus in the last four five years. 24:24 24 minutes, 24 seconds Yeah. So you know if you look at my next year guidance I've given a guidance without uh including any new acquisitions right. So we have done a 24:33 24 minutes, 33 seconds lot of you know M&A in last 1 or two years you know so you know for next 6 to 8 months we are only going to focus on 24:40 24 minutes, 40 seconds delivering organic growth because there are lot of opportunities that is available to us given that huge platform that we have built you know and now our 24:49 24 minutes, 49 seconds platform is including not only pharma but also met space in met space we are you know tying up with lot many new 24:56 24 minutes, 56 seconds companies you know whether it's in imaging segment whether it's in you know neuroscychiatry whether it's orthopedics, cardiology, you know, 25:04 25 minutes, 4 seconds multiple new segments. We are you know working with lot of global companies where we can provide them a distribution platform in India. Right? So our job as 25:12 25 minutes, 12 seconds a management is cut out for next year is to focus on lot of organic opportunities that can be built over this platform and that's the reason I have not included in 25:21 25 minutes, 21 seconds the guidance any new acquisitions as of now. But as we say we we we are not you know walking away from looking at any 25:29 25 minutes, 29 seconds new acquisition opportunity. You know if something interesting comes up we would definitely look at it. If it creates value for for the shareholders we would 25:37 25 minutes, 37 seconds definitely look at it and if that happens accordingly we will revise our guidance upwards. 25:45 25 minutes, 45 seconds Sure. Uh and sir with respect to uh you know the uh you know the GLP1 I mean we've seen that this is actually you 25:53 25 minutes, 53 seconds know encouraging to see the scale up happening in the ones that have gone generic. Can you give some color with respect to you know the positive impact 26:01 26 minutes, 1 second it is having on our business and if I take say 2 three years down the line I mean the positive thing is we have made 26:08 26 minutes, 8 seconds entry into medtech where do we see met as proportion of our business you know in terms of uh both sales and AIDA 26:18 26 minutes, 18 seconds so on on revenue side uh you know the meta contribution now given all the acquisition that we have done and now everything we have uh consolidated in 26:26 26 minutes, 26 seconds our revenues use it will be more than 15%. 26:34 26 minutes, 34 seconds And this figure what what would you expect or what would you aspire it to be sir in say 2 3 years it can go up to 20%. 26:43 26 minutes, 43 seconds See pharma will still remain a core part of our business right because that's where we have massive scale as well method is a synergistic opportunity and 26:52 26 minutes, 52 seconds if you look at the the the industry size of method and compare it with with the industry size of pharma this is what the 27:00 27 minutes ratio is approximately sure and I would assume that the you know impact on hida would be higher 27:07 27 minutes, 7 seconds given that metically has about 50% to higher you know 100% the kind of margins that we make on the farmer side. 27:15 27 minutes, 15 seconds Yes. And the reason why you know me the margins are higher than pharma is because we play a more commercial role 27:22 27 minutes, 22 seconds in in those contracts where we are also responsible for generating demand and sales for the companies and that's why 27:29 27 minutes, 29 seconds you know we end up uh enjoying better margins. 27:33 27 minutes, 33 seconds Sure. Sir uh one final thing before I join back is your view on you know the GLP1s. How do you see this uh you know positively impacting you know the 27:42 27 minutes, 42 seconds sorry to interrupt in between Sudaran I would request you to please rejoin the queue again for more questions. I think I will answer the GLP1 because I think 27:50 27 minutes, 50 seconds that's a question from many many analysts on this call or many participants on this call right so GLP1 as we said you know at end of the day 27:58 27 minutes, 58 seconds see we are doing approximately 10 to 12 crores of GLP sales per month okay which is approximately I would say 28:06 28 minutes, 6 seconds let's say 5% of all uh you know GLP value or GLP overall industry Thank 28:17 28 minutes, 17 seconds you. We will take the next question from the line of one Solanki from RSP and Ventures. Please go ahead. 28:26 28 minutes, 26 seconds Uh hi uh good morning. Uh my question is uh on the finance course as last also in 28:33 28 minutes, 33 seconds last call Mr. Prabhad mentioned that the finance cost will continue rise and also in this quarter also uh like it is 28:42 28 minutes, 42 seconds increased very well and as you are not going to uh acquire new acquisitions uh 28:48 28 minutes, 48 seconds I said I think uh the finance cost will come down sequentially in FI27 is my understanding correct? 28:57 28 minutes, 57 seconds Uh this is Bala here once. Uh so we we expect finance cost to remain relatively stable and then come down uh in future. 29:09 29 minutes, 9 seconds So because we we in the earlier years we had the IPO funds which were also uh parked pending investment into 29:17 29 minutes, 17 seconds acquisitions which has happened in the last year. Uh so that's the reason you see the higher interest cost in this 29:24 29 minutes, 24 seconds year. So like you rightly mentioned this will sequentially come down over the next uh couple of years. It's expected 29:31 29 minutes, 31 seconds to remain stable in the in the in the near term maybe in the next couple of quarters and then you'll see some reduction coming through. 29:39 29 minutes, 39 seconds Uh okay and the second question is on the depreciation depreciation is increased sequentially appro 50%. So is 29:46 29 minutes, 46 seconds it due to the new acquisitions we have done in the last two quarters or what? 29:52 29 minutes, 52 seconds Uh you are right the depreciation has increased because in the met business uh is slightly different from your typical 29:58 29 minutes, 58 seconds uh pharma distribution business where uh the the there will be assets uh that that will be placed at customer levels 30:06 30 minutes, 6 seconds as well and that's that's the reason why you're seeing a higher depreciation. 30:12 30 minutes, 12 seconds Okay. So, so these depreciation is continue to be in this level and maybe increase if we acquire new metric acquisition in next year. 30:22 30 minutes, 22 seconds Yeah. All not all metric you know business has this depreciation component specifically I would say in the uh IBD 30:30 30 minutes, 30 seconds segment of metadatal model where we are putting our machines in the lab you know against a fiveyear 30:39 30 minutes, 39 seconds uh you know revenue contract with them that those machines we are depreciating right so on other parts of business like cardiology and others uh you know we 30:48 30 minutes, 48 seconds don't have much of a depreciating machines Okay. Uh that's from myself and thank you. 30:59 30 minutes, 59 seconds We will take the next question from the lineup. Adita Chedda from Incred Asset Management. Please go ahead. 31:07 31 minutes, 7 seconds Uh hi, thank you for the opportunity. Uh so my question is on the working capital which is as a percentage of sales it has been in the range of 20 to 22%. 31:17 31 minutes, 17 seconds So what is your outlook on the best operating efficiency that you can have in this area? Uh so some math that I did 31:25 31 minutes, 25 seconds is that for the incremental sales that is that we have we will need an additional 300 crores of working capital versus an AITA of 400 crores that would 31:34 31 minutes, 34 seconds leave leave us with 100 crores of OCF which implies a 25% OCF to AITA conversion rate. So whether we expect this working capital as a percentage sales to come down directionally. 31:47 31 minutes, 47 seconds No, so what we are comparing is what you are comparing is year to year but compared with quarter 4 to next year 31:54 31 minutes, 54 seconds numbers right my quarter 4 already has a working capital investment of almost what you know if you annualize 1900 cr 32:03 32 minutes, 3 seconds of revenue 7600 7600 crores uh revenue worth of working capital is already there in the balance sheet right so we are looking at what 32:12 32 minutes, 12 seconds you know at the revenue guidance this is only 500 crores plus overfold which is highly you know 50 60 crores. 32:24 32 minutes, 24 seconds Got it. So on a reported basis for next year this ratio will come down which is working capital as a percentage of sales. 32:32 32 minutes, 32 seconds Yes. I mean incremental working capital as in uh percentage of incremental revenue. 32:38 32 minutes, 38 seconds Right. Uh my next question was about the acquisitions that we do. Uh what are the typical valuations that we pay for uh the valuations that we do? 32:50 32 minutes, 50 seconds The same that we have always uh said before which is five to seven times of enterprise value to aid. 32:59 32 minutes, 59 seconds Got it. Thank you. Thank you. 33:07 33 minutes, 7 seconds Going to take the next question from the line of Siddhart Nandi from CWC. Please go ahead. 33:13 33 minutes, 13 seconds Hi, thanks for the opportunity. Just wanted to understand you'd mentioned about certain global customers whom you are distributing products for in India. 33:23 33 minutes, 23 seconds Given uh given the current uh Middle East crisis, are you seeing a challenge uh either on pricing or on availability 33:32 33 minutes, 32 seconds for this and uh and how do you see that playing out especially say in in the first half of FI27? That was question 33:40 33 minutes, 40 seconds one. Uh question two just a clarification when you mentioned the minority interest uh uh proportion going 33:49 33 minutes, 49 seconds down from 38% to 25% I'm assuming that is uh that is not for the profits right that's for your net worth just just a 33:58 33 minutes, 58 seconds clarification there so I I'll you know try to understand your second question better but the first question that you talked about was 34:06 34 minutes, 6 seconds the global challenges uh from the Middle East conflict you know we are not importing importing a lot of stuff. 34:12 34 minutes, 12 seconds Okay. So even if when we are working with lot of partners, you know, we are working with their local subsidiaries in India. So they are importing the stuff 34:20 34 minutes, 20 seconds and we are doing the distribution and uh commercial role for them. Right? There are but our direct imports from abroad is very small portion of our sales. 34:29 34 minutes, 29 seconds Right? So it's not going to impact you know directly uh anything significant to us 34:36 34 minutes, 36 seconds uh in our business uh plan that we have prepared. But if the whole industry faces a challenge like you know the farmer industry faces challenge or you 34:45 34 minutes, 45 seconds know met industry faces challenge in terms of their own critical imports then we might we will be impacted by that as well. Sure, I appreciate that product. 34:55 34 minutes, 55 seconds What I meant to ask is while you may not be directly importing, if there is an import challenge that say their local subsidiary is facing, are you seeing any 35:03 35 minutes, 3 seconds impact on your business from the local subsidiary not being able to provide products or you know uh anything of that sort or or do you believe that largely you are insulated from from the crisis? 35:15 35 minutes, 15 seconds uh currently largely we are insulated you know to be honest like you look at the last quarter you know the conflict started in end of 35:23 35 minutes, 23 seconds February our numbers for the quarter was good next year next year also we are forecasting good numbers so I don't see 35:30 35 minutes, 30 seconds any significant impact coming from we are largely insulated on this front you know because lot of our business is domestic you know uh our import 35:39 35 minutes, 39 seconds component is very very small in our overall business so we are primarily a domestic player uh issues. 35:50 35 minutes, 50 seconds Sure, I hear you. I'll take the the minority one offline later. Uh just a second question on uh uh the breakdown 35:59 35 minutes, 59 seconds of your 23% growth. if you could give us some color on you know medtech versus pharma and if you could give us some 36:07 36 minutes, 7 seconds color on organic versus uh calendarization uh or in in this case 36:16 36 minutes, 16 seconds and organic will have obviously the three elements calendarization impact is around 11% you 36:23 36 minutes, 23 seconds know and the rest is organic in our 22% uh guidance and uh the growth on pharma 36:30 36 minutes, 30 seconds and metric both are equally you know contributing to the organic growth for next year. 36:36 36 minutes, 36 seconds Okay, thank you. Thanks a lot. 36:41 36 minutes, 41 seconds Thank you. We will take the next question from the line of Shabba from Bman Capital. Please go ahead. 36:49 36 minutes, 49 seconds Hi, good afternoon. Am I audible? Yes. Yes, you are. 36:56 36 minutes, 56 seconds Yeah. Uh so my first question is on uh organic growth. uh I [clears throat] and I asked this question last quarter as 37:03 37 minutes, 3 seconds well. So uh if I were to take a 12 quarter average of your IPM outperformance uh up to Q2 FI26 uh I 37:12 37 minutes, 12 seconds come to a number of 1.9 uh Q3 dipped suddenly to 1.4 before and 37:18 37 minutes, 18 seconds uh when I asked this question uh uh the response was that IPM numbers sometimes are inflated and it's revised onwards 37:26 37 minutes, 26 seconds but what we see is IPM continues uh to be in that 10 10 12% range and 1.4x 37:33 37 minutes, 33 seconds Forex is again the outperformance in Q4 as well. Uh now if I were to think about IPM next year I don't know 10% let's put 37:43 37 minutes, 43 seconds it at 10%. Uh you just mentioned uh to the previous participant that out of 23% 37:50 37 minutes, 50 seconds growth 11 is from calendarization. So if I just deduct that uh 12% uh is 37:57 37 minutes, 57 seconds basically uh the remaining growth. uh if I just add in some benefit because you are reducing some business voluntarily 38:05 38 minutes, 5 seconds uh it'll add to that somehow but maybe like 14 15% is the like for like if I just add back the businesses are 38:12 38 minutes, 12 seconds shutting down so again I'm coming to the 1.4 4 1.5x number. So structurally uh is the outperformance number reset for us 38:21 38 minutes, 21 seconds because of the higher scale and uh because met does not really grow in line with IPM. So you know we should look at it as more like a lesser rate or how should we look at it? 38:33 38 minutes, 33 seconds You are right you know for last two quarters we have seen that IPM growth rate which used to be 7 8% 38:41 38 minutes, 41 seconds has gone to 12%. Okay. And that's why our multiplier has gone down from 1.7 38:48 38 minutes, 48 seconds 1.8 to 1.4. If you look at our organic growth rate for last two quarters also have been in the range of 16 17% as it 38:57 38 minutes, 57 seconds was in earlier years as well right uh or earlier quarters as well but the denominator you know has increased 39:03 39 minutes, 3 seconds significantly you know from 7 to 9% it has gone to now 12% for last two quarters and that's why you know you see 39:10 39 minutes, 10 seconds this 1.4x against 1.7 1.8x tax that we used to have earlier. Okay. 39:16 39 minutes, 16 seconds Now next year you know when your question is very valid that you know even if you know let's say elasticity grows at 12% why are we forecasting only 39:25 39 minutes, 25 seconds 12% organic growth. Okay. Right. And the answer to that is the one that I told before that there are certain businesses 39:32 39 minutes, 32 seconds that we are giving up because you know they are not generating very high ROI for us and life for like in in certain businesses that we are taking up on a 39:41 39 minutes, 41 seconds net margin basis. Okay. So like to like growth is actually around 15%. You know which is again coming back to 1.5 times 39:49 39 minutes, 49 seconds of industry growth rate. But revenue recognized is is lower in our uh in our 39:56 39 minutes, 56 seconds uh financials because of the accounting treatment. Sorry to interrupt in between. Uh Mr. 40:06 40 minutes, 6 seconds Shbam before we proceed with the next question I would request you to please use your handset mode and speak and please sub to line when not speaking to 40:14 40 minutes, 14 seconds avoid the background disturbance. Now you may proceed with the question. Is is this clearer? Yes sir, this is please proceed. 40:22 40 minutes, 22 seconds Great. My second question is again on minority interest but I'll ask it in a different way. Uh so uh sir uh the first 40:31 40 minutes, 31 seconds time you were asked that question in this call uh you responded that there was abnormal uh profits in one subsidiary where it's probably close to 40:40 40 minutes, 40 seconds 50 60% I'm not sure but the minority interest hence from that one subsidiary increased. My counter point or response 40:47 40 minutes, 47 seconds to that to you is wouldn't that also have hence driven your a lot of your Aida margin expansion uh quarter on 40:55 40 minutes, 55 seconds quarter right so so let's say there is a subsidiary where you are let's say 55 or 60% 41:03 41 minutes, 3 seconds interest and let's say that's done really well right and uh in terms of margins that has been consolidated fully 41:10 41 minutes, 10 seconds in your numbers so Aida has taken the benefit EIT there is a benefit PBD there is a benefit pad there is a benefit but then it gets leaked out to uh 41:19 41 minutes, 19 seconds non-controlling interests right so when you say so now number one is that the case is is is then the right number for 41:27 41 minutes, 27 seconds AIDA margin 4.5 not the case if this was an abnormal case and then the second part to that is if we should expect a reduction in the run rate of minority 41:36 41 minutes, 36 seconds interest uh in the incremental quarters wouldn't that hence be a headwind to your margins because it helped your margins in Q4 I am just trying to 41:44 41 minutes, 44 seconds understand No. So you know the next year Hello. Yes sir. 41:52 41 minutes, 52 seconds I quarter four aida margins was 4.5 right while for next year the guidance I'm giving is 5%. Right. So definitely 42:00 42 minutes there's a much higher margin in next year that we are projecting with this uh this year right. So on overall margin 42:08 42 minutes, 8 seconds basis I'm revising my guidance upwards not reducing right now. The reason I told you was the that you know the 42:16 42 minutes, 16 seconds minority interest was abnormally higher in one subsidiary because there were certain sales that were prepawned by the customer you know. So the customer we 42:24 42 minutes, 24 seconds were planning for that sales in quarter four uh quarter one of this year but the customer requested for those equipments in quarter uh four itself because the 42:32 42 minutes, 32 seconds government project uh uh you know was executed before time. So that's the reason otherwise there's no abnormal as 42:40 42 minutes, 40 seconds such and the and the margin guidance that I've given is not only meta there are a lot of other factors on margin improvement there are certain businesses 42:48 42 minutes, 48 seconds which we are giving up because of you know low margin that also adds to the margin uplift you know there are a lot of organic businesses that we are 42:56 42 minutes, 56 seconds building in the company on metic space so that's all our high margin contribution businesses right there are operating leverage coming again 23% 43:04 43 minutes, 4 seconds growth we are talking about so operating leverage is also So contributing. So there are many factors which is going to impact and keep our margin another 50 43:13 43 minutes, 13 seconds basis points higher than what it was in quarter 4. Thanks a lot sir. All the best. 43:21 43 minutes, 21 seconds Thank you. 43:23 43 minutes, 23 seconds Thank you. We will take the next question from the line of Deva Aaranwal from PCOM family office. Please go ahead. 43:32 43 minutes, 32 seconds Yeah. Hi sir. Thanks for taking my question. Am I audible? 43:35 43 minutes, 35 seconds Yes. Yeah. So firstly I just wanted to know uh so currently I believe we have around four met companies. So uh is the 43:43 43 minutes, 43 seconds target for thousand cr revenue achievable from these companies or will we need some additions in this segment? 43:50 43 minutes, 50 seconds So thousand crores is just based on what we have today. What we are delivering today you know we don't need more companies to take it to thousand,000 is 43:59 43 minutes, 59 seconds our pace already achieved you know next year with organic growth it will be above,000 gross without adding anything more. 44:10 44 minutes, 10 seconds So uh sir our earlier growth was 30%. So now we are coming down to 23%. 44:15 44 minutes, 15 seconds So because you know last year we did lot of acquisitions also. So in 23% next year 44:22 44 minutes, 22 seconds we are not including any new acquisition right. So last year I think you know uh the new acquisitions contributed almost 44:30 44 minutes, 30 seconds 16% to our growth right next year that component is basically zero. 44:37 44 minutes, 37 seconds So are there limited opportunities available for this met segment acquisition? 44:42 44 minutes, 42 seconds No it's not the question of uh opportunities. opportunities are a lot you know now you know we have already proven that we can you know buy meta 44:51 44 minutes, 51 seconds acquisitions at reasonable price and execute it. So there is no shortage of pipeline but we have to achieve what we have already acquired right. So we need 45:00 45 minutes to build on this we need to spend more time on organically building this business you know optimizing this business going after a lot of 45:07 45 minutes, 7 seconds opportunities that presents itself based on the platform that we have. So today you know lot many global companies are looking at us or tying up with us 45:15 45 minutes, 15 seconds because they know that you know this is a business expertise that we have built over last few years. So we would rather focus our energies on that rather than 45:23 45 minutes, 23 seconds chasing new targets right and lastly if I just wanted to know your train I would request you to please rejoin the queue again. 45:32 45 minutes, 32 seconds Sure as a participant there. 45:36 45 minutes, 36 seconds Thank you. We will take the next question from the line of Venit from Toro Wealth Managers. Please go ahead. 45:44 45 minutes, 44 seconds Hi sir, good afternoon and congratulations for Sorry to interrupt in between. Venate, you're not audible. 45:58 45 minutes, 58 seconds No, you're not audible. Please use your handset and speak. 46:05 46 minutes, 5 seconds A Venita as there is no response I would request you to please the queue again. 46:10 46 minutes, 10 seconds No you're not audible sir. I would request you to please rejoin the queue again. 46:16 46 minutes, 16 seconds Thank you sir. We will take the next question from the line of Kumar Suk from Scientific Investing. Please go ahead. 46:24 46 minutes, 24 seconds Uh hello sir. My question is around uh the acquisitions we have done. uh I'm not looking at exact number but in what 46:32 46 minutes, 32 seconds percentage of these acquisition the key key management persons are still there with us 100% of the acquisition the recent 46:40 46 minutes, 40 seconds acquisitions we are talking about no I mean in last two three years because my understanding is this is a business where the key management person 46:47 46 minutes, 47 seconds is very important you know for the sales and for the collection uh so with that intent my question is there 46:55 46 minutes, 55 seconds so generally you know whenever we are doing an acquisition even if we are doing 100% acquisition you know the the promoters or the selling shareholders 47:04 47 minutes, 4 seconds stay with us for at least one year right that's the contract that uh we negotiate with them right so if you look at our 47:11 47 minutes, 11 seconds earlier acquisitions the ones that we do in did in FY19 2021 some of the promoters have left because you know 47:18 47 minutes, 18 seconds their lockin period is is is over but the recent acquisitions the you know everyone is with us you know because 47:25 47 minutes, 25 seconds they want to continue with us and anyway we have not bought 100% of their stake in the in the acquisition that we have done post uh post IPO right so they all 47:34 47 minutes, 34 seconds they all guys are with us and you know they believe in this ent vision so we are working together and jointly trying to grow business and since they hold a 47:43 47 minutes, 43 seconds part of the stake also there's a skin in the game for them there's an upside available to them uh great sir one related question so 47:51 47 minutes, 51 seconds once some of these promoters leave how do we take care of that relationship building which they had with the organization and second in the acquired 47:58 47 minutes, 58 seconds companies what has been the growth rate of the acquired companies pre-acquisition and postacquisition if you have that data. 48:05 48 minutes, 5 seconds So the first question you know how do we take care of this you know first of all you know even if somebody leaves is only the only the selling shareholder leave 48:13 48 minutes, 13 seconds now the management team stays with us right so you know the sales people the operations people the you know the customer interface people they all stay 48:21 48 minutes, 21 seconds they stay in the company it's only one person or two% that leads the company right so it's not that and by the time we have already had forged the 48:29 48 minutes, 29 seconds relationship ourselves so you know we have you know people in our company who are closely working with these companies at a at a pan India level. So we 48:38 48 minutes, 38 seconds maintain those relationships and carry those relationships even if they exit after after the lockin periods are over. 48:46 48 minutes, 46 seconds Great. And the second question on the pre and post equation growth rates that I will share with you separately. 48:53 48 minutes, 53 seconds Maybe the finance team can you know share with you data because of if I tell you something you know it may not be very accurate. 49:01 49 minutes, 1 second Sure. And the last question is uh given interruption between sorup. I will request you to please rejoin the queue again for more questions. 49:10 49 minutes, 10 seconds Thank you. We will take the next question from the line of Utkashya from Elco Quantum Solutions Private Limited. 49:17 49 minutes, 17 seconds Please go ahead. 49:19 49 minutes, 19 seconds Hi, this is Utkash from IPO Quantum Solutions. uh I actually wanted to understand that if you don't do any 49:27 49 minutes, 27 seconds acquisitions for the foreseeable future your FI28 growth assuming 1.4x 49:35 49 minutes, 35 seconds outperformance versus IPM should be 14 15%. Given that IPM would be 10%. Is that a fair assumption? 49:44 49 minutes, 44 seconds every FY28 guidance I'm not giving you know there are lot of business that we are trying to build in this year which will 49:51 49 minutes, 51 seconds determine the growth rate of FY28 you know there are lot of organic opportunities massive organic opportunities that are available with us 49:59 49 minutes, 59 seconds right so we are working on that so maybe in the second half of the year I I can give you more visibility for FY28 50:07 50 minutes, 7 seconds okay and this interest cost and depreciation that you have in this quarter has gone up is that sustainable is that sustainable number for the next year. 50:16 50 minutes, 16 seconds Interest cost will go up. No, because you know uh we have acquired many entities for which we are paying up you know and we have already finished up the 50:25 50 minutes, 25 seconds uh you know the IPO funds right so that is leading to increase in debt levels or liquidation of the investment that we 50:32 50 minutes, 32 seconds had right so the interest cost will go up for some time you know till the time we pay up all those debt levels 50:39 50 minutes, 39 seconds so what is a number we can work with for the full year FI27 interest cost 50:59 50 minutes, 59 seconds this quarter. How much? 58. 51:06 51 minutes, 6 seconds Uh 17. 51:14 51 minutes, 14 seconds uh why why don't we you know uh you know our financing will give you a uh you know a range 51:22 51 minutes, 22 seconds okay sure thank you we will take the next question 51:30 51 minutes, 30 seconds from the line of Anupam Aarwal from Lucky Investments please go ahead uh thank you for taking my question and congratulations on good numbers sir uh 51:38 51 minutes, 38 seconds just one question a lot of questions have been asked on IDA margin my question will solely be focused ing on gross margins. Uh we've improved about 51:46 51 minutes, 46 seconds 90 basis points for the quarter Y and 80 basis points for the whole year. Uh how are you able to kind of source better 51:54 51 minutes, 54 seconds from the manufacturers and what kind of um better margins you have been able to take from the entire channel? If you can maybe give some idea and color please. 52:04 52 minutes, 4 seconds So why we are able to get a better purchase is just because of our scale you know once you buy so much you know and in those quantities of course you 52:12 52 minutes, 12 seconds can enjoy you know economies of purchasing right so that's number one secondly you know in many places as we 52:20 52 minutes, 20 seconds said we are playing a commercial role you know commercial role means we are also responsible for sales and demand generation in that scenario the gross 52:29 52 minutes, 29 seconds margin that the companies give us is much higher than the gross margin that they would give for a pure fulfillment role. So the impact of you know the 52:38 52 minutes, 38 seconds reason for increasing gross margins is coming from basically these two two reasons. one is you know the scaleled uh you know purchase economies and 52:46 52 minutes, 46 seconds secondly is more commercial role being played when I say more commercial role when I 52:54 52 minutes, 54 seconds say you know in for many companies we are exclusive distributor for the in entire India market right so we are doing end to end work for them you know 53:02 53 minutes, 2 seconds from you know developing the the customer you know you know service 53:09 53 minutes, 9 seconds installation of equipments you know uh uh dist creating the distributor network in the country you know uh launching new 53:18 53 minutes, 18 seconds products. So you know a full full agency model as we say in other countries you know where you have full commercial role 53:25 53 minutes, 25 seconds you are playing once you play a full commercial role you you you would certainly expect much better gross margins than when you would play just a you know demand fulfiller role. 53:36 53 minutes, 36 seconds Understood sir. How much would be the contribution of these third party manufactured products sir? 53:42 53 minutes, 42 seconds So I I would say you know in more than uh 10 to 15% of our sales is coming from 53:49 53 minutes, 49 seconds uh where we are playing a full uh uh you know commercial role and have you seen that contribution increasing sir over the last 3 to four years? 53:59 53 minutes, 59 seconds Yes and that contribution should increase going forward as well because we are targeting such kind of opportunities. Understood. How much 54:06 54 minutes, 6 seconds incremental margins you would be getting sir in these kind of model compared to your uh uh generic distribution model. 54:14 54 minutes, 14 seconds It depends on you know what is the scale potential of of these companies you know uh it's no uniform 54:23 54 minutes, 23 seconds number I didn't give you but it could be at least double of uh normal distribution margin. 54:29 54 minutes, 29 seconds Understood. Uh great sir. Uh just last question in between I would request you to please rejoin the queue again. 54:37 54 minutes, 37 seconds Sure. Thank you. 54:39 54 minutes, 39 seconds Thank you. We will take the next question from the line of Karan Gupta from ACMIL. Please go ahead. 54:48 54 minutes, 48 seconds Yeah. Hi. Uh good afternoon. Am I audible? Yes, you're audible. 54:54 54 minutes, 54 seconds Yeah. So, uh two questions. One on margin, one on working capital side. 55:00 55 minutes uh the gross margin part that you have also mentioned in your AP is in the range of 8 to 15%, is it is the gross 55:08 55 minutes, 8 seconds margin right or uh what sorry uh what you refer to 55:17 55 minutes, 17 seconds uh slide number 20 please just the confirmation uh the 8 to 15% on the distributor side 55:24 55 minutes, 24 seconds uh it is basically the gross margin that you are Yeah. 55:32 55 minutes, 32 seconds Okay. Okay. Okay. So the band we are at the lower uh margin side 9% something. 55:40 55 minutes, 40 seconds uh what it will lead to increase the margin maybe in the 12 to 11 to 12% kind 55:48 55 minutes, 48 seconds of range and what is our uh margin in in uh uh in uh core pharma and met right 55:56 55 minutes, 56 seconds now that's the one question see large part of you know margin expansion the epeta margin expansion 56:04 56 minutes, 4 seconds that I'm talking about for next year also is going to come from gross margin expansion 56:10 56 minutes, 10 seconds [music] 56:10 56 minutes, 10 seconds Mhm. 56:11 56 minutes, 11 seconds DC also if you look at large part of our you know aida margin expansion has come from gross margin expansion itself. 56:18 56 minutes, 18 seconds Okay. Okay. So uh what is the gross margin right now? Core pharma and metic uh if you just say the gross number 56:27 56 minutes, 27 seconds definely you know uh what is the total gross margin for this quarter was 10.9%. Yeah. 56:35 56 minutes, 35 seconds 10 9 and 10 interrupt in between Mr. 56:39 56 minutes, 39 seconds Karan. I will request you to please rejoin the queue again for more questions. 56:46 56 minutes, 46 seconds Thank you. We will take the next question from the line of Barat Fisha from BCS Capital Ideas Limited. Please go ahead. 56:56 56 minutes, 56 seconds Yeah. Hi. Uh thank you. 57:00 57 minutes Uh I just wanted to understand uh what is the uh desired return on capital employed 57:09 57 minutes, 9 seconds that you're looking forward to in sync with that what is the 57:17 57 minutes, 17 seconds likely sustainable growth uh uh because superior ROC will have impact on your 57:26 57 minutes, 26 seconds ability to grow and your growth also will have impact on your ROC uh through 57:32 57 minutes, 32 seconds the operating leggage and therefore can you can you first talk about what in 57:40 57 minutes, 40 seconds your opinion is the desirable ROC and uh when do you see that being achieved 57:48 57 minutes, 48 seconds without diluting capital so uh the reported roi for this quarter 57:55 57 minutes, 55 seconds was 18.4% 4% right and uh with the margin expansion to next year by another half a percent uh from the current 58:04 58 minutes, 4 seconds quarter definitely the OC for next year will exceed 20%. 58:12 58 minutes, 12 seconds Oh uh my question was is that the desirable ROC that you look forward to or in your opinion that is more or less 58:21 58 minutes, 21 seconds in the character of business that you can achieve? 58:25 58 minutes, 25 seconds No, they there if you're asking are there opportunities to increase the ROC beyond 20%. Yes, it is available for sure, right? But it may not happen in uh in maybe next year or next quarter. 58:41 58 minutes, 41 seconds uh what it should be in your opinion is the uh real uh uh competitive advantage 58:49 58 minutes, 49 seconds you bring on the table for you to earn uh 20 22 to 24% ROC I mean at the end of 58:57 58 minutes, 57 seconds the day there is a demand for the product and pure distribution even in consumer businesses we have seen over a 59:04 59 minutes, 4 seconds period of time consumer businesses which were writing on high yadosi through impreg able distribution strength that 59:13 59 minutes, 13 seconds advantage is zero bid. So what really is the core mode in the sustainable advantage which will protect and enhance the return on capital employed? 59:25 59 minutes, 25 seconds So you know you have come to a very you know strategic point what is the mode available you know I tell you the the kind of mode that we have it's very 59:33 59 minutes, 33 seconds difficult for anyone to build you know we have 100,000 customers in India right and we have more than 3,000 companies 59:42 59 minutes, 42 seconds that for which we are the distributors in the country right nobody has that kind of a network so so many customers are there with us because there are so 59:50 59 minutes, 50 seconds many companies products we have available and so many companies are with us because we have so much of customers, right? So, it's a two-way mode, you know, it's a two-way closed loop system. 1:00:01 1 hour, 1 second More companies come to you because you have so much of customers and more customers come to you because you have so many companies, right? So, it's very difficult for anyone to build you know 1:00:10 1 hour, 10 seconds this two-way mode. uh and we have taken like 7 8 years we have done so many 40 50 M&As to build this kind of a mode you 1:00:19 1 hour, 19 seconds know and that gives us a sustainable long-term advantage uh because you know so many companies you know we we do a large part of their 1:00:27 1 hour, 27 seconds business in India you know there's not much of options available outside us the option available is going to you know smaller distributors who can only do a 1:00:36 1 hour, 36 seconds you know a limited role right so the the roses will keep on increasing you know as long as we keep on building 1:00:44 1 hour, 44 seconds this two-way mode and I believe that you know if somebody can forecast four five years down the line that will create a 1:00:52 1 hour, 52 seconds very unique barrier to entry for this business and uh if the retail becomes more and 1:01:00 1 hour, 1 minute more consolidated and institutionalized much like you are institutionalizing 1:01:07 1 hour, 1 minute, 7 seconds the distribution will the equation and the terms of the trade change between the two. 1:01:14 1 hour, 1 minute, 14 seconds Yes. So you know the reason why we have this unique advantage is because the supplier base is also very fragmented and the customer base is also very 1:01:22 1 hour, 1 minute, 22 seconds fragmented. And you are specifically about you know the retail being unorganized in India. You know retail do you see a lot of consolidation happening 1:01:30 1 hour, 1 minute, 30 seconds in retail space? I don't see that because you know India has more than 1 million pharmacy stores. You know the the number of stores that belong to 1:01:38 1 hour, 1 minute, 38 seconds chain stores is hardly 15,000. So still you know 97 98% of store network in 1:01:44 1 hour, 1 minute, 44 seconds India is basically mom and pop and you know even that 1 2% organized retail is happening after 30 40 years you know the 1:01:53 1 hour, 1 minute, 53 seconds biggest store network in India is uh is met plus which is 5 a half thousand and second biggest let's say met sorry first is Apollo second is met plus you know 1:02:02 1 hour, 2 minutes, 2 seconds together they add up to like 10 12,000 stores in the country and they're adding like 500 600 stores every year so you 1:02:08 1 hour, 2 minutes, 8 seconds imagine and then after med plus and uh you know Apollo there's no one having even 500 stores in India right so the 1:02:17 1 hour, 2 minutes, 17 seconds consolidation pace on retail is is you know it's not going to be such that you know the organized chain will start 1:02:24 1 hour, 2 minutes, 24 seconds contributing a large part of India's uh you know pharmacy business pharmacy retailing business 1:02:31 1 hour, 2 minutes, 31 seconds sure and um just one last bit on the other income uh I just wanted clarity 1:02:39 1 hour, 2 minutes, 39 seconds from Bala. Um it seems to swing uh year by year being high in fiscal 25 then 1:02:48 1 hour, 2 minutes, 48 seconds moderating in fiscal 26. So can you highlight uh the source of these other 1:02:55 1 hour, 2 minutes, 55 seconds income which is swinging there was one exceptional income or expense that I'm 1:03:01 1 hour, 3 minutes, 1 second ignoring but uh how is that other income uh behavior? 1:03:07 1 hour, 3 minutes, 7 seconds Yeah. So basically FI25 we had a large other income mainly because we had funds 1:03:14 1 hour, 3 minutes, 14 seconds from the IPO that were there during that were invested during FI25 in uh in in uh deposits mutual funds etc. We've 1:03:23 1 hour, 3 minutes, 23 seconds utilized those funds for acquisitions and for working capital as the purpose for which the IPO was done. So since those funds have now been invested into 1:03:31 1 hour, 3 minutes, 31 seconds the business you don't see it in other income in FI26. 1:03:34 1 hour, 3 minutes, 34 seconds Got it. So what last year is more representative now? 1:03:38 1 hour, 3 minutes, 38 seconds Yes, FI26 is more representative. You're right. Thank you. 1:03:47 1 hour, 3 minutes, 47 seconds Thank you very much ladies and gentlemen. Due to time constraint we will take that as the last question for today. I would now like to hand the 1:03:55 1 hour, 3 minutes, 55 seconds conference over to the management for the closing comments. Thank you and over to you sir. 1:04:02 1 hour, 4 minutes, 2 seconds Thank you everyone for joining this call. I hope I was able to address some of your queries during this call. But if any queries remain unanswered, please 1:04:10 1 hour, 4 minutes, 10 seconds feel free to reach out to our investor relations team. Thank you once again for your support and confidence in the company. Thank you so much. 1:04:19 1 hour, 4 minutes, 19 seconds Thank you members of the management. On behalf of DAM Capital Advisers, we conclude this conference. Thank you all for joining with us today and we will now disconnect your lines. Thank you.