Hester Biosciences Limited (HESTERBIO.NS) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Hester Biosciences Q3 FY '22 Earnings Conference Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Mitesh Shah from ICICI Securities Limited. Thank you, and over to you, sir.

Thanks, Rizyan. Good afternoon, everyone, and welcome to Hester's Q3 and 9 Months FY '22 Earnings Conference Call. We have the senior management, Mr. Rajiv Gandhi, CEO and Managing Director; Ms. Priya Gandhi, Executive Director; and Mr. Nikhil Jhanwar, Chief Financial Officer, participating in this call. I thank the management to give ICICI opportunity to host this call. Over to you, sir.

Yes. Good afternoon. I was just cut off and I just got reconnected. So I hope I have not missed anything. I just heard your last sentence, but good afternoon, everybody. I'm Rajiv Gandhi, CEO, Managing Director, Hester Biosciences and as always, nice to connect with all of you and talk to you about the general functioning of the company. Today, we are here to talk on the third quarter and the cumulative 9-month results for this financial year FY '22. While the press note, which has been published has -- we have tried to be as elaborate as possible. Nonetheless, I would like to just go through a few highlights, and then I would request all of you to ask me whatever questions you have. So for the quarter gone by as well as for the 9 months gone by, as you see the -- on a quarter-to-quarter basis, the revenues have gone up only by 2% and there has been a little -- quite -- there has been a dip in the profit, while on the 9-month level, the revenues have gone up by 16%, and the profit has gone up by 11% to address the low revenue growth and the drop in net profit. Q3 for the financial year FY '21, though it was a COVID year, it was an exceptional quarter for us. In fact, Q3 last year as well as Q4 last year, both were exceptional because they were -- there was a major poultry disease outbreak in the whole country, which led to a spurt of demand for a few poultry vaccines. So on a comparative basis, and this quarter, it has been going on in the normal way. The growth has been normal. Therefore, on a quarter-to-quarter basis, it definitely appears that there has been some -- there is hardly any growth. And talking about the profit in FY '21, due to the COVID period, there was -- and the profitability also was again exceptionally high because at that time, we -- there was no movement of our salespeople. There were no cost adding to the communications travel, et cetera, for the salespeople, though there was a big demand for poultry vaccines. So both combined has an impact on a comparative basis, on a Q3 basis. Another thing which I would like to highlight is that on a -- year-on-year basis, we have always had an additional income in the form of licensing fees as well as services. If you look at our -- this FY '22 Q3 quarter, there has been no license fees, while in the corresponding quarter FY '21, there was a licensing fee of a little over INR 3 crores. And if you look at a 9-month ending period, we had around INR 10 crores of licensing fees and services, while in this year, we have had totally only INR 3.65. So if we look at -- as that is also to be added in the revenues, therefore, it appears that our turnover has gone up by only 2% on a quarter basis. But if you really remove that and if you look at our pure product sales, it is actually up by 9%. And if you look on a 9 monthly basis, it is actually up by 23%. Coming on to the product that is the bifurcation, in our case is vaccines and health products. The growth between the two -- the 2 compared quarters is 0, as I told you. We had an immense big demand during the COVID year in FY '21 for the poultry vaccines which this year, we have been having a normal sale. So on a quarter-to-quarter basis, in Q3, the growth in vaccines is 0. And on a 9 monthly basis, the growth is being shown as 1-6, 16%. But if you see on the health products side, on a quarter-to-quarter, we have grown 42%. And on a 9-month to 9-month basis, we have grown to 49%. So overall, if you would analyze in terms of sales, whereas it does not show that, but there has been some growth as far as sales is concerned. Talking about the profitability as far as the gross profit and the net margins, et cetera, all are concerned, as we are again comparing on a quarter to quarter when last year, the expenses were less and the sales were very high. Therefore, definitely, it has impacted, and it has shown that there is a dip in our profitability and that dip, also on a 9-month basis, is seen because of the cumulative effect seen as last year, the expenses were reasonably less all throughout the year. Talking about the other developments as far as Hester Biosciences is concerned, we have been working on 3 vaccines that is the classical Swine Fever, the Lumpy Skin Disease and the Sheep Pox vaccine, and we hope to launch all these 3 vaccines in the first quarter of the next financial year. All these vaccines are in the final stage of their quality control tests as well as regulatory approvals at this point of time. On the PPR side, I would like to say that the government of India had issued a tender for the buying of PPR vaccine. It was a national tender. We, as Hester Biosciences India, participated in the tender and we were L1, and we have got the contract for the supply for the PPR vaccine for the next 2 years as per the tender and that total quantity would be approximately INR 20 crore doses of vaccines in 2 years' time. Taking price of it a little over INR 1, we could easily say that our sales should be up by around INR 22, INR 20. It would contribute to around INR 20 crores to INR 25 crores of sales in the next 2 years, additional to what we have been doing so far just on the PPR vaccine in itself. The animal health division, we are pushing it, and we are making it grow. We are adding products. We are adding manpower power, we are adding new territories, and we hope to continue grow this division in India at a much faster rate than what the vaccine division will grow because the baseline also for the health products is small as well as the market overall for health products in absolute rupee terms is much, much more bigger than the total market for the vaccines, which are totally being manufactured by us. Talking about our capacity enhancement projects. There are 2 projects that we are currently working on. One is increasing our capacity for the bulk antigen and second is increase the capacity for the fill/finish for the finished vaccine, both these projects are going as per the scheduled plan for completion, for implementation, and we are very confident that by the end of Q4, we would be able to make the first vaccine in this. I think in the press note, we have mentioned by mistake Q2 FY '23 -- okay. I have the wrong note in my hand. By and Q4 and Q3 -- in -- so in this -- sorry, in Q4, we would be able to commercialize both these current expansions. And with this expansion, our quantity would go up by 100% in terms of our capability to make the current vaccine, which we are already manufacturing. Coming to our subsidiaries, Hester Africa, we have received the licenses for the manufacturing. We have taken a few batches. Just 5 days ago, we had the final inspection for allowing us to start the marketing of the vaccine. The inspection has already gone through. We are awaiting the final report. Informally, we have already been told that we would be allowed to start the marketing in Hester Africa. So in the next 4 to 5 days, we should be making the first invoice out of Hester Africa, which would be a big historic event for us. Yes, the sales would slowly build up. It's not that to -- the day we get the permission, it would be a very big build up sales. But we have taken 3 vaccines in production. The batches are ready for sale. One is the PPR vaccine Nigerian strain that is used in Africa. Second is the Newcastle disease vaccine for the poultry. And the third is the CBPP, the full form of a contagious bovine pleuropneumonia vaccine, so that is the third of vaccine. We have taken the batches and hopefully, in the next few days, we should be launching them. Texas Life Science continues to grow in as much proportion as what our health product business is growing because all our products are being reduced over there and being marketed by us in Hester. Coming to Hester Nepal, there has been some progress at Hester Nepal and we are further pushing the progress. The PPR tenders from FAO have just started trickling in, and we are hoping that it would -- by the end of this financial year, we would actually cross -- the turnover that we had in the FY '20, FY '21 was very bad. Because of COVID, there were no tenders, no movement, no flights coming in and out of Kathmandu. And as you're aware, all our vaccines are only shipped through air. There is nothing that is sent by sea. And another interesting thing which I would like to highlight, which probably I might have highlighted in the earlier quarterly call is that OIE, which is the World Animal Health Organization. It is a French organization, OIE. Earlier, it was a French name OIE, but now -- they just use the word OIE, The full form is the World Animal Health Organization. They had put out a tender to create a vaccine bank for PPR vaccine. There were 2 companies that have won the tender. One is us and one is another Moroccan company. That business, too, was to have started in this quarter. Unfortunately, it has not yet started. But if that business starts hopefully in this quarter, we are very hopeful that, that in itself would recover -- make us recover completely out of all the current situation that we are in at this point of time. Talking about Hester Tanzania, our trading entity, the trading entity -- we are working on the trading entity. At the same time, we have acquired 50% straight in another trading entity in Africa wherein we want to transfer all the trading activity that is Thrishool Exim and through there, we will now build up the whole trading activity and the base in itself with Thrishool would be more than INR 4 million because that is what is expected to be done in this year as against the smaller turnover that we earlier had in Hester Tanzania. Hester Thrishool looks very promising, and there are many initiatives in trading that we have embarked on, and we are confident that this will become a very big venture as far as we are concerned. Last but not the least, coming back to Hester India. We have now taken a decision to launch a pet division. This is a new division that would be launched soon. I would just request Priya to talk on this division.

Good afternoon, everyone. So I think in the last press note, we had mentioned that we would be coming up with a pet division. So from that time until right now, there has been some progress at the back end wherein we've started identifying people geographies, products that we want to get into. To begin with, it will mostly the pharmaceutical products and not biological, which is -- I mean, considering Hester's stint has always been biological. But this time, we are doing -- we are taking another -- we are going -- we are taking another approach wherein we start -- first starting with health care products, and then we will slowly move on to vaccines in this particular division. And we are hopeful that we will be launching first few products by the end of this next upcoming quarter, which Q4. And in the next financial year, maybe in the third or the fourth quarter, we would probably have the full range of products that I intend -- that we intend to launch. So, yes, thank you.

So that makes give an overall of all the things happening at Hester. That completes our presentation. Over to all of you for your questions.

[Operator Instructions] The first question is from the line of Ankit Kanodia from Smart Sync Services.

Sir, I have 2 questions. Number one is regarding the COVID vaccine we are preparing. So in our press release also and also in our initial attach, we have mentioned about spectacular growth, which we are expecting that volumes in that. My question was regarding the margins and the returns on those actions compared to what we are doing right now. Will there be any change in that? And how much, for that, if you can give to [ us as ] guidance?

Yes. Thank you for your question. And I would like to apologize that in my briefing, I completely overlooked the COVID-19 vaccine project. Let me just brief you on that project, and I will also answer your question. The current status of the project is that the construction work is going on. There have been a little bit of a delay because a lot is dependent on imported consumables as well as imported equipment and everything to be shipped from Europe has definitely got delayed in their shipment. So we hope that by this -- by the -- by this quarter being ended, we are able to complete the function -- we are able to start working -- complete the construction and by approximately April, May, start doing the trial production. Everything is going on very systematically as far as this project is concerned. We are very confident and we already feel proud that we would be having one of the best BSL-3 facilities in the country once it is ready. Now talking about the business generation from this product. Our facility has been created to produce approximately 7-0, 70 lakh doses of the drug substance for the Covaxin, which will be supplied to Bharat Biotech. And let's presume that we would slowly build up this, we begin with 20 lakhs and then in the next 2, 3 months, we come up with the 70-lakh capacity, and we would supply it to Bharat Biotech. While we are still working on the margins, et cetera for this project, because this currently is -- everything is being worked on at this point of time. As you understand, this agreement with us as well as Bharat Biotech entering into agreements, all has happened due to an emergency situation in the country, and we are all working towards it. But having said that, we are confident that our turnover should definitely shoot up sizably with this project coming through. In terms of profitability, I would like to not address or talk anything on it at this point of time. I would add an appropriate time probably before the next investors' call through a special call or a press briefing, we would definitely give these details.

And my next question was regarding our Tanzania operation, which has just begun. So as far as our channel check, what we are hearing is that there is a lot of problem in the sense that even the government in -- some of the governments, not particularly in Tanzania, in Africa, has delayed their payments. So as in -- when we are entering this space and geography, what would be our mix in terms of government orders and also in terms of private orders? Any guidance you would like to do?

Yes. At the moment, we are focusing on the private market on the trade market because that is something which is always -- we would not want to -- we have not constructed the whole plan just based on any tender business. And some of the vaccines are to be produced for the first time. So they have never even been tendered before. So that is definitely not an approach that we are looking at. We are looking at selling it in the private market, create the demand, create awareness and sell. Once the tender business comes up, we are even hoping to do the tender business. But if at all and whenever it comes up, we will take a call at that point of time on how to supply, how to secure our payment. But currently, we want to take the risk by creating the demand rather than looking or worrying at the tender business, because that's the real long way to go. If you really look at it, any tender business which starts in any country for any particular vaccines, et cetera, it is only in the starting period. And then ultimately, it has to come down within the private sector and to be sold, distributed, manufactured by the private sector. So we would want to start this focus right from the beginning and let us see how it takes us further.

This really helps. One last point, if I may ask, regarding the Covaxin, which we are doing. So is it fair to assume that whatever revenue you may get through that vaccine, it would be -- the bulk of that will happen only in FY '23 and maybe some in FY '24 and then we might not have any revenue from then, assuming that COVID would be history by then?

Yes, the revenues have to be looked only in FY '23, definitely not in FY '22, '23, '24. We all wish, hope and pray that COVID goes away and that the need for the vaccine also goes down because that is what we all wish and pray. But considering that we are manufacturing it and we are giving it as a preventive dose and therefore, the government is also pushed and everybody is pushing for a preventive medication in terms of vaccines. We are also preparing plans on what next to be done with this beautiful facility created by us, how we take it further, what are the other vaccines that we will be manufacturing. This is our path, our gateway to get into human vaccines, but we do not want to dilute our thinking. At this point of time, we have taken up a national responsibility so we are only focusing on the COVID vaccine. Yes, after 2 years, we're sure -- we are pretty sure that in the next 6 months' time, we would have plans. And if COVID continues for any reason, be rest assured, our focus will, at that time, remain only on COVID.

And if the COVID is history by then and -- what would we -- this capacity or this facility will be available for our poultry and animal vaccine or -- so we have to do some CapEx related to that?

We will then, on this facility, it is a BSL-3 facility, our focus ideally would be on human vaccine.

The next question is from the line of Kuntal Shah from Oaklane Capital.

I had just 2 questions. IVRI, [ IHEE ], and a lot of governmental organizations keep licensing technology, what is the plans we have on licensing the technology from government institution and also from third-party commercial institution, considering now we will have that BSL-3, both for animals and humans? And secondly, was this question on what is the breakeven on Hester Africa at which we break even? At what level of sales after we break even at PBT level?

Okay. Answering your first question in terms of technology. Hester, for its animal vaccines, we have bought technology from Indian Veterinary Research Institute. We have also bought technology from other international institutes, et cetera. We are always open and looking at acquiring technology. In fact, we have also acquired the technology to make a new Brucella vaccine, and that technology has been bought also from the government of India for an Indian Council of agricultural research. So even the vaccines, which I just mentioned, classical Swine Fever vaccine, Sheep Pox, Lumpy Skin, all these are bought from Indian Veterinary Research Institute. It is our endeavor that whenever any technology is available, we are one of the first. It is on record. Even if you for and visit any of these institutes, we are the first to pitch to buy their technology. We shall continue that spirit in acquiring new technologies. And wherever BSL-3 is to be used, yes, we will use it. One thing is that, that if you use it as a human, we cannot do it in for animal. If you use it for animal, we cannot use it for human. So we will have to take a call. Our current call is very clear, human. Let time pass by, let us see how things unfold. But for the moment, it's clear on the human side. Coming to your Africa question on the breakeven, I think our breakeven should be at approximately, utilization of around 20% to 25% capacity.

Just one follow-up question on my side. So is there a plan to even license the technology for manufacturing human vaccines?

As I just answered the first question, that we all wish and hope that COVID goes away. But at the same time, if COVID remains, we will continue with making the bulk antigen, the drug substance for Covaxin. If the situation changes, be rest assured that it would be our next endeavor to search what next in human vaccine.

The next question is from the line of Viraj Mahadevia, an individual investor. [Technical Difficulty]

I can't hear you, Viraj.

As there's no response from the current partial, we'll move on to the next. That is from the line of Mithun Aswath from Kivah Advisors.

Yes. You may have already discussed this, but I joined a little bit late. Just wanted to understand when is the Africa unit going to start? And is there any target for your revenues for FY '23 from the Africa business? Number two is also on the Covaxin opportunity. Just wanted to understand in FY '23, I think any targets for that also that you see? And when is that production likely to start? Those were the couple of questions that I had.

I did answer them, but nonetheless, in brief, I will answer it once again. One was the Africa, we have already got the manufacturing license. We would be getting the marketing license in the next few days. So within a week from now, we would start marketing the first 3 vaccines, which we have already produced. In terms of forecast, there were well-defined forecast plans, everything before even the COVID year, then came in COVID. We are a little bit grappling towards on how to redefine the forecasting, the marketing activities in Africa. I do not have a precise answer to give you at this point of time. We are working hard. Let this one quarter go, let us move a little further, then we will firm up things. Because of COVID and many other issues, things have gone a little haywire. But I think given these 3 months' time, we should be able to be a little sure on things. In terms of the Covaxin vaccine drug substance project, we have created a capacity to manufacture 7-0, 70 lakh doses. That should build up slowly from the first 120 lakhs going towards 70 lakhs. Hopefully, by April, May, we should -- May, we should be taking the trial production. And based on that, we'll be taking the commercial production, and that's what it is.

Yes. I'm just trying to understand on the Covaxin opportunity in terms of, for us, revenues for next year, is there anything that we've targeted?

We are in talk with Bharat Biotech. We have yet to firm up the exact revenue model, not that everything is undecided, but the models are yet under definition. So once that happens, by the time we reach the commercial -- the stage of commercial manufacturing, selling, everything would be well defined. As you are aware, this has been happening due to an emergency situation. There is a lot of support that is being given to us by [ Bharat ], by the Department of Biotechnology. Everybody is involved and once there is clarity or more clarity on this, I would definitely give this information to you all as well as to our shareholders.

Yes. So if you just allow me a follow-up. I just want to understand, is the Covaxin opportunity similar in terms of the margins that our vaccine business is giving us? Because we've done a reasonable amount of CapEx, right, for the Covaxin vaccine opportunity as well. So just wanted to get a sense on that.

The margins for any loan licensing agreement, any job work agreement are always going to be less than those margins of a product which we are manufacturing from basic, where we are manufacturing the final project -- product, then we are marketing. So that margins are bound to be lesser than what it would be for our existing vaccine.

Okay, sir. And just one last one. On the animal products business, we've seen that -- I think there's a little bit of maybe a loss in this quarter. So just wanted to understand what is our thought on this? Because I think this was one of the areas where we want to focus and grow quite aggressively. So just wanted some thoughts on that.

In terms of this -- we are talking about the quarter ended 31st December, okay? Is that what you are looking at?

That's right. That's right, sir.

I'll just give it to Nikhil, our CFO, let him address this, and I will address the subjective part.

So as regards the animal health care products, if you see overall for the 9 months, there has been positive profit. As regards the quarter, since there has been increase into the marketing expenses during this period, and to that extent, there is a nominal loss of INR 10 lakh, which has happened in this quarter. So that's the overall scenario, which has happened.

Right. Just, what is the outlook on that business? Because I think there was a quite large focus on that, and that was one of the areas where we are going to see quite a bit of growth.

Yes. Health product is the segment, which would be growing faster than the poultry segment. And we are confident that we will grow this business. We are aggressively spending more. I would not use the word spending wrong word. We are investing more which on the marketing. So on a balance sheet term point, anything that we talk subjectively as investing, it goes in the balance sheet as an expenditure. So we are increasing the field force. We are putting in not many other -- we are adding products, adding people to develop products. So those are the areas which have actually caused for this, but you could just say that this is a very small abrasion, a temporary abrasion. We take it as an irrelevant situation.

Right, sir. And if you don't mind, just one last one in terms of your 2, 3-year outlook. You had mentioned that the domestic business could double in terms of revenues and the Africa business could give you another INR 250 crores. So literally maybe tripling of your revenues over the next 3 years. I just wanted to understand, in terms of CapEx, are we pretty much through for all this, and it is more about sweating the assets? Or to reach that target of, say, INR 750 crores, we would need further CapEx expense? If you could just give some [ traction ].

We have -- the current capital expenditure that we have made at this point of time in increasing the -- as what is shown in our balance -- in our press note, as I have mentioned, to increase our antigen production as well as the fill/finish. This would definitely, first of all, make our capacity multiplied by 2 of what it is at this point of time. With that in place, with Africa coming in place, let's see. We are reasonably aggressive, but the CapEx now required to reach higher milestones like INR 400 crores, INR 500 crores, INR 600 crores. The ratio or the -- I mean, the input-output ratio would definitely be on a very positive side towards the output.

[Operator Instructions] The next question is from the line of Anirudh Shetty from Solidarity Investment Managers.

My first question is I just want to understand the gross profit margin movement. If I look at it quarter-on-quarter and 9 months on 9 months, it's dropped by 11% and 4.7%. Would this be explained primarily due to the product mix, which is health products doing much better than vaccines? Or is there anything else that contributes to this?

I think this -- yes, sorry, not that I think, I'm sure of it, that the margins on vaccines are more than what the margins on the health products are. with the growth of the health products, there could be a little bit squeezing of the margins. But in days to come, if you look at absolute figures, we will still come out to be far ahead. Yes. When -- now our focus, definitely, we would want to keep it on the health products. But on the same time, look at the other opportunities that we are getting in terms of the PPR vaccine being supplied to the government, et cetera, which will again give us a big boost in terms of revenue, et cetera, which, again, we would be having good margins. So I think overall, yes, I do admit that there could be a dip in the margins, et cetera. But over a period of time, I do not think that we should remain disturbed or it should be at a lesser level.

So e average this a little bit -- how was the gross profit margins compared segment? If I just compare vaccines versus health, how do the GP margins compare? And at a larger scale, health is a bit small today, but at a larger scale, how would the EBITDA margin compare for these 2 segments?

Vaccine would be more. Health products would be less.

Okay. Would you be able to quantify it, sir?

I would not have those details with me right now to be able to give so detailed quantifications. I'm sorry about it.

No worries. I'll just move on to the next question. If I just look at your, say, key products, both on the poultry and the large animal vaccine side, if you look at PPR, Brucella, Goat Pox, what I wanted to understand is typically for -- on a per goat basis or per animal basis, how many doses of these vaccines would be required over the life of the animal?

Just a minute. In poultry, in a broiler, the life of the broiler in itself is 6 weeks. And as for the vaccination schedule, one, you can say 2 doses of Newcastle, 2 doses of Gumboro and 1 dose of -- yes, only 2 vaccines. In terms of layers, there are multiple vaccinations to be done in which you have 5 to 7 doses of Newcastle maybe 2, 3 doses of the inactivated Newcastle, then you have the Gumboro, then you have the Marek's Disease vaccine. There are fixed schedules at which these vaccines are given. On the cattle poultry -- sorry, sheep, goat, PPR vaccine normally is given every 2 years, 1 shot every 2 years. Brucella is given once in the lifetime of the animal, to the female calf. So likewise, if you see the vaccine, it depends upon the disease. Like, for example, MMR is taken only once in the life of human being. In Covaxin, we all are running around the third dose, fourth dose. So each vaccine has a different application in the host body. Like, for example, Lumpy Skin Disease that has to be given probably once in a year. So likewise, there are difference for different vaccines.

Got it. Just one final question. I just want to understand the supply chain for the pet animal business a little better. How will the manufacturing be done? Would you be doing it through Texas -- or are we partnering with someone else? And also, how would the distribution work? Are we looking to set up a completely new distribution team for this product? And if you just quantify how many people we're looking to hire for this?

Okay. In terms of manufacturing, we have Texas. We have many other options also. So because pet is, again, a specialized -- very different where the product mix is different, the need is different, everything, Texas is one of the companies which could produce a few. Then there are many other options that we have. In terms of marketing and distribution, it will be a completely separate marketing and distribution setup. Of course, our depots, which are there in Bangalore, in Chandigarh, in Pune, the depots would be the same. But further from there, the distribution, because pet products are not sold through the normal animal health care dealers or the actual user, I mean, so it could be completely different.

Got it. And are we looking to do outsourced manufacturing for pet animals or are we looking to set up a unit?

At the moment, outsource -- sorry, your question is, do we produce for others or we buy from others?

Yes. No, so for the pet animal products, we can use Texas, but for the products that Texas can't do will withe...

No, we will buy from elsewhere. We will not be producing at the moment by ourselves in Hester.

[Operator Instructions] The next question is from the line of Apurva Mehta from A M Investments.

Sir, just wanted to ask what is the amount of CapEx we had done for this -- developing this vaccine facility? Can you quantify that?

Our -- for the Covaxin project, our investment should be approximately INR 60 crores to INR 70 crores.

INR 60 crores to INR 70 crores. Is there any cost overrun in the project? Because we were -- I think we were at INR 40 crores kind of thing, and I think another...

All budgeted that way and there has -- we are looking at still increasing the capacity while it is going on, but there has been no cost overrun or anything of that sort.

Okay. And any more CapEx for next year? Any big CapEx needed? Or we are done with the CapEx program?

For the moment, we are done, but we never know what is in store for us next year. There -- on the animal side, we are more or less done. On the human side, all depends upon how the drug substance demand for Covaxin goes on. Based on that we might even look at getting into a fill/finish for human vaccines or this might continue. So at the moment, the situation is a bit fluid.

Okay. And normally, what will be the payback period for this type of CapEx in a normal circumstances kind of thing if you want to...

In normal circumstances, nobody just produces the drug substance and gives it, but we are looking at a payback period of between 4 to 6 years.

6 years, for our project? This project?

Yes.

Okay. And when we are looking at Hester Africa, which we are going for in a big way, what kind of marketing was trend to -- we'd need? Or what kind of expenses you had to, upfront, do it? And what is your sense of getting -- going into market where you are moving in Africa? So we are easily -- are able -- able going to sell it? Or can you throw some light on that?

Marketing of our vaccines in Africa is definitely going to be a little bit an uphill task. I would not use the word challenging because then that's not the right word. But yes, there are going to be many things that we would have to resolve one by one. You must keep in mind that while our facilities are multipurpose, a facility to produce many vaccines, most of the vaccine that we would be producing are going to be, for the first time, introduced in the African continent. So it's something [ tricky ] today. There was no vaccine, so there was no market, but now we are creating a vaccine that might create a big market. So it's like we are all working towards it. It is a very long-term project that we have taken, but it's not that our returns are going to be delayed, et cetera. There has been good help from the Bill & Melinda Gates Foundation in this project financially. And we are reasonably sure that we will overcome all these hurdles. We will create a marketing setup. We have already appointed distributors in quite a few countries. We have a few salespeople for the moment only in Tanzania. We will start hiring even more people. It's just that we were waiting for getting this approval now that we have got it, now that we are sure on how we are going to take it further, now we will embark on a defined plan.

And we will be launching these 3 products which you have mentioned earlier?

In the next 7 days.

In the next 7 days, okay. And are there any competition for this product from overseas or anything? I think Africa and any manufacturer in Africa, who must be producing other than...

There are a few government labs. There is one private lab in Morocco. There is one private lab in South Africa, but besides that, there is nobody else producing or even marketing any of these products. There are -- none of these vaccines are at the moment, even coming from Europe into Africa. I mean it would be noteworthy for all of you that vaccines in Africa today are sold at anything between 3 to 10x the price at what they are sold in India. It is not our endeavor to exploit and sell vaccines at a higher rate. We have a commitment to Tanzanian government. We have a commitment in the Bill & Melinda Gates Foundation that we would make sure that this is addressed well, no exploitation is done. Yes, our costs are high, therefore our product selling prices would also be high, but we don't take this as of an opportunity to sell a vaccine at 10x the price because that is not yet an opportunity. That is exploiting, which we will not do.

Great. And on this tender project of government of India, which is going on, we had got this order of almost 20 crores vaccine doses for 2 years.

Yes, PPR.

Yes, PPR. Any other tenders which we are trying to -- bigger tenders coming in the way or any other tenders which are there on the pipeline?

At the moment, there are no other tenders. But the state governments are buying some other vaccines like Lumpy Skin disease, Sheep Pox vaccine, et cetera, Goat Pox. They are buying that through state tenders.

And the peak turn of -- for this vaccine is around INR 20 crores for the 2 years contract?

Yes.

INR 20 crores to INR 25 crores?

Yes. Yes.

[Operator Instructions] The next question is from the line of [indiscernible], an Individual Investor.

Most of the questions have been answered. Sir, could you just help me out with the revenue and profit figures at Nepal, Tanzania and Life Sciences?

Just a minute. Nepal -- yes, I'll just request Nikhil to give the figures. And then if there are any questions, I will answer.

So in case of Nepal, the sales have been INR 7 crores. And overall, there is a loss of 8 lakhs in the 9-month period. And in case of Texas, INR 20 crores is the overall sales with INR 1 crore as profit. And in case of Tanzania, INR 2 crores has been the sales and 11 lakh is a loss in that entity.

[Operator Instructions] The next question is from the line of Yasser Lakdawala from M3 Investments.

Rajiv, could you help us understand what is the contribution of the new institutional tender business to our total revenues?

Hester India?

Yes, in Hester India and...

At the moment, maximum institutional business would be in the whole. So around 4% to 5%.

Okay. And sir, Rajiv, I also probably wanted to understand what is the strength of our field force in India? And how do we measure the productivity, right? As like in Pharma, we have MR productivity. So do we have similar metrics for our field force?

We have around between 200 to 250 salespeople in the field. And in terms of measuring, there -- I mean, there are systems in place. I mean, I would not really know these inner details, but there are all these systems. Just a minute, Priya would want to answer that.

Sorry, would you want to know how much is the per person -- what is your question exactly?

Yes. So yes, in per person in terms of productivity, right? Like in pharma, we have -- we measure the MR productivity. So what is the productivity for field force in India and for our consolidated business?

Okay. So no, there is a maturing methodology with which we use in our case as well. Speaking of the strength for poultry health care, the number of people are less compared to animal health care because the whole division works a little bit differently. So of course, the per person productivity in poultry would be a little bit more because the number of people are less while the turnover in the poultry health care is more. While in animal health care, it works a little differently. It's more to do with how you're seeing pharmaceutical companies work wherein the number of people are more while the per person is a little less.

[Operator Instructions] The next question is from the line from Anirudh Shetty from Solidarity Investment Managers.

Two questions from my end. So if I look at your working capital days over the last 8 to 10 years, our inventory days has improved substantially. We would have been about 190 days in FY ' 12 and now we're around, 100, 110. So I just wanted to understand, what were the primary reasons for such dramatic improvement? And going forward, do you see further scope for improvement in this number?

One thing is that as the business progresses, we become a little bit wiser and wiser on how to manage all these things on the lighter side. But over the period, we are dealing with people all across the country who are not doing a very structured business. So we keep on trying to educate them, enforce things on them, force them on inventory management, trying to become -- we become strict on payments. So these are the things that we do to really try to manage the inventory well. We make them plan for what they would want to sell, et cetera. So I think -- I mean, it's just that management. I mean, there's nothing else that we really have done towards this.

Got it. And do you see further scope for improvement from here on?

Further scope for improvement, I mean we are trying continuously. I do not know at this point of time. But we are continuously trying to make sure that inventory -- we try to become as efficient as possible. That's all. I have not -- I wasn't ready for this, neither have I studied this before answering the question. So therefore, my a little bit of inability to really give you an honest statistical manner.

No problem, sir. And the final question is just a follow-up on the Hester Tanzania question. Given that one is there is a huge pricing difference and vaccines, as we know it, is inherently profitable. but we also have a certain understanding with the government of Tanzania and a great foundation. So if I -- I don't want to get a specific number, but if I look at it and compare it with our India vaccine business, would the margins be more or less broadly similar at a larger scale or...

More.

It could be higher?

Will, not could. It will.

[Operator Instructions] As there are no further questions, I now hand the conference over to the management for the closing comments.

So thank you all for your questions. And as always, it's been nice. This interaction has always been nice and be rest assured we as a team are working hard towards ensuring that the company progresses well, does everything. If there are any speed breakers, we try to make sure that the speed breakers are crossed, and we again regained the speed or -- and try to take the business further with -- without really compromising on the philosophy with which we have been doing so far. And I think that's about it, there is nothing more. Thank you all and hoping to hear from you all and hoping to talk to you all again in the next quarter. Thank you.

Thank you. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.