Ipca Laboratories Limited (IPCALAB) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q2 FY '21 Earnings Conference Call of Ipca Laboratories Limited, hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Nitin Agarwal from DAM Capital Advisors. Thank you, and over to you, Mr. Agarwal.

Thanks, Margaret. Good morning, everyone, and a very warm welcome to Ipca Labs Q2 FY '21 Earnings Call, hosted by DAM Capital. On the call today, we have Mr. A. K Jain, Joint Managing Director, Ipca Labs; and Mr. Harish Kamath, Corporate Counsel. I will hand over the call to Mr. Jain to make some opening comments, and we will open the floor for questions thereafter. Please go ahead, sir.

Thanks, Nitin. Good morning to all participants, and thanks for taking out time and joining us for Q2 Ipca Labs conference call -- earnings call today. Today's con call and discussions and answer given may include some forward-looking statements based on our current business expectations, that must be viewed in conjunction with the risks our business faces. Our actual financial performance may differ from what is projected or perceived. You may use your own judgment on the information given during this con call. I would like to inform you that company's business and financial performance in Q2 FY '21 has been strong in spite of testing time on account of global COVID pandemic. We have used our internal -- the integrated business capabilities in furthering our global drug formulations and API business. The business and margin growth in Q2 FY '21 is largely driven by -- domestic formulation business had very good revival in Q2. Overall business growth was 6%, excluding business from Antimalarials, where we had a significant debacle in this particular quarter. The division had a significant decline -- the Antimalarial business division had a significant decline in business in FY -- Q2, on base of INR 95 crores -- the base is now reduced to around almost around INR 59 crores, so a decline of almost around INR 36 crores was observed in Q2 in Antimalarial business. The Pain and Cardiac business that constitutes more than 70% of the domestic business of the company. In Q2, the Pain segment has almost around 10% growth. And from the base of -- last year's base of INR 251 crores, the business went to almost around INR 276 crores in Q2 of current financial year. And in cardiovascular also, we had 6% growth from a base -- last year's base of INR 91 crores business became almost around INR 97 crores. And all other businesses also are reviving, except the Cough & Cold, where we are still seeing some kind of decline. Antibacterials, we are seeing some kind of decline. But all other businesses are -- the decline was much higher in our newer segments, like Derma, Ophthalmology in first quarter of the current financial year. Second quarter, there has been a significant recovery. There are only marginal declines -- declines are there in this business in the second quarter. And we see that all these business will turn to positive growth in the coming quarters. So domestic had a very good revival in the second quarter, except your Antimalarial divisions where the business decline was on account of the seasonality and all. And also, that segment has trivia as a segment, where the business decline is also continuing. Higher currency realizations on exports, almost around 5%, has also helped the company in overall growth. Overall reduced traveling costs and marketing costs has also helped in overall -- having a higher business margins in the -- continuing for the first quarter and second quarter. Higher business growth in API are continuing. And Institutional business in Q2, we had a very good performance, also similar to that we had in Q1. These upsides were somewhat offset by -- we have not made any provision for the MEIS benefit in Q2. Normally, in a quarter, that benefit would have been almost around INR 12 crores to INR 13 crores. But in view of uncertainties and no budget provisions still -- in view of that, no provision has been made. So almost around INR 12 crores to INR 13 crores worth of that earnings are not available in this quarter. Export freight continued to remain very high in current financial year. We almost paid, almost around 61% higher freight in current year, and that trend has continued. Of course, the percentage -- higher percentage will come down to around 30%, but overall, the freight continue to be high. Having given the basic presentation, all numbers are there in front of you. So I would request now for question-and-answer.

[Operator Instructions] The first question is from the line of Rahul Jain from Credence Wealth.

Sir, congratulations on a good set of numbers. Just a couple of questions. You did mention about Domestic business getting into the growth path now. So can we see for the next 2 quarters growth compared to the last year? And any focus areas in terms of therapy, which now we are focusing compared to say 6 months back? Secondly, sir, do we have any one-offs, like in quarter 1, we had some one-offs or additional business coming from excess use and government business we did on the domestic side. So in this quarter, anything with regards to some kind of business, which probably could not be a repeat business? And lastly, sir, on margins front, our gross margins continue to be around 67%, 67.5%. But we have seen a sharp jump in operating margins for this quarter probably due to the other expenses, operating leverage kicking in. So do we see now the shift? Going in the next 2 quarters and the year ahead, what kind of sustainable operating margins are we talking about? Or where do we see the operating margins for the next 6 months or next 12 to 15 months?

Thanks, Rahul. So I think overall Domestic business revival is very good, except the antimalarial business and all antibacterial and to some extent, Cough & Cold business. These are the businesses which are still having some kind of issues. But all other businesses are reviving very fast. The Pain segment is more than 50% [Audio Gap] 10%. Cardiovascular continued to remain strong. And our other businesses, which are upcoming businesses like Derma, URO, the CNS kind of business, all are now in the growth. We have seen good growth in the month of October in double digits. And we expect that business in the second half will be significantly better than what we had in the first half of the current financial year. And it's possible to achieve almost around 10%-plus kind of growth in the -- overall in the second half of the current financial year, looking at the current business expectations and also the performance, which we have seen in the month of October and all. As far as the businesses are concerned, I think overall there is no one-off kind of business in the current financial year in the second quarter of the current financial year. So it's all a normal business what we had. So there are no one-off as such in the top line. Except there was almost around -- earning of around INR 13 crores -- INR 12.5 crores to INR 13 crores, which was received on account of some contracts relating to an MNC company on supplies, which subsequently got canceled because of the change in the circumstances. And since we had incurred a higher cost around that time, so there was a compensation of almost around INR 12 crores and INR 12.5 crores, which we have received in the second quarter of the current financial year, and that has been accounted as a part of the other operating cost -- other operating income. So that's the only exceptional, I would say, that is a one-time. Other than that, we don't have any kind of one-off in the -- neither on expense side or nor on the income side. As far as gross margins are concerned, we had a business growth of almost around 7% in this quarter, overall numbers, stand-alone numbers. As against that, our material cost has gone down by 1%. And your trend continue to be, let's say, your overall intermediate trend is now a little softer in there. And the -- overall your solvents and some other things are at much lower prices now. And this trend is likely to continue because petroleum prices are continued to -- remain at lower end in the cycle. And therefore, we see that more or less, in spite of API business growing higher, where the material cost is higher, your gross margin levels has gone up. And also, one of the -- another reason is that in this particular quarter, I would say, that Antimalarials has declined, where we don't make that kind of gross margin. It's basically some of the products are also at a very, very low kind of margins are there and that business has declined. But other businesses have grown where the margins are better. And therefore, overall gross margin levels are also good. As far as the Generic businesses are concerned, of course, we had some kind of decline in U.K. But our European business has done much, much better. I think whatever decline, we had almost around of INR 40 crores from U.K., that has been compensated by the increase -- significant increase in the business -- from the other European country. And there also the business margin profile -- overall margin profile has improved because our margins compared to U.K. is much higher in the other businesses. So even Generic businesses wise, we did better, and trends will continue to be good as far as these issues are concerned. So -- and as far as the operating cost is concerned, operating costs will continue to remain in control. Of course, with the revival of Domestic, there will be some kind of additional cost will be there, but the travel and other costs will continue to remain significantly down. And also your other marketing costs, there will be some increase in there, but will be there in the second half of the year, but will remain in not a very, very high level. So overall, the margins levels would remain good. And whatever margins we reported, they are sustainable kind of margins what we have reported in the second quarter.

The next question is from the line of Amar Mourya from AlfAccurate Advisors.

Firstly, sir, on the Domestic business, if you can clarify, like I missed it in between. I mean what had led to the -- I mean what has been recovered and what is still degrowing? And when it will recover? If you can give the split, again, for that. And secondly, sir, in terms of the API run rate, I mean do we expect this kind of API run rate and this kind of pricing to continue for at least next 2 quarters? So these are 2 questions from my side, sir.

Thanks, Amar. As far as the businesses are concerned, I would say that the Pain segment is the major business segment for us, which include rheumatoid arthritis and osteoarthritis. Both the segments put together has grown by almost around 10% in this quarter. I have said that from base of last year's base of INR 251 crores, that business has become almost around INR 276 crores. And you will notice that this Pain is now almost more than 50% of our overall business in second quarter. Cardiovascular had almost around 6% growth from base of INR 91 crores, the business was around INR 97 crores. And there also recovery is very, very strong. The business recovery has been, let's say, in the first quarter, our Neuropsychiatry business was declining. That has also come in the positive growth. Ophthalmology business was declining, that has come in positive growth. And the decline in Derma business and URO business was almost around more than 20%, 25%. That decline has now become almost around 5%, 6%. So overall -- and we see that this business will have a good growth in the third quarter in the current year. The only businesses which are -- continue to show decline is number one, the older product portfolio, which we have almost around INR 80 crores, INR 90 crores kind of old product portfolio, where we are continuously seeing around 8%, 10% kind of decline. Antibacterials are continuously declining, and that decline percentage is around 12% or so. And your Cough & Cold is also having decline, which is around 10%, 12% decline is there in Cough & Cold also, and Antimalarial. Antimalarial base has significantly eroded. And normally second quarter have almost around more than 50%, 60% -- 55% to 60% kind of Antimalarial business. This year, there was no incidents of malaria, practically. And practically, that business has declined by almost around -- more than 50%, 55%. So completely base is eroded, as far as Antimalarial is concerned. And overall Antimalarial now in the business is becoming insignificant because overall, as and when year-end we will work out the final pie of the business, I think Antimalarial will become almost around 4% of the business. So now that risk is completely gone. Normal second quarter -- that's the highest base, and that base has already declined. So in future, even if Antimalarial, something happens, it's hardly going to be insignificant because it's -- now the overall base of Antimalarials are very, very low. And therefore, we are saying that, yes, there is a good revival, of course, that is subject to that if there is a second wave of infections and some lockdown, which are unlikely. If it happens, then business may again have some kind of issue. But otherwise, we are saying that, yes, the business growth is likely to be good in Domestic in the second half of the current financial year. As far as the API is concerned, right now, we are not there in the U.S. market. So there is a 0 business in that kind of segment. And there is where the most of the stocking and higher pricings and all that things have happened. So as far as we are concerned, it's a business as usual because we don't do -- we don't have any supply to U.S. currently. So the business growth is very continuing. Of course, as we have said earlier that we have capacity constraint, continuously we are working to do the debottlenecking. A lot of those kind of initiatives are currently also going on. So we are creating incremental capacities. And with that, the business growth is continuing. We have already started work on our Dewas project. Civil work has already started. All clearances are received. And so hopefully, I think in maybe around 14, 15 months' time, we should -- plan should be ready and thereafter, validations and all may take around 17, 18 months overall to be ready to do the commercial business from there. So that's it. Otherwise, API run rate, by and large, will continue.

Okay. So API run rate will -- Sir, If I may ask 1 more. Sir, Antibacterial and Cough & Cold would be how much contribution to the Domestic business?

Antibacterial was almost around 5%. Cough & Cold is around 4% of the business.

The next question is from the line of Abdul Puranwala from Anand Rathi.

Sir, my first question is again on the API side. Sir, could you -- is it possible for you to provide the current utilization at our plant? And how confident would we be to -- for this run rate to continue for next year as well based on the current capacity?

As I said, that some kind of 10%, 13% capacities we are continuously creating by debottlenecking. So that will continue. The capacity utilizations are currently very high. And absolute number giving is very difficult because some products may have 8, 10 steps. Some products may have just 2, 3 steps. So volume and all differs. The pricing and everything are different depending on what kind of starting material prices and all are there. But I would say that plant utilizations are almost around 90% currently. And some kind of incremental capacity creations is in pipeline, which is happening now, right, our existing plant at Ratlam in Madhya Pradesh. So that will continue, I think. And overall, we are projecting that the business growth in API in the second half will remain around 18% to 20% kind of business.

Sure, sir. And sir, my next question would be on, any update on -- from the U.S. FDA side with regards to your reinspection or resubmissions? Or any clarifications you would have seen from us?

We are continuously engaging with FDA. And till the time anything reached the finality, I would not like to comment. So I would say that status quo is continuing.

The next question is from the line of Surya Patra from PhillipCapital.

So sir, basically, first question is on the institutional business front. So is the -- the global field has raised their budget for the block of the current 3 years almost by 25%, more compared to the earlier period in terms of procuring the product, the already -- means whatever product that they have in procuring, whether it's antimalarial or work over all those segments. So there they have raised. So have you started seeing any benefits that's flowing into your supply, sir?

I mean overall we have given projections of around INR 200 crores to INR 225 crores for the current financial year. When you look at the number in the first 2 quarters, we've already done more than INR 170 crores.

Exactly. That is why I'm asking.

And the run rates are very strong. That trend will continue. So hopefully, business growth is -- on institution front is going to be very good.

And generally, sir, for the general export also, like this quarter, a marginal kind of sequential decline, of course, having a kind of a robust quarter last -- in the first quarter. So this is just a kind of sequential kind of issue that we are seeing, and the Y-o-Y 18% -- 17%, 18% kind of growth that we are seeing. This is the normalized Y-o-Y growth and should continue? Or this is a quarter, which is seeing some kind of moderation and possibly you can see pick up subsequently? Or your sense on the export front, sir?

So I have guided for API business growth of around 18% to 20% in the second half of the current year. As far as the Domestic business, I have talked about that growth could be around 10% kind of...

No, general formulation export, I'm talking about, sir.

Formulation export, there will be some kind of -- better business will continue because institutional business is continuously doing very well. Generic are other than U.K. business is going good. And U.K. will recover. In the second half, we will see a significant business increase in U.K. So even Generic business growth is going to be good.

Okay. U.K. was -- seen some kind of modulation or anything, sir, or any challenge that during this quarter?

Yes, we had some kind of issues with distributors. For that some overdue outstandings were there. The account was not regular, so we have reduced the supply. Now the account has become perfectly in order, and we have started accepting the orders and all. So U.K. business in last front till Q2 was almost around INR 53 crores, INR 54 crores. That has come down to around INR 12 crores in this quarter. So almost around more than INR 40 crores reduction is there in that. But that is almost around similar kind of from -- other than EU business, which were INR 48 crores last year in second quarter, that has become almost around INR 83 crores. So significant increase of almost around 70% has happened in the other EU business. So more or less, now even in third quarter, U.K. would do well. Europe will continue to do well. Australia, New Zealand, Canada, these businesses are continuously doing very well. So we will see a good growth in Generic business also.

Backward integration expects, whether it is through the PLI scheme, any update on that? Or the kind of -- what is the level of -- now if you are providing the quarterly data points, let's say, what percentage of your formulation is currently integrated? So -- and what is the level -- incrementally, what is the kind of thought process that you are now having for your case intermediate side that is a Noble Explochem that you had required? So something on these side, so -- which will ultimately achieve a kind of better integration for your overall business. So your thought on that, sir?

As far as on backward integrations on intermediate site is concerned, we have put up 1 project at our Aurangabad site, and that's the continuous process kind of plant. The deliveries of machines and all, which were expected in the month of April or May, that got significantly delayed because of COVID. Large number of people from suppliers got the COVID infections, and whole -- the schedule got upset. I think one part of the system is already received and installed and put to use. The second part of the system is now under installation. So probably that will become operational. So full automations will happen by December now, which were earlier expecting that at first quarter end that could have been happening. So that's one intermediate for one of our sartan product that will be produced through this kind of integration -- backward integration, a continues operating plant, not a base processing kind of plant. One of its kind that technology is new. All manufacturers are producing that intermediate through the batch process kind of things, and we have productive to use manufacturing plant. And if this experiment succeeds and everything goes well, we will further increase the capacity of in-house production. So the dependence on China on intermediate will then significantly come down. So that's the 1 update on that thing. As far as Noble Explochem is concerned, yes, because of your, again, pandemic and the travel restrictions and other things, we could not do much on that side. But now we are working on the projects and internal team is working. Hopefully, maybe in next 3, 4 months, we will be applying for environmental clearance, and all the environmental impact studies and others will be initiated. So anything happening on ground after that, it may take around 6, 8 months time. So any -- no CapEx would happen in current financial year. Next financial year, yes, we have lined up almost around 3, 4 intermediates that -- to be integrated at particular site after the receipt of environmental clearance. So that will take still some more time. As far as PIL (sic) [ PLI ] scheme is concerned, we are ready with the submissions for the 2 products on synthetic, organic or foreign chemistry product, not fermentation products. So we are not participating as far as fermentations are concerned. But the other API side, the chemistry side, we are putting up the application for 2 products. So that's the update, yes.

[Operator Instructions] The next question is from the line of  Kunal Dhamesha from Emkay Global.

So as you alluded that the most of the CapEx would be in FY '22, so that would include both Noble Explochem and Dewas? Or will we be doing some CapEx for Dewas in the FY '21 and then some would be spilled over to FY '22?

As I already cleared that Dewas, we already started construction. So that is going on. So next 6 months, civil structures would be ready, and installations would start from there at the year-end or maybe early part of the next financial year. And Noble, will take some more time, yes. And some more capacities are -- maybe around INR 100 crores is happening at Ratlam side, on API side, on debottleneckings and others. So that will become operational by March. Yes.

Okay. And then what would be the CapEx that you would be doing for Dewas and Noble Explochem?

Dewas, overall, will have almost around INR 250 crores. We are -- Noble, we have yet to work out numbers, so we will not be able to give you anything. And Dewas will be around INR 250 crores.

Okay. And the second question is on this continuous manufacturing that you've been talking from last 2 quarters. So how much edge it provides us in terms of the manufacturing costs over, let's say, that manufacturing? And then do you see that edge could eventually be through a lot of market share gain in sartan product?

Continuous manufacturing concern, your operating efficiencies are better, your CapEx is high. Because it's continuously console control kind of plants everything is automated. And your reaction outputs are better. Your reaction coefficients are far better. So I will not be able to talk much right now till the time we put up the plants and start seeing the benefits. But yes, the piloting and all indicates a significant reduction in the cost.

Significant would be 15%, 20% or even higher?

Right now, I will not give numbers. Let's wait for it. Yes.

The next question is from the line of Prakash Agarwal from Axis Capital.

Sir, if you could elaborate what really went wrong in U.K.? You said there is -- the business dropped from INR 50-plus crores to INR 12 crores? And what you have -- why are you expecting it to recover? Is the issues resolved?

Yes. Prakash, if you see first half of the current financial year, there is a substantial reduction in the U.K. business. Last year, first half, we did about INR 94 crores versus that this year we have done about INR 33 crores. So that is a INR 60 crores reduction in the U.K. Generic business. Whereas European business last year first half was INR 75 crores versus that this year first half we have done INR 178 crores. So there is a substantial improvement in the EU business, almost INR 100-plus crores.

Yes, I understood that. So I wanted to know, in U.K., what is wrong...

U.K. -- I mean I will tell you. U.K., now the account of the distributor is in control. It is online, actually. So there is no delay and all. So we have started accepting orders. You will see a good growth in the U.K. business in the second half compared to same period last year. So Europe will continue to grow. U.K. will also grow in the second half compared to the same period last year.

So I understand growth will come back. I'm trying to understand the reason of the decline and...

No. I said because there was a lot of receivable from the distributor. His account was not up to mark. That is why we stopped accepting order. So now the account has come up to level, whatever we were expecting. Now we have again started receiving order and manufacturing is happening. Yes. That is the only reason, nothing else.

So now how will it revise?

No, no. I said, orders are already there. We have started manufacturing. So you will see uptake in the shipment in the third quarter as well as in the fourth quarter.

Okay. And for the years to come because we have this business built on a new platform now?

Plus parallelly, we will be starting our own distribution, as we explained last quarter, and that work is also happening parallelly.

Yes, okay. Understood. Fair enough. Secondly, on -- any commentary on the sartan opportunity in the API? You did mention that growth of 15%, 20%. But how is the pricing competitiveness market share in the sartans business?

There has been not much variance with pricing compared to first quarter and second quarter, and we continue to have good order position in Losartan, where we are one of the biggest exporter from the country. And we believe that the thing will continue going forward.

So pricing, market share, both are not a issue?

Means, so far, it is not an issue.

Okay. Perfect. And lastly, on the CapEx, you did mention INR 250 crores for Dewas. But what is the expectation for second half and next year on an overall company basis?

Including our routine maintenance CapEx, this year, it will be about INR 200 crores, Prakash. Next year, it may increase to around INR 300 crores, INR 350 crores because most of the CapEx for Dewas would happen in the next financial year.

The next question is from the line of Mukesh Shah from Motilal Oswal Asset Management.

Sir, just 1 question from my side. You mentioned that the margins of about 28% that you did in this quarter is sustainable. I just wanted to understand, is that understanding correct for the second half of this year? And going forward into next year, should we build in similar margin structure? Or should we be the higher-margin structure? How should one think about that?

See more or less, whatever second quarter margin is there, more or less, that margin will going forward continue in the third and fourth quarter of the current financial year. Based on the presumption that the Domestic branded business will improve as we move month after month. That is what we are seeing.

Sure. And sir, we always look at margin expansion on a Y-o-Y basis. So is it safe to assume that next year we can build it on 28% or this 28% is where we can sustain?

No, no, no. Mukesh, please understand. In the first quarter, the margin what we had, it is impossible to replace because of that additional business and all. So let us focus on second, third, fourth quarter, whatever margin we are doing, that will continue. But first quarter margin, if you consider in the overall year, it is very difficult to replicate that kind of a margin.

I understand. Sir, my only question was that if you are at 28% margin, should 22 and -- FY '22 and '23 should be about 28%, closer to that range, right?

Yes, that is correct, right. So for that quarter there is some variation between 25% and 27%, it will fluctuate.

That will still be a very significant jump than what our historical margins were at '19, '20. Okay. So 28% is sustainable.

No, no. You see, during 2014, our margins were as good as what we are doing now, when our U.S. business was ongoing.

The next question is from the line of Abhishek Sharma from Jefferies.

Just 2 questions on sartans. First is on the landscape. Do you see any competition on horizon? Any of your competitors doing CapEx? Any new player trying to install capacity? So just what are you seeing on the market? That's the first one. And second is on the intermediate. So you said that you're basically bringing in 1 intermediate. I just wanted to check if that is OTBN? How many such intermediates do you plan to bring in? And when that process is done, would you become the lowest cost producer?

Abhishek, Mr. Jain has said this intermediate is for sartan business. I won't name the intermediate. But as far as the sartan businesses are concerned, so whatever guidance we have given, whatever internal -- whatever guidance our marketing team has given to us, we are progressing as for that guidance. And as you know, maybe our API business is now highly regulated. So it is not so easy for any consumer to gain source from one to another. So they have to go through a lot of processes and all. But as far as we are concerned, whatever projections we have given, whatever our expectation is there, so sartan businesses are progressing as per that.

But do you see any -- so I'm sure you are doing some landscaping in terms of your competition, people who have gone out of market, et cetera. Do you see any of them coming back?

See, in any case, Abhishek, we are not a big player in VALSARTAN. The people who went out are mostly for VALSARTAN in API. There whatever business I'm doing today is first on whatever I was doing earlier. As far as Losartan is concerned, there has been no disturbances. And whatever growth projection we have given to the market, we are moving as per that.

Right, sir. And just on intermediate. Without naming the intermediate, would -- after we have done this entire backward integration exercise, would this make you the lowest cost producer for sartans?

Yes, Abhishek, I would say something like this to remain competitive, we need to do all this. I won't say anything further than this. So whatever if it was, whatever we are projecting and whatever we are doing, if it is successful, that will give us a further competitive advantage vis-à-vis other players when it comes to sartan business.

The next question is from the line of Naresh Suthar from SBI Life Insurance.

Sir, first, one clarity on the margin guidance, which you just provided. So second half, you are expecting to continue around second quarter level like 28% margin. And for the next year and after that, you are expecting a range of 25% to 27%. Is that right?

Yes, that is next year, I said that correct. But if you see historically, the second quarter -- second half margin is lower than the first half margin always because second quarter business in the Domestic is always highest, if you see our quarter-wise Domestic business side. But this year, because of this COVID situation, hardly any malaria business. So going forward, our third and fourth quarter will be definitely better than the second quarter domestic business. That is what -- based on that, the projection what I gave you.

No. My question is more about the...

So it will be in the range of 25% to 27% going forward.

Sir, we -- lastly, like, we had around 20% margins. And because of this pandemic, we had some cost savings and also benefits in gross margin. So this the shift of -- from 20% to -- 25% to 27% is 5%, 6% shift. Is it higher because of the cost saving in marketing spend? Or is it higher by -- because of the gross margin benefit you're seeing? What is the overall...

Mostly because of the gross margin benefit, there is a 100, 150 basis point improvement in the gross margin.

So that is only 150.

Yes, 100 to 150 basis points, right?

So another 450 is because of other expenses, right?

That is correct, right.

So that is mainly because unlike marketing activities, which we are doing...

That is operation cost. But having said this, we've also incurred additional manpower cost, which was COVID allowance. So that we have spent about INR 20 crores plus. Another thing which is not there in this quarter is about INR 12 crores to INR 13 crores MEIS benefit on the export formulation business, which we used to get every quarter. So this quarter, because of the government, they are moving out of MEIS scheme and there is no budgeted provision for paying that. So we are not provided for that. Otherwise, this quarter, it would have been another 100 basis point improvement in the margin.